WTO Agreement on Trade Facilitation
The WTO Agreement on Trade Facilitation (TFA), which entered into force on February 22, 2017, contains binding commitments for the 164 WTO Members to modernize and simplify border procedures. It is the first multilateral agreement concluded since the creation of the WTO in 1994. A list of WTO Members that have ratified the TFA is available on the WTO website.
Some of the key provisions of the TFA aim to:
- Expedite release and clearance of goods at the border, for example by processing import documentation prior to the arrival of goods, and concentrating border controls on high risk goods while expediting the release of low-risk goods.
- Streamline customs formalities by cutting red tape, for example by reviewing customs formalities to ensure rapid release and reduced time and cost, and providing a single window for submission of customs documentation and data.
- Provide recourse to traders through a right of appeal or review of administrative decisions by border agencies.
- Ensure predictability through advance rulings by customs authorities that provide binding decisions on tariff classification and origin upon request of traders.
- Ensure transparency by requiring prior publication of relevant laws and regulations and by allowing traders to comment.
Most economic gains will flow to developing countries. The WTO estimates that the full implementation of the TFA could boost global merchandise exports by up to $1 trillion, with up to $730 billion accruing to developing countries, and reduce trade costs by an average of over 14 percent (nearly 17 percent for least-developed countries).
The TFA provides a new approach to implementation by developing and least-developed countries. The Agreement provides those Members with the flexibility to self-determine the timing of their own implementation of the TFA’s provisions, and to indicate whether they need assistance and support for capacity building in order to do so. Furthermore, developing and least-developed economies benefit from flexibilities under which commitments are not binding until they acquire the capacity to implement.
Some developing and least-developed countries will need assistance to implement the reforms necessary to bring their border procedures into compliance with the TFA’s provisions. Mechanisms are in place to assist developing countries implement the TFA. One example is the Global Alliance for Trade Facilitation, a public-private partnership which brings together donor countries, global businesses and international institutions to assist developing countries in the implementation of TFA reforms. Canada contributed $10 million to this alliance over seven years (2015-2022).
The implementation of the TFA will benefit Canadian traders by expediting, streamlining and enhancing the predictability of customs and border procedures for their exports to developing countries, which translates into lower trade costs. The benefits are expected to be most significant for small- and medium-sized enterprises (SMEs), for which trade costs are disproportionately high. The implementation of the TFA by developing countries could help Canadian SMEs increase their export presence in emerging markets, from Latin America and the Caribbean, to Africa and Asia.
The Canada Border Services Agency’s Small and medium enterprises toolkit is designed to make commercial and trade information more easily accessible to business. It identifies relevant websites and outreach products, and provides details on programs, policies and regulations intended to make it easier and faster for commercial goods to cross the border while enhancing border and trade chain security.
Canada’s Implementation of the TFA
On December 12, 2016, An Act to Amend the Food and Drugs Act, the Hazardous Products Act, the Radiation Emitting Devices Act, the Canadian Environmental Protection Act, 1999, the Pest Control Products Act and the Canada Consumer Products Safety Act and to make amendments to a related Act (the “Act”) was enacted. This legislation enabled Canada to ratify the TFA on December 16, 2016.
Further details on the legislative amendments contained in this Act
WTO Members committed to have a means to facilitate both domestic coordination and implementation of the provisions of the TFA. The Government of Canada uses well-functioning interdepartmental networks already in place to undertake the necessary strategic planning and to coordinate trade facilitation domestically, both between Global Affairs Canada, the Canada Border Services Agency and other departments and agencies responsible for the application of import, export and transit requirements at the border, as well as existing mechanisms for consultations with stakeholders. These mechanisms include the Border Commercial Consultative Committees, which provide officials and commercial stakeholders with a forum to discuss border-related policies and programs, as well as technical and operational issues that govern and affect Canada’s trade.
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