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Facing the Task of Facilitating WTO's Trade Facilitation Agreement

Free trade seems to have few friends in positions of power these days. But advocates of removing obstacles to the flow of international trade got at least one piece of good news earlier this year.

It came in the form of ratification of the World Trade Organization's Trade Facilitation Agreement. The TFA expedites the movement, release and clearance of goods crossing borders. The intent is to standardize trade-compliance rules among multiple countries and customs authorities. At long last, we face the prospect of untangling and harmonizing the Byzantine rules that govern the flow of imports and exports the world round.

There's still work to be done, however, says Eugene Laney, head of international trade affairs with DHL. In the U.S., the job of setting up a single window for the filing of trade documentation with some 48 government agencies is "99.9 percent" complete. But technical issues remain to be addressed, and some agencies still have to get on board and determine what kinds of data they can accept through the system.

Laney believes the single window can be finalized by regulators by year’s end. Meanwhile, U.S. Customs and Border Protection and other agencies need to instruct small and medium-sized businesses on how to become more engaged in submitting documentation online.

The U.S. wasn’t the first country to adopt the single window and other trade-facilitation measures, but it’s far from the last. More than 30 countries have yet to post documents online that clearly spell out their regulatory guidelines on importing and exporting, says Laney. In addition, some require additional funding to bring the technology up to speed, and educate their own regulators on the fine points of automation.

On the plus side, the concept of the single window has found favor in some unexpected places, such as Mozambique, Colombia and Malaysia. China, too, has been among those to pioneer the revolutionary idea. At the same time, says Laney, the various participants “are still in the framework of defining what a single window is. Each country views it in a different way.”

Over the past year, work has progressed in both the private and public sectors to determine the areas of greatest need among WTO members, as they embrace trade facilitation and automation. Over next six months or so, the resulting surveys will aid in the formation of programs to put the elements of the TFA into action on a global scale. The placement of crucial information on the Web, which Laney considers to be “low-hanging fruit,” should occur within the next 12 to 18 months.

In the U.S., a potential obstacle exists in the form of proposed cuts by Congress in multiple government programs, some of which could severely impact trade facilitation. Laney says the Trump Administration “has identified the single window as well as other Customs programs as important and vital to security, as well as the efficient flow of trade. I don’t think we’d be hit as hard with the pulling back of funding.” In the fierce politicking over the federal budget, however, nothing is ultimately untouchable.

The TFA consists of more than just the single window. It also promotes facilitation measures such as pre-arrival clearance and the electronic submission of import documents to customs. At the moment, says Laney, some 65 countries lack the capacity for such a setup. And customs agencies in more than 28 countries still don’t engage in pre-risk assessment, rendering agents ignorant of the nature of the cargo that’s approaching their borders.

Advantages to the trade community promised by the TFA are substantial. In the pharmaceuticals sector, for example, perishable drugs can’t afford to be held up by bureaucratic red tape. Lacking proper data and documentation, expensive shipments have to be sent back to the shipper or destroyed. The cost of such delays filters downstream to research labs and hospitals, jacking up healthcare costs.

What should businesses be doing right now to take full advantage of the TFA? DHL’s own efforts, under the label of “Export 101,” involves the education of small and medium-sized businesses on how to understand and comply with rules across the globe. Larger companies, meanwhile, need to employ staff within their legal and compliance departments to get up to speed on the new agreement.

Technology is an issue, although its challenges pale beside the need for business-process change. Organizations need to harmonize activities within their own walls before they can take advantage of the new regime. But the rewards are plentiful. Complying companies, in addition to speeding up the flow of product across borders, often discover new efficiencies within their supply chains, says Laney.

Don’t let the recent controversy over multilateral trade agreements serve as a reason for delay, says Laney. Rules on global sourcing, manufacturing and distribution might be changing, “but everyone is going to have to learn how to sell their goods outside the U.S.”

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