On Second Thought: Taking action on global trade facilitation

   The World Trade Organization’s Ministerial Conference, which took place in December in Nairobi, Kenya, was initially targeted as the date for entry into force of the landmark WTO Trade Facilitation Agreement (TFA) agreed to at the end of 2013. However, because only 57 WTO members had ratified the agreement prior to the ministerial, parties fell short in achieving this crucial milestone. Ratification by 110 WTO members is necessary for the TFA to enter into force.

   Achieving the fullest implementation of the TFA is critically important for expanding global commerce. This agreement promises to streamline customs processes and procedures, provide increased transparency and predictability, and speed the movement of goods across borders. According to the WTO, the TFA could reduce trading costs by more than 14 percent for low-income countries and more than 13 percent for upper middle-income countries, and create up to 20 million jobs. Further, projections hold that this landmark agreement could add more than $1 trillion to global trade flows. However, more countries, including some key U.S. trading partners, need to take further action now to get the TFA over the hump.

   Myanmar, Norway, Vietnam, Brunei, Zambia, and Ukraine ratified the TFA at the Nairobi ministerial, increasing the ratification count to 63 countries. These countries joined China, the United States, the European Union (on behalf of its 28 member states) and a number of others in ratifying the agreement. But there are some notable holdouts. For example, where are America’s regional and bilateral free trade agreement (FTA) partners, which have already made commitments in this area? Where are some of the Trans-Pacific Partnership nations, with whom the United States recently wrapped up negotiations, including both its NAFTA trading partners?

   Did we miss the connection that current and aspiring FTA partners would be a natural fit for the TFA’s market-opening and trade-expediting features? I applaud U.S. FTA partners like Australia and Nicaragua for their efforts to ratify the TFA. However, I wonder about the conspicuous absence of TFA ratification by other U.S. FTA partners such as those in North and Central America. While all our FTA partners have submitted their notifications for Category A commitments—those provisions that countries will implement upon entry into force of the TFA—most have yet to notify the WTO of formal TFA ratification.

   We awoke in the New Year having missed completion of two key milestones: 1) TFA’s entry into force, and 2) U.S. congressional passage of Customs Reauthorization legislation, which is pending in Congress. There is still work to do at home. The good news is that despite missing the deadline for entry into force the TFA was center stage at the Nairobi ministerial where the Global Alliance for Trade Facilitation was launched.

   The alliance is a U.S. Agency for International Development-led, public-private partnership aimed at helping developing countries implement the TFA. The alliance brings together donor countries such as the United States, the United Kingdom, Germany, and Canada (and possibly Australia soon), and the private sector, led by the World Economic Forum, Center for International Private Enterprise and the International Chamber of Commerce (ICC).

   The U.S. Council for International Business is the ICC’s U.S. affiliate, and timely TFA entry into force, followed by robust implementation, are key priorities for the USCIB Customs and Trade Facilitation Committee, which I chair. We cannot let the rate of country ratifications slow, nor can we permit aspirations to be an ending point. Visions require plans. Plans require commitment and, ultimately, execution.

   We in the business community need to keep the pressure up on countries and work in non-traditional ways to communicate the benefits of this agreement and the consequences we will face without it. While any potential difficulties of implementation will likely fall on customs administrations, it is important to note that the agreement was negotiated multilaterally and our challenges are many. Continued education on the TFA is essential for the year ahead. It is clear that the TFA’s entry into force and early congressional passage of Customs Reauthorization are readily attainable goals for 2016. Once the TFA has entered into force, there can be no gaps in its much-needed implementation, which for some countries will constitute a much longer process. All countries must strive to achieve the highest levels of implementation in order to secure the greatest benefits promised by the TFA. While the TFA can be seen as a win for importers and exporters, it is the developing countries that stand to gain the most.

   We could use some good news this year, and we should all push to ensure that the WTO Trade Facilitation Agreement helps bring it.

   Cook is vice president of government and trade relations with Hanesbrands. He chairs the Customs and Trade Facilitation Committee of the U.S. Council for International Business and can be reached by email Jerry.Cook@hanes.com.