Count down to entry into force of the World Trade Organisation Trade Facilitation Agreement

In December 2013, Member Countries of the World Trade Organisation (WTO) concluded negotiations on a Trade Facilitation Agreement (TFA) at their 9th Ministerial Conference as part of the wider “Bali Package”. The TFA is about simplification, standardisation, harmonisation and transparency of trade-related procedures. According to the WTO 2015 Global Trade Report, the impact of implementing WTO TFA measures would potentially reduce the cost of trade by as much as 14%.  The agreement recommends members of a customs union or a regional economic arrangement to adopt regional approaches in the implementation of their obligations including through regional bodies.

Following its adoption, WTO members undertook a legal review of its initial legal instruments to prepare for incorporation of the Bali decisions and on November 27, 2014 adopted a Protocol of Amendment to insert the new Agreement into Annex 1A of the WTO Agreement. At a country level, and with assistance from international and regional partners like TMA, members of the WTO (especially developing and least developed members) undertook a gap analysis of their trade related rules and regulations to better understand the necessary changes for them to comply with the TFA measures. The TFA will enter into force once two-thirds (110) of its 164 members complete domestic ratification process. At the moment, 108 countries have ratified the agreement, and its entry into force is imminent.

Within East African Community, TMA in collaboration with partners like UNCTAD and GIZ have been providing necessary support for the 5 Partner States to prepare for its implementation in a) undertaking needs analysis; b) preparing for the ratification process of acceptance of the TFA; and c) establishing the necessary institutional framework in form of National Trade Facilitation Committees to coordinate the implementation process. As a result, EAC Partner States have been able to identify and classify their compliance positions in three categories: a) those that they are able to implement immediately – category A; b) those that they will implement with own resources – category B; and c) those that they can implement with financial and human resources (technical assistance) assistance – Category C.

Even before the Agreement was signed, TMA supported EAC Partner States to implement a number of interventions covered by the Agreement including improvements of trade facilitation infrastructure such as ports, border crossing posts and roads as well as breaking down barriers beyond borders via its NTB and standards regional programme. At a regional level for example, TMA has been supporting implementations of One stop border posts and integrated border management programmes (Article 8 and 12 of the TFA); implementation of single window programmes (Article 10.4 of the TFA), implementation of AEO programmes (Article 7.7 of the TFA) and many more in the pipeline such as the trade information portal (Article 1 of the TFA).

With the WTO TFA entry into force imminent, developing countries that have ratified the Agreement  are expected to immediately a) commence Implementation of measures they have notified under Category A;  and b) notify to the WTO preparatory committee on trade facilitation measures under Category B and C and corresponding indicative dates for implementation. Within the EAC, all the five Partner States have notified their category A positions, established national trade facilitation as well as a regional trade facilitation committee. Only Kenya and Rwanda have ratified the TFA in East Africa.

For WTO members that have not ratified the TFA, on entry into force they will be expected to continue implementing trade facilitation initiatives under the existing GATT 1994 arrangements provided for by Articles V (freedom of transit), VIII (Fees and Formalities Connected with Importation and Exportation) and X (Publication & Administration of Trade Regulations),. They will however lose out on the benefits of TFA associated with reduced costs to trade, become less attractive to foreign direct investments and will be significantly constrained to participate in global value chains. Should they ratify after entry into force, they are expected to immediately implement category A provisions shorting the period of preparation and implementation.