Red tape annoys everyone. But, for importers and exporters, excessive red tape in the form of hidden and unreasonable customs fees, slow border release times and uncertain or unstated import requirements add cost and delay shipments.
To address trade facilitation issues like these, nations utilize international forums like the World Trade Organization (WTO) or agreements like the Trans-Pacific Partnership (TPP) to increase transparency and institute measures to harmonize import-export procedures.
“Red tape has always been a burden that is a part of trade,” said U.S. Grains Council Director of Trade Policy and Biotechnology Floyd Gaibler. “Trade facilitation is really about how to cut through the red tape and conflicting regulations of different countries.”
For global traders, complications can include duplicated documentation requirements and unclear customs procedures. As the WTO reported, “The United Nations Conference on Trade and Development (UNCTAD) estimates that the average customs transaction involves 20–30 different parties, 40 documents, 200 data elements (30 of which are repeated at least 30 times) and the re-keying of 60–70 percent of all data at least once.”
Gaibler explained that today’s technological advancements, including just-in-time delivery and component manufacturing, further emphasize the need for more uniform and efficient trade regulations.
The WTO has served as the primary focal point for discussing trade facilitation, he said, with the 2013 WTO Ministerial Conference in Bali outlining a Trade Facilitation Agreement (TFA) offering more transparent and harmonious trading procedures. According to the World Trade Report 2015, fully implementing these measures would reduce global trade costs by 14.3 percent and have potential to increase global exports 2.7 percent a year, worth between $1.8 and $3.6 trillion.
For agriculture specifically, the measures would reduce trade costs by 10.4 percent. Full implementation of the TFA would also significantly reduce the time needed to import or export products, by 47 percent and 91 percent over current averages, respectively.
Members are working to garner the two-thirds vote necessary to make the provisions fully enforceable. In the meantime, WTO members are expected to discuss the proposal at the 2015 WTO Ministerial Conference in Nairobi, Kenya, scheduled to take place in mid-December.
TPP negotiating partners have also proposed trade facilitation solutions in their agreement under Chapter 5 – Customs Administration and Trade Facilitation. The TPP agreement addresses the need for increased transparency in customs procedures as well as setting a standard for releasing goods within 48 hours of arrival. The TPP chapter also requires all countries in the agreement to publish customs laws, regulations and procedures, even specifying publication online and in English where possible.
No matter the forum, the overarching goals of trade facilitation measures remain the same – reducing delays and clarifying or eliminating time-consuming and costly procedures.
After all, as Gaibler said, “the driving force is to avoid these situations in the first place.”