Academic journal article The Lahore Journal of Economics

The WTO Trade Facilitation Agreement: Implications for Pakistan's Domestic Trade Policy Formulation

Academic journal article The Lahore Journal of Economics

The WTO Trade Facilitation Agreement: Implications for Pakistan's Domestic Trade Policy Formulation

Article excerpt

1. Introduction

This paper begins with a brief introduction to the concept of trade facilitation and summarizes the commitments arising from the Trade Facilitation Agreement (TFA) for members of the World Trade Organization (WTO). It then highlights how the TFA is perceived in the context of cost reduction and as a tool for development. The next part examines the current situation of Pakistan vis-à-vis the TFA and offers a snapshot of different international trade facilitation indicators (TFIs) that are published periodically by the World Bank and World Economic Forum. Finally, the paper focuses on the implications for domestic trade policymaking in Pakistan as it prepares to categorize and implement the binding provisions of the TFA.

Trade facilitation is the concept of reducing the costs and time involved in processing cross-border trade transactions. There is no standard definition of trade facilitation but it is universally accepted that it is a way to improve the efficiency of international trade. Institutions1 working in this area have evolved their own definitions consistent with their mandate, objectives, and work program. Even a cursory examination of these definitions, however, will show that trade facilitation covers the simplification, harmonization, standardization, and modernization of international trade and customs procedures.

In the context of the trade supply chain, the broader concept of trade facilitation covers every step of the movement of goods from the producer's premises up to the retailer's shelf, whereas the narrow version is confined to the procedures of border regulatory agencies. Quoting Robert Zoellick,2 "trade facilitation measures are basically an extension of market access procedures that lower transaction costs and increase timeliness of transit" (cited in International Trade Centre, 2013, p. 1). Simply put, trade facilitation refers to those measures that improve efficiency and transparency in the trade supply chain.

The term may be relatively new, but the concept is not. The three articles of the General Agreement on Tariffs and Trade (GATT) 1994 (Articles V, VIII, and X), which form the basis of the new TFA, have been part of GATT since its beginning in 1947. The World Customs Organization (WCO) has been working in this area for over half a century. The Kyoto Convention and Revised Kyoto Convention cover many of the areas now included in the new TFA. The mandate of the United Nations Conference on Trade and Development (UNCTAD) in this area dates back to the Final Act of its very first ministerial conference in 1964.3

Similarly, UNCTAD's Special Program on Trade Facilitation and the Expert Working Group on Trade Efficiency, which led to the adoption of the 1994 Columbus Ministerial Declaration on Trade Efficiency, are more than two decades old. The declaration, in turn, was instrumental for the inclusion of trade facilitation in the WTO agenda at the Singapore ministerial conference in 1996. Trade facilitation became more visible once it surfaced on the radar of the WTO and began to figure prominently in the work programs of many institutions and international treaties, including various regional trade agreements.

The success of the Bali ministerial conference was acknowledged by political leaders all over the world and its coverage in the electronic and print media was also overwhelmingly trade facilitation-centric. After protracted negotiations spread over more than a decade, the conclusion of negotiations on trade facilitation paved the way for the first new agreement since the creation of the WTO in 1995. The Bali outcome is the 'agreed text' pending legal review/scrubbing; it will become part of WTO law after acceptance of the Protocol of Amendment by two thirds of the WTO members and enter into force thereafter.

The TFA will create legally enforceable binding commitments across 160 WTO members, including Pakistan, to expedite the movement, release, and clearance of goods (including goods in transit) and will improve cooperation among WTO members on customs matters. …

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