The Trade Facilitation Agreement: Building Faith in International Trade in an Uncertain Time

By Lloyd, Ashley Kincaid | Denver Journal of International Law and Policy, Summer 2017 | Go to article overview

The Trade Facilitation Agreement: Building Faith in International Trade in an Uncertain Time


Lloyd, Ashley Kincaid, Denver Journal of International Law and Policy


I. INTRODUCTION

It is often theorized that multilateral trade can act as a stabilizing conduit for peace despite tumultuous governments, economic crisis, or social unrest. (1) Facilitating such trade in a pragmatic multilateral way has been a challenging project, but on February 22, 2017, the groundbreaking Trade Facilitation Agreement (TFA) entered into force. (2) The TFA is "the first new multilateral agreement in the nearly twenty-year history" of the World Trade Organization (WTO). (3)

"Trade facilitation" is defined by the United Nations Economic Commission for Europe (UNECE) with the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) as "the simplification, standardization and harmonization of procedures and associated information flows" required to move goods from seller to buyer and to make payment. (4) In the WTO context, trade facilitation primarily refers to reforming "border management processes so as to make import and export transactions more transparent, predictable and efficient." (5) Bernard Hoekman states, "[a]n even broader view of trade facilitation is to include any measure that promotes trade." (6) Trade facilitation, generally, is "now widely considered a necessary complement to broader economic liberalization--essential to reap [trade facilitation's] full benefits." (7)

One of the most beneficial aspects of trade facilitation is that it creates stability in markets and thus certainty and confidence in traders, importers, and exporters. (8) Extensive empirical data at this time exists to suggest trade facilitation can significantly boost trade, "diversification along the extensive margin of trade, and increase aggregate welfare." (9) Arguably, the TFA has far reaching effects, one is superseding the negative effects of high, as "trade facilitation has a larger effect than removing tariffs." (10) If one is inclined to embrace trade facilitation and accept the theory that trade at least encourages peace between nations, the TFA may be interpreted as a manifestation of the foregoing intuition that trade creates peace. Moreover, because the WTO's allows states to retaliate against any state that violates WTO agreements, and as the TFA is the first agreement that all WTO members signed, there are binding and legal repercussions that make the TFA indisputably unique.

This Article is comprised of the following sections: (II) background of the TFA's creation; (III) the ways in which protectionism hinders trade facilitation; (IV) a discussion of the TFA including: (A) its projected benefits, (B) the role of the Global Alliance, (C) implementing the TFA, and (D) regulating and enforcing the TFA despite protectionism in 2017; (V) non-protectionist critiques of the TFA; and (VI) concludes that the TFA will serve a significant purpose.

II. BACKGROUND

The WTO created the TFA as a natural consequence of the WTO's work. This section will summarize the WTO's history from its inception, through the Doha Development Agenda discussions, and finally to the Bali Ministerial Conference that culminated in the TFA's creation and entry into force. The WTO is an intergovernmental organization (IGO) (11) created in 1995 in Geneva, Switzerland. (12) Its creation arose from the Uruguay Round Agreement, (13) but its establishment occurred through Article 1 of the Agreement Establishing the World Trade Organizations' entry into force. (14) At the WTO's inaugural Ministerial Conference in 1996, trade facilitation discussions arose as a top priority. (15) Trade increased presumably from the certainty that the WTO rules provided for businesses and countries. The rules also had positive effect on equality. (16) The WTO held ten Ministerial Conferences to date, with an eleventh scheduled for December 2017 in Buenos Aries, Argentina. (17)

The Doha Conference was a landmark decision that paved the way for the TFA's creation. Controversy arising from popular movements against "megacorporations" prior to 200118 did not deter the WTO from continuing to strive towards its goals to work on efficient trade facilitation. …

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