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The WTO’s Trade Facilitation Agreement (TFA) impact on export diversification in the Tripartite region

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A study from the African Economic Research Consortium (AERC) analyses the effects of the implementation of the WTO’s Trade Facilitation Agreement (TFA) in terms of export diversification in the Tripartite region and its regional blocks (EAC/COMESA/SADC).

The TFA brings in a single text all those measures representing best practices for trade facilitation, which WTO member States have to incorporate into their national customs legislation and policies. The most important are:

  • Advance Rulings: Advance Rulings are written decisions adopted by Customs on request of private operators concerning the customs treatment applicable to goods. In practice such decisions, binding for both the private operator and the administration,  clarify doubts on the classification, the origin or the customs value of the goods in preparation for their importation. Advance rulings are therefore a mechanism which provides certainty to operators with respect to their obligations under the customs regulation concerning the correct classification, indication of origin or of the customs value of certain goods.
  • Pre-clearance: documentation relating to imported goods must be made available to customs before goods arrive in the country of importation, in order to allow them to verify all the information relating to the goods while they are still in transit, so as to be able to release them immediately on their arrival or direct them to the necessary checks, minimising movements and stops in the terminal areas. Closely linked to this tool is the separation of the payment of duties and other charges from the customs clearance process, so that they can be paid at a later stage (after release).
  • Special procedures for shipments of certain types of goods: these are special procedures for time-sensitive goods (e.g. perishable goods), for low-value or low-duty shipments, or for goods that need to quickly reach destination markets (e.g. air cargo). In order to maintain effective control over such consignments and to ensure the correct payment of duties and other charges, access to these procedures may be reserved to importers who meet certain criteria of customs reliability (e.g. AEO and other similar "trusted trader" schemes).
  • Maximum reduction of formalities: Customs formalities and documentary requirements need to be reduced as much as possible, in order to avoid trade restrictions and ensure the rapid release and clearance of goods, reducing the time and costs borne by importers.
  • Subjectivity and proportionality of penalties: Penalties applicable to the violation of customs laws, regulations or procedures must be applied to those responsible for the violation under domestic law and be proportional to the degree and gravity of the violation.
  • Widening the knowledge of customs and foreign trade laws, regulations and procedures: in particular, by their targeted dissemination through customs and trade portals
  • Recognition of the possibility for operators to adopt electronic payment instruments for duties and other charges
  • Appeal procedures: this is the right for traders to obtain review and correction of decisions made by customs officials within the context of administrative and/or judicial proceedings.
  • Use of guarantees for the rapid release of goods.
  • Use of "white lists" and "authorised operators" schemes to channel customs facilitations and simplifications to those operators who are judged by Customs as particularly reliable following an audit conducted on their business organisation.
  • Promotion of the use of 'single window' systems: a Single Window is a facility (in most cases an electronic platform) that allows parties involved in trade and transport to lodge standardized information and documents with a single entry point to fulfill all import, export and transit-related regulatory requirements. Its main aim is to simplify regulatory formalities and reduce operating costs for traders, by avoiding them to submit redundant information and data to all the actors involved in cross-border operations.
  • Maximum use of risk analysis and profiling techniques for the selection of goods to be subject to control.
  • Deferment of controls within the territory: easing of border controls and wider use of audits and post-clearance controls.
  • Simplified transit procedures.
  • Provisions for cooperation and coordination between customs of different countries and territories.

The results of the AERC study show that two measures in the WTO’s TFA are deemed to have the greater impact on diversification of Tripartite exports. These are the advance rulings and the appeal procedures. More specifically, advance rulings are the measures having the greatest impact on the diversification of exports within the Tripartite (for both primary commodities and manufactured goods), while appeal procedures have the most critical effect on diversification especially of manufactured exports to the rest of the world.

With regard to the performances of each Regional Economic Community within the Tripartite, the study concludes that SADC trade facilitation policies have had more impactful results in terms of diversification than those adopted by EAC and COMESA, even though the margin of difference between SADC and EAC is tiny.

 

 

 

 

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