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WTO Affairs Department of Ministry of Commerce Interprets Relevant Circumstances of Trade Facilitation Agreement

The World Trade Organization (WTO) General Council has recently passed the protocol on the Trade Facilitation Agreement (hereinafter referred to as the Agreement), bringing the Agreement into the WTO Agreement, and opened the protocol for members to accept. When two thirds of the members accept the protocol, the Agreement will go into effect. A few days ago, the head of the WTO Affairs Department of the Chinese Ministry of Commerce interpreted relevant circumstances of the Agreement.

I. What is the function of the protocol on the Trade Facilitation Agreement and what is its significance?

Answer: The WTO General Council passed the protocol on the Agreement and brought the protocol into the attachment 1A to the WTO Agreement, which endowed the Agreement a legal status as a multilateral agreement of trade in goods. The attachment 1A of the WTO Agreement contains 13 multilateral agreements of trade in goods such as the 1994 General Agreement on Tariffs and Trade, the Agreement on Agriculture and the Agreement on Technical Barriers to Trade. The passage of the protocol marks that the deadlock of the implementation of the Agreement lasting for four months is broken and the WTO negotiations are back on track.

In July 2014, the WTO General Council didn’t pass the protocol on time since India insisted on solving the problem of its attention on food security synchronously and the implementation of the Agreement got into trouble. With concerted efforts of all parties concerned, the U.S. and India reached agreement on the implementation of the protocol in November 2014, which laid a solid foundation for the successful passage of the protocol of the Agreement.

II. What kind of positive impact will it have on Chinese and global economy after the Trade Facilitation Agreement comes into effect?

Answer: As the first multilateral trade agreement reached by the WTO since its establishment about 20 years ago, the Agreement is an important breakthrough since the launch of the Doha Round Negotiations and is of great significance and far-reaching influence on the world and Chinese economy. According to estimates by international organizations, the effective implementation of the Agreement will reduce trade cost of developed countries by 10% and that of developing countrie by 13% to 15.5%. The implementation of the Agreement can enable the export of developing countries to increase up to 9.9% every year (almost US$569 billion), developed countries 4.5% (almost US$475 billion), and drive the global global GDP to increase US$960 billion and create 21 million jobs.

With regard to China, the implementation of the Agreement will accelerate the release and flow of goods, improve trade efficiency, reduce trade cost and play a positive role in raising the level of trade facilitation in China, improving the trade facilitation environment of major exporter members, reducing the import and export barriers of Chinese products, creating a convenient customs environment and pushing forward the sound development of Chinese foreign trade.

III. How were the negotiations on WTO trade facilitation launched? When were they concluded?

Answer: The topic of trade facilitation was first listed into the WTO work schedule at the ministerial conference in Singapore in 1996, and together with the other three topics of transparency of government procurement, trade and investment and trade and competitive policies, they are called “Singaporean Topics”. At the Doha ministerial conference in 2001, it was decided that the topic of trade facilitation would be launched after the Cancun ministerial conference, on the basis that consensus was reached on the mode of negotiations. In July 2004, the General Council passed the Doha July Package and made it clear to launch the negotiations on trade facilitation on the basis of the attachment D “Trade Facilitation Negotiation Mode”. In October 2004, the trade facilitation negotiating group was set up and the negotiations were officially launched.

On the basis of the proposals of members, the draft text of the Agreement was formed in December 2009. Since 2012, priority had been given to the topic of trade facilitation because of little differences between members. On December 7, 2013, the ministerial meeting in Bali decided to complete the negotiations on the Trade Facilitation Agreement.

IV. What’s the main content of the Trade Facilitation Agreement?

A: According to the Doha Work Program approved by the General Council in July 2004, trade facilitation negotiations should be aimed at clarifying and improving related contents of the Article V (Transit), VIII (fees and formalities) and X (publish and implementation of trade regulations) of GATT 1994, in order to further speed up the circulation, discharging and customs clearance of goods, including transit goods. The negotiations should also be aimed at strengthening technological aid and capacity building support in this field, and promoting effective cooperation between customs or other border management institutions in trade facilitation and customs execution. The results of the negotiations should fully consider the principle of giving developing members and least-developed countries special and differential treatments.

The Agreement includes three chapters and 24 articles. The first chapter (Article I-XII), stipulates the substantial obligations of members in trade facilitation. Of which, Article I-V are clarification and improvement to Article X of GATT 1994, covering information publishing, establishment of enquiry points, comments on laws and regulations, and the publishing, pre-judge, appeal or audit procedures. Article VI, VII, IX and X are further enrichment and expanding of Article VIII of GATT 1994, covering goods discharging and customs clearance measures like import and export fees and risk control, as well as disciplines related to documents and procedures of import and export and transit. Article XI is the clarification and improvement of Article V of GATT 1994, mainly stipulating the laws and regulations, procedures, fees and assurance of transit transport. Article VIII and Article XII mainly cover cooperation between customs and border institutions. The second chapter of the Agreement (Article XIII-XXII) stipulates the special and differential treatment enjoyed by developing members and least-developed countries when implementing the articles of Chapter 1, mainly manifested in implementing period and capacity building. Chapter 3 (Article XXIII-XXIV) stipulates the contents about institutional arrangement.

V. How did China participate in WTO trade facilitation negotiations?

A: To positively participate in and promote the negotiations, China submitted and jointly signed eight proposals consecutively, covering not only specific measures about the publishing and implementation of laws and regulations, risk control and follow-up audit, but also comprehensive issues like the determination of the demands and preferential fields of members, technological aid and capacity building. After the Agreement was signed, to show our positive attitude of supporting the implementation of the Agreement, China reported to the WTO its implementation plan of the agreement on June 30, 2014, a month earlier than the time limit stipulated by the Bali ministerial meeting. During the approval process by all WTO members, China stressed that multilateral implementation accorded to the benefits of all members, and appealed that the members pay attention to the concerns of developing members, sincerely implement Doha Round development goals, and promote the implementation of the decisions of the Bali ministerial meeting comprehensively and evenly.

VI. What preparations should China make for implementing the Trade Facilitation Agreement?

A: Firstly, the domestic approval procedure should be fulfilled. We should make the decision to accept the protocol on the agreement and submit to the WTO the acceptance instrument. Secondly, we would combine the implementation of the agreement with the modernization reform of our ports, and further make preparations on supporting policies of laws and regulations, supervision mechanisms and institutional functions, promote the reform and system building in related fields, raise the management level and administrative efficiency of our ports, and create a convenient and efficient customs environment, making it a new advantage of our foreign trade competition.