The World Trade Organization’s Ninth Ministerial Conference concluded Saturday, Dec. 7, in Bali, Indonesia, with agreement on a package of issues designed to streamline trade.
U.S. Trade Representative Michael Froman issued a statement hailing the first successful conclusion of multilateral trade negotiations in the two-decade history of the WTO.
“It took us until Saturday, one extra day, but indeed, the WTO has entered a new era,” Froman said. “For the first time in its almost 20-year history, the WTO reached a fully multilateral agreement. WTO Members have demonstrated that we can come together as one to set new rules that create economic opportunity and prosperity for our nations and our peoples.”
USTR also issued the following fact sheets on key components of the agreement:
- Trade Facilitation Agreement
- New Multilateral Agriculture Provisions (including public stock holding and food security in developing countries, TRQ administration, export subsidies and certain measures on cotton)
- Multilateral Results on Development (including certain preferential measures for least developed countries)
Any immediate benefits for red meat exports are likely to come from efficiencies promoted in the Bali agreement’s trade facilitation provision, which is designed to reduce costs by improving the speed and efficiency of customs procedures. It will be a legally binding agreement and is being described as one of the biggest reforms in the history of the WTO.
“The potential cost reductions of the trade facilitation measures in this agreement are estimated to be 10 percent for developed countries and around 15 percent for developing countries,” Froman explained. “Studies indicate that for every one percent in cost reduction, worldwide income increases by more than $40 billion, 65 percent accruing to developing countries. Some studies estimate the trade facilitation agreement we’ve reached here tonight will result in global GDP gains of nearly $1 trillion. Under this new agreement, a small business, including those in the United States, seeking to break into global markets and increase its export opportunities will be able to do so because it has faster, simpler, and less costly access to 159 economies.”
Highlights of the Trade Facilitation Agreement include:
Publication required: WTO members must publish the following information:
- Importation, exportation and transit procedures (including port, airport, and other entry-point procedures) and required forms and documents;
- Applied rates of duties and taxes connected to importation or exportation;
- Fees and charges imposed by or for governmental agencies;
- Rules for the classification or valuation of products for customs purposes;
- Laws, regulations and administrative rulings relating to rules of origin;
- Import, export or transit restrictions or prohibitions;
- Penalty provisions against breaches of import, export or transit formalities;
- Appeal procedures;
- Agreements or parts thereof with any country or countries relating to importation, exportation or transit;
- Procedures relating to the administration of tariff quotas.
Detention of goods: Members must inform the carrier or importer promptly in case of detention of goods declared for importation, for inspection by Customs or any other competent authority.
Retesting: Members may, upon request, grant an opportunity for a second test when the first test result shows an adverse finding. Members shall consider the result of the second test in the release and clearance of goods.
Penalties: Members shall ensure that penalties for a breach of a customs law, regulation, or procedural requirement are imposed only on the person responsible for the breach. Penalties shall be explained, in writing, to the person upon whom the penalty is imposed.
Perishable goods: To prevent avoidable loss, members shall:
- Provide for release of perishable goods under normal circumstances within the shortest possible time;
- Provide for the release of perishable goods, in exceptional circumstances where it would be appropriate to do so, outside the business hours of customs and other relevant authorities;
- Give appropriate priority to perishable goods when scheduling any examinations that may be required;
- Either arrange, or allow an importer to arrange, for the proper storage of perishable goods pending their release;
- In cases of significant delay in the release of perishable goods, and upon written request, the importing member shall communicate the reasons for the delay.
International standards: Members are encouraged to use relevant international standards (or parts thereof) as a basis for their importation, exportation or transit formalities and procedures except as otherwise provided for in the agreement.
Single window: Members shall endeavor to establish or maintain a single window, enabling traders to submit documentation and/or data requirements for importation, exportation or transit of goods through a single entry point to the participating authorities or agencies.
Customs brokers: From the entry into force of this agreement, members shall not introduce the mandatory use of customs brokers. Members shall publish any measures on the use of customs brokers and apply rules that are transparent and objective. Agreement was also reached on tariff rate quota (TRQ) administration, in an effort to increase TRQ utilization. Language was adopted on timing of TRQ notifications (opening of a quota and/or acceptance of license applications must be announced 90 days in advance, and tariff quota fill rates shall also be notified). More specific details were also included to help increase transparency in distribution of import licenses and to facilitate change in TRQ administration where TRQs are deemed to be underutilized because of administrative procedures. If, after three years of monitoring, quota usage is only 65 percent and this is due to the administrative system, a member must adopt a first-come first served or automatic license system.
In addition to these measures, the Bali agreement also includes a political commitment to reduce agricultural export subsidies and keep these subsidies at low levels. In USMEF’s view, the agreement also breathes life back into the Doha round and provides positive momentum on key issues such as market access and domestic support. With regard to reduction/elimination of duties, on U.S. meat exports, this will continue to be addressed in most major markets through the United States’ existing FTAs and potential agreements such as the TPP and TTIP. However, there is still potential for achieving lower duties through WTO channels in important markets such as China and the Philippines.
The latest draft texts are available on the WTO website. USMEF will provide further information on the Bali agreement as more details become available.