What the Free Trade Agreement says
The principles of the WTO Trade Facilitation agreement and Revised Kyoto Convention apply
What is trade facilitation?
The primary goal of trade facilitation is to help make trade across borders (imports and exports) faster, and cheaper and more predictable, whilst ensuring its safety and security. In terms of focus, it is about simplifying and harmonizing formalities, procedures, and the related exchange of information and documents between the various partners in the supply chain. Such a definition implies that not only the physical movement of goods is important in a supply chain, but also the associated information flows. It also encompasses all governmental agencies that intervene in the transit of goods, and the various commercial entities that conduct business and move the goods.
Why does it matter?
There are great potential gains from trade facilitation for both governments and the business community. Public entities will profit in terms of enhanced trade tax collection, better use of resources and increased trader compliance.
A more efficient and transparent delivery of public services will allow the administration to maintain high security levels and effective government control, while diminishing opportunities for corruption.
Traders will gain in terms of higher predictability and speed of operations and lower transaction costs, resulting in more competitive exports on global markets.
The fundamental principles of trade facilitation are transparency, simplification, harmonization, and standardization.
Transparency within government promotes openness and accountability of a government's and administration's actions. It entails disclosure of information in a way that the public can readily access and use it. This information may include laws, regulations and administrative decisions of general application, budgets, procurement decisions and meetings.
Simplification is the process of eliminating all unnecessary elements and duplications in trade formalities, processes, and procedures. It should be based on an analysis of the current, “As-Is”, situation.
Harmonization is the alignment of national procedures, operations and documents with international conventions, standards, and practices. It can come from adopting and implementing the same standards as partner countries, either as part of a regional integration process or because of business decisions.
Standardization is the process of developing formats for practices and procedures, documents and information internationally agreed by various parties. Standards are then used to align and, eventually, harmonize practices and methods
What this means for businesses
Customs and trade principles with the EU become the same as trade with the Rest of the World.
The EU-UK TCA contains a standard Chapter on Customs and Trade Facilitation. This refers to the key international customs agreements and calls for cooperation on customs issues in international forum and use of international standards.
This means that this is not specific to the UK or EU but the same principles that govern trade with the Rest of the World.
The WTO Trade Facilitation agreement will promote the simplification, modernization, and harmonisation of trade processes to reduce cost and time, boost trade flows.
The Trade Facilitation agreement which entered into force on 22 February 2017 following its ratification by two-thirds of the WTO membership. The TFA contains provisions for expediting the movement, release, and clearance of goods, including goods in transit.
The revised Kyoto Convention (RKC) is the main trade facilitation Customs convention. It was developed by the World Customs Organization and entered into force on 3 February 2006. It is an update and revision of the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention) adopted in 1973-1974. The RKC aims at facilitating trade by harmonizing and simplifying Customs procedures and practices. To this end the Convention provides standards and recommended practices for modern Customs procedures and techniques.
Issues without harmonisation can mean:
vast amounts of “red tape”
document requirements that lack transparency and involve duplication.
lack of cooperation between traders and customs agencies
lack of automatic data submission
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