1. Introduction
On 7 December 2013 at the Bali Ministerial, the 159 WTO Members approved the Trade Facilitation Agreement (TFA), the first new WTO multilateral agreement since the establishment of the WTO in 1995.Footnote 1 After 12 years of largely unsuccessful negotiations, the Doha Round appeared to have finally achieved some tangible, albeit limited, success. Although India subsequently vetoed the TFA due to concerns regarding public stockholding for food security purposes unrelated to the agreement, placing the multilateral status of the agreement in jeopardy, this temporary delay was resolved when the US agreed to provide India with assurances on the effectiveness of the peace clause in agricultural trade.Footnote 2 Hong Kong became the first Member to ratify the TFA on 12 December 2014.Footnote 3 The US ratified on 23 January 2015.Footnote 4 The TFA will enter into force once two-thirds of the WTO Members have ratified the agreement domestically.
The TFA is a major accomplishment for the international trading community and a significant milestone for the WTO, both as a blueprint for further international action and as a multilateral agreement. The TFA stands to regulate an area of trade that until now has largely been ignored. While the TFA may appear narrow in scope, in some ways it is the broadest WTO agreement besides the General Agreement on Tariffs and Trade (GATT), with every internationally traded good subject to trade facilitation measures. The TFA is rooted in the GATT's provisions and exceptions and forged through compromise between developing and developed nations. It represents a new hope for the relevance of the WTO, particularly in light of the previous failures of the Doha Round and the increased regionalization of international trade.
This article offers a first look at the new TFA, from the agreement's origins to its structure and potential jurisprudential impact. In order to understand what the TFA hopes to accomplish, how it is likely to be interpreted, and what its effect will be in practice, we must turn to how it has been drafted, its role within the larger umbrella of WTO agreements, and where it might fit jurisprudentially. Despite some potential pitfalls, this article argues that the TFA offers the WTO a shot at renewed relevance and could be the most significant step forward for the multilateral trading regime since the establishment of the WTO. The unique development measures together with the application of the GATT exceptions to the agreement will be particularly important in determining the impact of the TFA.
2. Trade facilitation and economic efficiency
Economists have estimated the cost of cross-border trading at more than $2 trillion per year, due largely to duplicative, unnecessary customs procedures, customs and border fees, and administrative requirements.Footnote 5 The TFA could reduce this by up to $1 trillion by streamlining procedures and standardizing trade facilitation rules across borders, providing a significant boost to the global economy.Footnote 6 The OECD has estimated that the TFA is likely to reduce the cost of trading by up to 14.1% of total costs for low-income countries, 15.1% for lower middle-income countries, and 12.9% for upper-middle-income countries.Footnote 7
Trade facilitation is aimed at reducing one of the ‘less visible barriers produced by inefficient administration and organization of the trade transaction process' that is increasingly a focus as other, more obvious barriers, such as tariffs, are gradually negotiated away.Footnote 8 Trade facilitation constitutes those policies that deal with the entry of goods into a country and with the transparency and provision of information relating to the entry of goods. The WTO has not provided a formal definition of trade facilitation, although the 1996 Singapore Ministerial Conference authorized exploratory work ‘on the simplification of trade procedures in order to assess the scope for WTO rules in this area’.Footnote 9 Elsewhere, the WTO defined trade facilitation as the ‘simplification and harmonization of international trade procedures, including activities, practices and formalities involved in collecting, presenting, communicating, and processing data required for the movement of goods in international trade’.Footnote 10
The cost of a shipment is inversely proportional to the time required to complete it, which affects the volume of trade that may take place.Footnote 11 Every day a product is delayed from leaving the factory before being shipped is equivalent to a reduction in trade of more than 1%.Footnote 12 To give an idea of the divergent time frames in play, it takes 116 days for a container to move from a factory in the Central African Republic onto the ship at the port (including all of the customs, administrative, and port requirements), while it only takes five days from Copenhagen.Footnote 13 The fact that the Central African Republic is landlocked cannot alone explain the staggering discrepancy in time required.
It is with this incremental but significant economic impact in mind that economists have focused their attention on reducing these types of barriers and improving trade efficiency. Among the more useful indicators are those that pertain directly to the points at which trade facilitation costs arise: border elements, such as port efficiency and customs environment, and ‘inside the border’ elements such as regulatory environment and e-business usage.Footnote 14 Some of the factors to be considered include transparency and corruption, as well as hidden import barriers.Footnote 15 Greater engagement with e-commerce and general improvements in domestic infrastructures relating to internet access have been shown to significantly reduce trading costs.Footnote 16 Another important area for improvement is port efficiency, where small gains in efficiency can result in significant reductions in cost. In all of these areas, improvements in technology can offer significant reductions in cost and improvements in efficiency. Trade facilitation is critical to maintaining international supply chains, which are key to manufacturing and other commercial processes.Footnote 17 In supply chain situations, there is generally fairly consistent demand for the goods being shipped. The larger the volume of trade, the more efficient it tends to become.
The TFA directly addresses some of the concerns identified by economists and traders, such as improving transparency, encouraging the use of internet technologies to handle customs applications, reducing institutional limitations, and improving access to information. Until the TFA has been in effect for a few years, however, it will be impossible to measure quantifiable improvements in economic efficiency across the global trading system as a result of the agreement. Determining the legal effect of the TFA as a regulatory instrument, however, may, to some extent, be extrapolated from the scope and structure of the agreement.
3. The origins and mandate of the Trade Facilitation Agreement
3.1 The origins of the Trade Facilitation Agreement
The TFA may be the newest trade agreement in the WTO's arsenal, but the origins of the agreement considerably precede even the existence of the GATT. Although trade facilitation may appear to be a relatively new concept, the League of Nations' 1921 Convention and Statute on Freedom of Transit (which is still in force), and the 1923 International Convention Relating to the Simplification of Customs Formalities were the first international agreements relating to what we think of today as trade facilitation.Footnote 18 Covering many of the same issues as the TFA, these two agreements set the precedent for future discussions concerning trade facilitation-linked issues.
With coverage including everything from import and export restrictions to the minimization of requirements for certificates of origin, the International Convention Relating to the Simplification of Customs Formalities seems strikingly modern, and addresses many of the issues covered by the TFA. Article X of the GATT, which forms part of the mandate of the TFA, for instance, was partly based on Articles 4 and 6 of the convention.Footnote 19 Similarly, the Convention and Statute on Freedom of Transit foreshadows Article V of the GATT, with Article 1 of the Statute, for instance, being repeated almost verbatim in Article V:1 of the GATT.Footnote 20
The area of customs simplification has been of considerable importance to the world of international trade, with customs practices evolving in light of changing technologies and advancements in transportation and communication. The World Customs Organization (WCO), established in 1953 as a result of an examination of customs issues raised by the GATT, adopted the International Convention on the Simplification and Harmonization of Customs Procedures (the Kyoto Convention) in 1974, which was subsequently amended in 2006.Footnote 21 The Kyoto Convention covers a range of customs matters, including simplification of documentation, assessment of duties and taxes, and appeals mechanisms in customs matters, and provides a number of specific guidelines to aid countries in reducing barriers to trade due to customs hurdles.
The WCO has played a crucial role in the development of the TFA, supplementing the Negotiating Group on Trade Facilitation's work. Throughout the negotiations, the WCO was actively involved, providing comments, clarifications, and self-assessment checklists for the TFA negotiation process.Footnote 22 The WCO welcomed the TFA with its Dublin Resolution, which recognized the importance of the TFA, and expressed commitment of the WCO to the efficient implementation of the TFA, with a pledge to engage immediately with the WTO in facilitating the governance and implementation of the agreement.Footnote 23 Like the World Intellectual Property Organization (WIPO) in relation to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the WCO will serve to provide technical assistance in relation to the implementation of the TFA, and its conventions will continue to apply to matters relating to trade facilitation. This close relationship between the WCO and the TFA should be beneficial for the successful implementation of the TFA, allowing Members as well as the WTO to obtain guidance on specific measures and policies relating to trade facilitation.
From its historical roots in the treaties of the League of Nations to its more modern cousin in the form of the Kyoto Convention, the TFA is built on historically agreed principles of trade facilitation, and represents a crystallization of practices with a view to improvement. The TFA has also drawn from the many national trade facilitation initiatives as well as the work of the United Nations Centre for Trade Facilitation and Electronic Business. The TFA is not a radically new agreement – concern with customs and border issues may be one of the oldest negotiated areas of international trade – but it represents an understanding of modern practices and areas in which improvement in efficiency and transparency are needed.
3.2 The mandate of the Trade Facilitation Agreement: Articles V, VIII, and X of the GATT
3.2.1 Articles V, VIII and X and the relationship between the GATT and WTO specialized agreements
While the first mention of trade facilitation in the WTO came in the Singapore Ministerial Declaration of 1996,Footnote 24 the authorization for the TFA stems from Annex D of the Doha Round Working Programme, from August 2004. This established a mandate to develop a trade facilitation agreement with a view of clarifying and improving relevant aspects of Articles V, VIII, and X of the GATT (V relating to freedom of transit, VIII to fees and formalities connected with importation and exportation, and X relating to publication and administration of trade regulations).Footnote 25
The use of specialized WTO agreements to clarify GATT articles is central to the functioning of the WTO and not limited to the TFA. Other WTO Agreements that have similarly expanded upon underlying GATT articles include the Safeguards Agreement, the Subsidies and Countervailing Measures (SCM) Agreement, the Anti-Dumping Agreement, and the Trade Related Investment Measures (TRIMS) Agreement. Of these agreements, the Safeguards Agreement, with its stated goal of ‘clarifying and reinforcing the disciplines of GATT 1994, and specifically those of Article XIX’ offers the clearest precedent for the TFA.Footnote 26 The Anti-Dumping Agreement and SCM Agreement also provide context for the TFA. How WTO jurisprudence has interpreted the relationship of these agreements to the GATT can provide insight into the relationship between the TFA and the GATT and help explain how the TFA may be interpreted in conjunction with Articles V, VIII, and X of the GATT.
Article I of the Safeguards Agreement provides limitations on the agreement's scope, as it provides only for the establishment of ‘rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX of GATT 1994’.Footnote 27 Similarly, the Anti-Dumping Agreement states that its provisions shall ‘govern the application of Article VI of GATT 1994 in so far as action is taken under anti-dumping legislation or regulations'.Footnote 28 The SCM Agreement relates back to Article XVI of the GATT concerning subsidies and Article VI on countervailing measures, and in its footnotes provides for certain terms to be interpreted in the same way as in Article XVI.Footnote 29 The TFA's goal, on the other hand, is the clarification and improvement of relevant aspects of Articles V, VIII, and X of the GATT ‘with a view to further expediting the movement, release and clearance of goods, including goods in transit’.Footnote 30 This is a more expansive mandate, and suggests that the scope of the TFA is meant to extend further beyond the prescriptions of the underlying GATT articles than other WTO Agreements with similar GATT-related mandates. In this way, the TFA marks a change from other specialized agreements and may result in different jurisprudential analyses. Jurisprudence that has arisen from disputes under the other agreements is still relevant, however, in comprehending how the WTO dispute settlement system views the relationship between multilateral non-GATT agreements and the GATT.
The earliest discussion of the relationship between a specialized agreement and general GATT provisions in WTO jurisprudence was in Brazil–Desiccated Coconut. In its 1997 opinion, the Appellate Body (AB) explained the relationship between the specialized agreements and the GATT, noting that the WTO Agreement, unlike its GATT 1947 predecessor, is a single undertaking, with the annexes containing the multilateral agreements forming an integral part of the WTO Agreement.Footnote 31 As noted in Annex 1A of the WTO Agreement, in the event of a conflict between the GATT and another multilateral agreement, the non-GATT agreement is to prevail.Footnote 32 This does not mean, however, that the other multilateral agreements supersede the GATT.Footnote 33
In Argentina–Footwear, the AB found that the existence of a specialized agreement should not be taken to mean that the requirements of the underlying GATT article are subsumed by the specialized agreement; rather, the underlying article establishes certain prerequisites that are carried over into the more specialized agreement.Footnote 34 The underlying GATT article and the specialized agreement are ‘an inseparable package of rights and disciplines which have to be considered in conjunction’.Footnote 35 Any measure must, therefore, comply both with the underlying GATT article and with the specialized agreement.Footnote 36 Similarly, the panel in US–1916 Act (EC) emphasized the close link between Article VI of the GATT and the Anti-Dumping Agreement,Footnote 37 explaining, as was made clear in Brazil–Desiccated Coconut, that the WTO Agreement is a single treaty instrument.
In EC–Bananas III, the AB noted the cumulative application of WTO agreements, finding that unless explicitly stated, there is a presumption of internal coherence between the GATT and specialized agreements, befitting the WTO Agreement as single treaty instrument.Footnote 38 In US–Upland Cotton, the AB emphasized that all provisions of a treaty must be interpreted harmoniously, noting that the individual WTO agreements are part of a single treaty, the WTO Agreement.Footnote 39
Since Article 31.2 of the Vienna Convention on the Law of Treaties (VCLT) provides that interpretive context includes the preamble and annexes to a treaty, the agreements in Annex 1A of the Agreement Establishing the WTO are a part of the WTO Agreement as a whole.Footnote 40 Inclusion in Annex 1A is necessary for an agreement to become an official part of the WTO single undertaking. The Ministerial Decision on the TFA indicates that a Protocol of Amendment will be drawn up to insert the agreement into Annex 1A of the WTO Agreement, so that it will be an integrated part of the single undertaking.Footnote 41 The TFA contains a further statement cementing the relationship between the TFA and the GATT, noting that ‘[n]otwithstanding the General interpretative note to Annex 1A … nothing in this Agreement shall be construed as diminishing the obligations of Members under the GATT 1994’.Footnote 42 The TFA's provisions will therefore be interpreted in light of Articles V, VIII, and X of the GATT. The relationship between specific provisions in the TFA and their underlying articles will, however, need to be determined in the context of the how phrasing is used across the agreements.
Articles 31–33 of the VCLT provide the framework for the interpretation of treaty texts in the WTO. While the AB has on multiple occasions found differences in application between identical wording in different articles and agreements – the suggestion being that each Article of the GATT should be read as a mini-statuteFootnote 43 – a turn of phrase that mirrors one elsewhere in the WTO Agreements, while not dispositive, is significant, since differences in interpretations of similar clauses across agreements will usually be minor. It is, at the same time, important to keep policy issues in mind. The Members that negotiated the TFA did not negotiate solely amongst lawyers but also through policy-makers and economists whose primary goals were not necessarily a carefully crafted legal agreement, internally consistent with all other WTO instruments, but a functional agreement reflecting consensus among parties with divergent interests. Nevertheless, the relationship between Articles V, VIII, and X and the TFA will be paramount in determining how the TFA will be interpreted by WTO panels and the AB.
3.2.2 Articles V, VIII, and X in WTO jurisprudence
Articles V and VIII have not featured heavily in WTO jurisprudence, in part because their scope was not clearly defined and they were not linked to any other WTO agreements. Article X has featured more prominently, but not primarily in relation to trade facilitation issues. With the agreement of the TFA, there is likely to be more jurisprudence relating to these articles, as bringing a claim under the TFA will likely also involve a claim under the relevant GATT articles.
Article V addresses the freedom of transit and contains two main obligation: not to hinder traffic in transit by imposing unnecessary delays or restrictions or by imposing unreasonable charges, and to accord MFN treatment to all transiting goods of all Members.Footnote 44 Article VIII addresses fees and formalities connected with importation and exportation, except for import and export duties and internal taxes within the scope of Article III of the GATT.Footnote 45 Article X addresses publication and administration of trade regulations, and requires a party to publish its trade-related laws in a prompt and accessible manner, abstain from enforcing measures of general application prior to their publication, and administer these laws in a uniform, impartial, and reasonable manner, including maintaining tribunals or procedures for prompt review and correction of administrative action relating to customs matters.Footnote 46
To date, Article V has only featured prominently in one WTO case, the 2010 Panel decision in Colombia–Ports of Entry, which related to the freedom of transit and most favored nation treatment for products that have been in transit.Footnote 47 In Colombia–Ports of Entry, the panel found that Colombia's distinctions based on the place of origin or departure of textiles, apparel, and footwear were in violation of the second sentence of Article V:2, which ‘extends MFN obligations to goods based on the circumstances of their transit’.Footnote 48 Panama's claims under Article V:2, first sentence, concerning the extension of unrestricted access via the most convenient route for the passage of goods, whether or not the goods have been trans-shipped or changed modes of transport,Footnote 49 and V:6, regarding the application of MFN obligations to countries whose territory is the ultimate destination of the good in transit, not just those through which the good passes,Footnote 50 were also upheld. Given the extent to which the complaint dealt with details relating to goods in transit, which are more specifically covered by the TFA, Panama's claims would likely have been brought under the TFA as well as under Article V, had the TFA been in existence.
Two WTO cases have featured Article VIII: the Panel decision in China–Raw Materials, the discussion of which was found by the AB to be outside of its terms of reference,Footnote 51 and the panel and AB decisions in Argentina–Textiles. In Argentina–Textiles, the AB upheld a finding by the panel that an improper ad valorem tax on imports, ostensibly to raise funds for financing customs activities, could not be made permissible by including it in a separate schedule, since the GATT rules would still apply to the schedule.Footnote 52 The AB found that there is nothing in the WTO agreements that would take precedence over Article VIII obligations, which would include any arguments on the part of Argentina relating to the legal status of a schedule.Footnote 53 One GATT decision, the 1987 US–Customs User Fee panel report, addressed Article VIII in considerable detail, analyzing its negotiating history as well as the applicability of its provisions.Footnote 54 As this was a GATT panel, however, the holding does not have the same jurisprudential value.
Of the three articles, Article X has featured in the most disputes, generally in connection with non-trade facilitation-related issues. The AB clarified the scope of Article X in EC–Poultry, noting that it ‘relates to the publication and administration of “law, regulations, judicial decisions and administrative rulings of general application”, rather than to the substantive content of such measures'.Footnote 55 The 2006 EC–Selected Customs Matters dispute interpreted Article X:3 in relation to measures pertaining to the classification of products for customs purposes and the lack of appeals procedures.Footnote 56 As with Colombia–Ports of Entry, it is likely, given its subject matter, that were this dispute brought subsequent to the implementation of the TFA, the US, as complainant, would bring claims under both the TFA and Article X of the GATT. How this dispute might be brought under the TFA will be examined in the next section as a means of illustrating how the underlying GATT provisions and the new TFA may interlink.
4. The structure of the Trade Facilitation Agreement and its jurisprudential impact
4.1 Structural overview
The obligations in the TFA fall into three categories: (1) obligations that are fully mandatory upon entry into force of the agreement, (2) obligations that will become mandatory when or if a further condition or commitment occurs, and (3) obligations that are inherently aspirational, or of a soft-law character. Discussion of the last category of obligations is beyond the scope of this article, but closer examination of these is warranted, as the extent to which the aspirational provisions are implemented by key WTO Members will shape how effective the TFA will be in not merely reducing limited barriers to trade but in determining the development of future trade facilitation measures.
The TFA is structured in three sections: Section I contains the general provisions, Section II provides rules on special and differential treatment (S&DT), and Section III sets out institutional arrangements and final provisions. Section I obligations fall mainly into the categories of fully mandatory obligations and aspirational, or voluntary obligations, with Section II giving rise to conditional obligations. Articles 1 (publication and availability of information), 2 (opportunity to comment, information before entry into force and consultations), 3 (advance rulings), 4 (procedures for appeal or review) and 5 (other measures to enhance impartiality, non-discrimination and transparency) of Section I all originate from the provisions of Article X of the GATT, since they all concern the publication and administration of trade regulations. Article 5, furthermore, refers to the notification or guidance for protecting human, animal, or plant life or health within its territory, as well as to sanitary and phytosanitary conditions, which directly relates to measures falling under the Sanitary and Phytosanitary (SPS) Agreement.Footnote 57 Articles 6 (disciplines on fees and charges imposed on or in connection with importation and exportation and penalties), 7 (release and clearance of goods), 8 (border agency cooperation), 9 (movement of goods intended for import under customs control) and 10 (formalities connected with importation and exportation and transit) are clarifications of Article VIII of the GATT, dealing as they do with matters related to fees and formalities connected with importation and exportation. Finally, Article 11 (freedom of transit) provides clarification of Article V of the GATT.
Article 12 provides further guidance on the operation of the TFA, covering customs cooperation, including measures promoting compliance and cooperation and exchange and provision of information.Footnote 58
The TFA represents progress in the area of transparency for the WTO, which in the past has come under criticism in that area. As the negotiations were ongoing, each draft of the TFA was posted onto the WTO website, allowing interested parties to follow the negotiations and understand what the major concerns were of the various country blocs as the negotiations progressed.
From its draft form to its final form, the TFA opted, in a number of places, for the stronger wording of the suggestions in the draft, choosing ‘shall’ rather than ‘may’ or equivalent language in laying out obligations rather than suggestions for WTO Members.Footnote 59 The final version of Article 5.1 reflects an even greater degree of strengthening over earlier drafts. Article 5.1(a), regarding adopting a system of notifications for enhancing the level of controls at the border in respect of foods, beverages, and feedstuffs covered under the notification for protecting human or animal life or health, previously read ‘[a] Member may issue the notification … only after it is established that such goods … have not fulfilled the prescribed Sanitary or Phytosanitary regulations in at least one recent case’.Footnote 60 The final version provides much stronger SPS protection, stating that ‘the Member may, as appropriate, issue the notification or guidance based on risk’.Footnote 61 This leaves the broader assessment of what constitutes sufficient risk in the hands of the WTO Members.
One of the main goals of the TFA is to improve information sharing and to streamline technologies used in trade facilitation procedures. Many of the current barriers to trade that trade facilitation measures are meant to reduce involve redundant requirements for information and differences in technological levels between WTO Members. The text of the agreement contains several provisions directly relating to technology and others relating to information sharing more broadly. In the area of technology, Article 1.2 requires making information available through the internet, including descriptions of importation, exportation, and transit procedures and the required forms for importation, exportation, or transit. Article 7.1 addresses pre-arrival processing requirements, requiring Members to, ‘as appropriate’ provide for advance submission of documents in electronic format for pre-arrival processing. Article 7.2 states that Members shall ‘to the extent practicable, adopt or maintain procedures allowing the option of electronic payment for duties, taxes, fees and charges collected by customs incurred upon importation and exportation’. This focus on electronic media indicates recognition on the part of the negotiators that databases and online submissions are effective tools in increasing efficiency.
In the broader category of information sharing, Article 1 covers publication and availability of information, with Article 1.1 requiring Members to promptly publish a range of information in a ‘non-discriminatory and easily accessible manner in order to enable governments, traders and other interested parties to become acquainted with them’. Article 7.7 provides for the creation of a category of ‘authorized operators’ who meet certain criteria, and for whom alternate, more streamlined procedures will be applied. Trade facilitation measures imposed according to this subsection are to include at a minimum any three of a list of seven accommodations, which include low documentary and data requirements and a single customs declaration for all imports and exports in a given period. This serves to provide additional trade facilitation support to qualified traders. Article 8 requires border control agencies of WTO Members to cooperate with each other and to coordinate activities in order to facilitate trade. Finally, Article 10 instructs the Trade Facilitation Committee to develop procedures for sharing relevant information relating to formalities and documentation requirements, while calling on Members to use information technology to support the single window for document and data requirement submission.Footnote 62 All these provisions serve the fundamental goal of streamlining border measures and enhancing information sharing and technological cooperation between Member states, which are at the core of the TFA's aims of improving economic efficiency.
The TFA provides a clarification of the substantive detail relating to Articles V, VIII, and X without expanding the scope of the GATT Articles. The additional obligations that arise from the TFA are mostly administrative in nature, rather than substantive obligations for national regulatory reform, although the soft-law provisions may play a role in such future reform. The TFA is a result of the recognition of the need to cut the costs of cross-border trading, resulting in the creation of a set of rules that will act as guidelines for standardized national trade facilitation measures.
4.2 EC–Selected Customs Matters: a Trade Facilitation Agreement analysis
Having seen how the TFA was shaped and structured, how, then, might these various provisions apply? It is useful to return to the 2006 EC–Selected Customs Matters dispute mentioned above and briefly attempt to sketch out how the claims might have differed in a post-TFA world. In EC–Customs, the US brought claims under Articles X:3(a) and X:3(b) against the EC concerning its non-uniform administration of laws and regulations and its failure to institute tribunals for the purpose of reviewing administrative action relating to customs matters.Footnote 63 Articles X:3(a) and X:3(b) provide as follows:
3. (a) Each contracting party shall administer in a uniform, impartial and reasonable manner all its laws, regulations, decisions and rulings of the kind described in paragraph 1 of this Article.
(b) Each contracting party shall maintain, or institute as soon as practicable, judicial, arbitral or administrative tribunals or procedures for the purpose, inter alia, of the prompt review and correction of administrative action relating to customs matters. Such tribunals or procedures shall be independent of the agencies entrusted with administrative enforcement and their decisions shall be implemented by, and shall govern the practice of, such agencies unless an appeal is lodged with a court or tribunal of superior jurisdiction within the time prescribed for appeals to be lodged by importers.
Article X:1 provides that ‘laws, regulations, judicial decisions and administrative rulings' pertaining to the classification or valuation of products for customs purposes be promptly published in such a way as to allow enable governments and private parties to familiarize themselves with them.Footnote 64 Article X:3 therefore requires that WTO Members provide a uniform interpretation of these laws and regulations, as well as offering tribunals or procedures for reviewing administrative actions taken in relation to customs issues.
The US challenge in EC–Customs was to ‘the design and structure of the EC system of customs administration “as such’’ and its lack of uniform administration.Footnote 65 In particular, the US claimed that there was non-uniform administration in relation to tariff classifications, customs valuation, customs procedures, and Article 221 of the Community Customs Code.Footnote 66
Article 243(1) of the Community Customs Code provided for an appeal mechanism whereby the appeal would be lodged with the EU member state where the relevant decision was made.Footnote 67 The specific implementation of the appeals procedure was up to the individual Member state to determine, thus being a part of national law rather than a part of the broader EU regulatory framework.Footnote 68 In some Member states, administerative reviews were voluntary or even absent, whereas other states had a mandatory administrative review requirement.Footnote 69
Applying the new TFA to the facts in EC–Customs, Article 4 of the TFA sets out rules pertaining to the right to appeal or review an administrative decision. Article 4.1.1 states that:
Each Member shall provide that any person to whom customs issues an administrative decision has the right, within its territory to:
(a) an administrative appeal to or review by an administrative authority higher than or independent of the official or office that issued the decision;
and/or
(b) a judicial appeal or review of the decision.
While Article X of the GATT also provides for administrative review in Article X:3, it is less clear as to who may have recourse to such administrative review. Article 4 of the TFA clarifies that any person to whom an administrative decision has been issued has a right to an administrative review. Under this rule, it seems clear that the US would be able to bring a claim of violation of Article 4.1.1 of the TFA in addition to the broader Article X:3(b) claim, since certain EU Member states had no administrative review procedures in place, and in some the reviews were at the discretion of the agency handling them. The US claim that the EU violated the requirement that they administer the regulations in a uniform, impartial and reasonable manner would remain an Article X:3(a) claim, as this is a broader claim and one that would logically fall to the underlying GATT articles rather than the more specific TFA.
The TFA is designed to clarify Articles V, VIII, and X of the GATT; to work side-by-side with them in providing distinct requirements that eliminate some of the questions of interpretation present in the underlying GATT articles. While in the case of EC–Customs, it is unlikely that the application of the TFA would result in a different conclusion, the existence of the TFA would have made the analytical task of the panel more straight-forward, thus hopefully accelerating the dispute settlement process and clarifying the obligations of WTO Members with respect to customs issues. In the quest for regulatory clarity, this would be a great benefit.
5. The Trade Facilitation Agreement: a development perspective
5.1 Developing country concerns
While trade facilitation may seem innocuous, with limited goals that benefit most countries by reducing the cost of trading, from a development perspective it raises issues relating to infrastructure, capacity building, and whether developing countries should prioritize trade facilitation over other development concerns.Footnote 70
It is not clear that a new agreement on trade facilitation will harm developing countries. A trade facilitation agreement could provide a global economic boost of one trillion dollars and most countries are in agreement that an agreement on trade facilitation is desirable.Footnote 71 Some have argued, however, that the cost of making necessary changes to the customs regimes of developing countries will be prohibitively expensive, and that they have not been afforded sufficient protection under the S&DT provisions in the draft TFA.Footnote 72
The negotiations initially focused more on simplifying, harmonizing, and standardizing border and customs procedures than on providing methods for developing countries to increase and facilitate exports. The concern from developing countries is that expansion of exports requires a different type of trade facilitation, and that the result of this agreement would be an increase in imports from developed countries without corresponding higher exports from developing countries.Footnote 73 India, in particular, vocally pushed for changes to the draft agreement, citing the substantial cost burdens placed on developing countries. Its claims included a call to make it compulsory for customs authorities globally to allow exporters to take back a portion of rejected consignments at the borders before nullifying the entire shipment.Footnote 74 The OECD, on the other hand, stated that a trade facilitation deal would particularly benefit developing countries in places like Africa where long border delays and poor infrastructure have been a major issue in increasing regional trade.Footnote 75
Although critics who focus on developing country issues are right to be concerned with the effect of the TFA on developing countries, and with the success of the Bali Ministerial in addressing development concerns generally, the TFA is arguably a bigger success for furthering the development agenda than the more widely touted Decision on Public Stockholding for Food Security Purposes, whose limited timeframe became the key sticking point blocking India's acceptance of the TFA.Footnote 76 India's temporary veto of the TFA, while a political move aimed at renegotiating food security issues rather than a reflection of problems with the TFA itself, seemed particularly out of place given the TFA's strong focus on developing countries and their needs.
5.2 Development measures in the Trade Facilitation Agreement
The TFA has addressed developing country concerns in considerable detail, using novel measures to empower developing countries in their implementation of TFA measures. Section II of the TFA contains the S&DT provisions. Over the various drafts, the TFA has evolved from only perfunctorily addressing the genuine concerns of developing country Members to recognizing the need to provide structured and mandated support in relation to capacity building and implementation of trade facilitation rules by means of conditional obligations which will only become mandatory when or if certain conditions are met.
While the development and trade facilitation debate was not fully resolved to the satisfaction of all parties in the run-up to the Bali Ministerial, the final version of the TFA is far more cognizant of the necessity of providing assistance and support for capacity building than earlier versions were. Specifically, the TFA now recognizes the need for developing countries to receive support from developed countries in building capacity necessary to implement certain provisions, and provides a mechanism whereby developing countries may opt into obligations with respect to these provisions if and when they feel ready. Developed country Members, acting as donors, agree to help developing country and least developed country (LDC) Members by providing assistance and support for capacity building, including promotion of regional and sub-regional integration.Footnote 77 With regards to LDCs, targeted assistance and support are to be provided by the donors.Footnote 78 In addition, many of the amended provisions involve lengthening the time available to developing countries and LDCs to implement various provisions relating to trade facilitation.
The TFA provides for three categories of provisions in relation to developing and LDC Members: Category A, Category B, and Category C. The Members are to self-designate the provisions that fall under each of the categories.Footnote 79 The difference in categories relates to the time the Member has to implement provisions consistent with the TFA, with Category A provisions requiring the shortest time for implementation and Category C requiring additional capacity building using support to be provided by developed countries.Footnote 80 In the last version of the draft negotiating text, the time allowed for developing countries to notify the Committee on Trade Facilitation on dates for implementation of provisions in Categories B and C were the same, and the precise amount of time available had not been agreed, with options presented for 90, 180, or 365 days.Footnote 81 In the final version of the agreement, the amount of time available for a developing country to notify the Committee concerning the definitive dates for implementation of Category B provisions was agreed as a full year.Footnote 82 For Category C provisions, after one year of entry into force of the TFA, the developing country Members must inform the Committee regarding the capacity-building arrangements entered into with the help of donor Members.Footnote 83 Within 18 months of informing the Committee (i.e. within two and a half years of the entry into force of the TFA), the donor Members and developing country Members must inform the Committee of the definitive dates for implementation.Footnote 84 With Category C provisions, therefore, it could be considerably more than two and a half years after entry into force before the provisions would need to be implemented, affording time for developing countries to work with donor Members to build capacity. As a result, the obligations in these provisions are conditional on the successful cooperation between developing country Members and donor Members.
With regard to the application of the WTO's procedural rules, the Dispute Settlement Understanding, to the settlement of disputes relating to the TFA, the TFA provides grace periods for developing and least developed countries. For LDCs, an additional grace period of eight years after implementation of the TFA is provided in the final text, during which the provisions relating to consultation and nullification and impairment of benefits will not apply to the settlement of disputes against LDCs in relation to Categories B and C measures.Footnote 85
Besides agreeing the time frames for implementation and providing a mechanism for developed countries to provide capacity-building aid to developing countries, the final version of the TFA offers two significant high-level procedures for aiding developing and LDCs in implementing rules under the TFA. First, the TFA provides a protocol for the establishment of an Expert Group designed to examine situations where developing country Members are unable to implement provisions under Categories B and C.Footnote 86 Such situations may arise where a request for an extension of the implementation date has not been granted or where a Member self-assesses that it does not have the capacity to implement a provision under Category A. In these cases, once the Member notifies the Committee of its inability to implement the provision, an Expert Group consisting of highly qualified trade facilitation and capacity-building experts is to be immediately established. In addition to this mechanism whereby developing countries can receive support relating to implementation issues, the TFA also provides for an annual dedicated session by the Committee to discuss any problems regarding implementation in relation to capacity building.Footnote 87
These two processes, together with the mechanism for providing capacity-building aid, are specific to the TFA and not found in any other WTO agreement. Both of these processes were added to the final version of the TFA and were not in previous drafts. This is the result of significant negotiations with developing country Members regarding their logistical difficulties in relation to implementing trade facilitation rules. Other WTO agreements may call for special support to be provided to developing countries, but none as explicitly and with such detailed rules as the TFA.Footnote 88
One possible concern lies with the allocation of responsibility for failure to implement a Category C measure in a timely fashion. While the TFA sets out requirements for donor countries to provide information concerning their assistance in order to aid transparency,Footnote 89 no mechanism exists to hold donor countries accountable for failure to assist the developing country Member. In the event of a dispute concerning implementation of Category C measures, procedural issues arising from the involvement of donor countries could foreseeably arise.
Despite a number of significant measures unique to the TFA that are meant to address developing country concerns, the question remains as to whether these improvements are sufficient, or if they are merely plasters to cover up the continuing concerns of developing countries regarding implementation problems relating to capacity-building and infrastructural requirements. What their effect may be on the WTO more broadly also remains to be seen. If successful, the S&DT measures set out in the TFA may become a model for future WTO agreements. In any case, the inclusion of these measures in the TFA already represents a step forward for the WTO and its relationship with developing countries, and marks a break from the business-as-usual model of S&DT previously embraced by the WTO and its Member states.
5.3 Dispute settlement concerns
Despite the potential benefits of the TFA's S&DT measures to developing countries, the complexity of the S&DT provisions in the TFA may give rise to additional concerns relating to the dispute settlement process. By instituting three categories of measures with different implementation dates and leaving the decision concerning the timeframe for implementation up to the individual developing country Member, the TFA will not apply uniformly across WTO Members. In previous agreements involving a delay for developing country Member implementation, the measures were to come into effect within a fixed time frame – five years in the case of TRIPS measures.Footnote 90 There was therefore predictability in bringing disputes based on claims related to these agreements. With the TFA, such clarity will not exist, and the WTO dispute settlement system will have to address claims brought against developing countries under the TFA on a case-by-case basis, interpreting the TFA's rules in each case in light of the status of the measures in questions.
The TFA further explicitly provides for changes to the dispute settlement system in relation to developing country Members and the implementation of trade facilitation measures. In particular, the TFA provides for a grace period in the application of Article XXIII of the GATT, meaning that for a period of eight years in the case of Categories B and C measures for LDCs, six years in the case of Category A measures for LDCs, and two years in the case of Category A measures for developing countries, no disputes can be brought against trade facilitation measures implemented by these countries.Footnote 91 No other WTO agreement has implemented such exceptions, and the effect of these concessions on the dispute settlement system remains to be seen. The main issue that may arise is, as with the delay in implementation period, the associated reduction in legal clarity and the difficulty in determining the viability of claims vis-à-vis developing countries due to the case-by-case nature of the applicability of dispute settlement rules.
This lack of uniformity could potentially affect the precedential value of panel and AB decisions. While panel and AB decisions do not de jure constitute a precedent for future disputes, the AB has previously indicated that its findings should be followed by panelsFootnote 92 and that panel and AB decisions ‘create legitimate expectations among WTO Members, and, therefore, should be taken into account where they are relevant to any dispute’.Footnote 93 With TFA disputes involving developing countries subject to multiple interpretations depending on the implementation choices of the Member, following previous decisions may prove to be more difficult, requiring a close analysis of the previous dispute's particular set of circumstances. This could undermine the goal of the TFA to reduce administrative burdens on individual parties and improve efficiency, as it could lead to delays in adjudicating disputes. This is arguably the most serious concern regarding the implementation of the TFA, but with careful monitoring of trade facilitation measures and clear communication between Member states, most dispute settlement issues should be resolvable.
6. The applicability of GATT exceptions and exemptions
Article 24.7 of the TFA states that all GATT exceptions and exemptions shall apply. The TFA also clarifies that nothing in the agreement shall be construed as diminishing the rights and obligations of Members under the TBT and the SPS Agreements, as well as under the GATT.Footnote 94 While not an exception, some of the technical regulations subject to the TBT Agreement as well as some of the measures subject to the SPS Agreement may impact trade activity at the border, particularly in relation to importing biological materials.
In previous drafts of the agreement, only Articles XX and XXI of the GATT were mentioned, and the inclusion of exceptions was still open to negotiation. Included almost as an afterthought, the exceptions provision would appear to have significant jurisprudential implications for the TFA, broadening, as it does, the scope of the TFA by incorporating all exceptions from the GATT. The footnote to the exceptions and exemptions notes that the exemptions include Articles V:7 and X:1 and the Ad note to Article VIII.Footnote 95 The question for future interpretation of the TFA is what effect the application of the main GATT exceptions (Articles XX and XXI) will have on the interpretation of what is permitted under the TFA.
The TFA is not the only WTO Agreement to include such a broad provision concerning exceptions – Article 3 of the TRIMs Agreement similarly states that ‘[a]ll exceptions under GATT 1994 shall apply, as appropriate, to the provisions of this Agreement’. The TRIMs Agreement is much more limited in its coverage than the TFA, since it serves only to interpret and clarify GATT Article III on National Treatment and Article XI on quantitative restrictions. The application of GATT exceptions to the TRIMs is therefore a logical extension of the function of TRIMs as a clarification of GATT articles. The TFA's broader scope and more expansive mandate (the clarification and improvement of Articles V, VIII, and X) require a more cautious evaluation of the impact of such a broad exception provision on its implementation.
With Articles V, VIII, and X forming the original mandate of the TFA, a panel or AB would likely find them applicable to the agreement even had the final agreement not explicitly included the exemptions relating to those articles. With the GATT articles relating to both exceptions and exemptions being directly referenced, future disputes will need to take into account current interpretations of these provisions as defined through GATT jurisprudence, with limited freedom to interpret them in light of the peculiarities of the TFA. This interpretive position may pose particular challenges with respect to the general GATT exceptions. The following discussion focuses mainly on Article XX, as no Article XXI defenses have yet been presented before the WTO.
Article XX of the GATT sets out general exceptions from the GATT obligations, allowing measures that are inconsistent with the GATT to be applied in situations where such measures may be necessary to protect public morals (XX(a)) for instance, or to protect plant, animal, and human life or health (XX(b)) or exhaustible natural resources (XX(g)). Article XX is a powerful affirmative defense to claims of inconsistency with the GATT, as WTO jurisprudence recognizes that WTO Members should have the ability to regulate in such sensitive areas.
The relationship between Article XX and other WTO Agreements depends on the text of the other agreements and whether they explicitly incorporate Article XX or its subsections. In some cases, such as the SPS Agreement, the agreement itself evolved out of Article XX(b) of the GATT and the necessity of imposing measures that protect plant, animal, and human life or health. There is therefore a close relationship between the article and the agreement, with Article XX(b) explicitly mentioned in the preamble to the SPS Agreement. In other cases, such as the TRIMs Agreement, the agreement explicitly provides for the application of all exceptions under the GATT, which would include Article XX. In still other cases, however, whether Article XX applies or not is less clear.
One issue is that the non-GATT WTO Agreements are lex specialis, and would therefore fall outside of the scope of the GATT, with these agreements having been negotiated to apply in specific situations that would otherwise fall under the broader provisions of the GATT. As lex specialis, it has been argued that Article XX should only apply to those agreements where it is explicitly mentioned, and not to those where it is not mentioned, particularly in light of the explicit mention of Article XX in some agreements and not others.Footnote 96 The recently renegotiated Government Procurement Agreement (GPA), a plurilateral WTO agreement, while not explicitly mentioning Article XX, sets out exceptions that largely correspond to Article XX.Footnote 97 This allows for a possible interpretation of the exception language in the GPA in a way that may differ somewhat from the general Article XX jurisprudence, while at the same time obtaining guidance from existing Article XX jurisprudence, since the language is applicable only with reference to the agreement. The benefit of this approach is a custom-tailored application of the language of Article XX to the specifics of the GPA.
Some scholars have argued, however, that Article XX should apply more broadly, interpreting the wording in the chapeau of the Article that ‘nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures’ to cover all of the WTO Agreements and not just the GATT in the meaning of ‘this Agreement’.Footnote 98 This position seems slightly tenuous as WTO negotiators were aware of the provisions of the GATT and negotiated the other WTO Agreements with that understanding in mind, leaving the wording of the GATT unchanged. In the middle ground between those advocating that Article XX only applies where explicitly mentioned and those arguing that Article XX should cover all WTO agreements lies the view that the GATT exceptions should apply to those agreements that take their mandate directly from GATT provisions.
In the case of the TFA, the exceptions provision explicitly includes all GATT exceptions. By explicitly including these exceptions, the negotiating parties were ensuring that there would be no subsequent interpretive questions as to their applicability, and reflects the position that Article XX and the other exceptions can only apply to the non-GATT WTO agreements where explicitly mentioned.
Since Article XX is directly applicable to the TFA, in interpreting its scope, panels and the AB will have to look to the body of Article XX jurisprudence as it applies to the GATT. The room for interpreting Article XX differently in line with the specifics of the TFA is more limited than in the case of the GPA, where the Article XX-mirroring language could be interpreting with a view to, but independent from, existing Article XX jurisprudence. In practice, what this will mean for the TFA remains to be seen, but it is possible to envision certain divergent approaches that WTO Members could take in applying these exceptions to the TFA.
One approach would be to view the inclusion of the broad exceptions as a possible avenue around some of the obligations that might arise under the TFA, as a number of more trade protectionist measures could be arguably legitimized by the application of Article XX exceptions. With trade facilitation a mostly logistical exercise, the use of a broad Article XX brushstroke could invalidate many of the goals the TFA is working towards achieving, particularly with regards to economic efficiency and streamlining of the trade facilitation process.
Any general exception that is applied to the agreement could undermine the narrowly constructed goals of reducing burdens relating to the physical transport through, or entry into, a Member state. With the TFA, the measures are mostly procedural rather than legislative – to concretely reduce barriers to trade in the form of border and customs measures. This could be viewed as reducing the scope for general exceptions to apply. With other WTO agreements, exceptions often apply to more legislative measures, which may cover a wide range of regulatory goals or broad policy intentions. Legislative measures regulate behaviors and the legality of certain actions more broadly, allowing room for derogation via the careful application of exceptions. In contrast, purely procedural measures are limited to the process which they exist to regulate. In that sense, a procedural measure, which prescribes how a set of actions must be completed, leaves little room for the application of exceptions without undermining the legal clarity the measure is intended to produce.
It is important not to overstate the potential effect of Article XX on the TFA, however. In many of the areas that the TFA governs, measures that violate TFA rules by affecting the movement of goods across borders would likely also violate Article XI of the GATT, acting as quantitative restrictions. In such circumstances, it is likely that the primary claim would be under Article XI rather than under the narrower, less adjudicated TFA provision, with Article XX being used as a justification against the Article XI claim.
One can imagine a situation where an Article XX(a) exception relating to public morals, for instance, was used as an affirmative defense for certain measures applying to alcohol or literature at the border in a discriminatory and non-legitimate fashion which results in disguised restrictions on trade. In such situations, it is likely that the measure in question would be primarily challenged under GATT Article XI as a quantitative restriction, rather than under the TFA, and then justified under Article XX provisions, as has been the case with recent disputes including China–AV (Article XX(a))Footnote 99 and China–Rare Earths (Article XX(g)).Footnote 100
Here, furthermore, it is important to recall the chapeau of Article XX, which would likely mitigate the aforementioned potential negative effects. The chapeau of Article XX provides limits on the policies that may be enacted under the Article XX exceptions, prohibiting the imposition of measures that are disguised means of discrimination against or among other Members, and prohibiting arbitrary or unjustifiable discrimination in countries where the same conditions apply.Footnote 101 In order for a measure to qualify under an Article XX exception, it must first be shown to fit under the particular exception of Article XX. Next, the measure needs to be shown to be applied in a non-discriminatory, non-arbitrary way, and not to be a bad faith attempt to hide trade protectionism. Using Article XX to block goods at the border under the guise of an Article XX exception to the TFA would, therefore, require evidence that the measures were not intended to be protectionist. This second hurdle might be difficult to overcome, as it is likely that panels and the AB would see through the attempt to disguise the restriction on trade as an Article XX exception.
The text of the TFA already covers one of the most important Article XX exceptions separately from the general exception provision – Article 5 of the agreement provides for notification systems in the case of enhanced levels of controls or inspections at the border in respect of foods, beverages, or feedstuffs covered under the notification for protecting human or animal life or health within its territory, which relates directly to Article XX(b), as well as to the SPS Agreement. This seemingly redundant inclusion of a specific reference to the Article XX(b) exception in light of the inclusion of the broader general exceptions presumably arises from the relationship between Article 5's language concerning sanitary and phytosanitary conditions and the SPS Agreement, and the special relationship that the SPS Agreement has within the framework of the TFA as a whole. It could be argued that this exception diminishes the scope for general applicability of the Article XX exception, recognizing the importance of special protection for SPS measures.
In the case of the SPS Agreement, only Article XX(b) applies – a narrow exception that forms the core of what SPS measures are all about – the protection of plant, animal, and human life or health. The TFA is, of course, a much broader agreement than the SPS Agreement, with trade facilitation measures running the gamut from information sharing to technological assistance and capacity building. In light of this, perhaps the broad application of Article XX is consistent with the aims of the TFA, since the provisions of the TFA cover a wide range of situations that might give rise to the application of Article XX exceptions.
Rather than view the application of Article XX as a way to work around the obligations of the TFA, another approach is to view the GATT exceptions as providing an avenue for more efficient control of negative trade. There are a number of trade issues that may give rise to the invocation of an Article XX defense by WTO Members in relation to the TFA. It may be possible to address concerns with regulatory issues that are difficult to act upon in the context of other WTO agreements through the measures provided for in the TFA, particularly when the regulatory goal is preventing the entry into the country of the substance in question. With issues of food safety and importation of dangerous plant or animal substances, the ability to turn back shipments at the border, rather than at some later stage of the importation process, could benefit countries where the concern is the spread of disease or the entry of invasive plant or animal life. The same concerns may arise with regards to activities like the smuggling of wildlife, where the ability to address the trade violation often comes after the animals have already illegally entered the country. The application of GATT exceptions to the TFA offers a possible solution to these difficulties.
While Article XX is the main GATT exception, Article XXI is available to WTO Members as a defense as well. Article XXI provides for security exceptions, which allow parties to take the action necessary to protect their security interests, including in matters relating to fissionable material and arms traffic. Although it is unclear how panels or the AB would interpret the rather broad wording of Article XXI, the Article potentially raises a few concerns in terms of where the exceptions might lead. It is only natural to want to protect the borders in the case of security threats, but as trade facilitation deals concretely with the measures taken to bring the goods in (rather than taxes, import duties, or other more fiscal measures), could this exception be used to allow parties to take advantage of supposed security threats to restrict imports? There are legitimate concerns relating to security that must be taken into account, but security measures should be designed in a way that allows international trade to take place without unnecessary hurdles.Footnote 102 Article XXI might arguably be more likely to be invoked in relation to the TFA than with respect to any other WTO agreement because the TFA governs trade at the borders, the point at which the security exceptions might be most appropriately invoked. Since Article XXI could give countries leeway to control the import of dangerous materials and weapons at the point of import, it is possible that disputes arising from the TFA may see invocations of this heretofore neglected exception.
Concerns relating to the potential misapplication of Article XX and Article XXI to TFA-related situations appear, on the whole, unjustified, given the structure and scope of the TFA, and the likelihood that any challenges would be brought under GATT provisions, particularly Article XI. On the one hand, the TFA can be viewed as a highly focused trade instrument, designed to effect narrow procedural changes to border and customs measures. It can, however, also be viewed in light of the types of goods its provisions affect. Viewed this way, the TFA is arguably one of the broadest WTO agreements, since its provisions will have an impact on every good that enters a country, whether perishable, manufactured, government procured, hazardous, or otherwise. In this sense, the scope of the TFA rivals that of the GATT, unlike other WTO agreements, whose focuses are limited to certain specific trade situations (subsidies, dumping) or narrowly constructed categories of goods (plant or animal, labelled). If all goods that cross international borders are subject to trade facilitation measures under the TFA, then it seems logical that the general GATT exceptions should also apply. In this way, exceptions are to be seen as applying to the goods, not to the types of measures. The breadth of the TFA lies in understanding that all goods will be subject to the agreement, requiring the application of GATT exceptions by national governments if the same conditions are to apply to goods in a post-TFA world as applied purely under GATT rules. This universal applicability of the TFA to goods involved in international trade is part of what makes the TFA so important, for while its mandate may at first seem narrow, its impact is in fact resoundingly broad.
In trying to understand how the GATT exceptions may be used by WTO Members with regards to TFA provisions, it is important to take the technological aspects built into the agreement into consideration. If the goal of the agreement to facilitate trade through improved technological measures is achieved, WTO Members may be in a better position to regulate ‘bad’ trade through a judicious use of Article XX and XXI exceptions while streamlining ‘good’ trade. Since TFA measures apply to all trade in goods, up-to-date technology will facilitate the determination of whether shipments are high risk or low risk. Online submissions of customs forms, databases of authorized traders, and electronic records of problem areas could improve efficiency and reduce cost, which are the ultimate goals of the TFA, while facilitating appropriate application of Article XX exceptions to specific situations. Achieving this level of technological competence across developing as well as developed countries, however, will require the S&DT provisions relating to technical assistance to meet their aims of reducing technological barriers for developing countries with help from developed countries. How this plays out will depend in part on whether the development concerns have been fully resolved.
7. Conclusion
The TFA is a new hope for the continuing relevance of the WTO. The precise language used to lay out the process for addressing developing country needs in the TFA sets the tone for future multilateral WTO agreements. Now that such concrete measures have been provided, it would be hard for developed countries to argue that more aspirational language is sufficient. True, some of this may be specific to the nature of the TFA; it is a highly technical agreement dealing with a very specific subset of trade issues that require more capacity and infrastructural support than most other trade agreements. Even so, the TFA is also extremely broad, covering every type of good that crosses international borders as part of the international trade process, and these development-oriented provisions should therefore be applicable to a wide range of future new or renegotiated agreements.
The effectiveness of the agreement as a whole will depend in part on how the dispute settlement process handles the varying degrees of implementation of the TFA by developing countries as well as how exceptions are used by Member states and interpreted by panels and the AB. While exceptions have the potential to be misused as a way for WTO Members to dodge their obligations, these exceptions also have the potential to protect WTO Member policies in such sensitive areas as security policy and environmental regulation, and act as regulatory controls on the part of WTO Members. If properly applied, the exceptions used in conjunction with the TFA could become one of the strongest tools for WTO Members to separate low risk trade shipments from potentially negative trade. If the technical assistance measures available to developing countries succeed in raising technological levels across WTO Members, the combination of efficient technology with more effective methods of categorizing and prioritizing shipments according to risk could result in benefits to the global economy that go beyond purely financial gains towards a trading system that is one step closer to operating on the basis of harmonized rules. The TFA has set a benchmark for technical agreements and developing country agendas going forward, and while it remains to be seen how effective the balancing of technical assistance requirements with the implementation of trade facilitation measures will be, it is unquestionably a step in the right direction. As the first multilateral agreement in this area, the TFA will serve as a blueprint for future trade facilitation measures.
