The difference facilitation makes

was the subject of my Trade Tripper column in the past weekend's issue of BusinessWorld:

As your Trade Tripper hinted in last week’s column (“Facilitating Bali,” Jan. 3), the significance of the Bali Package, circling around trade facilitation, remains a huge area of inquiry. And one specific legitimate query is what exactly does trade facilitation bring, particularly for a developing country like the Philippines? So far, it’s hard to come up with concrete positive responses.

And indeed asked that while the Trade Facilitation Agreement looks good on paper (for a copy see https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN13/39.pdf), in reality what is its relevance? The Philippines could make the necessary customs improvements on its own, without the need of an international multilateral agreement tying it up to other countries. After all, by doing it unilaterally, no country can sue the Philippines under the World Trade Organization (WTO) dispute settlement system, assuming something in our customs rules do not come up to par in that country’s view.

Neither do we need a trade facilitation agreement for improving trade with other countries as most of our major trading partners are richer countries anyway with quite developed and transparent customs procedures. In fact, most of the provisions contained in the Trade Facilitation Agreement are conceivably implemented already by these developed countries, leaving it only to the poorer countries (like the Philippines) to shoulder the additional burden of accelerating the upgrade of their customs procedures (which, as I said, could be better done unilaterally). Talk about differential treatment.

The only conceivable customs regulations problem (due to language issues) would be China (and perhaps, Japan). But both are parties with the Philippines in regional trade deals (ASEAN-China, JPEPA, and ASEAN-Japan), of which trade facilitation is included.

Of the latter issue, it must also be said that the Trade Facilitation Agreement essentially contains the same provisions as the Revised Kyoto Convention on the Simplification and Harmonization of Customs Procedures (for a copy see http://www.wcoomd.org/en/topics/facilitation/instrument-and-tools/conventions/pf_revised_kyoto_conv/kyoto_new.aspx), which was effected in 2006. The only possible added value that the Trade Facilitation Agreement brings is that it allows countries to sue each other under the WTO dispute settlement system. How that could possibly be for the benefit of the Philippines remains a mystery.

Although, on the other hand, the Trade Facilitation Agreement does declare that developed countries are entitled to “assistance and support for capacity building,” with capacity building being defined as “technical, financial, or any other mutually agreed form of assistance.”

Quite interestingly and relevantly, International Business Law Adviser reported on Japan’s “24-hour advance manifest rule,” taking effect on March 10, which “requires all inbound cargo carriers to submit complete manifests a full 24 hours before leaving their ports of departure. The rule has since been widely adopted by countries all over the world.”

Under the said Rule, “notice of all containerized freight bound for Japan must be transmitted at least 24 hours before cargo is loaded onto vessels to the Nippon Automated Cargo and Port Consolidated System (NACCS), the Japanese government agency responsible for the country’s import/export and customs clearance services.” The information that must be included: “type of cargo; names of trading parties; route; schedule; and identification of the vessel and container. The regulation applies to all containerized cargo intended for delivery into a Japan port. Empty containers, break bulk cargo, and Foreign Remaining on Board (FROB) cargo are all exempt from this rule.” The penalties, in this case, are tough: “Shippers that fail to comply with JP24 will face tough penalties, including a fine of approximately $5,000 that must be sent before cargo reaches Japanese ports. Other penalties for noncompliance may include up to one year of jail time with hard labor.”

Additionally to that mentioned, further technical areas that need deeper examination include customs risk management procedures, duty drawback, and rules of origin compliance.

Another thing about the Trade Facilitation Agreement is that the same needs to be approved by each individual WTO member governmen before it becomes effective. With US President Barack Obama still without a Trade Promotion Authority (and with upcoming mid-term Congressional elections this year that the Republicans are poised to gain advantages in), expert opinions are varied as to how the US will legally accept the Bali Package.

Finally, in relation to the matter of country approval is the issue of overlapping provisions with other WTO texts. This was actually brought up cogently in the International Economic Law and Policy Blog by C.Raghavan: “rather than presenting to Members specific amendment to each of the provisions of GATT 1994, and pre-shipment inspection agreement, and have each of it ratified or accepted by two-thirds majority of membership, the Bali decision requires the TF as such to be presented to Members for acceptance or approval to be made a part of Annex 1A of the Marrakesh Treaty. How valid would such a procedure be under public international law? And what would it mean in terms of rights and obligations, taking note of the over-riding interpretative note to Annex IA”.

More on the Bali Package in succeeding columns.