The World Trade Organization’s Trade Facilitation Agreement

Approaches for Full Implementation After Five Years in Action

Edouard Descôtis
Project Manager, German Alliance for Trade Facilitation

Claudia Hofmann
Project Manager, German Alliance for Trade Facilitation

Disclaimer: The article represents the opinion of the authors and is based on research in progress. It is not meant to represent the position or opinion of the GIZ and/or the German Alliance for Trade Facilitation, nor the official position of any GIZ staff member. Any errors are the fault of the authors.

Five years ago, on 22 February 2017, the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO) entered into force with the objective to expedite the movement, release, and clearance of goods. The agreement has been widely ratified by 154 out of the 164 WTO Members. Moreover, according to data published on the TFA Facility’s website, 75.2% of its provisions have been implemented to date.[1] However, discrepancies between countries exist, and while red tape has been dramatically cut by developed countries, the implementation rate of least-developed countries (LDCs) remains low at 43%.[2] Why is that the case?

Cross-border trade still faces numerous obstacles in some regions. In February 2022, WTO Director-General Ngozi Okonjo-Iweala stressed that trade facilitation measures taken by governments “have helped ensure that food, vaccines, medical products and other essential supplies continued to reach people despite difficult conditions” during the COVID-19 pandemic.[3] However, she also highlighted that “there is more work to be done” to reach full implementation. Hence, how exactly can implementation be achieved? This article touches upon two different possibilities: (1) A “softer” approach focused on capacity building and development work, and (2) a legalistic approach based on the rule of law under the WTO legal system.

For a start, it is important to recall that countries are not at the same level when it comes to trade facilitation. Some WTO Members are landlocked countries that must partially rely on trade facilitation efforts of their neighbors, while others are small countries with a unique port that handles all imports and exports. To reflect these differences, a unique feature was introduced into the TFA. The latter allows developing countries and LDCs to decide on their own schedules and pace of implementation based on their capacity and the complexity of the measures to implement. This is known as notifications within categories A, B and C; with Category A being those measures that countries opt to implement upon the TFA’s entry into force,[4] Category B on a date set after a transitional period of time, and Category C those for which assistance would be needed. Another key element of the TFA is the important role of technical assistance and support for capacity building to help developing countries and LDCs remove barriers and modernise border procedures to accelerate trade.

Several initiatives have been undertaken to provide technical assistance such as the German Alliance for Trade Facilitation. This initiative brings together the strengths of private companies, business associations and governmental institutions to support projects aimed at removing barriers to make trade faster and cheaper. Successful projects have been implemented, for instance in Montenegro with a new procedure that uses pre-arrival data to fast-track customs clearance of express cargo.

Further to supporting the TFA’s implementation via targeted small-scale projects, one should not forget that it is a legal agreement in the end that has been ratified, and hence, fully accepted by WTO Members. As with any legal instrument, once ratified, governments are expected to start implementing its provisions in the light of possible legal consequences for their inaction. What if WTO Members fail to do so? In other words, what if a WTO Member that happens to be a transit country fails to implement certain trade facilitation provisions, which then, in turn, causes adverse effects in a landlock country? The question that comes to mind is whether the latter would have any possibility to act and react.

This hypothetical example once again shows that trade can only flow smoothly if WTO rules – such as the ones we can find in the TFA – are respected. The WTO dispute settlement system was established during Uruguay Round negotiations (1986-1994),[5] and has ever since been considered as the cornerstone of the WTO multilateral trading system. Although it has suffered serious challenges in more recent years, since the WTO’s establishment on 1 January 1995 and until the end of 2020, dispute settlement allowed Members to settle their trade quarrels in a structured way. The system has, thus, made a substantial contribution to stabilizing the global economy over the years.

Since 1995, a total of 612 disputes have been initiated. However, at the time of writing,[6] only four disputes cite provisions from the TFA, which is most likely due to the relatively young age of the agreement. Nonetheless, one should not forget that the idea of legally binding provisions on trade facilitation was not newly invented with the TFA and that the latter builds upon three provisions from the General Agreement on Tariffs and Trade (GATT) 1994 on the freedom of transit; fees and formalities; and the administration of trade regulations (Articles V, VIII, and X).[7]

At the same time, however, under the TFA, developing countries and LDCs have been granted special and differential treatment (S&DT). Article 20 sets out a grace period and different timeframes foreseen for the non-application of dispute settlement against developing countries and/or LDCs. The grace period varies between categories of measures and the WTO Member’s development status. As an example, measures notified by LDCs as Category B and C are not subject to any dispute settlement proceedings for a period of eight years following implementation.

As mentioned above, developing countries and LDCs can decide on their own schedule for implementation. In this regard, many countries have notified definitive dates of implementation for Category C measures for a date after 2025. In addition, Article 17 of the TFA provides for an ‘early warning mechanism’, which allows developing countries and LDCs that consider themselves to be experiencing difficulties in implementing provisions categorized as B or C to obtain an extension of their definitive dates for implementation. In this situation, developing countries are entitled to an extension period of up to 18 months, while LDCs to a period of up to 3 years. While even longer extension periods are possible, the main conclusion here is that it might actually take some time until WTO Members, including developing countries and LDCs themselves, can make use of WTO dispute settlement to fully implement the TFA’s provisions.

Five years after the entry into force of the TFA; what are the mechanisms in place to support trade facilitation? While this article has shown that WTO dispute settlement is not exactly an option for cases between and against developing countries and LDCs at this point in time (even if brought by this group of Members themselves), cases can still be lodged among developed countries. The deadlock and political situation of the WTO Appellate Body, which is a not a focus of this article but has been widely discussed in the media and in trade circles, poses further challenges to solving trade quarrels.[8] Overall, providing sufficient time for implementation as foreseen in the TFA, and taking the capacity of countries into consideration while supporting these with technical assistance is still the most realistic way to reach full implementation for now.


[1] See WTO Trade Facilitation Agreement Facility; https://www.tfafacility.org/.

[2] See WTO Trade Facilitation Agreement Facility; https://tfadatabase.org/implementation. Implementation rate according to notification data.

[3] WTO (2022), Supply chain resilience highlighted at fifth anniversary of Trade Facilitation Agreement (22 February 2022), Trade Facilitation; https://www.wto.org/english/news_e/news22_e/fac_22feb22_e.htm.

[4] Note that LDCs would implement Category A measures within one year after entry into force. See WTO TFA, Art.14.1(a).

[5] On WTO negotiation rounds, please see WTO (no date), https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact5_e.htm.

[6] June 2022.

[7] Although not the focus of this short article, note that there is, hence, case law and WTO jurisprudence on trade facilitation topics under GATT 1994 provisions.

[8] For further information, see for example, Chatham House (2020), Dispute settlement in crisis, Reforming the WTO; https://www.chathamhouse.org/2020/09/reforming-world-trade-organization/04-dispute-settlement-crisis.

Photo credits: yotanika/shutterstock.com

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