By Evelyn M. Suarez
On November 27, 2014, the World Trade Organization (WTO) was finally able to overcome an impasse created by India in July which prevented implementation of the Trade Facilitation Agreement reached in Bali in December 7, 2013. As described by WTO Director General (DG) Azevedo, “the impasse related to the political link between two of the Bali decisions – the decision on Public Stockholding for Food Security Purposes, and the Trade Facilitation Agreement.” The WTO General Council was able to address India’s objections after a breakthrough made by the U.S. and India on November 13, 2014 to simultaneously adopt the protocol necessary to implement the TFA and a decision clarifying the terms of an existing food security “peace clause.”
The WTO clarified that the peace clause agreed to in Bali will remain in force until a permanent solution is found hopefully by December 31, 2015 which is in advance of the original target date. It also adopted the protocol of amendment which formally inserts the TFA into the WTO rulebook according to DG Acevedo. Importantly, this clears the way for the TFA to come into force. However, it also removes the July 31, 2015 deadline for WTO members to ratify the TFA leaving open the ratification process open indefinitely. The Agreement enters into force once two-thirds of WTO members have completed their domestic ratification process.
So what does finalization of the first WTO multilateral agreement mean to international business? According to DG Azevedo it means that the work of the WTO is back on track. The WTO General Council decisions were lauded by IMF Managing Director Christine Lagarde, who commented that this would provide an opportunity for advancing multilateral trade negotiations in other areas which is essential for global growth. According to U.S. Trade Representative Ambassador Michael Froman “[t]he Trade Facilitation Agreement has the potential to fundamentally reform global customs practices and substantially reduce the costs and time associated with goods crossing borders. It’s a perfect example of how breaking down barriers to trade can unlock new opportunities for developed and developing countries alike, and it’s a particularly important win for small- and medium-sized businesses in all countries.” That’s why TFA implementation is strongly supported by groups like the International Chamber of Commerce. Read more…