To ratify or not to ratify? Is that the question?
Poppy S. Winanti
The Jakarta Post
Trade facilitation is the only trade agenda that has survived from the WTO Ministerial Conference in Singapore, which was held back in 1996. The trade negotiation agendas, which are well known as 'the Singapore Issues', consist of trade and investment, trade and competition policy, transparency in government procurement and trade facilitation.
While other agenda items were taken off the table after the Doha Ministerial Conference, trade facilitation was the only agenda that all WTO members agreed to negotiate further.
After negotiations launched in 2004, it took almost 10 years for the Trade Facilitation Agreement (TFA) to be finally concluded. The TFA was concluded at the WTO Bali Ministerial Conference in December 2013 as part of the 'Bali Package' and has become the first multilateral trade agreement signed since the establishment of the WTO in 1994.
The TFA's main purpose is to ease customs procedures and facilitate the movement, release and clearance of goods. The TFA is expected to cut bureaucracy and corruption in customs procedures and consequently speed up trade and lower the cost of international trade.
The first section of the TFA contains approximately 40 technical measures that the government is required to implement in order to reduce trade costs. These comprise a series of measures for the prompt and efficient movement of goods across borders.
Each member is obliged to publish all information regarding procedures, regulations, fees and charges, penalties and any other necessary information.
All information should be available on the Internet, along with enquiry points that should be made available. Furthermore, the TFA also obliges members to issue an advance ruling, provide procedures for appeal or review, ensure border agency cooperation and provide a guarantee for freedom of transit, among other things.
In addition to the obligations embedded in the TFA, it should be noted that the TFA is the only WTO trade agreement that extends comprehensive and special provisions regarding developing countries and least developed countries (Section 2 of the TFA) that uniquely allows them to implement the Agreement based on their own assessment.
In this regard, each developing country and least developed country may determine when it will implement and identify whether it will need any technical assistance and support for capacity building to implement the measures.
In this context, the Agreement sets out three different categories of notifications. Category A provisions mean that the member is able to implement when the Agreement comes into force. Category B provisions mean that the member is able to implement the Agreement after a transitional period following it coming into effect.
Category C provisions allow a nation to not only implement the Agreement's requirements after a transitional period as in Category B, but also provides that nation with assistance and capacity building support. To assist with reaching these goals, the WTO members also created the Trade Facilitation Agreement Facility (TFAF) in 2014 as a supporting body and a focal point to assist developing countries and least developed countries in dealing with their TFA obligations.
As part of Indonesia's obligations, on July 31, 2014, Indonesia notified the Preparatory Committee on Trade Facilitation that only three provisions could be categorised into Category A. These are provisions on penalty disciplines, pre-arrival processing, and the use of Customs Brokers. However, nearly two years after its conclusion at the Bali Ministerial Conference, Indonesia has not yet ratified the Agreement. Considering the next WTO Ministerial Conference will be held in December in Nairobi, the question is whether the Indonesian government has to make a decision to ratify the Agreement or not?
Nevertheless, this question is a little more complicated. Whether Indonesia decides to ratify the Agreement or not, the Protocol of Amendment and TFA requires two-thirds of the WTO members to ratify and convey their acceptance to the WTO Secretariat in order for the agreement to come into force.
Based on the September member numbers of the organization, it would require around 107 out of 161 WTO members to ratify the TFA.
Even though the latest data shows that as of September 2015, only 17 members have ratified the Agreement, including ASEAN members Malaysia and Singapore, the enforcement of the Agreement seems inevitable. Unless, Indonesia is able to influence other members not to ratify, the insertion of the Agreement into the WTO Agreement is only a matter of time. With this in mind, to ratify or not to ratify is no longer the question. Once two-thirds of the Members have ratified, the Agreement will be automatically adopted, whether Indonesia ratifies the Agreement or not.
Against this background, perhaps the more appropriate question to ask is, what should Indonesia do to prepare itself? What efforts should be made to take advantage of any opportunities following from the Agreement?
By the time the Agreement comes into force, Indonesia has to provide notification of commitment categories for the TFA provisions. Conducting an assessment to identify three different categories of notifications under Section 2 of the TFA is indeed an urgent need. Indonesia, therefore, should take full advantage of the TFA by requesting technical assistance and support for capacity building to implement the provisions that Indonesia is not ready to implement yet.
Furthermore, designing a roadmap for TFA implementation is also a must. This roadmap can be used as the basis for policy recommendations. What are the targets, what should be done, when should it be done, how should it be done and which government agency should be responsible are among the important questions that should be addressed in the roadmap of Indonesia's implementation of its obligations under the TFA.
Therefore, consolidating and preparing Indonesia's own domestic readiness is much more crucial than debating whether to ratify the WTO TFA or not.
The writer is director of the Center for World Trade Studies (CWTS) Universitas Gadjah Mada.
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