Trade Facilitation Agreement


And its implications for Pakistan


Trade facilitation is a buzzword in the world of trade these days. World Trade Organisation’s (WTO) Trade Facilitation Agreement (TFA) is also a hot stuff in the present world trading system.

Although the TFA is still to be implemented by the member countries of WTO, it has some clear implications for all of them, be it in their domestic trade policymaking or their trade with the outer world.

No wonder the TFA has its implications on the trade policy formulation in Pakistan, the country being a founding member of the WTO. Being a developing country, Pakistan’s implementation strategy of the TFA would be categorised into a three-tier process mentioned in the agreement, as opposed to the developed countries that are required to implement the TFA right after its entry into force.

The developing countries along with the least developed countries (LDCs) will be implementing the provisions of TFA as, category A commitments which a member will be undertaking right after the entry into force of the TFA, category B commitments which a member will enforce after the transitional period would end and category C commitments which a member will be implementing after the completion of transitional period and after getting the technical support to enhance the implementation capacity as envisaged in the agreement.

It may be said that the starting point of the TFA’s implementation may not be the same but the end goal is the same i.e., to take the trade facilitation measures up to the highest possible level and still make significant effort to improve upon it.

So what will be the implications of TFA on the trade policy in Pakistan and how is it going to progress in order to implement all 37 binding measures contained in the 13 articles of the agreement?

In his recently published paper (September 2014) in ‘The Lahore Journal of Economics’, Mohammad Saeed argued that the policymakers in Pakistan do not have the luxury of time, as the Bali Ministerial required the WTO members to submit their category A commitments by July 2014. The Government of Pakistan (GoP) also needs to submit its commitments under category B and C presumably till August 2015 with the indicative dates of implementation.

The paper tells us that once the TFA enters into force, the GoP must immediately be notifying the measures under category A and for this it needs to start minutely analysing all the provisions of the agreement. Technically speaking, Pakistan already have some measures envisaged in its legislation and also implementing it, so the agreement would not be an altogether new ballgame for it.

Saeed also argues that the different governments in Pakistan might have different approaches in dealing with the TFA. One government may consider it enough just to show compliance with the provisions of the agreement whereas another government might consider designing an implementation strategy for the measures included in TFA in order to have a greater degree of trade facilitation.

The paper further argues that although Ministry of Commerce mainly deals with the task of trade policy formulation in Pakistan, in the case of TFA it would not be acting alone and various governmental agencies need to be consulted before making any decision about notifying different measures under the three categories for the implementation. Moreover, it will have serious implications for the so-called turf war between the different governmental agencies which seem to be very possessive about their respective distribution of work contained in the ‘Rules of Business’.

Pakistan already has a National Trade and Transport Facilitation Committee, as the TFA obligates the WTO members to have such a committee at national level. It is a vibrant group of 40 members coming from different ministries and private sector. It implies that there has to be a mutually symbiotic relationship between the government and the private sector, which is a major challenge in itself as both of them have mixed perceptions about each other’s working environment.

Undoubtedly, the adoption of TFA and its subsequent implementation is a huge challenge for the world in general and the developing and least developed countries in particular. Trade facilitation is totally different from tariff reduction. Tariff reduction is a finite regime i.e., once the zero tariff is achieved, nothing more can be done. On the other hand, trade facilitation is an infinite process of step by step improvements in the world trading system in which various domestic and international public and private agencies are involved, starting from a producer to the end consumer.

Pakistan is not doing that bad to improve upon its trade facilitation regime as shown by the various trade facilitation indicators (TFIs) by different international institutions. It already has many custom-centric measures in place but they are just there to show legal compliance to the international trading regime. The real challenge will be to improve them in a way that inefficiencies can be reduced to save time and cost.