Context+of+TF+negotiations

Trade facilitation was included in the agenda of the WTO at the WTO Ministerial Conference in Singapore in 1996. The issue has gained importance against a background of changing economic context, specifically the expansion of trade flows. WTO members were seeking to address a perceived gap in the existing regulatory framework when it came to the objective of trade facilitation, and striving for a deeper integration of the multilateral trading system.

Changing trade patterns
Trade facilitation gained increasing attention at the WTO in the 90's. Driven by trade liberalization and tariff reduction obtained by the GATT and other economic reforms in the 80's-90's, trade flows expanded (see picture below) and became more global with the integration of many developing countries into the production networks.

Tariff levels and quota systems were no longer perceived as the main barrier to trade and attention shifted to non-tariff measures and domestic policies that impact international trade. Border controls, administrative procedures and documentary requirements are such non-tariff trade barriers. They can cause significant delays and costs to businesses worldwide (see chapter on economic gains, etc). With the emergence of globalized value chains and sub-contracting of production across countries, the supply chains have become more sensitive to cost efficiency, reliable and speedy movement of goods and information across international borders. The costs and delays of administrative procedures have thus become more visible and critical to the integration of countries in international trade flows. Against this background of changing trade patterns, a number of WTO members, including the EEC and Japan (*1), felt that certain practices and procedures were restricting trade, and that there was a need to evaluate the scope for multilateral rules to facilitate trade. Trade facilitation was therefore put on the agenda of the WTO at its first Ministerial Conference in Singapore in 1996. In the Singapore Ministerial Declaration, WTO members directed //”(...) the Council for Trade in Goods to undertake exploratory and analytical work (...) on the simplification of trade procedures in order to assess the scope for WTO rules in this area"//. (*2)

Closing gaps in existing regulatory framework and work by international organizations
Multilateral cooperation in the area of trade facilitation predates the Singapore Declaration. Various intergovernmental bodies, such as UN/CEFACT and UNCTAD, worked to develop standards and recommendations relative to trade facilitation. Various sectoral agreements dealing with facilitation of procedures, Customs, port and airport procedures also existed and were coordinated by existing international organizations, such as WCO, IATA and IMO. Private sector associations, such as the ICC and IRU, were also active in the area of trade facilitation. Existing WTO agreements, such as the valuation agreement, the preshipment inspection agreement and the rules of origin agreement, contain Customs-procedure-related provisions. The GATT 1994 contains a general framework for transparency, uniformity and impartiality of treatment. Nevertheless, despite the existing legal framework and the efforts of the various organizations, barriers caused by administrative procedures, remained in place. Multilateral rules were seen as a necessary approach to advance trade facilitation beyond the scope of the sectoral and regional application of some of the existing agreements, and to provide a binding legal framework of rules. The European Communities established that a framework of WTO rules is necessary because //"...the solutions proposed by UN, WCO and UNCTAD, and indeed other organisations, have not been universally adopted by all WTO members, either due to a lack of political will or because in some cases they have not met specific needs or kept pace with changes in the ways of doing trade or in technology"//.(*3). Canada, similarly mentioned that gaps in existing work by other organizations could be filled by the WTO, and that this includes //"...identifying where the development of WTO rules could provide a framework of binding commitments to facilitate trade and where the WTO can enhance current technical discussions and assistance efforts to the benefit of all Members.//" (*4)

Deeper integration of the multilateral trading system
Finally, the successful termination of the Uruguay Round and the creation of the WTO in 1994 were seen as major steps for advancing the multilateral trade system. Some WTO members sought to advance further the integration of a multilateral trading system. In fact, with the successful conclusion of the Uruguay Round, the 117 participating members of the WTO created a broad legal framework covering most international trade and a large variety of countries, from industrialised to least developed countries. Furthermore, with the creation of the WTO, members have created an institution for monitoring the agreements and the enforcement of its rules through a robust dispute-settlement mechanism. WTO rules were thus given more legal effect than other international agreements that lack such an enforcement mechanism, and members expect WTO rules to have a stronger impact. Driven by this positive expectation of the multilateral trade system, some WTO members pushed for deeper integration of the international trading system. Deeper integration should address the harmonization of domestic regulatory regimes. This approach is different from the focus of the GATT and Uruguay Round, which was on limiting and preventing discrimination of foreign products or producers. Trade facilitation was seen as an issue of deeper integration, as were the issues of investment and trade, government procurement and trade, and competition law and trade. All four new issues were put on the agenda of the WTO at the Singapore Ministerial Conference, which led to their naming as "Singapore issues". Only trade facilitation was kept on the agenda of the WTO after years of negotiations between members over the launch of a new round of trade negotiations have led to the elimination of the other three issues.

Read the next topic: Scope of TF at WTO to get introduced to the scope of the negotiations on trade facilitation at the WTO.

(*1) The group of WTO members that supported multilateral rules on trade facilitation later became known as the Colorado Group. They included WTO members such as Australia, Canada, Chile, Colombia, Costa Rica, EEC (later EC), Hong Kong China, Hungary, Japan, Korea, Morocco, New Zealand, Norway, Paraguay, Singapore, Switzerland, and The US. Note that groups are informal grouping of WTO members and their membership composition can evolve at any time (*2) World Trade Organisation, Singapore Ministerial Declaration, 18 December 1996 (WT/MIN(96)/DEC) (*3) World Trade Organisation, Communication from the European Communities, 22 September 1998 (G/L/122) (*4) World Trade Organisation, Communication from Canada to the Council of Trade in Goods, 30 September 1998 (G/L/126)