3 Ways a New Customs Agreement Makes it Easier to Meet Global Demand
February 24 2017 - 12:00PM
The following is an article written by Laura Lane of UPS.
The newly minted Trade Facilitation Agreement (TFA) is a
game-changer for the way goods cross borders and move around the
world.
At UPS, the seamless movement of packages is our lifeblood — so
we are excited by this World Trade Organization (WTO) agreement,
which ushers in a new global framework of rules that make trade
safer, cheaper and faster for American businesses.
TFA creates mechanisms that bring all 164 WTO member countries
to a higher standard for how goods cross borders.
The pact reduces burdensome paperwork requirements, decreases
holds and inspections of goods at the border and mitigates other
costly and redundant barriers — allowing trade to happen as quickly
as the e-commerce economy demands. This is without changing a
single U.S. law, basically leveling the playing field so that
everyone else follows many of the same customs rules we do.
Let’s zero in on three benefits of TFA:
Security: Trade facilitation and more secure supply
chains
The easier it is to answer the who, what, when and where about a
shipment, the safer supply chains will be.
TFA addresses this issue head on, implementing “trusted trader”
programs that streamline border clearance for routine, known
shippers, who ship the majority of global trading volume and have
strong partnerships with delivery providers like UPS.
By facilitating the movement of these trusted traders’
shipments, TFA allows border agencies to concentrate valuable
resources and personnel on the shipments most likely to pose a
threat.
Frictionless trade: Reaching more consumers
TFA also supports a meaningful national export agenda by
removing unnecessary costs and red tape, making it easier for a
business to reach foreign consumers. For U.S. exporters, this means
helping them reach the 95 percent of the consumers who live outside
the United States.
This is particularly critical to micro, small and medium-sized
companies who want to market internationally but are often deterred
by complexity.
When it is easier to trade, more trade happens, and TFA will
make it easier than ever for American businesses to sell to new
markets. Half of the world’s countries hold up at least one in five
express shipments that reach their borders — often for random
inspections that do little to increase security.
A full 15 percent of countries hold more than half of the
packages, according to the Global Express Association’s annual
audit of border holds. These delays result in higher costs for
businesses, and often countries lack the tools needed to improve
the processes.
TFA provides those tools and utilizes those countries leverage
technology and internationally recognized risk-management standards
to streamline the import process.
Raising standards: Strengthening the supply chain’s
weakest links
Lastly, TFA goes further than any trade agreement in decades to
raise standards among developing countries with the weakest trade
infrastructure and, in doing so, connects their growing and
thriving middle-class populations to the global economy. This
includes American exporters who manufacture the goods those same
populations want to buy.
TFA mandates the processing of shipment data before the
good physically arrives, collecting duties and taxes after the
release from customs’ control, expediting the movement of low-risk
shipments by known traders. TFA also calls for higher thresholds
for imposing duties and taxes on low-value goods and eliminating
burdensome paperwork redundancies.
Many developed countries, including the United States, already
have these measures in place. But with TFA, all 164 members of the
WTO will now be working to meet these standards, strengthening the
entire global supply chain.
The bottom line
Last year was the first time since 2001 that GDP growth outpaced
trade growth.
We at UPS are looking forward to the opportunities TFA brings
our customers, and our UPS customs experts around the world are
lending our company’s supply chain know-how to help foreign
governments’ learn from our best practices and help them address
their unique implementation needs.
This is another way that UPS — the global team of United Problem
Solvers — is working to grow American exports and get American
products to anywhere and everywhere in the world.
Laura Lane is president of global public affairs at UPS.
Reprinted with permission of Longitudes, the UPS
blog devoted to the trends shaping the global economy.
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UPS Public Relations
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