TRADE

WTO: World Trade Statistical Review 2017

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On 28 July 2017 the WTO issued the latest annual statistical report World Trade Statistical Review 2017. This publication examines trends in trade in goods and services and trade policy developments including restrictive trade practices.

World merchandise exports have risen by around 32% in value since 2006 to USD 16 trillion in 2016, and exports of commercial services have increased by around 64% in the same period, reaching USD 4.77 trillion in 2016. However trade growth in terms of volume of merchandise showed its lowest growth since the financial crisis, at 1.3% in 2016. This was half the growth rate of the previous year. This is due partly to low growth of world GDP at 2.3%, down from 2.7% in 2015. Growth in world trade is expected to rise slightly in 2017 to 2.4%.

In recent years the ratio of global trade growth to GDP growth has fallen to around 1:1 from an average of around 1.5:1 since 1946. In 2016 the ratio was 0.6:1, falling below 1 for the first time since 2001.

International trade is still concentrated within a few countries with the highest ten trading nations accounting for more than half the global trade in merchandise and commercial services. The share of developing countries in world merchandise trade is 41% and their share of trade in commercial services is 36%. Trade between developing countries is rising and accounted for more than half their total exports in 2015. However those countries classified as least developed countries (LDCs) still have a share of less than 1% in exports of merchandise and commercial services.

Digital trade

The increasing use of new technologies is expected to have a positive impact on digital trade in future with opportunities for entrepreneurs and small businesses. To analyze these trends and formulate good policy in the area improved statistics are necessary. The WTO and OECD have therefore put together an inter-agency task force to take the issue forward.

Trade policy trends

From mid-October 2016 to mid-May 2017 WTO members implemented 74 new trade restrictive measures, a decrease on the amount recorded in the previous annual report. Trade restrictive measures include new tariffs on import or exports; increases in existing tariffs; import bans or quantitative restrictions; more complex customs regulation or procedures; or restrictive changes to local content requirements. The measures could be temporary or permanent.

In the same period WTO members introduced 80 measures to facilitate trade. However the trade coverage of the import-facilitating measures is more than three times the amount in value of the estimated trade coverage of the import restrictive measures. Trade facilitating measures include the elimination or reduction of tariffs on imports or exports; simplified customs procedures; elimination of import or export taxes; or elimination of quantitative restrictions on imports or exports.

Trade facilitation agreement

The report notes that the WTO’s Trade Facilitation Agreement (TFA) entered into force in February 2017. The agreement aims to save trade costs for WTO members by simplifying and standardizing customs procedures and facilitating the flow of goods across borders.

Developing countries are permitted to set their own timetable for implementation according to their capacity. They can also obtain access to capacity-building resources to enable them to implement the agreement. The WTO has established a Trade Facilitation Agreement Facility to assist developing countries in assessing their needs and finding potential development partners. Developing countries are requested to set out the provisions of the TFA that they can implement immediately, the provisions that will require more time for implementation and those that may require capacity building support. The various commitments therefore provide a road map for the full implementation of the agreement by all WTO members.

PGA Highlights: July 2017

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In the United States the following events have taken place under the several PGA during the month of July 2017.

Agencies Summary
Federal Register Upcoming public hearing on 2016/2017 GSP review:
The GSP Subcommittee of the Trade Policy Staff Committee (TPSC) will join a public hearing on the GSP country practice review of Bolivia on September 26, 2017. Deadline for submission of post-hearing briefs is October 17, 2017 and deadline for submission of comments, pre-hearing briefs and requests to appear at the public hearing is September 5, 2017. See Details
Notice of request for Panel Review:
A request for Panel Review was filed on behalf of Maquilacero S.A. de C.V. with the United States Section of the NAFTA Secretariat on July 12, 2017, pursuant to NAFTA Article 1904. Panel Review was requested of the Department of Commerce’s final determination regarding Certain Circular Welded Non-Alloy Steel Pipe from Mexico. See Details
Fiscal year 2018 tariff-rate quota allocations for sugar and sugar products:
The United States Trade Representative (USTR) provided notice of country-by-country allocations of the Fiscal Year (FY) 2018 (from October 1, 2017 through September 30, 2018) in-quota quantity of the tariff-rate quotas for imported raw cane sugar, certain sugars, syrups and molasses (also known as refined sugar), specialty sugar, and sugar-containing products. See Details
Extension of import restrictions on some objects from Cyprus:
This document amends the CBP regulations to reflect an extension of import restrictions on pre-classical and classical archaeological objects, and Byzantine and post-Byzantine ecclesiastical and ritual ethnological materials from Cyprus. The restrictions are due to expire on July 16, 2017. See Details
Electronic information for cargo exported from the U.S.:
This final rule amends U.S. CBP regulations regarding the requirements to provide data for certain exported cargo to conform to current requirements. Various CBP regulations regarding exported cargo refer to outdated regulations or requirements of the U.S. Census Bureau, including the requirement to submit a paper Shipper’s Export Declaration (SED). See Details
CBP CBP releases Harmonized System Update:
The U.S. Customs and Border Protection (CBP) issued Cargo Systems Messaging Service (CSMS) #17-000421 on July 26, 2017, announcing that the Harmonized System Update (HSU) 1706 was created on July 25, 2017, containing 834 ABI records and 157 harmonized tariff records. Adjustments required by the verification of the 2017 Harmonized Tariff Schedule (HTS) are also included. See Details
ACE current deployment updates:
The U.S. CBP released Cargo Systems Messaging Service (CSMS) #17-000423 on July 27, 2017, announcing an updated release schedule for the ACE post release capabilities, including liquidation (excluding the already deployed notice of liquidation), reconciliation, drawback, duty deferral, statements, collections, and the Automated Surety Interface (ASI). The ACE Deployment G is to be scheduled on September 16, 2017 for non-ABI entry summary/lineless (for CBP only), duty Deferral, e214. In case of statements, the ACE Deployment G will be scheduled on December 17, 2017 and for reconciliation, ACE Core Drawback and Trade Facilitation and Trade Enforcement Act (TFTEA) Drawback, liquidation and Automated Surety Interface (ASI), the ACE Deployment G is to be dated on February 24, 2018. Another opportunity was disclosed in this updates. That is, trade users will have the option to file either Core Drawback or TFTEA Drawback between February 2018 and February 2019. See Details
Drawback in ACE system:
The U.S. Customs and Border Protection (CBP) will deploy Drawback capabilities in ACE on February 24, 2018, at which time Drawback entries will no longer be filed/processed in ACS and must be done via ACE. Between February 2018 and February 2019, trade users will have the option to submit either Core Drawback or TFTEA Drawback. The rescheduled deployment date will be published at least 30 days in advance of the mandatory transition. Additionally, when filing an ABI drawback claim the paper CBP Drawback entry form 7551 and the Certificate of Manufacturer form 7552 will no longer be required. Note that, there will be a limit on the number of records per claim. See Details
Duty Deferral in ACE:
The U.S. Customs and Border Protection (CBP) will deploy Duty Deferral capabilities in ACE on September 16, 2017, at which time Duty Deferral entries will no longer be filed/processed in ACS and must be done via ACE. This news describes some changes for the trade community with respect to Duty Deferral entries in ACE. See Details
Liquidation in ACE:
The U.S. CBP will deploy Liquidation capabilities in ACE on February 24, 2018, at which time liquidations will no longer be filed/processed in ACS and must be done via ACE. This phased approach ensures that the ACE core post release capabilities continue to interface seamlessly with collections in the legacy system. Note that, liquidations will be posted 365 days a year, including holidays.  The trade will be able to search the electronic bulletin by filer or date the event occurred. Postings will be kept online for 15 months to allow time to search for a liquidation.  After 18 months, a request will need to be made to CBP to view a past liquidation. See Details
Reconciliation in ACE:
The U.S. Customs and Border Protection (CBP) will deploy Reconciliation capabilities in ACE on February 24, 2018.  This phased approach ensures that the ACE core post release capabilities continue to interface seamlessly with collections in the legacy system. Note that, No longer need to submit original amounts for transmitting Reconciliation Entry Type 09. ACE will automatically populate the original values, duties, taxes, and fees. This information will be pulled from the associated entry summaries. See Details
CBP declares alert on EPA FIFRA requirements:
The U.S. CBP released Cargo Systems Messaging Service (CSMS) #17-000416 on July 24, 2017, providing a reminder on special import requirements for imported goods subject to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Starting from August 1, 2017, if trade provides EPA Pesticides with disclaim codes C or D for commodities subject to FIFRA import requirements, ACE will automatically send an SO70 message to trade that indicates that EPA has put a “Documents Required” on that entry, to signify ‘additional information required’. This is because PGA data is evaluated in parallel with CBP data. See Details
FSIS process for certain fish and fish products:
The CBP published CSMS #17-000393 on behalf of the Food Safety and Inspection Service (FSIS). The FSIS is announcing that starting from August 2, 2017, all shipments of imported siluriformes fish and fish products that make U.S. Customs entry on or after August 2, 2017, must be presented at an Official Import Inspection Establishment for reinspection by FSIS personnel prior to entering U.S. commerce. FSIS has posted an updated letter with instructions for filing the import application (FSIS form 9540-1). Note that, the Partner Government Agency (PGA) Message Set for these products under FSIS jurisdiction will not be available for use until further notice. See Details
FCC FCC announces plans to eliminate Form 740 for RF devices:
The Federal Communication Commission (FCC) streamlined and modernized the authorization requirements for most radio frequency devices, such as cell phones or TV receivers, that are imported, marketed, or operated within the United States on July 13, 2017. The commission also eliminates FCC Form 740 – the FCC’s unique import declaration for RF devices brought into the United States. See Details

WTO and OECD: Aid for Trade monitoring report

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The sixth aid-for-trade monitoring report has been published by the WTO and OECD under the title “Aid for Trade at a Glance: Promoting Trade Inclusiveness and Connectivity for Sustainable Development. The Aid for Trade initiative, launched in 2005, aims to help developing countries participate in global trade by assisting with the supply side and addressing trade-related infrastructure constraints. The report notes that more than USD 300 billion has been devoted to programs and projects since the initiative was launched.

The focus of the latest edition is on physical and digital connectivity. Trade connectivity is essential for inclusiveness, sustainable growth and reduction of poverty. Digital networks are essential to trade and are interlinked with the physical trade infrastructure. Without an affordable internet connection the market place of the world-wide web cannot be accessed. The report points out that around 3.9 billion people remain offline.

As a result of digitalization a larger number of low-value transactions and small shipments cross national borders, and goods are increasingly combined with services. Services therefore represent a growing share of exports of manufactured products.  New technology lowers the cost of supplying cross-border services and facilitates connections between parts of the supply chain. This does not eliminate comparative advantage or other constrains from information symmetries and trade barriers; but many of the constraints of international trade are being overcome and new business models are being created.

The 2030 Agenda for Sustainable Development has set targets for universal, affordable access to the internet. Although mobile broadband networks are available to more than 50% of people in the less developed countries (LDCs) the devices and network connections are still expensive and coverage is limited. The high costs of digital connections can be seen as trade costs that exclude firms and consumers from the online market for goods and services.

Measures are required to improve the supply side of digital connectivity including ICT infrastructure and availability of network coverage; and the demand side such as affordability and internet usage. This involves mobilizing additional finance to develop infrastructure, ICT services markets and regulatory environments. Aid for Trade supports governments in their efforts to bridge the digital divide.

There is also a digital trade policy divide. Developing countries must consider the trade policy aspects of digitalization. Digital connectivity alone is not sufficient without additional policies to develop the potential of e-commerce, including technical and financial assistance to develop human, institutional and infrastructure capabilities.

Commerce is hindered by border clearance delays and inadequate physical infrastructure. Digitalization of customs services can make the customs and border agencies more efficient. The report emphasizes the need to streamline customs services for micro, small and medium enterprises (MSMEs). Many of these concerns will be addressed by the WTO Trade Facilitation Agreement.

The Trade Facilitation Agreement aims to simplify and harmonize international trade procedures, speeding up the movement and clearance of goods. Complete implementation of the agreement could lower trade costs by 16.5% for low income countries and 17.4% for lower middle income countries. The TFA covers a range of trade facilitation measures including customs cooperation, customs procedures, freedom of transit, formalities, appeals procedures and fees and charges. Countries self-assess and declare their ability to implement each measure.

Services trade is important in growing connectivity as services support trade in goods, supply chains and manufacturing activities. They are also involved in the infrastructure enabling e-commerce and online services. Governments need to help promote the development of e-commerce strategies supporting trade logistics, development of e-commerce skills, adequate legal frameworks, online payments and access to finance. These combined with an increase in connectivity can increase e-commerce possibilities, generating economic growth and employment.

E-commerce can raise productivity in developing countries across all economic sectors, including MSMEs and enterprises owned by women, by connecting to customers and suppliers worldwide. Governments need to promote internet access and training to ensure that existing inequalities of access do not increase. The private sector is also important in supporting MSMEs and individuals to become connected to the global economy.

 

Brazil launches consultation on proposals for new customs procedures

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Brazil has recently inaugurated a consultation on proposals for new customs action plans. On a new website the tax authority plans to integrate all processing and data for its foreign trade operations and make the export process easier. Responses to the consultation must be received by 24th July through the Inland Revenue website.

Ukraine: European Parliament increases quotas for Ukrainian agricultural products

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The European Parliament has approved a package of additional trade concessions for Ukraine, designed to increase trade flows and foster the country’s economic development.

The preferences will be introduced for a period of up to three years as a supplement to the Deep and Comprehensive Free Trade Area (DCFTA) with the European Union. The EU is now offering additional trade concessions in view of Ukraine’s economic difficulties and its efforts to reform. Parliament agreed to permit the import into the EU of a range of Ukrainian agricultural products within limited zero-tariff quotas.

As reported, after negotiations between the European Commission, the Council of the European Union and MEPs the European Parliament’s Committee on International Trade (INTA) proposed to increase quotas on Ukrainian honey by 2,500 tonnes, preserved tomatoes by 3,000 tonnes, grape juice by 500 tonnes, oats by 4,000 tonnes, wheat by 65,000 tonnes, maize by 625,000 tonnes, barley by 325,000 tonnes and groats and pellets of certain cereals by 7,800 tonnes.

US: Department of Commerce finalizes sugar trade compromise with Mexico

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The U.S. Department of Commerce has finalized an agreement on the suspension of anti-dumping and countervailing duties on Mexican exports of sugar.

The agreement, which reworked a 2014 pact, averts steep duties on U.S. imports of sugar from Mexico, the top foreign supplier to the lucrative 11-million-tonne U.S. market. It also prevents the risk of retaliation from Mexico just as the two countries and Canada are ready to renegotiate the North American Free Trade Agreement (NAFTA) this year.

The two countries had reached a provisional agreement at the beginning of June 2017 following intensive negotiations. This agreement included measures to prevent dumping of Mexican sugar, with the US alleging that Mexican sugar was being sold into the US market at below the cost price in Mexico.

EU and Japan reach agreement in principle on trade deal

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An agreement in principle has been reached on a free trade deal between the European Union (EU) and Japan. The deal includes sizable tariff cuts, co-operation on standards and regulations and opening up of public procurement markets.

The EU and Japan together account for 19% of global gross domestic product and 38% of goods exports. Around 10% of Japanese exports go to the EU. This is more than double the proportion of EU goods exported to Japan.

The EU estimates the agreement will save it EUR 1 billion in customs duties each year and increase exports to Japan from more than EUR 80 billion to more than EUR 100 billion a year.

Tariff reduction and elimination

Japan’s main objective is to reduce or eliminate EU import duties on its automobile sector. This is very important because the EU is the world’s largest importer of road vehicles. The EU has agreed to gradually phase out all tariffs on cars imported from Japan, with some safeguards in the event of a sudden large rise in imports.

For the EU the most important goal was to reduce Japan’s tariffs on imports of European meat, wine, and dairy products. The EU agricultural sector will be subject to much lower tariffs on exports to Japan. Currently, Japan’s import duties on food are high, ranging from 15% on wine to 30-40% on cheese. After the agreement is effective some tariffs will fall to zero immediately and others will be phased out over 15 years. For some very sensitive products, the zero tariff will only apply up to a certain volume of imports.

Non-tariff barriers

Both sides will benefit from removing non-tariff barriers, such as incompatible product standards. The agreement includes provisions for greater harmonization of standards. The EU considers that this will help its manufacturers increase their exports to Japan.

Investor protection

Before the deal takes effect the EU and Japan must agree on the issue of investor protection. The EU does not want to use “investor state-dispute settlement” tribunals. These tribunals have been widely criticized by campaign groups as offering a way for multinationals to undermine environmental and labor standards. The alternative could be investment courts but Japan may object to this option.

Effective date

According to the European Commission president, the deal could take effect in early 2019. This will however depend on the outcome of negotiations on the remaining details of the agreement. Some further time will be required to turn the agreement in principle into the final text of a free trade agreement.