Written by: Alexandre Larouche-Maltais, Article No. 78 [UNCTAD Transport and Trade Facilitation Newsletter N°91 - Third Quarter 2021]
Good to know
When World Trade Organization (WTO) members signed the Trade Facilitation Agreement (TFA), they committed to submitting different notifications depending on their level of development.
All countries must provide “transparency notifications”, i.e. communication with information on how the countries have implemented six TFA measures (publication, internet publication, enquiry points, use of customs brokers, single window, and customs cooperation.)
All members are also expected to provide information on assistance and support for capacity building to the WTO Secretariat. Donor countries should share contact details of their development agencies and some information on how to request assistance. Recipient countries should share contact details of their national focal point and trade facilitation project information and progress.
Developing and least developed countries have much more to do than developed countries. They must communicate their “implementation intentions” through notifications where they classify TFA obligations in 3 categories depending on their implementation capacity (ABC designations):
- Category A commitments refer to TFA measures that were already implemented by the time the TFA entered into force
- Category B commitments refer to measures that require additional time for their implementation
- Category C commitments refer to measures that require additional time, as well as technical and financial assistance to be implemented.
Developing and least developed countries must initially notify indicative implementation dates for each B and C measure, and then the definitive implementation dates for the same measures. They are also expected to share their technical assistance needs for all C measures. In case of unexpected problems, they need to submit notifications for a “Category shift” or a “request for extension”, or both!
For more information on notifications and timelines, please see the TFA Notification Guide
Five reasons why "the struggle is real" for Least Developed Countries:
Out of the 46 countries recognized as Least Developed Countries (LDCs) by the United Nations, 35 have joined the WTO, while 8 are in the process of accession.
At the global level, the WTO Trade Facilitation Agreement Database (TFAF) estimates that 70% of all members’ commitments under the TFA have been implemented so far.[1] However, notification data shows that LDCs have implemented only 37% of their commitments.
Overall, very few LDCs have submitted all required notifications under the WTO TFA. Despite their best efforts, many countries have missed deadlines for submitting implementation notifications, such as category ABC designations and indicative and definitive implementation dates, as well as transparency notifications.
Based on UNCTAD’s extensive experience partnering with LDCs, this article identifies some of the key challenges faced by LDCs regarding both, notifications and implementation, of commitments under the TFA.
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Limited awareness of transparency obligations
The first challenge relates to the fact that government officials in Capital cities may not be aware of numerous transparency obligations. Some TFA measures include a dual obligation: countries must first implement a trade facilitation reform, and then (for transparency purposes) they must inform other WTO members by submitting a notification to the WTO secretariat. Article 10.6 on customs brokers is a typical example of this dual obligation. Under this TFA provision, WTO members must avoid introducing the mandatory use of customs brokers and notify the WTO Committee about domestic measures on the use of customs brokers.
According to TFAF, 23 LDCs should have fully implemented this provision as per their individual commitments, yet only 11 LDCs had provided information on the use of customs brokers. This shows that LDCs’ governmental officials still face difficulties in grasping notification obligations.
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Past commitments that cannot be fulfilled
Another challenge faced by LDCs has to do with issues concerning pre-existing commitments. Some LDCs have made commitments in the past that they cannot fulfil afterwards. One the of most common examples is TFA Art. 1.4. This provision is closely related to the first three paragraphs of the same article, as it requires WTO members to notify the places where information listed is published. Thus, the definitive implementation date of Art. 1.4 (Notification) should be aligned with definitive implementation dates of Art. 1.1. (Publication), Art. 1.2. (Information available through the Internet) and Art. 1.3 (Enquiry Point), or at an ulterior date. Simply put, this is as if you communicated the address of the house you plan of owning in 5 years… without having found nor bought that property.
In several cases, LDCs have committed to comply with Art. 1.4 on a date prior to implementation dates of previous paragraphs, which is not possible to do. In practical terms, this would mean that a country would provide the contact details of its enquiry point before setting up the enquiry point. According to TFAF, 16 LDCs should have fully complied with Art. 1.4, but only 10 LDCs had provided information required that provision as of 26 August 2021.
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Inappropriate ABC designations
The special and differential treatment (S&DT) provisions under the TFA allow developing countries and LDCs to shift commitments between categories B and C to obtain technical or financial assistance. Despite that fact that 91% of LDCs have submitted all ABC designations to the WTO, evidence indicates that some ABC designations are inappropriate as they have been based on inaccurate assessments of their individual national trade facilitation situation. As a result, LDCs had to request more commitment shifts then developing countries. As of 26 August 2021, 29% of LDCs shifted commitments from Category B to C (compared to 8% of all developing countries), asking for technical and/or financial assistance to implement trade facilitation measures.
Some LDCs may have designated measures as A but realized later that they did not fully comply with the legal requirements. However, if a measure is designated as A, the TFA does not allow LDCs and developing countries to shift it to either B or C. This leads to a triple problem, where, first, LDCs cannot share technical or financial assistance needs for measures inadequately categorized as A and receive technical and financial support for implementing them. Second, inaccurate designations provide an inaccurate global overview of the TFA implementation in LDC countries, as estimated by the WTO TFAF. And third, other WTO members might initiate a case under the dispute settlement mechanism against the non-compliant member.
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Absence of national focal points and staffing issues in permanent missions
Under TFA Art. 22.3, developing countries and LDCs must appoint a focal point responsible for coordinating and prioritizing assistance and support. They should be the “go-to” person for donor countries and other international development partners. Although LDCs have significant technical and financial assistance needs (42.5% of LDCs’ commitments have been categorized in “C”), only half of them (18 LDCs) have communicated their donor coordinators’ contact details. For LDCs, appointing a donors’ coordinator and notifying his/her contact details to the WTO should be the first step of a fundraising campaign for trade facilitation reforms.
Unfortunately, LDCs’ permanent missions in Geneva may not always be able to make up for the absence of national focal points. LDCs generally have a limited number of representatives based in Geneva. On average, G7 countries have 36 representatives (some with assistants to help them) in their permanent representations in Geneva, whereas LDCs have only 6 representatives (some are not even based in Geneva but in Brussels or Paris).[2] Each of them must address multiple multilateral issues and they are often overwhelmed with the volume of work and competing priorities. In this context, LDC representatives may face difficulties in providing advice to the capital on notifications, monitoring commitments made under the TFA, and communicating questions or feedback received by other WTO members.
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Multiple notifications with tight deadlines
The TFA S&DT provisions provide implementation flexibility to developing countries and LDCs. However, the downside of those provisions is that developing countries and LDCs are expected to submit a series of notifications with sometimes tight deadlines. Often, they would need more time to prepare those communications. As of 26 August 2021, the WTO Secretariat has received 9 requests for extension of time to notify implementation dates, all of them were from LDCs. The impossibility of requesting for an extension for a missed deadline worsens this problem.
Also, some deadlines are simply missed. Many LDCs missed the deadline for submitting their technical assistance requirements and capacity building needs for category C measures. As of 1 June, eight LDCs that have not yet presented any technical assistance needs and requirements, and one LDC presented some. Yet, these notifications are necessary to inform other members (especially donors) on specific needs they need assistance with and for which measure.
Implementation challenges underestimated
LDCs face significant human and technical capacity challenges that preclude them from anticipating upcoming notification obligations, assessing implementation readiness, preparing communications to the WTO, and meeting deadlines. Why? One could think that negotiators might have underestimated the number of notifications that developing countries and LDCs would be required to submit. These challenges might have been overlooked during the multilateral negotiations for the TFA.
Other factors, such as the relatively high staff turnover in LDC administrations, may further complicate this challenge. Unforeseeable external factors, such as political instability or armed conflicts in some regions can complicate political processes, and the covid-19 global pandemic has exacerbated already existing difficulties in most WTO members. In this context, putting more pressure on LDCs at the WTO may not be helpful or even be counterproductive.
Our assessment suggests that technical assistance requirements for helping LDCs with their notifications have been underestimated by WTO members. UNCTAD supports developing countries and LDCs in these endeavours, within existing projects and available resources, but more such support will be necessary.
[1] Based on countries’ implementation commitments according to notification data, as of 26 August 2021
[2] Blue Book Edition No. 119. Updated on 06 September 2021.
Further information: UNCTAD capacity building programmes for National Trade Facilitation Committees or
Contact the author: Alexandre Larouche-Maltais | Economic Affairs Officer, UNCTAD Trade Facilitation Section | [email protected]
