The Trade Facilitation Agreement: A New Hope for the World Trade Organization

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The Trade Facilitation Agreement: A New Hope for theWorld Trade Organization

ANTONIA ELIASON

World Trade Review / FirstView Article / May 2015, pp 1 - 28DOI: 10.1017/S1474745615000191, Published online: 04 May 2015

Link to this article: http://journals.cambridge.org/abstract_S1474745615000191

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The Trade Facilitation Agreement: A NewHope for the World Trade Organization

ANTONIA EL IASON*

Assistant Professor, University of Mississippi School of Law

Abstract: The new WTO Trade Facilitation Agreement (TFA) is a significant stepforward for the international trading regime, representing new hope for therelevance of the WTO.The TFA is the first multilateral agreement since the creation of the WTO in

1995 and includes novel measures to help developing countries build capacity,while also taking into consideration regulatory concerns of WTO membersthrough the application of the general GATT exceptions to the new agreement.While the TFA may appear narrow in scope, with regards to goods it is arguablythe broadest WTO Agreement besides the GATT, since all goods that crossnational borders find themselves subject to trade facilitation measures. If the TFAis properly interpreted, the combination of capacity-building measures, a focus ontechnological improvements and the judicious invocation of Article XX couldresult in a win-win situation wherein routine positive trade is streamlined,reducing time required to cross borders, while negative trade is more easilycontrolled and regulated at the border.Despite regulatory questions concerning implementation, it is likely that

the TFA will reduce the cost of trading across borders, while improving tradefor developing countries and allowing WTO members to better controltrade flows, through a combination of procedural streamlining and regulatorydiscretion.

1. Introduction

On 7 December 2013 at the Bali Ministerial, the 159 WTOMembers approved theTrade Facilitation Agreement (TFA), the first new WTO multilateral agreementsince the establishment of the WTO in 1995.1 After 12 years of largely unsuccessfulnegotiations, the Doha Round appeared to have finally achieved some tangible,albeit limited, success. Although India subsequently vetoed the TFA due to

*Email: [email protected] The final text of the Trade Facilitation Agreement is available at http://www.wto.org/english/

tratop_e/tradfa_e/tradfa_e.htm.

World Trade Review, Page 1 of 28© Antonia Eliason doi:10.1017/S1474745615000191

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concerns regarding public stockholding for food security purposes unrelated to theagreement, placing the multilateral status of the agreement in jeopardy, this tem-porary delay was resolved when the US agreed to provide India with assuranceson the effectiveness of the peace clause in agricultural trade.2 Hong Kongbecame the first Member to ratify the TFA on 12 December 2014.3 The USratified on 23 January 2015.4 The TFA will enter into force once two-thirds ofthe WTO Members have ratified the agreement domestically.

The TFA is a major accomplishment for the international trading communityand a significant milestone for the WTO, both as a blueprint for further inter-national action and as a multilateral agreement. The TFA stands to regulate anarea of trade that until now has largely been ignored. While the TFA mayappear narrow in scope, in some ways it is the broadest WTO agreement besidesthe General Agreement on Tariffs and Trade (GATT), with every internationallytraded good subject to trade facilitation measures. The TFA is rooted in theGATT’s provisions and exceptions and forged through compromise between devel-oping and developed nations. It represents a new hope for the relevance of theWTO, particularly in light of the previous failures of the Doha Round and theincreased regionalization of international trade.

This article offers a first look at the new TFA, from the agreement’s origins to itsstructure and potential jurisprudential impact. In order to understand what theTFA hopes to accomplish, how it is likely to be interpreted, and what its effectwill be in practice, we must turn to how it has been drafted, its role within thelarger umbrella of WTO agreements, and where it might fit jurisprudentially.Despite some potential pitfalls, this article argues that the TFA offers the WTO ashot at renewed relevance and could be the most significant step forward for themultilateral trading regime since the establishment of the WTO. The unique devel-opment measures together with the application of the GATT exceptions to theagreement will be particularly important in determining the impact of the TFA.

2. Trade facilitation and economic efficiency

Economists have estimated the cost of cross-border trading at more than $2 trillionper year, due largely to duplicative, unnecessary customs procedures, customs and

2Kazmin, ‘Modi’s Move to Thwart WTO Deal Causes Confusion’, Financial Times (1 August 2014),http://www.ft.com/intl/cms/s/0/c67cfc5a-197f-11e4-9745-00144feabdc0.html#axzz3IhKrLl1l; ‘India andthe US Reach WTO Breakthrough over Food’, BBC (13 November 2014), http://www.bbc.com/news/business-30033130.

3 ‘Hong Kong, China First to RatifyWTO’s Trade Facilitation Agreement’ (10 December 2014), http://www.wto.org/english/news_e/news14_e/fac_10dec14_e.htm.

4 ‘United States Takes Final Step TowardWTO Trade Facilitation Agreement’, Press Release, Office ofthe United States Trade Representative (23 January 2015), https://ustr.gov/about-us/policy-offices/press-office/press-releases.

2 A N T O N I A E L I A S O N

http://www.ft.com/intl/cms/s/0/c67cfc5a-197f-11e4-9745-00144feabdc0.html%23axzz3IhKrLl1l

http://www.ft.com/intl/cms/s/0/c67cfc5a-197f-11e4-9745-00144feabdc0.html%23axzz3IhKrLl1l

http://www.bbc.com/news/business-30033130



http://www.wto.org/english/news_e/news14_e/fac_10dec14_e.htm



https://ustr.gov/about-us/policy-offices/press-office/press-releases





border fees, and administrative requirements.5 The TFA could reduce this by up to$1 trillion by streamlining procedures and standardizing trade facilitation rulesacross borders, providing a significant boost to the global economy.6 The OECDhas estimated that the TFA is likely to reduce the cost of trading by up to 14.1%of total costs for low-income countries, 15.1% for lower middle-income countries,and 12.9% for upper-middle-income countries.7

Trade facilitation is aimed at reducing one of the ‘less visible barriers producedby inefficient administration and organization of the trade transaction process’ thatis increasingly a focus as other, more obvious barriers, such as tariffs, are graduallynegotiated away.8 Trade facilitation constitutes those policies that deal with theentry of goods into a country and with the transparency and provision of infor-mation relating to the entry of goods. The WTO has not provided a formaldefinition of trade facilitation, although the 1996 Singapore Ministerial Conferenceauthorized exploratory work ‘on the simplification of trade procedures in orderto assess the scope for WTO rules in this area’.9 Elsewhere, the WTO definedtrade facilitation as the ‘simplification and harmonization of international tradeprocedures, including activities, practices and formalities involved in collecting,presenting, communicating, and processing data required for the movement ofgoods in international trade’.10

The cost of a shipment is inversely proportional to the time required to completeit, which affects the volume of trade that may take place.11 Every day a product isdelayed from leaving the factory before being shipped is equivalent to a reduction intrade of more than 1%.12 To give an idea of the divergent time frames in play, ittakes 116 days for a container to move from a factory in the Central AfricanRepublic onto the ship at the port (including all of the customs, administrative,and port requirements), while it only takes five days from Copenhagen.13 Thefact that the Central African Republic is landlocked cannot alone explain the stag-gering discrepancy in time required.

5 Pascal Lamy, Former Director General of theWTO, Speech to the Chittagong Chamber of Commerce(1 February 2013), http://www.wto.org/english/news_e/sppl_e/sppl265_e.htm.

6 Ibid.7 ‘TheWTOTrade Facilitation Agreement – Potential Impact on Trade Costs’, OECD, February 2014,

http://www.oecd.org/trade/facilitation/The%20WTO%20Trade%20Facilitation%20Agreement%20%E2%80%93%20Potential%20Impact%20on%20Trade%20Costs.pdf.

8 Yukyun ‘Harry’ Shin, ‘New Round and Trade Facilitation: Proposing a Tentative Draft Agreementon Trade Facilitation Measures’, 35 Journal of World Trade (2001) 229, at 229.

9World Trade Organization, ‘Singapore Ministerial Declaration of 18 December 1996’, WT/MIN(96)/DEC/1, I.L.M. 8 (1996).

10 A. Grainger, ‘Trade Facilitation: A Conceptual Review’, 45 Journal of World Trade (2011) 39, at41 (citing a WTO training note posted to its website).

11 S. Creskoff, ‘Trade Facilitation: An Often Overlooked Engine of Trade Expansion’, 3Global Tradeand Customs Journal (2008) 1, at 4.

12 S. Djankov, C. Freund, and C. S. Pham, ‘Trading on Time’, 92 The Review of Economics andStatistics (2010) 166, at 166.

13 Ibid. 167.

The Trade Facilitation Agreement 3

http://www.wto.org/english/news_e/sppl_e/sppl265_e.htm

http://www.wto.org/english/news_e/sppl_e/sppl265_e.htm

http://www.oecd.org/trade/facilitation/The%20WTO%20Trade%20Facilitation%20Agreement%20%E2%80%93%20Potential%20Impact%20on%20Trade%20Costs.pdf





It is with this incremental but significant economic impact in mind that econom-ists have focused their attention on reducing these types of barriers and improvingtrade efficiency. Among the more useful indicators are those that pertain directly tothe points at which trade facilitation costs arise: border elements, such as portefficiency and customs environment, and ‘inside the border’ elements such as regu-latory environment and e-business usage.14 Some of the factors to be consideredinclude transparency and corruption, as well as hidden import barriers.15

Greater engagement with e-commerce and general improvements in domestic infra-structures relating to internet access have been shown to significantly reducetrading costs.16 Another important area for improvement is port efficiency,where small gains in efficiency can result in significant reductions in cost. In allof these areas, improvements in technology can offer significant reductions incost and improvements in efficiency. Trade facilitation is critical to maintaininginternational supply chains, which are key to manufacturing and other commercialprocesses.17 In supply chain situations, there is generally fairly consistent demandfor the goods being shipped. The larger the volume of trade, the more efficient ittends to become.

The TFA directly addresses some of the concerns identified by economists andtraders, such as improving transparency, encouraging the use of internet technol-ogies to handle customs applications, reducing institutional limitations, andimproving access to information. Until the TFA has been in effect for a fewyears, however, it will be impossible to measure quantifiable improvements in econ-omic efficiency across the global trading system as a result of the agreement.Determining the legal effect of the TFA as a regulatory instrument, however,may, to some extent, be extrapolated from the scope and structure of theagreement.

3. The origins and mandate of the Trade Facilitation Agreement

3.1 The origins of the Trade Facilitation Agreement

The TFA may be the newest trade agreement in the WTO’s arsenal, but the originsof the agreement considerably precede even the existence of the GATT. Althoughtrade facilitation may appear to be a relatively new concept, the League ofNations’ 1921 Convention and Statute on Freedom of Transit (which is still inforce), and the 1923 International Convention Relating to the Simplification of

14 J. S. Wilson, C. L. Mann, and T. Otsuki, ‘Trade Facilitation and Economic Development:Measuring the Impact’, World Bank Policy Research Working Paper Series, Working Paper No. 2988,2003, at 3–4. Wilson et al. find these indicators more useful than single parameter trade facilitation indi-cators to measure trade facilitation. Other economic studies have also focused on these types of indicators.

15 Ibid. at 8.16 Ibid. at 13.17 Creskoff, ‘Trade Facilitation’, supra note 11, at 8.




Customs Formalities were the first international agreements relating to what wethink of today as trade facilitation.18 Covering many of the same issues as theTFA, these two agreements set the precedent for future discussions concerningtrade facilitation-linked issues.

With coverage including everything from import and export restrictions tothe minimization of requirements for certificates of origin, the InternationalConvention Relating to the Simplification of Customs Formalities seems strikinglymodern, and addresses many of the issues covered by the TFA. Article X of theGATT, which forms part of the mandate of the TFA, for instance, was partlybased on Articles 4 and 6 of the convention.19 Similarly, the Convention andStatute on Freedom of Transit foreshadows Article V of the GATT, with Article1 of the Statute, for instance, being repeated almost verbatim in Article V:1 ofthe GATT.20

The area of customs simplification has been of considerable importance to theworld of international trade, with customs practices evolving in light of changingtechnologies and advancements in transportation and communication. TheWorld Customs Organization (WCO), established in 1953 as a result of an exam-ination of customs issues raised by the GATT, adopted the InternationalConvention on the Simplification and Harmonization of Customs Procedures(the Kyoto Convention) in 1974, which was subsequently amended in 2006.21

The Kyoto Convention covers a range of customs matters, including simplificationof documentation, assessment of duties and taxes, and appeals mechanisms incustoms matters, and provides a number of specific guidelines to aid countries inreducing barriers to trade due to customs hurdles.

The WCO has played a crucial role in the development of the TFA, supplement-ing the Negotiating Group on Trade Facilitation’s work. Throughout the nego-tiations, the WCO was actively involved, providing comments, clarifications, andself-assessment checklists for the TFA negotiation process.22 The WCO welcomedthe TFA with its Dublin Resolution, which recognized the importance of the TFA,and expressed commitment of theWCO to the efficient implementation of the TFA,with a pledge to engage immediately with the WTO in facilitating the governanceand implementation of the agreement.23 Like the World Intellectual Property

18 Convention and Statute on Freedom of Transit, 20 April 1921, 7 L.N.T.S. 11, InternationalConvention Relating to the Simplification of Customs Formalities, 3 November 1923, 30 L.N.T.S. 371,Articles 3, 4, and 11.

19 Article X of GATT 1994 – Scope and Application, TN/TF/W/4, 12 January 2005, 2.20 Convention and Statute on Freedom of Transit, art. 1, 20 April 1921, 7 L.N.T.S. 11.21 International Convention on the Simplification and Harmonization of Customs Procedures, 18May

1973, O.J. L 100, 21/04/1975, 1 (amended 2006).22Negotiating Group on Trade Facilitation, Communication from the World Customs Organization,

9 February 2005, TN/TF/W/16.23 Resolution of the Policy Commission of the World Customs Organization on the Conclusion of an

Agreement on Trade Facilitation by the World Trade Organization, 11 December 2013.




Organization (WIPO) in relation to the Agreement on Trade-Related Aspects ofIntellectual Property Rights (TRIPS), the WCO will serve to provide technicalassistance in relation to the implementation of the TFA, and its conventions willcontinue to apply to matters relating to trade facilitation. This close relationshipbetween the WCO and the TFA should be beneficial for the successful implemen-tation of the TFA, allowing Members as well as the WTO to obtain guidance onspecific measures and policies relating to trade facilitation.

From its historical roots in the treaties of the League of Nations to its moremodern cousin in the form of the Kyoto Convention, the TFA is built on historicallyagreed principles of trade facilitation, and represents a crystallization of practiceswith a view to improvement. The TFA has also drawn from the many nationaltrade facilitation initiatives as well as the work of the United Nations Centre forTrade Facilitation and Electronic Business. The TFA is not a radically new agree-ment – concern with customs and border issues may be one of the oldest negotiatedareas of international trade – but it represents an understanding of modern prac-tices and areas in which improvement in efficiency and transparency are needed.

3.2 The mandate of the Trade Facilitation Agreement: Articles V, VIII, andX of the GATT

3.2.1 Articles V, VIII and X and the relationship between the GATT and WTOspecialized agreements

While the first mention of trade facilitation in the WTO came in the SingaporeMinisterial Declaration of 1996,24 the authorization for the TFA stems fromAnnex D of the Doha Round Working Programme, from August 2004. This estab-lished a mandate to develop a trade facilitation agreement with a view of clarifyingand improving relevant aspects of Articles V, VIII, and X of the GATT (V relatingto freedom of transit, VIII to fees and formalities connected with importationand exportation, and X relating to publication and administration of traderegulations).25

The use of specialized WTO agreements to clarify GATT articles is central to thefunctioning of the WTO and not limited to the TFA. Other WTO Agreements thathave similarly expanded upon underlying GATT articles include the SafeguardsAgreement, the Subsidies and Countervailing Measures (SCM) Agreement, theAnti-Dumping Agreement, and the Trade Related Investment Measures (TRIMS)Agreement. Of these agreements, the Safeguards Agreement, with its stated goalof ‘clarifying and reinforcing the disciplines of GATT 1994, and specifically

24World Trade Organization, SingaporeMinisterial Declaration of 18 December 1996,WT/MIN(96)/DEC, 1, 8 (1996). The declaration stated, regarding trade facilitation: ‘We further agree to … direct theCouncil for Trade in Goods to undertake exploratory and analytical work, drawing on the work ofother relevant international organizations, on the simplification of trade procedures in order to assessthe scope for WTO rules in this area.’

25 Annex D of the Doha Round Working Programme.




those of Article XIX’ offers the clearest precedent for the TFA.26 The Anti-Dumping Agreement and SCM Agreement also provide context for the TFA.How WTO jurisprudence has interpreted the relationship of these agreements tothe GATT can provide insight into the relationship between the TFA and theGATT and help explain how the TFA may be interpreted in conjunction withArticles V, VIII, and X of the GATT.

Article I of the Safeguards Agreement provides limitations on the agreement’sscope, as it provides only for the establishment of ‘rules for the application of safe-guard measures which shall be understood to mean those measures provided for inArticle XIX of GATT 1994’.27 Similarly, the Anti-Dumping Agreement states thatits provisions shall ‘govern the application of Article VI of GATT 1994 in so far asaction is taken under anti-dumping legislation or regulations’.28 The SCMAgreement relates back to Article XVI of the GATT concerning subsidies andArticle VI on countervailing measures, and in its footnotes provides for certainterms to be interpreted in the same way as in Article XVI.29 The TFA’s goal, onthe other hand, is the clarification and improvement of relevant aspects ofArticles V, VIII, and X of the GATT ‘with a view to further expediting the move-ment, release and clearance of goods, including goods in transit’.30 This is a moreexpansive mandate, and suggests that the scope of the TFA is meant to extendfurther beyond the prescriptions of the underlying GATT articles than otherWTO Agreements with similar GATT-related mandates. In this way, the TFAmarks a change from other specialized agreements and may result in different jur-isprudential analyses. Jurisprudence that has arisen from disputes under the otheragreements is still relevant, however, in comprehending how the WTO disputesettlement system views the relationship between multilateral non-GATT agree-ments and the GATT.

The earliest discussion of the relationship between a specialized agreement andgeneral GATT provisions in WTO jurisprudence was in Brazil–DesiccatedCoconut. In its 1997 opinion, the Appellate Body (AB) explained the relationshipbetween the specialized agreements and the GATT, noting that the WTOAgreement, unlike its GATT 1947 predecessor, is a single undertaking, with theannexes containing the multilateral agreements forming an integral part of theWTO Agreement.31 As noted in Annex 1A of the WTO Agreement, in the eventof a conflict between the GATT and another multilateral agreement, the

26 Agreement on Safeguards, preamble, 15 April 1994, O.J. L336, 23/12/1994, 184.27 Agreement on Safeguards, art. I, 15 April 1994, O.J. L336, 23/12/1994, 184.28 Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994

(Antidumping Agreement), art. 1, 15 April 1994, O.J. L336 23/12/1994, 103.29 Agreement on Subsidies and Countervailing Measures, footnote 13, 15 April 1994, 1869 U.N.T.S.

14, for example.30 TFA, preamble.31 Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut, 12, WT/DS22/AB/R (21

February 1997).




non-GATT agreement is to prevail.32 This does not mean, however, that the othermultilateral agreements supersede the GATT.33

In Argentina–Footwear, the AB found that the existence of a specialized agree-ment should not be taken to mean that the requirements of the underlyingGATT article are subsumed by the specialized agreement; rather, the underlyingarticle establishes certain prerequisites that are carried over into the more special-ized agreement.34 The underlying GATT article and the specialized agreement are‘an inseparable package of rights and disciplines which have to be considered inconjunction’.35 Any measure must, therefore, comply both with the underlyingGATT article and with the specialized agreement.36 Similarly, the panel in US–1916 Act (EC) emphasized the close link between Article VI of the GATT andthe Anti-Dumping Agreement,37 explaining, as was made clear in Brazil–Desiccated Coconut, that the WTO Agreement is a single treaty instrument.

In EC–Bananas III, the AB noted the cumulative application of WTO agree-ments, finding that unless explicitly stated, there is a presumption of internal coher-ence between the GATT and specialized agreements, befitting the WTO Agreementas single treaty instrument.38 In US–Upland Cotton, the AB emphasized that allprovisions of a treaty must be interpreted harmoniously, noting that the individualWTO agreements are part of a single treaty, the WTO Agreement.39

Since Article 31.2 of the Vienna Convention on the Law of Treaties (VCLT) pro-vides that interpretive context includes the preamble and annexes to a treaty, theagreements in Annex 1A of the Agreement Establishing the WTO are a part ofthe WTO Agreement as a whole.40 Inclusion in Annex 1A is necessary for an agree-ment to become an official part of the WTO single undertaking. The MinisterialDecision on the TFA indicates that a Protocol of Amendment will be drawn upto insert the agreement into Annex 1A of the WTO Agreement, so that it will bean integrated part of the single undertaking.41 The TFA contains a further state-ment cementing the relationship between the TFA and the GATT, noting that

32WTO Agreement, Annex 1A General interpretative note to Annex 1A.33Brazil–Desiccated Coconut, supra note 31, at 14.34 Appellate Body Report,Argentina – SafeguardMeasures on Imports of Footwear, WT/DS121/AB/R

(14 December 1999), para. 83.35 Ibid. at para. 77 (citing the panel report, para. 8.58, paraphrasing the panel report in Brazil–

Desiccated Coconut, para. 227).36 Ibid. at para. 84.37 Panel Report, United States – Anti-Dumping Act of 1916, WT/DS136/R (31 March 2000), para.

6.195.38 Appellate Body Report, European Communities – Regime for the Importation, Sale and

Distribution of Bananas, WT/DS27/AB/R (9 September 1997), para. 155–157.39 Appellate Body Report, United States – Subsidies on Upland Cotton, WT/DS267/AB/R (3 March

2005), para. 549.40United States–Anti-Dumping Act of 1916, supra note 37, para. 6.195.41World Trade Organization, Agreement on Trade Facilitation: Draft Ministerial Decision of 6

December 2013, WT/MIN(13)/W/8 (2013).




‘[n]otwithstanding the General interpretative note to Annex 1A … nothing in thisAgreement shall be construed as diminishing the obligations of Members under theGATT 1994’.42 The TFA’s provisions will therefore be interpreted in light ofArticles V, VIII, and X of the GATT. The relationship between specific provisionsin the TFA and their underlying articles will, however, need to be determined in thecontext of the how phrasing is used across the agreements.

Articles 31–33 of the VCLT provide the framework for the interpretation oftreaty texts in the WTO. While the AB has on multiple occasions found differencesin application between identical wording in different articles and agreements – thesuggestion being that each Article of the GATT should be read as a mini-statute43 –a turn of phrase that mirrors one elsewhere in the WTO Agreements, while notdispositive, is significant, since differences in interpretations of similar clausesacross agreements will usually be minor. It is, at the same time, important tokeep policy issues in mind. The Members that negotiated the TFA did not negotiatesolely amongst lawyers but also through policy-makers and economists whoseprimary goals were not necessarily a carefully crafted legal agreement, internallyconsistent with all other WTO instruments, but a functional agreement reflectingconsensus among parties with divergent interests. Nevertheless, the relationshipbetween Articles V, VIII, and X and the TFA will be paramount in determininghow the TFA will be interpreted by WTO panels and the AB.

3.2.2 Articles V, VIII, and X in WTO jurisprudence

Articles V and VIII have not featured heavily in WTO jurisprudence, in partbecause their scope was not clearly defined and they were not linked to anyother WTO agreements. Article X has featured more prominently, but not primar-ily in relation to trade facilitation issues. With the agreement of the TFA, there islikely to be more jurisprudence relating to these articles, as bringing a claimunder the TFA will likely also involve a claim under the relevant GATT articles.

Article V addresses the freedom of transit and contains two main obligation: notto hinder traffic in transit by imposing unnecessary delays or restrictions or byimposing unreasonable charges, and to accord MFN treatment to all transitinggoods of all Members.44 Article VIII addresses fees and formalities connectedwith importation and exportation, except for import and export duties and internaltaxes within the scope of Article III of the GATT.45 Article X addresses publication

42 TFA, Article 24.6.43 See, e.g., Appellate Body Report, Japan – Taxes on Alcoholic Beverages, 21, WT/DS8/AB/R (4

October 1996). The AB here described the concept of ‘likeness’ as ‘a relative one that evokes the imageof an accordion. The accordion of “likeness” stretches and squeezes in different places as different pro-visions of the WTO Agreement are applied’.

44 Article V of GATT 1994 – Scope and Application, Note by the Secretariat, TN/TF/W/2, 12 January2005.

45 Article VIII of GATT 1994 – Scope and Application, Note by the Secretariat, TN/TF/W/3, 12January 2005.




and administration of trade regulations, and requires a party to publish its trade-related laws in a prompt and accessible manner, abstain from enforcing measuresof general application prior to their publication, and administer these laws in auniform, impartial, and reasonable manner, including maintaining tribunals orprocedures for prompt review and correction of administrative action relating tocustoms matters.46

To date, Article V has only featured prominently in one WTO case, the 2010Panel decision in Colombia–Ports of Entry, which related to the freedom oftransit and most favored nation treatment for products that have been intransit.47 In Colombia–Ports of Entry, the panel found that Colombia’s distinc-tions based on the place of origin or departure of textiles, apparel, and footwearwere in violation of the second sentence of Article V:2, which ‘extends MFN obli-gations to goods based on the circumstances of their transit’.48 Panama’s claimsunder Article V:2, first sentence, concerning the extension of unrestricted accessvia the most convenient route for the passage of goods, whether or not the goodshave been trans-shipped or changed modes of transport,49 and V:6, regardingthe application of MFN obligations to countries whose territory is the ultimate des-tination of the good in transit, not just those through which the good passes,50 werealso upheld. Given the extent to which the complaint dealt with details relating togoods in transit, which are more specifically covered by the TFA, Panama’s claimswould likely have been brought under the TFA as well as under Article V, had theTFA been in existence.

Two WTO cases have featured Article VIII: the Panel decision in China–RawMaterials, the discussion of which was found by the AB to be outside of its termsof reference,51 and the panel and AB decisions in Argentina–Textiles. InArgentina–Textiles, the AB upheld a finding by the panel that an improper advalorem tax on imports, ostensibly to raise funds for financing customs activities,could not be made permissible by including it in a separate schedule, since theGATT rules would still apply to the schedule.52 The AB found that there isnothing in the WTO agreements that would take precedence over Article VIII obli-gations, which would include any arguments on the part of Argentina relating to

46 Article X of GATT 1994 – Scope and Application, Note by the Secretariat, TN/TF/W/4, 12 January2005.

47 Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry, WT/DS366/R (27April 2009).

48 Ibid. at paras. 7.427–7.430.49 Ibid. at para. 7.401.50 Ibid. at paras. 7.465–7.467.51 Appellate Body Report, China – Measures Related to the Exportation of Various Raw Materials,

WT/DS394/AB/R, WT/DS394/AB/R, WT/DS398/AB/R (30 January 2012), para. 235.52 Panel Report, Argentina – Measure Affecting Imports of Footwear, Textiles, Apparel, and Other

Items, WT/DS56/R (25 November 1997), paras. 6.75, 6.77, 6.79.




the legal status of a schedule.53 One GATT decision, the 1987 US–CustomsUser Fee panel report, addressed Article VIII in considerable detail, analyzingits negotiating history as well as the applicability of its provisions.54 Asthis was a GATT panel, however, the holding does not have the same jurispruden-tial value.

Of the three articles, Article X has featured in the most disputes, generally in con-nection with non-trade facilitation-related issues. The AB clarified the scope ofArticle X in EC–Poultry, noting that it ‘relates to the publication and adminis-tration of “law, regulations, judicial decisions and administrative rulings ofgeneral application”, rather than to the substantive content of such measures’.55

The 2006 EC–Selected Customs Matters dispute interpreted Article X:3 in relationto measures pertaining to the classification of products for customs purposes andthe lack of appeals procedures.56 As with Colombia–Ports of Entry, it is likely,given its subject matter, that were this dispute brought subsequent to the implemen-tation of the TFA, the US, as complainant, would bring claims under both the TFAand Article X of the GATT. How this dispute might be brought under the TFA willbe examined in the next section as a means of illustrating how the underlyingGATT provisions and the new TFA may interlink.

4. The structure of the Trade Facilitation Agreement and its jurisprudential impact

4.1 Structural overview

The obligations in the TFA fall into three categories: (1) obligations that are fullymandatory upon entry into force of the agreement, (2) obligations that willbecome mandatory when or if a further condition or commitment occurs, and(3) obligations that are inherently aspirational, or of a soft-law character.Discussion of the last category of obligations is beyond the scope of this article,but closer examination of these is warranted, as the extent to which the aspirationalprovisions are implemented by key WTO Members will shape how effective theTFA will be in not merely reducing limited barriers to trade but in determiningthe development of future trade facilitation measures.

The TFA is structured in three sections: Section I contains the general provisions,Section II provides rules on special and differential treatment (S&DT), and Section

53Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel,and Other Items, para. 64–74, WT/DS56/AB/R (27 March 1998).

54United States Customs User Fee, L/6264 – 35S/245, 25 November 1987.55 Appellate Body Decision, European Communities – Measures Affecting the Importation of Certain

Poultry Products, WT/DS69/AB/R (13 July 1998), para. 115.56 Panel Report, European Communities – Selected Customs Matters, WT/DS315/R (16 June 2006);

Appellate Body Report, European Communites – Selected Customs Matters, WT/DS315/AB/R (13November 2006).




III sets out institutional arrangements and final provisions. Section I obligations fallmainly into the categories of fully mandatory obligations and aspirational, orvoluntary obligations, with Section II giving rise to conditional obligations.Articles 1 (publication and availability of information), 2 (opportunity tocomment, information before entry into force and consultations), 3 (advancerulings), 4 (procedures for appeal or review) and 5 (other measures to enhanceimpartiality, non-discrimination and transparency) of Section I all originate fromthe provisions of Article X of the GATT, since they all concern the publicationand administration of trade regulations. Article 5, furthermore, refers to the notifi-cation or guidance for protecting human, animal, or plant life or health within itsterritory, as well as to sanitary and phytosanitary conditions, which directly relatesto measures falling under the Sanitary and Phytosanitary (SPS) Agreement.57

Articles 6 (disciplines on fees and charges imposed on or in connection with impor-tation and exportation and penalties), 7 (release and clearance of goods), 8 (borderagency cooperation), 9 (movement of goods intended for import under customscontrol) and 10 (formalities connected with importation and exportation andtransit) are clarifications of Article VIII of the GATT, dealing as they do withmatters related to fees and formalities connected with importation and exportation.Finally, Article 11 (freedom of transit) provides clarification of Article V ofthe GATT.

Article 12 provides further guidance on the operation of the TFA, coveringcustoms cooperation, including measures promoting compliance and cooperationand exchange and provision of information.58

The TFA represents progress in the area of transparency for the WTO, which inthe past has come under criticism in that area. As the negotiations were ongoing,each draft of the TFA was posted onto the WTO website, allowing interestedparties to follow the negotiations and understand what the major concerns wereof the various country blocs as the negotiations progressed.

From its draft form to its final form, the TFA opted, in a number of places, for thestronger wording of the suggestions in the draft, choosing ‘shall’ rather than ‘may’or equivalent language in laying out obligations rather than suggestions for WTOMembers.59 The final version of Article 5.1 reflects an even greater degree ofstrengthening over earlier drafts. Article 5.1(a), regarding adopting a system ofnotifications for enhancing the level of controls at the border in respect of foods,beverages, and feedstuffs covered under the notification for protecting human oranimal life or health, previously read ‘[a] Member may issue the notification …only after it is established that such goods … have not fulfilled the prescribed

57 TFA, Article 5.1, 5.1(b).58 TFA, Article 13.1 and 13.2.59 See, e.g., TFA, Article 1.2.1 compared to Draft TFA v.17, Article 1.2.1; TFA, Article 3.7 compared

to Draft TFA v.17, Section I, Article 3.5.




Sanitary or Phytosanitary regulations in at least one recent case’.60 The finalversion provides much stronger SPS protection, stating that ‘the Member may,as appropriate, issue the notification or guidance based on risk’.61 This leavesthe broader assessment of what constitutes sufficient risk in the hands of theWTO Members.

One of the main goals of the TFA is to improve information sharing and tostreamline technologies used in trade facilitation procedures. Many of thecurrent barriers to trade that trade facilitation measures are meant to reduceinvolve redundant requirements for information and differences in technologicallevels between WTO Members. The text of the agreement contains several pro-visions directly relating to technology and others relating to information sharingmore broadly. In the area of technology, Article 1.2 requires making informationavailable through the internet, including descriptions of importation, exportation,and transit procedures and the required forms for importation, exportation, ortransit. Article 7.1 addresses pre-arrival processing requirements, requiringMembers to, ‘as appropriate’ provide for advance submission of documents in elec-tronic format for pre-arrival processing. Article 7.2 states that Members shall ‘tothe extent practicable, adopt or maintain procedures allowing the option of elec-tronic payment for duties, taxes, fees and charges collected by customs incurredupon importation and exportation’. This focus on electronic media indicates recog-nition on the part of the negotiators that databases and online submissions areeffective tools in increasing efficiency.

In the broader category of information sharing, Article 1 covers publication andavailability of information, with Article 1.1 requiring Members to promptlypublish a range of information in a ‘non-discriminatory and easily accessiblemanner in order to enable governments, traders and other interested parties tobecome acquainted with them’. Article 7.7 provides for the creation of a categoryof ‘authorized operators’ who meet certain criteria, and for whom alternate, morestreamlined procedures will be applied. Trade facilitation measures imposedaccording to this subsection are to include at a minimum any three of a list ofseven accommodations, which include low documentary and data requirementsand a single customs declaration for all imports and exports in a given period.This serves to provide additional trade facilitation support to qualified traders.Article 8 requires border control agencies of WTO Members to cooperate witheach other and to coordinate activities in order to facilitate trade. Finally, Article10 instructs the Trade Facilitation Committee to develop procedures for sharingrelevant information relating to formalities and documentation requirements,while calling on Members to use information technology to support the single

60Draft TFA v.17, Section I, Article 5.1(a).61 TFA, Article 5.1(a).




window for document and data requirement submission.62 All these provisionsserve the fundamental goal of streamlining border measures and enhancing infor-mation sharing and technological cooperation between Member states, which areat the core of the TFA’s aims of improving economic efficiency.

The TFA provides a clarification of the substantive detail relating to Articles V,VIII, and Xwithout expanding the scope of the GATT Articles. The additional obli-gations that arise from the TFA are mostly administrative in nature, rather thansubstantive obligations for national regulatory reform, although the soft-law pro-visions may play a role in such future reform. The TFA is a result of the recognitionof the need to cut the costs of cross-border trading, resulting in the creation of a setof rules that will act as guidelines for standardized national trade facilitationmeasures.

4.2 EC–Selected Customs Matters: a Trade Facilitation Agreement analysis

Having seen how the TFA was shaped and structured, how, then, might thesevarious provisions apply? It is useful to return to the 2006 EC–Selected CustomsMatters dispute mentioned above and briefly attempt to sketch out how theclaims might have differed in a post-TFA world. In EC–Customs, the US broughtclaims under Articles X:3(a) and X:3(b) against the EC concerning its non-uniform administration of laws and regulations and its failure to institute tribunalsfor the purpose of reviewing administrative action relating to customs matters.63

Articles X:3(a) and X:3(b) provide as follows:

3. (a) Each contracting party shall administer in a uniform, impartial and reason-able manner all its laws, regulations, decisions and rulings of the kinddescribed in paragraph 1 of this Article.

(b) Each contracting party shall maintain, or institute as soon as practicable,judicial, arbitral or administrative tribunals or procedures for thepurpose, inter alia, of the prompt review and correction of administrativeaction relating to customs matters. Such tribunals or procedures shall beindependent of the agencies entrusted with administrative enforcementand their decisions shall be implemented by, and shall govern the practiceof, such agencies unless an appeal is lodged with a court or tribunal ofsuperior jurisdiction within the time prescribed for appeals to be lodgedby importers.

Article X:1 provides that ‘laws, regulations, judicial decisions and administrativerulings’ pertaining to the classification or valuation of products for customs pur-poses be promptly published in such a way as to allow enable governments and

62Article 10.1.2 and 10.4 of the Trade Facilitation Agreement.63EC–Selected Customs Matters, Request for Consultations by the United States, WT/DS315/1, G/L/

694, 27 September 2004.




private parties to familiarize themselves with them.64 Article X:3 therefore requiresthat WTO Members provide a uniform interpretation of these laws and regu-lations, as well as offering tribunals or procedures for reviewing administrativeactions taken in relation to customs issues.

The US challenge in EC–Customs was to ‘the design and structure of the ECsystem of customs administration “as such’’ and its lack of uniform adminis-tration.65 In particular, the US claimed that there was non-uniform administrationin relation to tariff classifications, customs valuation, customs procedures, andArticle 221 of the Community Customs Code.66

Article 243(1) of the Community Customs Code provided for an appeal mechan-ism whereby the appeal would be lodged with the EU member state where the rel-evant decision was made.67 The specific implementation of the appeals procedurewas up to the individual Member state to determine, thus being a part of nationallaw rather than a part of the broader EU regulatory framework.68 In someMemberstates, administerative reviews were voluntary or even absent, whereas other stateshad a mandatory administrative review requirement.69

Applying the new TFA to the facts in EC–Customs, Article 4 of the TFA sets outrules pertaining to the right to appeal or review an administrative decision. Article4.1.1 states that:

Each Member shall provide that any person to whom customs issues an admin-istrative decision has the right, within its territory to:

(a) an administrative appeal to or review by an administrative authority higherthan or independent of the official or office that issued the decision;

and/or

(b) a judicial appeal or review of the decision.

While Article X of the GATT also provides for administrative review in Article X:3,it is less clear as to who may have recourse to such administrative review. Article 4of the TFA clarifies that any person to whom an administrative decision has beenissued has a right to an administrative review. Under this rule, it seems clear that theUS would be able to bring a claim of violation of Article 4.1.1 of the TFA inaddition to the broader Article X:3(b) claim, since certain EU Member states hadno administrative review procedures in place, and in some the reviews were atthe discretion of the agency handling them. The US claim that the EU violated

64General Agreement on Tariffs and Trade, Art. X, 15 April 1994, 1867 U.N.T.S. 187, para. 1.65EC–Selected Customs Matters Panel, supra note 56 at para. 7.51.66WorldTradeLaw.net Dispute Settlement Commentary, Panel Report, European Communities–

Selected Customs Matters, 10.67EC–Selected Customs Matters Panel, supra note 56 at para. 2.69–70.68 Ibid. at para. 2.70.69 Ibid. at para. 2.72.




the requirement that they administer the regulations in a uniform, impartial andreasonable manner would remain an Article X:3(a) claim, as this is a broaderclaim and one that would logically fall to the underlying GATT articles ratherthan the more specific TFA.

The TFA is designed to clarify Articles V, VIII, and X of the GATT; to work side-by-side with them in providing distinct requirements that eliminate some of thequestions of interpretation present in the underlying GATT articles. While in thecase of EC–Customs, it is unlikely that the application of the TFA would resultin a different conclusion, the existence of the TFA would have made the analyticaltask of the panel more straight-forward, thus hopefully accelerating the disputesettlement process and clarifying the obligations of WTO Members with respectto customs issues. In the quest for regulatory clarity, this would be a great benefit.

5. The Trade Facilitation Agreement: a development perspective

5.1 Developing country concerns

While trade facilitation may seem innocuous, with limited goals that benefit mostcountries by reducing the cost of trading, from a development perspective itraises issues relating to infrastructure, capacity building, and whether developingcountries should prioritize trade facilitation over other development concerns.70

It is not clear that a new agreement on trade facilitation will harm developingcountries. A trade facilitation agreement could provide a global economic boostof one trillion dollars and most countries are in agreement that an agreement ontrade facilitation is desirable.71 Some have argued, however, that the cost ofmaking necessary changes to the customs regimes of developing countries will beprohibitively expensive, and that they have not been afforded sufficient protectionunder the S&DT provisions in the draft TFA.72

The negotiations initially focused more on simplifying, harmonizing, and stan-dardizing border and customs procedures than on providing methods for develop-ing countries to increase and facilitate exports. The concern from developingcountries is that expansion of exports requires a different type of trade facilitation,and that the result of this agreement would be an increase in imports from devel-oped countries without corresponding higher exports from developing countries.73

India, in particular, vocally pushed for changes to the draft agreement, citing the

70 See ‘WTO Negotiations on Trade Facilitation: Development Perspectives’, South Centre Report,15 November 2013, http://www.southcentre.int/wp-content/uploads/2013/11/Trade-Report-on-Trade-Facilitation_EN.pdf).

71N. Basu, ‘India Demands Changes in WTO Trade Facilitation Agreement’, Business Standard (21September 2013), http://www.business-standard.com/article/economy-policy/india-demands-changes-in-wto-trade-facilitation-agreement-113091800886_1.html.

72 South Centre Report, supra note 70, at 2.73 Ibid. at 2.


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substantial cost burdens placed on developing countries. Its claims included a callto make it compulsory for customs authorities globally to allow exporters to takeback a portion of rejected consignments at the borders before nullifying the entireshipment.74 The OECD, on the other hand, stated that a trade facilitation dealwould particularly benefit developing countries in places like Africa where longborder delays and poor infrastructure have been a major issue in increasingregional trade.75

Although critics who focus on developing country issues are right to be con-cerned with the effect of the TFA on developing countries, and with the successof the Bali Ministerial in addressing development concerns generally, the TFA isarguably a bigger success for furthering the development agenda than the morewidely touted Decision on Public Stockholding for Food Security Purposes,whose limited timeframe became the key sticking point blocking India’s acceptanceof the TFA.76 India’s temporary veto of the TFA, while a political move aimed atrenegotiating food security issues rather than a reflection of problems with the TFAitself, seemed particularly out of place given the TFA’s strong focus on developingcountries and their needs.

5.2 Development measures in the Trade Facilitation Agreement

The TFA has addressed developing country concerns in considerable detail, usingnovel measures to empower developing countries in their implementation of TFAmeasures. Section II of the TFA contains the S&DT provisions. Over the variousdrafts, the TFA has evolved from only perfunctorily addressing the genuine con-cerns of developing countryMembers to recognizing the need to provide structuredand mandated support in relation to capacity building and implementation of tradefacilitation rules by means of conditional obligations which will only become man-datory when or if certain conditions are met.

While the development and trade facilitation debate was not fully resolved to thesatisfaction of all parties in the run-up to the Bali Ministerial, the final version of theTFA is far more cognizant of the necessity of providing assistance and support forcapacity building than earlier versions were. Specifically, the TFA now recognizesthe need for developing countries to receive support from developed countries inbuilding capacity necessary to implement certain provisions, and provides a mech-anism whereby developing countries may opt into obligations with respect to theseprovisions if and when they feel ready. Developed country Members, acting asdonors, agree to help developing country and least developed country (LDC)

74 Basu, ‘India Demands Changes in WTO Trade Facilitation Agreement’, supra note 71.75 S. Donnan, ‘WTO chief Roberto Azevedo warns on red tape at borders’, Financial Times

(12 November 2013), http://www.ft.com/intl/cms/s/0/e51deefc-4bc2-11e3-a02f-00144feabdc0.html#axzz3IhKrLl1l.

76World Trade Organization, Bali Ministerial Declaration of 7 December 2013, WT/MIN(13)/38,WT/L/913.


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Members by providing assistance and support for capacity building, including pro-motion of regional and sub-regional integration.77 With regards to LDCs, targetedassistance and support are to be provided by the donors.78 In addition, many of theamended provisions involve lengthening the time available to developing countriesand LDCs to implement various provisions relating to trade facilitation.

The TFA provides for three categories of provisions in relation to developing andLDCMembers: Category A, Category B, and Category C. TheMembers are to self-designate the provisions that fall under each of the categories.79 The difference incategories relates to the time the Member has to implement provisions consistentwith the TFA, with Category A provisions requiring the shortest time forimplementation and Category C requiring additional capacity building usingsupport to be provided by developed countries.80 In the last version of the draftnegotiating text, the time allowed for developing countries to notify theCommittee on Trade Facilitation on dates for implementation of provisions inCategories B and C were the same, and the precise amount of time available hadnot been agreed, with options presented for 90, 180, or 365 days.81 In the finalversion of the agreement, the amount of time available for a developing countryto notify the Committee concerning the definitive dates for implementation ofCategory B provisions was agreed as a full year.82 For Category C provisions,after one year of entry into force of the TFA, the developing country Membersmust inform the Committee regarding the capacity-building arrangementsentered into with the help of donor Members.83 Within 18 months of informingthe Committee (i.e. within two and a half years of the entry into force of theTFA), the donor Members and developing country Members must inform theCommittee of the definitive dates for implementation.84 With Category C pro-visions, therefore, it could be considerably more than two and a half years afterentry into force before the provisions would need to be implemented, affordingtime for developing countries to work with donor Members to build capacity. Asa result, the obligations in these provisions are conditional on the successfulcooperation between developing country Members and donor Members.

With regard to the application of the WTO’s procedural rules, the DisputeSettlement Understanding, to the settlement of disputes relating to the TFA, theTFA provides grace periods for developing and least developed countries. ForLDCs, an additional grace period of eight years after implementation of the TFAis provided in the final text, during which the provisions relating to consultation

77 TFA, Article 21.1, 21.3.78 TFA, Article 21.2.79 TFA, Article 14.80 Ibid.81 Draft TFA, version 17, Section II, 4.1(a), TN/TF/W/165/Rev.17.82 TFA, Article 16.1(b).83 TFA, Article 16.1(d).84 TFA, Article 16.1(e).




and nullification and impairment of benefits will not apply to the settlement of dis-putes against LDCs in relation to Categories B and C measures.85

Besides agreeing the time frames for implementation and providing a mechanismfor developed countries to provide capacity-building aid to developing countries,the final version of the TFA offers two significant high-level procedures foraiding developing and LDCs in implementing rules under the TFA. First, theTFA provides a protocol for the establishment of an Expert Group designed toexamine situations where developing country Members are unable to implementprovisions under Categories B and C.86 Such situations may arise where arequest for an extension of the implementation date has not been granted orwhere aMember self-assesses that it does not have the capacity to implement a pro-vision under Category A. In these cases, once theMember notifies the Committee ofits inability to implement the provision, an Expert Group consisting of highlyqualified trade facilitation and capacity-building experts is to be immediately estab-lished. In addition to this mechanism whereby developing countries can receivesupport relating to implementation issues, the TFA also provides for an annualdedicated session by the Committee to discuss any problems regarding implemen-tation in relation to capacity building.87

These two processes, together with the mechanism for providing capacity-build-ing aid, are specific to the TFA and not found in any otherWTO agreement. Both ofthese processes were added to the final version of the TFA and were not in previousdrafts. This is the result of significant negotiations with developing countryMembers regarding their logistical difficulties in relation to implementing tradefacilitation rules. Other WTO agreements may call for special support to be pro-vided to developing countries, but none as explicitly and with such detailed rulesas the TFA.88

One possible concern lies with the allocation of responsibility for failure toimplement a Category C measure in a timely fashion. While the TFA sets outrequirements for donor countries to provide information concerning their assist-ance in order to aid transparency,89 no mechanism exists to hold donor countriesaccountable for failure to assist the developing country Member. In the event of adispute concerning implementation of Category C measures, procedural issuesarising from the involvement of donor countries could foreseeably arise.

Despite a number of significant measures unique to the TFA that are meant toaddress developing country concerns, the question remains as to whether these

85 TFA, Article 20.3.86 TFA, Article 18.87 TFA, Article 21.4.88 In the SPS Agreement, for instance, Article 9 provides for technical assistance to be extended to

developing countries, but in aspirational terms, suggesting that importing members ‘shall consider’ provid-ing such technical assistance. Agreement on the Application of Sanitary and Phytosanitary Measures, 15April 1994, O.J. L336, 23/12/1994, 40.

89 TFA, Article 22.




improvements are sufficient, or if they are merely plasters to cover up the continu-ing concerns of developing countries regarding implementation problems relatingto capacity-building and infrastructural requirements. What their effect may beon the WTO more broadly also remains to be seen. If successful, the S&DTmeasures set out in the TFA may become a model for future WTO agreements.In any case, the inclusion of these measures in the TFA already represents a stepforward for the WTO and its relationship with developing countries, and marksa break from the business-as-usual model of S&DT previously embraced by theWTO and its Member states.

5.3 Dispute settlement concerns

Despite the potential benefits of the TFA’s S&DTmeasures to developing countries,the complexity of the S&DT provisions in the TFA may give rise to additional con-cerns relating to the dispute settlement process. By instituting three categories ofmeasures with different implementation dates and leaving the decision concerningthe timeframe for implementation up to the individual developing countryMember, the TFA will not apply uniformly across WTO Members. In previousagreements involving a delay for developing country Member implementation,the measures were to come into effect within a fixed time frame – five years inthe case of TRIPS measures.90 There was therefore predictability in bringing dis-putes based on claims related to these agreements. With the TFA, such claritywill not exist, and the WTO dispute settlement system will have to addressclaims brought against developing countries under the TFA on a case-by-casebasis, interpreting the TFA’s rules in each case in light of the status of the measuresin questions.

The TFA further explicitly provides for changes to the dispute settlement systemin relation to developing country Members and the implementation of trade facili-tation measures. In particular, the TFA provides for a grace period in the appli-cation of Article XXIII of the GATT, meaning that for a period of eight years inthe case of Categories B and C measures for LDCs, six years in the case ofCategory A measures for LDCs, and two years in the case of Category A measuresfor developing countries, no disputes can be brought against trade facilitationmeasures implemented by these countries.91 No other WTO agreement hasimplemented such exceptions, and the effect of these concessions on the disputesettlement system remains to be seen. The main issue that may arise is, as withthe delay in implementation period, the associated reduction in legal clarity and

90Agreement on Trade-Related Aspects of Intellectual Property Rights, 15 April 1994, MarrakeshAgreement Establishing the World Trade Organization, Annex 1C, The Legal Texts: The Results of theUruguay Round of Multilateral Trade Negotiations 320 (1999), 1869 U.N.T.S. 299, 33 I.L.M. 1197(1994), Article 65.

91 TFA, Article 20.




the difficulty in determining the viability of claims vis-à-vis developing countriesdue to the case-by-case nature of the applicability of dispute settlement rules.

This lack of uniformity could potentially affect the precedential value of paneland AB decisions. While panel and AB decisions do not de jure constitute a pre-cedent for future disputes, the AB has previously indicated that its findingsshould be followed by panels92 and that panel and AB decisions ‘create legitimateexpectations among WTO Members, and, therefore, should be taken into accountwhere they are relevant to any dispute’.93 With TFA disputes involving developingcountries subject to multiple interpretations depending on the implementationchoices of the Member, following previous decisions may prove to be moredifficult, requiring a close analysis of the previous dispute’s particular set of circum-stances. This could undermine the goal of the TFA to reduce administrative burdenson individual parties and improve efficiency, as it could lead to delays in adjudicat-ing disputes. This is arguably the most serious concern regarding the implemen-tation of the TFA, but with careful monitoring of trade facilitation measures andclear communication between Member states, most dispute settlement issuesshould be resolvable.

6. The applicability of GATT exceptions and exemptions

Article 24.7 of the TFA states that all GATT exceptions and exemptions shallapply. The TFA also clarifies that nothing in the agreement shall be construed asdiminishing the rights and obligations of Members under the TBT and the SPSAgreements, as well as under the GATT.94 While not an exception, some of thetechnical regulations subject to the TBT Agreement as well as some of the measuressubject to the SPS Agreement may impact trade activity at the border, particularlyin relation to importing biological materials.

In previous drafts of the agreement, only Articles XX and XXI of the GATTwere mentioned, and the inclusion of exceptions was still open to negotiation.Included almost as an afterthought, the exceptions provision would appear tohave significant jurisprudential implications for the TFA, broadening, as itdoes, the scope of the TFA by incorporating all exceptions from the GATT. Thefootnote to the exceptions and exemptions notes that the exemptions includeArticles V:7 and X:1 and the Ad note to Article VIII.95 The question forfuture interpretation of the TFA is what effect the application of the main GATTexceptions (Articles XX and XXI) will have on the interpretation of what is per-mitted under the TFA.

92 Appellate Body Report, US–Shrimp (Article 21.5 — Malaysia), para. 109.93 Japan–Alcoholic Beverages, supra note 43, at pp. 107–108.94 TFA, Article 24.6.95 TFA, Footnote 23.




The TFA is not the only WTO Agreement to include such a broad provision con-cerning exceptions – Article 3 of the TRIMs Agreement similarly states that ‘[a]llexceptions under GATT 1994 shall apply, as appropriate, to the provisions ofthis Agreement’. The TRIMs Agreement is much more limited in its coveragethan the TFA, since it serves only to interpret and clarify GATT Article III onNational Treatment and Article XI on quantitative restrictions. The applicationof GATT exceptions to the TRIMs is therefore a logical extension of the functionof TRIMs as a clarification of GATT articles. The TFA’s broader scope and moreexpansive mandate (the clarification and improvement of Articles V, VIII, and X)require a more cautious evaluation of the impact of such a broad exception pro-vision on its implementation.

With Articles V, VIII, and X forming the original mandate of the TFA, a panel orAB would likely find them applicable to the agreement even had the final agreementnot explicitly included the exemptions relating to those articles. With the GATTarticles relating to both exceptions and exemptions being directly referenced,future disputes will need to take into account current interpretations of these pro-visions as defined through GATT jurisprudence, with limited freedom to interpretthem in light of the peculiarities of the TFA. This interpretive position may poseparticular challenges with respect to the general GATT exceptions. The followingdiscussion focuses mainly on Article XX, as no Article XXI defenses have yet beenpresented before the WTO.

Article XX of the GATT sets out general exceptions from the GATT obligations,allowing measures that are inconsistent with the GATT to be applied in situationswhere such measures may be necessary to protect public morals (XX(a)) forinstance, or to protect plant, animal, and human life or health (XX(b)) or exhaust-ible natural resources (XX(g)). Article XX is a powerful affirmative defense toclaims of inconsistency with the GATT, as WTO jurisprudence recognizes thatWTO Members should have the ability to regulate in such sensitive areas.

The relationship between Article XX and other WTO Agreements depends onthe text of the other agreements and whether they explicitly incorporate ArticleXX or its subsections. In some cases, such as the SPS Agreement, the agreementitself evolved out of Article XX(b) of the GATT and the necessity of imposingmeasures that protect plant, animal, and human life or health. There is thereforea close relationship between the article and the agreement, with Article XX(b)explicitly mentioned in the preamble to the SPS Agreement. In other cases, suchas the TRIMs Agreement, the agreement explicitly provides for the application ofall exceptions under the GATT, which would include Article XX. In still othercases, however, whether Article XX applies or not is less clear.

One issue is that the non-GATT WTO Agreements are lex specialis, and wouldtherefore fall outside of the scope of the GATT, with these agreements having beennegotiated to apply in specific situations that would otherwise fall under thebroader provisions of the GATT. As lex specialis, it has been argued that ArticleXX should only apply to those agreements where it is explicitly mentioned, and




not to those where it is not mentioned, particularly in light of the explicit mentionof Article XX in some agreements and not others.96 The recently renegotiatedGovernment Procurement Agreement (GPA), a plurilateral WTO agreement,while not explicitly mentioning Article XX, sets out exceptions that largely corre-spond to Article XX.97 This allows for a possible interpretation of the exceptionlanguage in the GPA in a way that may differ somewhat from the general ArticleXX jurisprudence, while at the same time obtaining guidance from existingArticle XX jurisprudence, since the language is applicable only with reference tothe agreement. The benefit of this approach is a custom-tailored application ofthe language of Article XX to the specifics of the GPA.

Some scholars have argued, however, that Article XX should apply more broadly,interpreting the wording in the chapeau of the Article that ‘nothing in this Agreementshall be construed to prevent the adoption or enforcement by any contracting party ofmeasures’ to cover all of theWTOAgreements and not just the GATT in themeaningof ‘this Agreement’.98 This position seems slightly tenuous as WTO negotiators wereaware of the provisions of theGATT and negotiated the otherWTOAgreements withthat understanding in mind, leaving the wording of the GATT unchanged. In themiddle groundbetween those advocating thatArticleXXonly applieswhere explicitlymentioned and those arguing that Article XX should cover all WTO agreements liesthe view that the GATT exceptions should apply to those agreements that take theirmandate directly from GATT provisions.

In the case of the TFA, the exceptions provision explicitly includes all GATTexceptions. By explicitly including these exceptions, the negotiating parties wereensuring that there would be no subsequent interpretive questions as to their appli-cability, and reflects the position that Article XX and the other exceptions can onlyapply to the non-GATT WTO agreements where explicitly mentioned.

Since Article XX is directly applicable to the TFA, in interpreting its scope,panels and the AB will have to look to the body of Article XX jurisprudence asit applies to the GATT. The room for interpreting Article XX differently in linewith the specifics of the TFA is more limited than in the case of the GPA, wherethe Article XX-mirroring language could be interpreting with a view to, but inde-pendent from, existing Article XX jurisprudence. In practice, what this will mean

96D. Peat, ‘The Wrong Rules for the Right Energy: The WTO SCM Agreement and Subsidies forRenewable Energy’, 24 Environmental Law and Management (2012) 3.

97 Agreement on Government Procurement, Article XXIII:2 reads: ‘Subject to the requirement thatsuch measures are not applied in a manner which would constitute a means of arbitrary or unjustifiablediscrimination between countries where the same conditions prevail or a disguised restriction on inter-national trade, nothing in this Agreement shall be construed to prevent any Party from imposing or enfor-cing measures: necessary to protect public morals, order or safety, human, animal or plant life or health orintellectual property; or relating to the products or services of handicapped persons, of philanthropic insti-tutions or of prison labour.’

98 See, e.g., B. J. Condon, ‘Climate Change and Unresolved Issues in WTO Law’, 12 Journal ofInternational Economic Law (2009) 895 for a discussion of this debate.




for the TFA remains to be seen, but it is possible to envision certain divergentapproaches that WTOMembers could take in applying these exceptions to the TFA.

One approach would be to view the inclusion of the broad exceptions as a poss-ible avenue around some of the obligations that might arise under the TFA, as anumber of more trade protectionist measures could be arguably legitimized bythe application of Article XX exceptions. With trade facilitation a mostly logisticalexercise, the use of a broad Article XX brushstroke could invalidate many of thegoals the TFA is working towards achieving, particularly with regards to economicefficiency and streamlining of the trade facilitation process.

Any general exception that is applied to the agreement could undermine the nar-rowly constructed goals of reducing burdens relating to the physical transportthrough, or entry into, a Member state. With the TFA, the measures are mostly pro-cedural rather than legislative – to concretely reduce barriers to trade in the form ofborder and customs measures. This could be viewed as reducing the scope forgeneral exceptions to apply. With other WTO agreements, exceptions often applyto more legislative measures, which may cover a wide range of regulatory goals orbroad policy intentions. Legislative measures regulate behaviors and the legality ofcertain actionsmorebroadly, allowing roomfor derogation via the careful applicationof exceptions. In contrast, purely proceduralmeasures are limited to the processwhichthey exist to regulate. In that sense, a procedural measure, which prescribes how a setof actions must be completed, leaves little room for the application of exceptionswithout undermining the legal clarity the measure is intended to produce.

It is important not to overstate the potential effect of Article XX on the TFA,however. In many of the areas that the TFA governs, measures that violate TFArules by affecting the movement of goods across borders would likely alsoviolate Article XI of the GATT, acting as quantitative restrictions. In such circum-stances, it is likely that the primary claim would be under Article XI rather thanunder the narrower, less adjudicated TFA provision, with Article XX being usedas a justification against the Article XI claim.

One can imagine a situation where an Article XX(a) exception relating to publicmorals, for instance, was used as an affirmative defense for certain measures apply-ing to alcohol or literature at the border in a discriminatory and non-legitimatefashion which results in disguised restrictions on trade. In such situations, it islikely that the measure in question would be primarily challenged under GATTArticle XI as a quantitative restriction, rather than under the TFA, and thenjustified under Article XX provisions, as has been the case with recent disputesincluding China–AV (Article XX(a))99 and China–Rare Earths (Article XX(g)).100

99 Panel Report, China – Measures Affecting Trading Rights and Distribution Services for CertainPublications and Audiovisual Entertainment Products, WT/DS363/R (12 August 2009).

100 Panel Report, China – Measures Relating to the Exportation of Rare Earths, Tungsten, andMolybdenum, WT/DS431/R (26 March 2014).




Here, furthermore, it is important to recall the chapeau of Article XX, whichwould likely mitigate the aforementioned potential negative effects. The chapeauof Article XX provides limits on the policies that may be enacted under theArticle XX exceptions, prohibiting the imposition of measures that are disguisedmeans of discrimination against or among other Members, and prohibiting arbi-trary or unjustifiable discrimination in countries where the same conditionsapply.101 In order for a measure to qualify under an Article XX exception, itmust first be shown to fit under the particular exception of Article XX. Next, themeasure needs to be shown to be applied in a non-discriminatory, non-arbitraryway, and not to be a bad faith attempt to hide trade protectionism. Using ArticleXX to block goods at the border under the guise of an Article XX exception tothe TFA would, therefore, require evidence that the measures were not intendedto be protectionist. This second hurdle might be difficult to overcome, as it islikely that panels and the AB would see through the attempt to disguise the restric-tion on trade as an Article XX exception.

The text of the TFA already covers one of the most important Article XX excep-tions separately from the general exception provision – Article 5 of the agreementprovides for notification systems in the case of enhanced levels of controls orinspections at the border in respect of foods, beverages, or feedstuffs coveredunder the notification for protecting human or animal life or health within its ter-ritory, which relates directly to Article XX(b), as well as to the SPS Agreement. Thisseemingly redundant inclusion of a specific reference to the Article XX(b) exceptionin light of the inclusion of the broader general exceptions presumably arises fromthe relationship between Article 5’s language concerning sanitary and phytosani-tary conditions and the SPS Agreement, and the special relationship that the SPSAgreement has within the framework of the TFA as a whole. It could be arguedthat this exception diminishes the scope for general applicability of the ArticleXX exception, recognizing the importance of special protection for SPS measures.

In the case of the SPS Agreement, only Article XX(b) applies – a narrow excep-tion that forms the core of what SPS measures are all about – the protection ofplant, animal, and human life or health. The TFA is, of course, a much broaderagreement than the SPS Agreement, with trade facilitation measures running thegamut from information sharing to technological assistance and capacity building.In light of this, perhaps the broad application of Article XX is consistent with theaims of the TFA, since the provisions of the TFA cover a wide range of situationsthat might give rise to the application of Article XX exceptions.

101GATT, Article XX. The chapeau reads: ‘Subject to the requirement that such measures are notapplied in a manner which would constitute a means of arbitrary or unjustifiable discriminationbetween countries where the same conditions prevail, or a disguised restriction on international trade,nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contractingparty of measures.’




Rather than view the application of Article XX as a way to work around the obli-gations of the TFA, another approach is to view the GATT exceptions as providingan avenue for more efficient control of negative trade. There are a number of tradeissues that may give rise to the invocation of an Article XX defense by WTOMembers in relation to the TFA. It may be possible to address concerns with regu-latory issues that are difficult to act upon in the context of other WTO agreementsthrough the measures provided for in the TFA, particularly when the regulatorygoal is preventing the entry into the country of the substance in question. Withissues of food safety and importation of dangerous plant or animal substances,the ability to turn back shipments at the border, rather than at some later stageof the importation process, could benefit countries where the concern is thespread of disease or the entry of invasive plant or animal life. The same concernsmay arise with regards to activities like the smuggling of wildlife, where theability to address the trade violation often comes after the animals have alreadyillegally entered the country. The application of GATT exceptions to the TFAoffers a possible solution to these difficulties.

While Article XX is the main GATT exception, Article XXI is available to WTOMembers as a defense as well. Article XXI provides for security exceptions, whichallow parties to take the action necessary to protect their security interests, includ-ing in matters relating to fissionable material and arms traffic. Although it is unclearhow panels or the AB would interpret the rather broad wording of Article XXI, theArticle potentially raises a few concerns in terms of where the exceptions mightlead. It is only natural to want to protect the borders in the case of securitythreats, but as trade facilitation deals concretely with the measures taken tobring the goods in (rather than taxes, import duties, or other more fiscal measures),could this exception be used to allow parties to take advantage of supposed securitythreats to restrict imports? There are legitimate concerns relating to security thatmust be taken into account, but security measures should be designed in a waythat allows international trade to take place without unnecessary hurdles.102

Article XXI might arguably be more likely to be invoked in relation to the TFAthan with respect to any other WTO agreement because the TFA governs tradeat the borders, the point at which the security exceptions might be most appropri-ately invoked. Since Article XXI could give countries leeway to control the importof dangerous materials and weapons at the point of import, it is possible that dis-putes arising from the TFA may see invocations of this heretofore neglectedexception.

Concerns relating to the potential misapplication of Article XX and Article XXIto TFA-related situations appear, on the whole, unjustified, given the structure andscope of the TFA, and the likelihood that any challenges would be brought underGATT provisions, particularly Article XI. On the one hand, the TFA can be viewed

102 Creskoff, ‘Trade Facilitation’, supra note 11, at 1.




as a highly focused trade instrument, designed to effect narrow procedural changesto border and customs measures. It can, however, also be viewed in light of thetypes of goods its provisions affect. Viewed this way, the TFA is arguably one ofthe broadest WTO agreements, since its provisions will have an impact on everygood that enters a country, whether perishable, manufactured, government pro-cured, hazardous, or otherwise. In this sense, the scope of the TFA rivals that ofthe GATT, unlike other WTO agreements, whose focuses are limited to certainspecific trade situations (subsidies, dumping) or narrowly constructed categoriesof goods (plant or animal, labelled). If all goods that cross international bordersare subject to trade facilitation measures under the TFA, then it seems logicalthat the general GATT exceptions should also apply. In this way, exceptions areto be seen as applying to the goods, not to the types of measures. The breadth ofthe TFA lies in understanding that all goods will be subject to the agreement, requir-ing the application of GATT exceptions by national governments if the same con-ditions are to apply to goods in a post-TFA world as applied purely under GATTrules. This universal applicability of the TFA to goods involved in internationaltrade is part of what makes the TFA so important, for while its mandate may atfirst seem narrow, its impact is in fact resoundingly broad.

In trying to understand how the GATT exceptions may be used by WTOMembers with regards to TFA provisions, it is important to take the technologicalaspects built into the agreement into consideration. If the goal of the agreement tofacilitate trade through improved technological measures is achieved, WTOMembers may be in a better position to regulate ‘bad’ trade through a judicioususe of Article XX and XXI exceptions while streamlining ‘good’ trade. SinceTFA measures apply to all trade in goods, up-to-date technology will facilitatethe determination of whether shipments are high risk or low risk. Online sub-missions of customs forms, databases of authorized traders, and electronicrecords of problem areas could improve efficiency and reduce cost, which are theultimate goals of the TFA, while facilitating appropriate application of ArticleXX exceptions to specific situations. Achieving this level of technological compe-tence across developing as well as developed countries, however, will require theS&DT provisions relating to technical assistance to meet their aims of reducingtechnological barriers for developing countries with help from developed countries.How this plays out will depend in part on whether the development concerns havebeen fully resolved.

7. Conclusion

The TFA is a new hope for the continuing relevance of the WTO. The preciselanguage used to lay out the process for addressing developing country needs inthe TFA sets the tone for future multilateral WTO agreements. Now that such con-crete measures have been provided, it would be hard for developed countries toargue that more aspirational language is sufficient. True, some of this may be




specific to the nature of the TFA; it is a highly technical agreement dealing with avery specific subset of trade issues that require more capacity and infrastructuralsupport than most other trade agreements. Even so, the TFA is also extremelybroad, covering every type of good that crosses international borders as part ofthe international trade process, and these development-oriented provisionsshould therefore be applicable to a wide range of future new or renegotiatedagreements.

The effectiveness of the agreement as a whole will depend in part on how thedispute settlement process handles the varying degrees of implementation of theTFA by developing countries as well as how exceptions are used by Memberstates and interpreted by panels and the AB. While exceptions have the potentialto be misused as a way for WTOMembers to dodge their obligations, these excep-tions also have the potential to protect WTO Member policies in such sensitiveareas as security policy and environmental regulation, and act as regulatory con-trols on the part of WTOMembers. If properly applied, the exceptions used in con-junction with the TFA could become one of the strongest tools for WTO Membersto separate low risk trade shipments from potentially negative trade. If the technicalassistance measures available to developing countries succeed in raising technologi-cal levels across WTOMembers, the combination of efficient technology with moreeffective methods of categorizing and prioritizing shipments according to risk couldresult in benefits to the global economy that go beyond purely financial gainstowards a trading system that is one step closer to operating on the basis of harmo-nized rules. The TFA has set a benchmark for technical agreements and developingcountry agendas going forward, and while it remains to be seen how effective thebalancing of technical assistance requirements with the implementation of tradefacilitation measures will be, it is unquestionably a step in the right direction. Asthe first multilateral agreement in this area, the TFA will serve as a blueprint forfuture trade facilitation measures.



The Trade Facilitation Agreement: A New Hope for the World Trade Organization

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