2013 WTO decisions affecting exporters

Every 2 years the Member states of the World Trade Organisation (WTO) meet to vote on continuing and new measures to achieve their goals of promoting open trade, and assisting producers of goods and services and importers and exporters conduct their international business.

Although the administration of the WTO is conducted by the WTO Secretariat, whose brief is to ensure that negotiations progress smoothly and any rules agreed are correctly applied and enforced, the WTO is actually run by its member governments.  All major decisions are made by these members as a whole, either in the two yearly meetings (the last of which was based in Bali in December 2013), or through ambassadors and delegates who meet regularly in Geneva.

As such, the WTO is the only global international organisation dealing with the rules of trade between nations.  WTO agreements are negotiated and signed off by the bulk of the world’s trading nations and ratified in their parliaments.  At the moment, 160 countries are members of the WTO, the most recent country to join in December 2013 being Yemen.

Although a number of decisions were made at the Bali conference, I would like to mention two in this article.

Import duties on electronic transmissions
Generally speaking, most goods being imported into a country will be liable to import duty and other taxes.  There is one major exception.  Software which is transmitted electronically is presently not liable to duty in the WTO member states.  However, there are continuing discussions on whether this should remain the case, particularly in view of the growing value of software sales globally.  However, one of the decisions made at Bali 2013 was that members continue to agree not to charge import duties on electronic transmissions. If they had decided otherwise, the cost to the end-user could have increased dramatically. Please note, however, that this only applies to members of the WTO.

The continuing problem of ‘Red Tape’
The UN Conference on Trade and Development (UNCTAD) estimates that the average Customs transaction involves 20-30 different parties, 40 documents, 200 data elements (30 of which are repeated at least 30 times) and the re-keying of 60-70% of all data at least once.  With the lowering of tariffs around the world, the cost of complying with these Customs formalities is often much greater than the cost of duties to be paid.

Analysts believe that the reason most SME’s are not active players in International Trade has more to do with red tape than tariff barriers.  The administrative barriers for organisations who do not regularly ship out product are often simply too high to make foreign markets appear attractive.

According to the Organisation for Economic Co-operation and Development (OECD), the measures that would make the biggest impact in terms of reducing costs are:

– harmonisation of documents
– streamlining customs procedures (such as pre-arrival clearance)
– predictability in customs regulations

One of the WTO’s objectives is to try and reduce the red tape inherent in so many international trade transactions.  However, this is not a simple matter.  For example, one of the challenges faced is to ensure that all countries are able to establish a workable and reliable electronic clearance facility.  In many cases this requires that both the physical communication infrastructure and the legal framework in the countries concerned is able to cope with this requirement.  In a lot of countries, setting this up is both a lengthy and expensive procedure.  However, at least there is a willingness today to commit resources to trying to achieve this goal.

Maria Narancic from Point to Point Export Services is an independent international trade adviser who assists organisations world wide with their international trade projects, documentation, Documentary Credits and import/export training.  She is based in the United Kingdom.  If you require any further assistance with the matters mentioned above, please do contact us by e-mail on info@point-point.com or check out other useful International Trade articles on the Point to Point Export Services website at www.point-point.com 
 

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