3 Ways a New Customs Agreement Makes it Easier to Meet Global Demand

Atlanta, Feb. 24, 2017 -- The following is an article written by Laura Lane of UPS. 

The newly minted Trade Facilitation Agreement (TFA) is a game-changer for the way goods cross borders and move around the world.

At UPS, the seamless movement of packages is our lifeblood — so we are excited by this World Trade Organization (WTO) agreement, which ushers in a new global framework of rules that make trade safer, cheaper and faster for American businesses.

TFA creates mechanisms that bring all 164 WTO member countries to a higher standard for how goods cross borders.

The pact reduces burdensome paperwork requirements, decreases holds and inspections of goods at the border and mitigates other costly and redundant barriers — allowing trade to happen as quickly as the e-commerce economy demands. This is without changing a single U.S. law, basically leveling the playing field so that everyone else follows many of the same customs rules we do.

Let’s zero in on three benefits of TFA:

Security: Trade facilitation and more secure supply chains

The easier it is to answer the who, what, when and where about a shipment, the safer supply chains will be.

TFA addresses this issue head on, implementing “trusted trader” programs that streamline border clearance for routine, known shippers, who ship the majority of global trading volume and have strong partnerships with delivery providers like UPS.

By facilitating the movement of these trusted traders’ shipments, TFA allows border agencies to concentrate valuable resources and personnel on the shipments most likely to pose a threat.

Frictionless trade: Reaching more consumers

TFA also supports a meaningful national export agenda by removing unnecessary costs and red tape, making it easier for a business to reach foreign consumers. For U.S. exporters, this means helping them reach the 95 percent of the consumers who live outside the United States.

This is particularly critical to micro, small and medium-sized companies who want to market internationally but are often deterred by complexity.

When it is easier to trade, more trade happens, and TFA will make it easier than ever for American businesses to sell to new markets. Half of the world’s countries hold up at least one in five express shipments that reach their borders — often for random inspections that do little to increase security.

A full 15 percent of countries hold more than half of the packages, according to the Global Express Association’s annual audit of border holds. These delays result in higher costs for businesses, and often countries lack the tools needed to improve the processes.

TFA provides those tools and utilizes those countries leverage technology and internationally recognized risk-management standards to streamline the import process.

Raising standards: Strengthening the supply chain’s weakest links

Lastly, TFA goes further than any trade agreement in decades to raise standards among developing countries with the weakest trade infrastructure and, in doing so, connects their growing and thriving middle-class populations to the global economy. This includes American exporters who manufacture the goods those same populations want to buy.

TFA mandates the processing of shipment data before the good physically arrives, collecting duties and taxes after the release from customs’ control, expediting the movement of low-risk shipments by known traders. TFA also calls for higher thresholds for imposing duties and taxes on low-value goods and eliminating burdensome paperwork redundancies.

Many developed countries, including the United States, already have these measures in place. But with TFA, all 164 members of the WTO will now be working to meet these standards, strengthening the entire global supply chain.

The bottom line

Last year was the first time since 2001 that GDP growth outpaced trade growth.

We at UPS are looking forward to the opportunities TFA brings our customers, and our UPS customs experts around the world are lending our company’s supply chain know-how to help foreign governments’ learn from our best practices and help them address their unique implementation needs.

This is another way that UPS — the global team of United Problem Solvers — is working to grow American exports and get American products to anywhere and everywhere in the world.

Laura Lane is president of global public affairs at UPS.

Reprinted with permission of Longitudes, the UPS blog devoted to the trends shaping the global economy.

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