TPP Will Make Trade Easier
By: Steve Craven
The Trans Pacific Partnership makes headlines for its massive tariff cuts among the 12 signatory nations – or for controversy about its environmental, investment and dispute settlement provisions. Those controversies are generally overblown, but that’s for other posts to address. Today I want to get into ways in which TPP makes life easier, especially for smaller importers and exporters.
Chapter 5 of the TPP sounds mundane enough: Customs Administration & Trade Facilitation. But this is exciting stuff to anybody who has ever tried to move shipments smoothly across borders. It can be hard enough to even find out what the rules are, much less ensure that a container full of perishable goods gets across the docks before it is cooked by the sun. Chapter 5 tries to make all that – and more – a whole lot easier.
This is especially important to small or medium-sized businesses that find complex border procedures among the worst obstacles to building their sales. These smaller traders, too, tend to want to send their shipments quickly via express carriers who must be able to cross borders speedily. Sure, major corporations want to do all this quickly, but the small companies can’t afford the large, specialized staffs that the big boys can devote. On balance, trade facilitation will disproportionately help the little guy, whether exporting or importing.
Chapter 5 requires each of the TPP parties to make its customs laws, regulations and procedures available publicly and easily in on-line editions. In English, if possible. This should end many of the misunderstandings that can arise at border crossings – and also reduce the potential for corruption among independent customs officials throughout the TPP region. You will be able to see exactly what the rules are before making a shipment. Plus, the TPP agreement requires that each country establish single contact points to answer questions you may have about their customs requirements. Even exporters need to know this stuff in order to deal with importers at the other end of the pipeline.
While there are exceptions, the TPP requires that goods be cleared through customs within 48 hours of arrival if at all possible. If customs officials haven’t figured out how much is owed in duties or other fees by that point, there must be an ability to release goods under bond or provisional duty payments. Also, Chapter 5 requires that procedures for penalties and other payments be clarified; no more shake downs at the border.
The single contact points can be formally asked to make rulings on customs valuation or other issues before goods are shipped. Their rulings will provide predictability because they must be allowed to stand in place for at least three years. TPP customs officials will be required to make such binding rulings within 150 days of receiving the request. You likely won’t use this for small, one-time shipments, but it can be invaluable if you plan to make repeated shipments to a large customer.
Documentation requirements will be cut even further for express shipments, as well as weight or size limitations on express cargo. And each TPP government will be required to set de minimis values for express shipments below which no duties will be collected, further expediting shipments.
TPP Chapter 5 requires clear, concise customs procedures to be publicly and readily available on the Internet. That, in itself, is going to make trade easier for all of our smaller companies that venture across the world.
Steve Craven advises companies on international business strategies and how to overcome problems encountered in foreign markets. He is a former consultant, American diplomat and a U.S. trade negotiator. He served as a Career Diplomat and Senior Foreign Service Officer, member of the U.S. Commercial Service, U.S. Department of Commerce. Mr. Craven also previously served as Chair of the Hawaii Pacific Export Council.