TPP Customs Language Could Boost Trade Flows More So than Tariff Reductions, Study Says
Clear timelines, greater legal transparency, and advance tariff rulings required within the customs regimes of Trans-Pacific Partnership member countries could have a larger role than the pact’s tariff reductions in sparking trade and enhancing supply chains, according to an analysis of the TPP published by the Peterson Institute for International Economics (here). While TPP contains several important customs provisions, it stops short of setting deadlines for countries to implement World Customs Organization standards and to start using a single automated entry point, said the think tank. Some customs provisions also contain weak implementation language, as words like “endeavor” and “encourage,” ostensibly instead of language like “require” and “must,” frequently appear, it said.
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TPP also should have set a minimum for de minimis levels, the institute said. The U.S. uses a $800 de minimis threshold for imports, but de minimis levels vary among different countries. “The differences are confusing to exporters and discourage trade in low-value/low-volume goods and ecommerce,” said the PIIE. “The administrative delay of customs is sometimes so great as to completely deter low-value trade.”
But the agreement succeeds in several areas, including transparency, requiring members to publish customs laws and regulations; as well as in clearance speeds, setting 48-hour and 6-hour time limits for regular and express shipments, respectively, the analysis said. Advance ruling provisions aim, in part, to ease the difficulty often associated with tariff classifications of complex goods prior to import, and dictate that customs regimes issue an advance ruling within 150 days of an importer’s or exporter’s written request. According to Peterson, the TPP's rulings language is stricter than what is included in the World Trade Organization-brokered Trade Facilitation Agreement (TFA), which requires advance rulings to be issued in a “reasonable” amount of time.