Before a product can be imported into the U.S., a shipper must satisfy regulations of at least 13 government agencies from Customs and Border Protection to the Transportation Department.
Other countries require the filing of as many as 30 forms, some on paper, according to Brandon Fried, executive director of the Washington-based Airforwarders Association, which represents companies that handle air-freight shipments.
United Parcel Service Inc. (UPS:US), Boeing Co. (BA:US), Caterpillar Inc. (CAT:US) and FedEx Corp. (FDX:US) are among companies hopeful that a Dec. 7 World Trade Organization agreement will establish common procedures and cut red tape that can leave perishable goods rotting on piers. The WTO says the accord may boost the global economy by $1 trillion.
“What’s in place now is a pretty fragmented system where each country kind of makes its own rules, which leads to delays in transit,” Fried said.
Trade ministers from the WTO’s 159 member nations meeting in Bali, Indonesia, unanimously agreed on measures to make customs rules more transparent, expedite the release of perishable goods at ports, promote the use of electronic payments and adopt common customs standards, according to a fact sheet from the U.S. Trade Representative’s office.
“What this agreement is doing is facilitating the movement of everything to electronics,” Laura Lane, president of global public affairs for UPS in Washington, said in a phone interview. “We think it will drive greater volume.”
The WTO’s general council still needs to adopt the agreement, which may not happen until July. Critics say the measures amount to little more than a commitment from member countries to update their customs rules rather than address more serious issues.
Lori Wallach, head of the Global Trade Watch program at Washington-based Public Citizen, said it’s too early to tell whether the agreement will measurably boost trade.
“If you think of the countries that have a large volume of trade, a lot of them already have computerized, streamlined customs,” she said in a phone interview
UPS and Memphis, Tennessee-based FedEx for years have advocated making goods flow more easily through customs, something they say can create jobs for small- and medium-sized businesses in particular.
Lane said that Atlanta-based UPS wouldn’t have invested as much time as it has in the issue “unless we saw that the benefits were big.”
FedEx sees the Bali deal as making “global trade simpler, more transparent and more predictable,” Michael Ducker, chief operating officer of FedEx Express, said in a statement.
The deal will expedite customs procedures by allowing for pre-clearance before goods arrive at ports, Michelle Wein, a research analyst focusing on trade at the Information Technology and Innovation Foundation in Washington, said in a phone interview.
“The major beneficiaries of the Bali deal are the developing countries,” particularly in sub-Saharan Africa, Wein said. “It’s really aimed at integrating them into global supply chains.”
Even in the European Union, companies must comply with different laws in each of the EU’s 28 member states. according to the U.S. Trade Representative’s office.
“Companies large and small will now find it simpler, faster and less costly to access the markets” of the WTO’s member states, Chicago-based Boeing said in a statement yesterday.
Jane Taeger, director of compliance at Samuel Shapiro & Co., a Baltimore-based customs broker and freight forwarder, said the Bali agreement may ease the burden on importers that lack the manpower to comply with existing rules.
Some importers don’t take advantage of the lower duties offered through U.S. free-trade agreements with nations such as Chile or Colombia because of the red tape involved in proving the goods originated in those nations, she said.
“It’s very burdensome for importers to maker free-trade agreement claims because they must substantiate it,” she said. Taeger said some importers could reduce costs by as much as 16 percent if they could more easily comply with customs procedures.
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