Current Situation and Recommendations for the implementation of the WTO Trade Facilitaition Agreement in Vietnam. Current Situation and Recommendations for the implementation of the WTO Trade Facilitaition Agreement in Vietnam. Current Situation and Recommendations for the implementation of the WTO Trade Facilitaition Agreement in Vietnam. Current Situation and Recommendations for the implementation of the WTO Trade Facilitaition Agreement in Vietnam. Current Situation and Recommendations for the implementation of the WTO Trade Facilitaition Agreement in Vietnam.
OVERVIEW OF TRADE FACILITATION AGREEMENT
Overview of Trade facilitation
Trade facilitation currently lacks a universal definition, but the World Trade Organization (WTO) describes it as the simplification of international trade procedures This includes various activities and practices related to the collection, circulation, and processing of data and information essential for the movement of goods across borders.
Trade facilitation, as defined by the ICC, enhances the efficiency of cross-border goods trading processes, focusing on comprehensive simplification efforts to lower international trade costs The World Customs Organization (WCO) emphasizes that trade facilitation involves eliminating unnecessary trade barriers through the application of modern technologies and improved management practices, all while aligning with common international standards.
Trade Facilitation (TF) refers to the policies and processes aimed at minimizing time, costs, and risks associated with international transactions, excluding trade barriers like import taxes and quotas Essentially, TF enhances the procedures, conditions, and documentation involved in the import, export, and transit of goods, facilitating faster and more cost-effective circulation In contrast, trade promotion focuses on boosting revenue for businesses, often interpreted at the national level as increasing export sales.
Trade facilitation (TF) plays a crucial role in enhancing customs procedures, standard harmonization, and simplifying documentation while promoting non-paper transactions Additionally, it encompasses trade promotion activities such as fairs, exhibitions, and advertising The benefits of trade facilitation are significant, as they streamline processes and enhance trade efficiency, ultimately contributing to economic growth and development.
The advantages of trade facilitation (TF) can be evaluated by analyzing the costs associated with trade transactions, which encompass both direct and indirect expenses Direct costs comprise expenses such as customs clearance document preparation, freight charges, and financial fees In contrast, indirect costs refer to opportunity costs incurred during the transportation of goods from the seller to the buyer.
The benefits of facilitating trade not only include the reduction of costs in trade transactions, but also the reduction of risks in international trade transactions.
TF brings enormous benefits to governments and both buyers and seller, as shown in Table 1 below.
Table 1.1: Benefits of trade facilitation to governments and both buyers and sellers
Benefits to governments Benefits to business
- Increase efficiency in the control process
- Increasing efficiency in resource exploitation
-Accelerate the paperwork process due to the consistency of the policy
-Simplify the process of domestic and international trade exchange
Resource: Economic Commission for Europe (ECE), 2002.
Trade facilitation between countries offers significant long-term benefits, including enhanced competitive advantages, increased foreign direct investment (FDI), greater participation of small and medium-sized enterprises in international trade, and overall economic growth Recent studies indicate that improving trade facilitation could boost per capita GDP by approximately 2.5% in Asia-Pacific nations.
WTO research from 2017 indicates that implementing the Trade Facilitation Agreement (TFA) by 2030 could lead to an annual global export growth of up to 2.7% and a 0.5% increase in world GDP Developing countries (DCs) and least developed countries (LDCs) could experience even greater benefits, with potential annual export growth of 3.5% and a 0.9% boost in economic output This improvement in trade efficiency is comparable to reducing trade costs equivalent to a 219% tariff, ultimately promoting greater diversity in these economies.
Achieving Trade Facilitation (TF) requires countries to incur certain costs, primarily related to policy development and implementation, which often discourages negotiations However, the World Trade Organization (WTO) highlights that the benefits of agreeing on TF policies can outweigh these initial expenses Furthermore, governments can mitigate these costs for participants by incorporating them into related service charges.
Establishing and facilitating trade involves several key types of fees, including organizational costs for restructuring and policy development, legislative expenses for modifying existing legal frameworks or creating new laws, and infrastructure and training costs for developing electronic communication systems and internal networks, as well as training personnel to effectively manage these systems.
The Organisation for Economic Co-operation and Development (OECD) has created Trade Facilitation Indicators (TFIs) to assist governments in enhancing border procedures, reducing trade costs, and increasing trade flows These indicators highlight key areas for improvement and allow for the assessment of the potential impact of reforms By utilizing these estimates, governments can prioritize trade facilitation initiatives and effectively mobilize targeted technical assistance and capacity-building efforts for developing countries.
The OECD Trade Facilitation Indicators (TFIs) enable countries to assess their trade facilitation strengths and weaknesses They evaluate both the absolute implementation of trade facilitation measures and countries' performance in comparison to others, utilizing various quantitative metrics focused on critical aspects of border processes.
The TFIs take values from 0 to 2, where 2 designates the best performance that can be achieved They are calculated on the basis of information in the TFIs database.
Table 1.2: The OECD trade facilitation indicators
Advance rulings are official statements provided by the administration to traders, clarifying the classification, origin, and valuation methods applicable to specific goods during importation These rulings outline the rules and processes governing such determinations, ensuring transparency and consistency in trade practices.
Appeal Procedures The possibility and modalities to appeal administrative decisions by border agencies.
Co-operation with neighbouring and third countries.
Co-operation between various border agencies of the country; control delegation to customs authorities.
Fees and Charges Disciplines on the fees and charges imposed on imports and exports.
Electronic exchange of data; automated border procedures; use of risk management.
Simplification of trade documents; harmonisation in accordance with international standards; acceptance of copies.
Streamlining of border controls; single submission points for all required documentation (single windows); post- clearance audits; authorised economic operators.
Customs structures and functions; accountability; ethics policy.
Publication of trade information, including on internet; enquiry points.
The OECD trade facilitation indicators assess border procedures, including advance rulings and transit guarantees, for 163 countries, taking into account various income levels, geographical regions, and stages of development.
Overview of Trade Facilitation Agreement
1.2.1 Process of Trade Facilitation Agreement’s negotiation in WTO
The Trade Facilitation Agreement (TFA) emerged from a decade-long effort that began in 1996, marked by the WTO's focus on trade facilitation initiated at the Singapore Ministerial Conference During this conference, WTO members tasked the Council for Trade in Goods with exploring and analyzing the simplification of trade procedures to evaluate the potential for establishing WTO rules in this domain.
In July 2004, after years of exploration, WTO members officially initiated negotiations on trade facilitation, guided by the modalities outlined in Annex D of the "July package." The primary goal of these negotiations is to clarify and enhance key elements of Articles V, VIII, and related provisions.
X of the GATT 1994 with a view to further expediting the movement, release and clearance of goods, including goods in transit” Negotiations were also aimed at
The article emphasizes the importance of improving technical assistance and capacity building in trade facilitation and customs compliance It highlights the need for effective collaboration among customs and relevant authorities to enhance these processes Additionally, it underscores the commitment to providing extensive special and differential treatment for developing countries (DCs) and least-developed countries (LDCs).
On 12 October 2004, the Trade Negotiations Committee established the Negotiating Group on Trade Facilitation Hundreds of proposals made by WTO members, individually or through groups or alliances, were submitted for consideration by the Negotiating Group.
The proposals continued to be refined until ministers concluded the negotiations on trade facilitation at the Bali Ministerial Conference in December
In 2013, a Preparatory Committee on Trade Facilitation was formed under the General Council of the WTO to facilitate the swift implementation of the Agreement This committee, which includes all WTO members, is responsible for ensuring the efficient operation of the Agreement upon its enactment Its duties include conducting a legal review of the Trade Facilitation Agreement (TFA), receiving notifications from members regarding their immediate commitments (Category A commitments), and drafting a Protocol of Amendment to incorporate the Agreement into Annex 1A of the WTO Agreement.
The legal review was completed by members in July 2014 and delegations began to submit their Category A notifications.
On November 27, 2014, WTO members adopted a revised Protocol to introduce the Trade Facilitation Agreement (TFA) into the mandatory agreements system The TFA was set to take effect once two-thirds of WTO members completed their domestic ratification and submitted a valid acceptance instrument This threshold was achieved on February 22, 2017, with the deposit of the 110th instrument, enabling the Agreement to come into force.
1.2.2 Structure and content of Trade facilitation agreement
The Trade Facilitation Agreement (TFA) aims to streamline the movement, release, and clearance of goods, including those in transit, by establishing clear and uniform trade facilitation standards aligned with international norms This implementation fosters favorable conditions for fulfilling commitments related to various trade benefits within Free Trade Agreements (FTAs) that Vietnam is part of, such as the ASEAN Free Trade Area (AFTA), the Trans-Pacific Partnership Agreement (CPTPP), and the Vietnam-Eurasian Economic Union Free Trade Agreement (VN-EAEU FTA), along with other Regional Comprehensive Partnership Agreements.
The WTO Trade Facilitation Agreement (TFA) establishes essential measures for enhanced cooperation between Customs and various authorities regarding trade facilitation and customs compliance It emphasizes the importance of technical assistance and capacity building in these areas The agreement is organized into a Preamble and 24 Articles (referred to as "Art" in subsequent texts) and is divided into three main parts.
Section I: From Art 1 to Art 12 - including 12 Technical Trade Facilitation
Measure Provisions of the WTO TFA; which contains the technical trade facilitation measures that make up the bulk of the implementation obligations.
Section II: From Art 13 to Art 22 - including 10 Special and Differential
The WTO Trade Facilitation Agreement (TFA) includes a comprehensive framework for Special and Differential Treatment (SDT), outlining the roles and responsibilities of developing countries (DCs), least developed countries (LDCs), and donor members (developed countries) in relation to implementation transitions and capacity-building support.
Section III: including Art 23 and Art 24 – which contains 02 institutional arrangements and final provisions, including some important provisions on the relationship between the TFA and rights and obligations under other WTO agreements
Each Section will be explained in details in below parts.
1.2.2.1 Section I: Technical Trade Facilitation Measures
Section I of the technical trade facilitation measures establishes obligations aimed at enhancing transparency, governance, and decision-making, while also modernizing border procedures and improving the movement of goods in transit Comprising twelve provisions, this section includes approximately 36 trade facilitation measures, which can be further categorized into around 240 notification obligations under the Trade Facilitation Agreement's innovative implementation framework.
The first eleven provisions of trade facilitation measures aim to clarify and enhance aspects of Articles X, VIII, and V of the General Agreement on Tariffs and Trade 1994 (GATT 1994) Specifically, Articles 1-5 address the publication and administration of trade regulations as outlined in GATT Article X, Articles 6-10 focus on fees and formalities associated with trade under GATT Article VIII, and Article 11 pertains to the freedom of transit as specified in GATT Article V.
The new obligation, referred to as 12, emphasizes the importance of enhanced customs cooperation, fostering improved border collaboration, and facilitating information exchange Detailed trade facilitation measures and their connections to the foundational GATT provisions are outlined in Table 1.3, which offers a comprehensive comparison of these relationships.
Table 1.3: TF Measures “Clarify and Improve” Aspects of the GATT
GATT Article X: Publication and Administration of Trade Regulations:
TFA Article 1: Publication and Availability of Information
TFA Article 2: Opportunity to Comment, Information before Entry into
Force and Consultation TFA Article 3: Advance Rulings
TFA Article 4: Procedures for Appeal or Review
TFA Article 5: Other Measures to Enhance Impartiality, Non-Discrimination and Transparency GATT Article VIII: Fees and Formalities Connected with Importation and
TFA Article 6: Disciplines on Fees and Charges Imposed on or in Connection with Importation and Exportation and Penalties TFA Article 7: Release and Clearance of Goods
TFA Article 8: Border Agency Cooperation
TFA Article 9: Movement of Goods Intended for Import under Customs
Control TFA Article 10: Formalities Connected with Importation, Exportation and
Transit GATT Article V: Freedom of Transit:
TFA Article 11: Freedom of Transit
(Source: Robert McDougall, Evaluating the Implementation Obligations of the Trade Facilitation Agreement in the Context of Existing Multilateral Trade
Rules, International Center for Trade and Sustainable Development, 2017)
The legal nature of the trade facilitation measures outlined in the Trade Facilitation Agreement (TFA) is crucial for assessing implementation obligations and identifying capacity building needs on a provision-by-provision basis Additionally, it is important to consider two further observations in this context.
First, the extent to which the measures are binding can be distinguished by whether they are: 1) “best endeavour” provisions containing only
2) mandatory provisions subject to qualifiers such as “where practicable,” “to the extent possible,” “where appropriate,” and “subject to its laws and regulations;” and,
3) unqualified mandatory provisions containing “shall.” Although all three types are legal obligations that could be subject to review in dispute settlement proceedings, the expectations related to compliance will differ For “best endeavours” provisions, there is at a minimum and expectation not to act in a manner contrary to the obligation; for mandatory provisions with qualifiers, there may be some liability to demonstrate that the condition of the qualifier has been met; whereas unqualified mandatory provisions will be subject to full review.
The ratification process of the Trade Facilitation Agreement in Viet
In November 2015, Vietnam ratified the Trade Facilitation Agreement (TFA), becoming the 60th country to do so The TFA officially came into effect on February 22, 2017, after Rwanda, Oman, Chad, and Jordan submitted their acceptance instruments to the WTO, raising the total number of acceptances to 112, surpassing the required 110 ratifications for the agreement to take effect.
As a developing country, Vietnam is eligible for special and differential treatment (SDT) under the Trade Facilitation Agreement (TFA), allowing it to decide the timing of implementing specific provisions To utilize SDT, Vietnam must categorize each TFA provision and inform other WTO Members upon the TFA's activation The categories include Category A, which comprises provisions Vietnam will implement immediately; Category B, for those to be enacted after a transitional period; and Category C, which includes provisions requiring additional support and capacity building before implementation.
The TFA is expected to boost national and business competitiveness as a result of Vietnam’s implementation of its commitments under the agreement.
On October 13, 2016, the Prime Minister of Vietnam approved Decision No 1969/QD-TTg, which outlines the preparation and implementation plan for the WTO Agreement on Trade Facilitation This decision establishes specific goals, requirements, and assigns tasks to various ministries, designating relevant functional agencies as primarily responsible for executing these objectives.
- Widely publicizing and disseminating the content of TFA;
- Develop manuals and detailed guidance documents for other government agencies on the terms, conditions and provisions of TFA;
- Develop the schedule for implementation of TFA and ensure consistency in the application and implementation of those commitments;
- Classifying commitments in category A, B and C;
Supporting businesses in maximizing the benefits of the Trade Facilitation Agreement (TFA) is crucial, alongside pursuing technical assistance and capacity-building from international organizations like the WTO, World Bank, WCO, UNCTAD, ADB, and developed nations.
US, the UK, Japan, and Australia; and
- Report on implementation progress to WTO;
Decision 1969 also indicated that the Ministry of Finance (MOF) is the focal point responsible for implementing the TFA In particular, the MOF is responsible for:
• Implementing national outreach plans to provide information on the TFA;
• Operating the single-window system;
• Classifying provisions into Categories A, B, and C;
• Seeking technical support and assistance for capacity building;
• Formulating roadmap for implementation of Categories B and C provisions;
• Reviewing relevant legal framework for further amendments.
Various ministries, including the Ministry of Transport (MOT), the Ministry of Health (MOH), the Ministry of Science and Technology (MOST), and the Ministry of Agriculture and Rural Development (MOARD), are responsible for collaborating with the Ministry of Finance (MOF) to effectively implement the Trade Facilitation Agreement (TFA).
The Prime Minister of Vietnam also issued Decision No 1899/QĐ-TTg dated
On October 4, 2016, the National Steering Committee on ASEAN Single Window, National Single Window, and Trade Facilitation (NSC) was established, as amended by Decision No 684/QĐ-TTg on June 4, 2019 The General Department of Vietnam Customs (GDVC), under the Ministry of Finance, serves as the NSC's standing body, tasked with advising, coordinating, and facilitating the implementation of the programs, plans, projects, and schemes approved by the NSC.
After the TFA official came into force, Vietnam has conducted steps to implement its commitments, as follows:
- In 2017, Vietnam notified its Category A provisions to the WTO;
In the first quarter of 2017, the GDVC, in collaboration with relevant authorities and business communities, will identify the following: (i) Category A provisions that remain unimplemented, (ii) Category B provisions, and (iii) Category C provisions.
In alignment with the directives of the National Steering Committee (NSC) and the Prime Minister, the General Department of Vietnam Customs (GDVC) launched the VTIP e-commerce portal on July 12, 2017, with support from the World Bank, to facilitate the declaration of customs regulations and procedures This initiative has been complemented by numerous seminars and workshops, including a significant event at the APEC 2017-SOM conference on August 16, where GDVC hosted a seminar titled "Enhancing the Participation of Relevant Parties in the Implementation of the WTO Trade Facilitation Agreement" to foster collaboration between Vietnam Customs and ASEAN regional customs authorities.
- Domestic legislation has amended to fully implement Category A provisions;
-On 28 May 2018, Vietnam notified the WTO of its official plan to implement Categories B (14 units) and C provisions (9 units).
-For capability building, Vietnam has been seeking support from WB, ADB, UNCTAD, WTO, etc and from developed countries such as the U.S., United Kingdom, Australia, and Japan.
1.3.2 Vietnam commitments in implementing the Trade Facilitation Agreement
As a developing country, Vietnam is subject to the Trade Facilitation Agreement (TFA), which categorizes its commitments into three groups Category A commitments must be implemented immediately upon the TFA's enforcement, while Category B commitments are to be executed after a designated period or with technical assistance, as outlined in Category C According to the WTO database from 2019, Vietnam's implementation rates are as follows: 26.5% for Category A, 48.7% for Category B commitments scheduled between December 2020 and December 2023 without capacity-building support, and 24.8% for Category C commitments expected from December 2021 to December 2024 with such support.
Figure 1.3 Share of Categories A, B, C in Vietnam
Source: Trade Facilitation Agreement Database - WTO
The detailed articles of each category that Vietnam commits are listed in the below tab
Table 1.5 Articles of Category A, B and C of Vietnam
Art Content Category Implementation Date
1.1 Publication B by 31 December 2021 by 31 December 2021
1.2 Information available through internet C by 31 December 2021 by 31 December 2022
2.1 Comments and information before entry into force A by 22 February 2017
3 Advance rulings C by 31 December 2021 by 31 December 2022
4 Procedures for appeal or review A by 22 February 2017
5.1 Notifications for enhanced controls or inspections B by 31 December 2020 by 31 December 2021
5.2 Detention B by 31 December 2021 by 31 December 2022
5.3 Test procedures C by 31 December 2023 by 31 December 2024
6.1 General disciplines on fees and charges A by 22 February 2017
6.2 Specific disciplines on fees and charges A by 22 February 2017
6.3 Penalty Disciplines B by 31 December 2021 by 31 December 2021 7.1 Pre-arrival processing C by 31 December 2023 by 31 December 2024
7.2 Electronic payment B by 31 December 2019 by 31 December 2020
7.3 Separation of release B by 31 December 2021 by 31 December 2022
7.4 Risk management C by 31 December 2023 by 31 December 2024
7.5 Post-clearance audit B by 31 December 2021 by 31 December 20217.6 Average release times B by 31 December 2021 by 31 December 20217.7 Authorized operators B by 31 December 2023 by 31 December 2023
7.9 Perishable goods B by 31 December 2021 by 31 December 2022
8 Border Agency Cooperation C by 31 December 2023 by 31 December 2024
9 Movement of goods A by 22 February 2017
10.2 Acceptance of copies A by 22 February 2017
10.3 Use of international standards B by 31 December 2021 by 31 December 2021
10.4 Single window C by 31 December 2020 by 31 December 2021
10.6 Use of customs brokers A by 22 February 2017
10.7 Common border procedures A by 22 February 2017
10.8 Rejected Goods B by 31 December 2021 by 31 December 2022
10.9 Temporary admission of goods and inward and outward processing C by 31 December 2023 by 31 December 2024
2017 to 31 December 2023 from 22 February 2017 to 31 December 2024
12 Customs cooperation B by 31 December 2023 by 31 December 2023
(Source: Vietnam General Customs Department, 2019)
A Fully notified in A B Fully notified in B C Fully notified in C
Ap Partially notified in A Bp Partially notified in B Cp Partially notified in
Category A encompasses Articles 1.3, 1.4, and 2, which address the publication and availability of information, as well as opportunities for enterprises and related parties to comment before legal documents take effect Article 4 outlines the appeal or review process, while Article 6 details the fees and charges associated with importation, exportation, and penalties Articles 7.8, 9, and 10 discuss the release and clearance of expedited goods, the movement of goods under customs control, and the formalities related to importation, exportation, and transit, respectively Additionally, Article 11 emphasizes the freedom of transit Beyond Category A, Vietnam features over two-thirds of its total articles in Categories B and C.
Vietnam has requested various types of technical assistance, including human resources and training, information and communication technology, legislative and regulatory framework, infrastructure and equipment, and institutional procedures, as illustrated in the chart below.
Figure 1.4 Types and share of requested technical assistance of Vietnam
CURRENT STATUS OF TRADE FACILITATION’S
Current status of the implementation of Category A in Vietnam
Category A comprises provisions that the Vietnam implemented by the time the TFA Agreement enters into force in 2017, including Art 1 (1.3, 1.4), Art 2, Art
4, Art 6 (6.1, 6.2), Art 7 (7.8), Art 9, Art 10 (10.1, 10.2, 10.5, 10.6, 10.6 and 10.7) and Art 11 (11.1-11.4) The legal framework that Vietnam applied in each of those provisions are clearly stipulated at Annex 1.
2.1.1 The publication and availability of information (Article 1.3 and 1.4)
2.1.1.1 Article 1.3: Publication information of enquiry points
Members are required to set up enquiry points to address reasonable inquiries from governments, traders, and other interested parties It is recommended that these members do not charge fees for responding to inquiries or for providing necessary forms and documents, as outlined in the Trade Facilitation Agreement (TFA) by the WTO in 2014.
Vietnam has established standards for addressing inquiries from businesses and traders, with response methods tailored to the format of the inquiry For instance, inquiries sent via email receive email replies, while those submitted in written form are answered through postal mail The response time is regulated, requiring immediate answers for simple questions and a timeframe of 7 to 10 working days for more complex issues (1915/QĐ-TCHQ) Each department has a designated inquiry point, such as the customs department's single window web portal (www.customs.gov.vn/Lists/TuVanTrucTuyen/Default.aspx), which provides online support and information These inquiry points are equipped with advanced technology, including fax machines, telephones, and computers, to facilitate quick responses and maintain a database of resolved cases for future reference Despite Vietnam's effective implementation of these practices, there remains a need for improvement in the skills of personnel handling inquiries and the synchronization of databases.
In accordance with Article 1.4, all members are required to inform the National Committee on Trade Facilitation of the WTO To comply with this mandate, the Prime Minister of Vietnam issued Decision 1899/QD-Ttg in 2016, establishing the National Committee.
The 1899 Committee, established under Decision No 684/QD-TTg (2019), serves as the standing body for the ASEAN Single Window system, the National Single Window system, and trade facilitation, led by the General Department of Vietnam Customs (GDVC) This committee plays a crucial role in assisting the government and coordinating with various ministries to implement the Trade Facilitation Agreement and enhance national logistics in Vietnam To date, the 1899 Committee has conducted five regular meetings, with the most recent being the fourth meeting held in February.
19, 2019 and the fifth meeting on July 31, 2019 In fact, Vietnam totally implements this article in TFA.
2.1.2 Opportunities to comment and Information before Entry into Force
2.1.2.1 Article 2.1: Opportunities to comment and Information before Entry into Force
Article 2.1 mentions that each member shall provide opportunities and an appropriate time period to traders and other interested parties to comment on proposed laws and regulations related to customs Also, each member makes sure that information of new or amended legal documents is public for enterprises (TFA WTO, 2014).
Vietnam has established a foundation and technical tools for authorities to gather feedback from stakeholders through web portals and seminars with businesses Comments are collected and synthesized within 20 days of the public release of draft legal documents Each department has a legal team responsible for preparing new or amended regulations, which includes publicizing information on their websites and collecting feedback from enterprises before finalizing the documents Key governmental bodies, such as the Ministry of Finance (MOF), Ministry of Industry and Trade (MOIT), and Ministry of Justice (MOJ), play essential roles in issuing and reviewing legal documents related to customs, commerce, and overall legal compliance In summary, Vietnam has successfully fulfilled its commitment to this process.
Article 2.2 emphasizes the importance of consultations between border agencies and stakeholders within the territory In Vietnam, the customs department conducts periodic consultations with enterprises every six months to a year, allowing for the exchange of ideas and feedback Information about these seminars is publicly available on the websites of relevant agencies or at the seminar venues Although the Vietnam Chamber of Commerce and Industry (VCCI) organized numerous seminars on Trade Facilitation following Vietnam's ratification of the Trade Facilitation Agreement (TFA) in 2015, the frequency of these seminars has declined, highlighting a limitation in Vietnam's compliance with the TFA requirements.
2.1.3 Procedure for appeal or review (Article 4)
Article 4 in TFA (WTO) mentions that each member shall provide that any person to whom customs issues an administrative decision has the right, within is territory, to an administrative appeal to or review an administrative authority higher than or independent of the official or office that issued the decision (TFA WTO, 2014).
Vietnam has established a framework for the implementation of appeal resolutions, with a 30-day timeframe for ordinary cases and 45 days for complex or remote cases during the first appeal For second-time appeals, the resolution period extends to 45 days for standard issues and up to 70 days for more complicated matters.
The appeal process begins with the submission and verification of the appeal's content before resolution In the event of a second appeal, the decision and the announcement regarding the resolution of this appeal are made public.
In Vietnam, each department is assigned a unit dedicated to handling appeals, such as the Customs Inspectorate Department within the GDVC Additionally, the appeal resolution process is enhanced by a high-tech database system that facilitates efficient information retrieval and issue resolution.
2.1.4 Disciplines on fees and charges imposed on or in connection with importation and exportation (Article 6.1 and 6.2)
Under articles 6.1 and 6.2 of the Trade Facilitation Agreement (TFA) by the World Trade Organization (WTO), it is mandated that information regarding fees and charges—including their rationale, the authority responsible, and payment methods—must be made publicly available Additionally, a sufficient time frame must be established between the announcement of any new or revised fees and their implementation Furthermore, customs processing fees are required to be capped at a level that reflects the actual costs associated with the specific import or export activities involved (TFA WTO, 2014).
In Vietnam, the Ministry of Finance (MOF) oversees the management of fees and charges related to import and export activities in accordance with WTO regulations Customs officers and border agencies adhere to established procedures for collecting these fees, as detailed in Annex 1, and conduct regular checks and reporting The country fully implements the Trade Facilitation Agreement (TFA) requirements, ensuring transparency in fees and charges associated with imports, exports, and penalties Customs officers strictly comply with the relevant legal regulations during the release and clearance of goods.
Article 7.8 of TFA (WTO) mentions that each member shall adopt or maintain procedures allowing for the expedited release of at least those goods entered through air cargo facilities, while maintaining customs control Besides,members shall minimize the documentation required for the release of expedited shipments and provide for those to be released under normal circumstances as rapidly as possible after arrival.
Vietnamese customs officers can expedite the release of goods upon request from enterprises, streamlining the customs clearance process Simplified documentation requirements, such as pre-arrival processing of goods information and single submission of data, enhance efficiency Clear procedures for expedited release necessitate close cooperation between customs officers and businesses, utilizing E-documents and online declarations Well-trained customs personnel possess the necessary expertise to manage expedited clearances effectively, supported by advanced technology Consequently, Vietnam successfully ensures compliance with expedited goods clearance regulations.
2.1.6 Movement of goods intended for import under customs control (Article 9)
Current status of the implementation of Category B in Vietnam
Category B comprises provisions that Vietnam will implement after a transitional period following the entry into force of the Agreement, including Art 1 (1.1), Art 5 (5.1, 5.2), Art 6 (6.3), Art 7 (7.2, 7.3, 7.5, 7.6, 7.7 and 7.9), Art 10
10.8) Art 11 (11.16, 11.17) and Art 12 The legal framework that Vietnam applied in each of those provisions are clearly stipulated at Annex 2.
2.2.1 The publication and availability of information (Article 1.1)
Members are required to promptly publish all import, export, and transit procedures and related rules in a non-discriminatory and easily accessible manner This transparency allows governments, traders, and other interested parties to familiarize themselves with these regulations (TFA WTO, 2014).
Vietnam employs various methods to disseminate information, including organizing conferences, dialogues, and utilizing websites, newspapers, and magazines, as well as posting on information boards within each unit Additionally, the country adheres to specific standards for information publication, which encompasses two categories: draft legal documents and officially promulgated legislative documents.
When drafting legal documents, the responsible agency must gather input from affected entities and relevant organizations, clearly outlining the topics for feedback The complete draft must be published on the agency's information portal for a minimum of 60 days, unless it falls under simplified procedures Should the agency make revisions during the comment period, the updated draft must also be made available.
Legislative documents must be sent to the Vietnam News Agency within three days of their publication or signing by the competent authority The agency will then publish the complete legislative document in the Official Gazette within 15 days for central regulatory agencies and within seven days for local government units, starting from the date the document is received.
While Vietnam effectively fulfills its commitments, there are areas for improvement, including the formal presentation of published information, the need for skilled personnel to manage and continuously update the information, and the overall quality of the database system.
2.2.2 Other measures to enhance impartiality, non-discrimination and transparency (Article 5.1 and Article 5.2)
2.2.2.1 Article 5.1: The notifications for enhanced controls or inspections
Under Article 5.1, a Member can implement a notification system to enhance border controls and inspections for foods, beverages, or feedstuffs to protect human, animal, and plant health This notification can be issued and terminated promptly when the relevant circumstances change, with timely publication of its termination or notification to the exporting Member or importer Vietnam is committed to fulfilling this requirement by the deadline of 31.
December 2021 (6 years after the ratification).
Vietnam has established specific procedures for issuing outbreak declarations, including criteria for declaring and ending outbreaks, as outlined in Decision 02/2016/QD-TTg However, there is no designated authority for general warnings, with various ministries responsible for different sectors: the Ministry of Science and Technology (MOST) for general goods, the Ministry of Health (MOH) for food safety, and the Ministry of Industry and Trade (MOIT) for industrial equipment Additionally, coordination among these agencies is inconsistent, and there is a lack of an adequate IT system to support emergency responses, resulting in ineffective inspection and control measures.
Under Article 5.2, members are required to promptly notify the carrier or importer if goods declared for importation are detained for customs inspection or by any relevant authority (TFA WTO, 2014) Vietnam is committed to fulfilling this obligation by 31 December 2022, seven years post-ratification.
Since its implementation in 2014, Vietnam Customs has utilized the Automated Cargo Clearance System (VNACCS/VCIS) to provide businesses with immediate notifications regarding the status of their consignments during customs clearance However, the lack of automated systems in other ministries and agencies often results in delays for written notifications.
2.2.3 Penalties Disciplines on Fees and Charges imposed on or in connection with importation and exportation (Article 6.3)
Vietnam is committed to implementing the specified article by December 31, 2021, six years after ratification Each Member is required to ensure that penalties are proportionate to the facts and severity of the breach Additionally, a written explanation must be provided to those penalized, and if an individual voluntarily discloses a breach before it is discovered by customs, this should be considered as a potential mitigating factor.
The current implementation of this article is as follows:
All government agencies maintain dedicated administrative units tasked with managing administrative sanctions For instance, the General Department of Vietnam Customs (GDVC) has an Anti-Smuggling and Investigation Department, while Local Customs Departments and their sub-departments also oversee the enforcement of these sanctions Additionally, specialized management ministries have established units specifically for addressing administrative sanctions.
The procedures for addressing administrative violations include documenting the violation, transferring case files for penal liability assessment or administrative sanctions, and extending decision-making timelines for serious cases beyond departmental authority Additionally, these procedures involve making and executing sanctioning decisions, as well as managing the financial penalties collected from administrative violations.
-There are already specified and detailed procedures of the Penalties disciplines on fees and charges for customs processing imposed on import/export:
This article discusses the principles and forms of sanctioning, including maximum fine levels across various fields, and outlines the remedial measures available for addressing administrative violations It details the competencies required to impose sanctions, the procedures for sanctioning, and the execution of sanctioning decisions, including coercive measures Additionally, it examines the consideration of extenuating circumstances and the policies and procedures for evaluating such circumstances or pursuing conciliation.
While the procedures outlined are generally clear and comprehensive, they may not effectively motivate businesses to identify errors independently or address violations involving entities outside the country or those lacking a specified address.
2.2.4 Release and Clearance of Goods (Article 7.2, 7.3, 7.5, 7.6, 7.7 and 7.9)
Each Member is required to establish procedures that permit electronic payments for customs duties, taxes, fees, and charges related to import and export activities, as outlined in the TFA WTO 2014 Vietnam has committed to implementing these electronic payment options by December 31, 2020, which is five years following the ratification of the agreement.
Current status of the implementation of Category C in Vietnam
Category C outlines Vietnam's commitments to implement specific provisions after a transitional period post-Agreement enforcement, emphasizing the need for assistance and capacity-building support, as detailed in Article 1 (1.2).
Art 3, Art 5 (5.3), Art 6 (6.3), Art 7 (7.1, 7.4), Art 8, Art 10 (10.4, 10.9) and
(11.5-11.15) The legal framework and requiring supports that Vietnam applied in each of those provisions are clearly stipulated at Annex 3.
2.3.1 Publication of information through the Internet (Article 1.2)
Each Member is required to provide and regularly update online all necessary procedures, forms, and documents for importation, exportation, and transit, including contact information for enquiry points that guide interested parties on practical steps (TFA WTO, 2014) This commitment must be fulfilled by 31 December 2022, seven years post-ratification Vietnam has established a legal framework to implement these requirements, and current procedures are now in effect.
The Internet serves as a vital resource for various types of information, including legal documents, administrative procedures, customs procedures, and customs declaration forms It also provides essential lists of import and export goods, tax schedules related to these goods, and notices of prior rulings, facilitating easier access to important regulatory information.
For legal documents, publication must occur in the Official Gazette and on relevant websites The drafting agency is tasked with preparing and gathering the necessary documents for online dissemination, while the Official Gazette is responsible for editing these documents to align with the established sample format.
+ For guiding documents: The drafting agency will be responsible for preparing the content and posting the original information on its official website.
+ Contact information of enquiry points: posted on the websites of agencies or posted at the offices of the agencies managing each specialized field.
The institutional framework involves various departments, agencies, and functional units that collaborate to update and disseminate professional information to specialized departments for publication For instance, the Customs authority utilizes specialized sections, such as its electronic portal and customs newspaper, to gather, edit, and publish relevant information online.
Government websites, including those of the Ministry of Finance (MOF), General Department of Vietnam Customs (GDVC), and local Customs Departments, are regularly updated with essential information such as HS codes and import/export tariffs However, while the information technology system is established, it suffers from a lack of synchronization, and the web design often fails to meet user accessibility needs.
Article 3 mentions that each Member shall issue an advance ruling in a reasonable, time-bound manner to the applicant that has submitted a written request containing all necessary information and shall endeavour to make publicly available any information on advance rulings which it considers to be of significant interest to other interested parties, taking into account the need to protect commercially confidential information (TFA WTO, 2014) Vietnam commits to implement this article by 31 December 2022 (7 years after the ratification) Currently, Vietnam has implemented the procedures as follows:
Customs authorities are authorized to issue prior determinations regarding tariff classification and origin, as outlined in paragraph 9 (a) of this Article However, there is currently no provision for prior determinations concerning the additional matters specified in paragraph 9 (b).
- The advance rulings are binding with customs and the applicant.
- The validity of a judgment is reasonable (3 years).
Requests for advance rulings must be submitted in writing and will be made public The conditions and procedures for canceling, invalidating, or amending an advance ruling are outlined in Article 7 of Circular 38 and Article 1 of Circular 39.
The procedures regarding the application process for advance rulings, their distribution to customs authorities and traders, and the supervision of their implementation during customs clearance have been established However, there is a need for ongoing updates and amendments to these procedures to ensure their effectiveness.
Upon request, a Member may allow a second test if the initial test of imported goods shows an adverse result, considering the second test's outcome for the release and clearance of the goods The Member must also inform the importer where the test can be conducted (TFA WTO, 2014) Vietnam is committed to implementing this article by December 31, 2024, nine years post-ratification, and has already established the necessary procedures.
-When there is a complaint from an enterprise, it is legal that this enterprise could take a sample to conduct re-inspection at third inspection unit.
There are three main types of inspection and examination activities related to customs: 1) State inspection of quality conducted by the Center for Standards Quality and Technical Measurement No 1 and specialized agencies; 2) Inspection of conditional import and export goods, including prohibited items and food safety, performed by state management agencies and specialized ministries; and 3) Goods checking and analysis for tax calculation classification carried out by licensed commercial assessment organizations, the Customs Inspection Department, and the General Department of Vietnam Customs (GDVC).
-There is already an automated system for exchanging the inspection results among the Customs units at the department level and the general department level (via the VNACC/VCISS system).
The National Single Window facilitates management and specialized inspection procedures among various ministries; however, the electronic processes are not fully implemented Businesses still need to submit paper documents to specialized inspection agencies, and the digital processes are often only partially applied, frequently limited to the registration step.
Conducting inspection activities faces several challenges, including a shortage of skilled personnel to effectively assess and manage cargo inspection operations, as well as the absence of standardized equipment necessary for analyzing goods samples.
2.3.4 Release and Clearance of Goods (Article 7.1 and 7.4)
Article 7.1 mandates that each Member establish procedures for submitting import documentation and other necessary information, such as manifests, to facilitate the processing of goods before their arrival This aims to expedite the release of goods upon arrival Additionally, Members are encouraged to allow for the advance submission of documents in electronic format for pre-arrival processing Vietnam is committed to implementing these measures by the deadline of 31.
December 2024 (9 years after the ratification).
Evaluating the current implementation of the TFA in Vietnam
2.4.1 Achievements that Vietnam has completed in the implementation of the TFA
Since the approval of the TFA WTO Agreement in 2015, Vietnam has made significant progress in fulfilling its commitments under the agreement, successfully implementing the required WTO standards.
2.4.1.1 Vietnam has completed the review, assessment and classification of the TFA commitments into categories A, B and C and has made detailed plans to implement these commitments according to the committed schedule.
Vietnam has fully complied with 15 Category A commitments of the Trade Facilitation Agreement (TFA), which are set to be implemented immediately upon the TFA's enforcement The country continues to monitor and effectively implement these provisions as part of its ongoing customs modernization efforts.
The commitments outlined in categories B and C of the TFA aim to enhance the implementation capacity for TFA Members from developing and least developed countries The Vietnam Customs Authority, in collaboration with relevant ministries and agencies, has assessed and proposed an official roadmap for executing these commitments and has communicated this plan to the WTO.
2.4.1.2 Vietnam has been continuously improving the legal and institutional framework to implement its commitments under the TFA Agreement: many legal documents have been reviewing, amending, issuing or being in the process to be developed in order for the TFA requirements (explained in detailed in Annex 1,2 and 3) The implementation has also been strictly conducting, regularly reviewing and assessing to supplement the necessary contents for the TFA requirements The establishment and operation of the National Committee on Trade Facilitation (NTFC) under the Government's Decision No 1899/QD-TTg of October 4, 2016, to directly advise, order and regulate the implementation of Vietnam's commitments in TFA has also been implemented according to the TFA requirements.
2.4.1.3 Vietnam has also mobilized technical assistance to implement the TFA Agreement: After the World Bank's support for the construction and development of the e-commerce portal to fulfill the information transparency obligations of the TFA Agreement, Vietnam has received the relevant technical assistance proposals for the implementation of the TFA Agreement as follows:
The United States Agency for International Development (USAID) is supporting Vietnam through the Trade Facilitation Program (TFP), aimed at reforming, standardizing, harmonizing, and simplifying administrative procedures to align with the International standards of the Trade Facilitation Agreement (TFA) With a total funding of $25 million, this project has been in effect from October 2018 to October 2023 and consists of four key components.
(i) Harmonizing and simplifying interdisciplinary policies and procedures;(ii) Strengthening coordination between central and local levels of government authorities;
(iii) Promoting implementation at the local and inter-local levels;
(iv) Fostering cooperation between Customs and the private sector.
-The Mercator program is supported by the World Customs Organization (WCO), focusing on four areas including:
(ii) Coordinate with border management authorities;
2.4.1.4 Enhance dissemination and propaganda of the TFA Agreement widely to ensure that: the consistent application of the TFA Agreement in accordance with the commitments in the WTO; concerned ministries and agencies, especially border management agencies, are aware of their obligations and responsibilities in implementing the TFA; increase awareness of the TFA provisions and commitments to the public authorities and business communities, especially customs officers, by organizing propaganda and dissemination seminars, integrated in annual professional seminars and customs-business consultation forums.
2.4.1.5 In the field of customs reform and modernization: Recently, with synchronous implementation of reform and modernization in terms of building a legal basis, reforming processes, procedures and lifting up high efficiency of application of information technology in management, expanding the application of modern management methods, using modern equipment to improve the efficiency of inspection, supervision, control and maritime industry, Customs have raised the level of professionalism and depth in carrying out customs operations according to the set targets.
The objectives related to customs procedures, supervision, tax administration, and control, along with post-clearance inspections and performance indicators, have been effectively implemented in line with established orientations The successful execution of the customs reform and modernization plan has significantly addressed existing deficiencies, ultimately enhancing operational efficiency across various business segments.
As of March 2020, the General Department of Customs has developed a stable IT system, VNACC/VCIS, that effectively supports key customs management areas, including customs procedures, tax payments, goods management at seaports, risk management, post-clearance inspections, violation handling, online public services, and the implementation of the National Single Window.
16 component databases, including 12 component databases serving customs operations management.
2.4.1.6 Result of the OECD trade facilitation indicators in Vietnam
Vietnam is classified as a lower middle-income country and faces significant challenges in meeting the WTO trade facilitation agreement According to the OECD's 2020 trade facilitation indicators, there is a gap of approximately 3 to 4 points between Vietnam and high-income countries Despite this, Vietnam's trade facilitation indicators surpass those of several regional neighbors, including Laos, Cambodia, Indonesia, Malaysia, Myanmar, and the Philippines.
The OECD Trade Facilitation Indicator (TFI) for Vietnam stands at 15.001, which is notably higher than its ASEAN neighbors, including Laos at 7.649, Cambodia at 10.8, and Myanmar at 5.881 While Vietnam's TFI is competitive, it is slightly lower than Thailand's 15.149 and significantly below Singapore's 19.29, indicating room for improvement in trade facilitation practices.
Figure 2.1: The OECD trade facilitation indicators in Vietnam
Source: OECD - sim.oecd.org
2.4.2 Difficulties of the implementation of TFA in Vietnam
The global situation is expected to remain complex and unpredictable in the near future, particularly following the COVID-19 outbreak that originated in China and spread worldwide, significantly impacting public health and the global economy Vietnam faces several challenges, including the reduction of tariffs and compliance with international agreements, fluctuations in high-tax goods like gasoline and automobiles, and issues related to smuggling and trade fraud These factors will notably influence Vietnam's economic landscape Amidst the ongoing slowdown of the world economy and US-China trade tensions, Vietnam must navigate both opportunities and challenges Consequently, the implementation of the Trade Facilitation Agreement (TFA) in Vietnam encounters several difficulties that need to be addressed.
2.4.2.1 Difficulty of the conflict between TF requirements and effective management requirements of government.
In developing countries, the legal system faces significant challenges, impacting the professionalism of import-export companies The prevalence of smuggling enterprises and corruption among customs officers complicates the effective implementation of trade facilitation (TF) measures.
In 2013, the Tan Son Nhat Customs Department intercepted a significant amount of illegal drugs being imported into Vietnam by air, either for local consumption or transit to other countries Notably, under the TF regime, 600 packs of heroin were seized en route to Taiwan This situation highlights the ongoing challenges faced by Customs in balancing trade facilitation with stringent management requirements While there is a desire to open markets and reduce trade barriers, it is equally crucial to safeguard borders against crime and illegal smuggling.