THE TRADE FACILITATION AGREEMENT IN MALAWI: CUSTOMS CLEARING AGENTS

By Tawela Taona Msiska | Associate

‘Trade Facilitation can reduce the cost of trade and spark competitiveness, productivity, innovation and growth’ – Global Alliance for Trade Facilitation.

Introduction

The Trade Facilitation Agreement (TFA or the Agreement) is a binding multilateral trade agreement between members of the World Trade Organization. The agreement was entered into force on February 22nd 2017 and rectified by two-thirds of the WTO members. International businesses face the burden of difficult border requirements and this affects small and medium-sized enterprises the most. The TFA aims to deal with those border requirements by simplifying, facilitating, and harmonizing export and import processes. Furthermore, the TFA sets out provision for release and clearance of goods and expediting the movement of goods, including goods in transit.

Additionally, appropriate authorities of trade facilitation and customs compliance issues are required to effectively cooperate under the Agreement. Malawi has been a member of the WTO since May 31st, 1995 and accepted the TFA by depositing its instrument of acceptance on July 12, 2017. This brief article will discuss the TFA’s operation in Malawi, with particular regard to licencing of customs clearing agents.

Institutional Framework

Currently, the TFA agreement is being implemented in Malawi with the assistance of the Global Alliance for Trade Facilitation [the Alliance]. The Alliance is a public-private partnership led by the Center for International Private Enterprise, the International Chamber of Commerce, and the World Economic Forum, in cooperation with Deutsche Gesellschaft fur International Zusammenarbeit (GIZ). It endeavors to reduce cost and time in trade and to remove obstacles in supply chain. Further, the Alliance facilitates public-private dialogue and delivers various projects around the world through business and political networks. The Alliance is governed by the following donor groups; United States, Canada, United Kingdom, Australia, Germany, and Denmark). The following are the main aims of the alliance:

  1. To establish public-private dialogues on trade facilitation
  2. To deliver country trade facilitation projects
  3. To use data to measure and strengthen the impact of the alliance.

Thus, the alliance delivers projects in countries where governments are dedicated to trade facilitation reforms and where governments and the private sectors are willing to work together Malawi is one of those countries.

Malawi Project: Modernizing Licensing for Customs Clearing Agents

Subject to Article 10.6 of the TFA provides for ‘Use of Custom Brokers’. The Alliance introduced a new licensing framework for agents in Malawi. Under this new scheme or project, the Alliance is working on the licensing framework with the Malawi Revenue Authority (MRA), the Ministry of Trade, Industry and Tourism (MTI), Customs Clearing Agents’ Association as well as Local and International businesses.

The purpose of the project is for the professional development of clearing agents, who take care of customs clearing at borders. The agents will participate in e-learning and get licensed through the support of a scholarship fund. Indeed, this will improve the current state of customs clearing in Malawi which is run by untrained customs agents, inconsistent services, incorrect classification of goods and costly border delays.

The alliance delivered a similar project in neighboring Zambia and the learnings of which will benefit Malawi. The projects in Malawi and Zambia will ensure knowledge and resources sharing to support the harmonization of trade processes in the region.

The project shall equip and qualify professional clearing agents who will help improve the custom clearing in Malawi. Consequently, the customs process will become smoother with less errors in classification while creating regulations and fees obligated on all competing goods. The new improvements will enable local businesses to be more internationally competitive and trade will become cost effective for businesses which will make Malawi an investment attraction. Without a doubt, the project will strengthen the trust and constructive relationship between businesses and the Malawian Government.

As part of its mechanisms, the Alliance will evaluate the impact of the project by assessing the reduction of time spent on customs processing, physical inspection and classification of errors. Additionally, the Alliance will determine how well customs and clearing agents are performing their duties.

Conclusion

This has been a follow-up update of Malawi on the International Trade scene. It is a great stride that Malawi is participating in the implementation of the Trade Facilitation Agreement. Malawi needs to compete and have a far greater presence in the international trade scene, which can be achieved through its participation in international trade regulations such as these.