In 2016 the world was surprised by the passing of Brexit and
Trump winning the US Presidential election. Looking to 2017 from a global trade
perspective, these events make one prediction certain: trade barriers in the
Western Hemisphere will not be lowered.
To what extent there will be an increase in tariff and non-tariff
barriers is unclear, but there is no time like the present to speculate a
An interesting year is ahead, and it’s being kicked off on
January 1 with the 2017 Harmonized System (HS) Nomenclature overhaul per the
latest World Customs Organization (WCO) directions. These changes to the HS Nomenclature will be
one of the largest in recent years, with more than half of the changes
impacting codes in the agricultural and chemical sectors. In total, there will be 233 sets of amendment
revisions. These revisions are meant to address growing global concern around
environmental and social issues as well as the importance of collecting HC
With customs professionals expressing a growing concern about their supply chain compliance/Global Trade Management (GTM) challenges,
the recent political events in the UK and US have led to increasing uncertainty
in the industry. Be prepared for an exciting 2017!
The average global rates have decreased over the years, yet the
question is whether 2017 will buck that trend.
Will the USA walk away from bilateral or multi-lateral Free Trade
Agreements (FTAs), ban countries from General System of Preference (GSP), or increase
duty rates for certain countries of origin to protect domestic manufacturing? Will
Brexit have an effect on the UK – European Union (EU) duty rates? How will the UK re-create their own external
tariff and will it be able to break off UK FTAs from the current EU FTAs? A
step further, it is to be seen if any of these events will affect duty rates
(initially) on a unilateral basis, if there will be repercussions, and whether a
tit-for-tat culture will initiate a tariff war?
It’s all not too likely. Negating
FTAs is not easily done, and the UK will be cautious to create any economic upheaval
that may negatively affect their status as a financial leader in the market.
However, the prospect of an increase in duty rates is
realistic as a number of large economic forces will be closely reviewing their
trade agreements and tariff structures.
Who would have thought the General Agreement on Tariffs and Trade/World Trade
Organisation (GATT/WTO) bound rates books would ever have to be dusted off to
check possible rate increases would not violate these agreements?
Additionally, two other events could impact duties in
2017. It can be expected that the US
will increase pressure on low cost manufacturing, which would lead to a
significant number of new Anti-dumping duties/Countervailing Duties (ADD/CVD)
cases as unilateral duty increases are possibly too obvious. Lastly, China’s growing debt may threaten
current economic stability, but the association with duty rates will likely not
be seen in 2017.
Most likely there will be additional paperwork required for
goods to move between the UK and the EU, and equally likely there will be UK
FTA specific documentation requirements once it is clear how the UK will
rearrange its trade relationships with the current EU FTA partners.
On the artificial side of trade barriers, some token reactionary
measures may be taken to hamper certain trade lanes (read: importing from
China), but expect additional non-tariff barriers to be more in the security,
trademark, and consumer marking areas, specifically security around additional
compliance measures for dual-use goods (a global trend), a stricter enforcement
of trademarked goods, and closer reviews of consumer marking where safety of
products containing certain materials is concerned. For example, ‘simple’
accidents like smart phones catching fire will pave the way for more agencies
ensuring all imported products are safe for handling.
Some 2017 predictions
And now the unofficial 2017 predictions:
Sensibly common ground will be found and China
manufacturing will continue as is, although there will be a face saving
announcement about increased market accessibility of foreign products into
China. This agreement will bear little result.
FTA utilization rates will improve. A common compliance standard (i.e. proof of
eligibility) will be agreed on and this will boost the use of FTAs.
Hopefully, the WCO announces that in 2022 they
will randomly make products obsolete by no longer allowing them to be
classified (i.e. any logical or possible HS codes will specifically exclude
these products). Under consideration are
items such as flip phones, satchels, Yanni CD’s, and toy panda bears holding
One thing is for
certain, 2017 will prove to be an interesting year in the Global Trade