G/TFA/W/6  
 
14 June 2018  
(18-3716) Page: 1/5 
Committee on Trade Facilitation  Original: English  
 
THE ROLE OF " NOTICE AND COMMENT " AND RELATED ADMINI STRATIVE  
PROCEDURES IN TRADE FACILITATION IMPLEME NTATION  
COMMUNICATION FROM T HE UNITED STATES  
The following communication, dated 14 June 2018, is being circulated at the request of the  
delegation of the United States.  
 
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1  INTRODUCTION  
Among the most significant obstacles to international trade and investment, particularly for small 
and medium -sized enterprises (SMEs), are unnecessary and burdensome " red tape ", or border and 
behind -the-borde r procedures and costs.  Overly restrictive and non -transparent requirements 
related to the movement, release, and clearance of goods, including goods in transit, 
disproportionately impact SMEs, who have limited monetary and personnel resources to manage 
these contingencies. SMEs often spend considerable sums of money to procure or manufacture 
quality products for trade, and only discover new or unfamiliar requirements when their products 
arrive at a destination country  and are presented at customs. Unwritte n and non -transparent 
requirements, delays, and additional costs at the border negatively impact traders on both sides of 
the border and inhibit SMEs from fully participating in commerce including global value chains.  
 
The Agreement on Trade Facilitation ( TFA) has the potential to improve customs procedures by 
making them significantly more transparent and efficient in cooperation with border regulator y 
agencies and private sector. Expediting the movement, release and clearance of goods, including 
goods in transit, will increase the competitiveness of the private sector, especially small and 
medium -sized enterprises (SMEs), by reducing direct and indirect trade transaction costs and 
deepening regi onal supply chain integration.  
 
Through the implementation of TFA Article 1 (Publication) and Article 2 (Opportunity to Comment, 
Information before Entry into Force, and Consultations), WTO Members have the opportunity to 
incorporate internationally -recognized good practices and other innovations in global regulatory  
policymaking, resulting in greater transparency and im proved governance.  These advances will 
specifically benefit SMEs.  
 
The prominence of transparency in publication and rulemaking in the TFA suggests that during the 
intervening years since the GATT 1947  was drafted, Members recognized the necessity for more 
comprehensive and accessible publication of customs -related regulations and procedures, and 
commensurate op portunities for public comment.  These views are supported by independent 
economic studies tha t have shown that reducing policy uncertainty benefits SMEs far  more than it 
does large firms.  Even a small increase in transparency can increase S ME exports by more than 
half.1 Properly understood, these commitments help steer Members toward developing ti me-tested 
mechanisms and procedures for addressing some of the most prevalent impediments to small and 
medium -size businesses, traders, and investors – opaque, difficult to find, complex, and  overly 
burdensome regulations.  
                                                
1 Studies have shown that if transparency improves  by one unit, the probability that an SME will export 
increases by 66 %. Similarly, there is a 53% increase in SME' s export propen sity. Li, Y. and John S. Wilson 
(2009), " Trade Facilitation and Expanding the Benefits of Trade: Evidence from Firm Level Data ", Asia-Pacific 
Research and Training Network on Trade: Working Paper Series, (No. 71.)  G/TFA/W/6  
 
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  SMEs in the United States create two of every three new jobs and account for over one third of US 
exports. Fostering small business innovation therefore is critical to helping raise individuals and 
groups of entrepreneurs, including youth and women, out of poverty; increasing economic 
development and growth; and raising standards of living. From this perspective, arbitrary 
government regulations and procedures, especially at the border, can prevent small business from 
creating new products, competing in the economy, and succeeding in globa l markets.  
 
The history of administrative regulatory reform in the United States suggests that institutionalizing 
more transparent, assessable, and responsive methods for soliciting and channeling public 
participation in the development of regulations, inc luding customs -related requirements and 
procedures, fosters consideration of more adaptable and flexible approaches to rulemaking that 
help innovati ve SMEs to stay in the market. Predictable and streamlined customs -related 
regulations and procedures simila rly help ensure that all individuals and businesses have more 
opportunities to benefit from recent advances in global trade, logistics, e -commerce, and the new 
digital economy.  
 
To fully implement and receive the benefits of the TFA commitments, it is vita l to establ ish 
well-functioning public consultation procedures that allow for all interested persons , regardless of 
where they live or who they are, to have meaningful opportunities to receive timely notice of new 
regulatory proposals and amendments and to offer commen ts to improve these proposals. This 
feedback fosters a dynamic " SME ecosystem " in which entrepreneurs and small businesses  can 
create, innovate, and grow -beyond all frontiers.  
 
2  THE US  APPROACH TO IMPLEMEN TATION OF THE TFA PU BLIC COMMENT AND  
CONSULTATIONS OBLIGA TIONS  
The United States implements key aspects of TFA Article 1 (Publication) and Article 2 (Opportunity 
to Comment, Information before Entry into Force, a nd Consultations) through the US  
Administrative Procedures Act of 1946 (APA), as  amended, and related US regulatory procedures.  
The APA introduced requirements, now in place for decades, that agencies publish all their 
governing procedures and allow any member of the public to petition the agency for a change or 
even a repeal of a r egulation.  
 
The APA established a sin gle set of uniform obligations –"minimum basic essentials" –on all federal 
agencies, whether called Executive Branch or independent agencies as defined i n the law. It 
requires that US  federal agencies provide the public wit h an opportunity to comment on the text of 
the rule or on the substa nce of the regulatory proposal2, including key infor mation underlying the 
proposal.  As a practical matter, an  agency must provide the public –any interested person, whether 
or not a nationa l of the United States –with an adequate opportunity to submit " written data, views 
or arguments"  on the proposed rule.  
 
3  NOTICE AND COMMENT  
For the purposes of implementing TFA Article 2, the important practice under the APA is the 
process fo r "rules". The APA defines "rule" as " an agency statement of general or particular 
applicability and future effect designed to implement, interpret, or prescribe law or policy or 
describing the organization, procedure, or practice requirements of an agency ". In short, a rule 
usually sets a standard for future conduct of persons, designed to implement, interpret, or  
prescrib e law or policy for the future.3 
 
Notice of Proposed Rulemaking : Once an agency has developed the content of a proposed 
regulation, or  "rule", the APA requires that the agency publish a proposed rule in the Federal 
Register in what is known as the Notice  of Proposed Rulemaking (NPRM).  In keeping with evolving 
                                                
2 See APA, 5 U.S.C.  §553(b)(3).  
3 The form of APA rulemaking discussed in this paper is commonly known as informal notice and 
comment rulemaking that is c onducted under 5 U.S.C.  §553. At the time of enactment of the APA, however, 
many agencies engaged in a formal rulemaking through an adversarial hearing l ike adjudication under 5 
U.S.C.  §§556-557. As agency rulemaking has evolved historically since enactmen t of the APA, most Federal 
agency rulemakings have gravitated towards use of the informal notice and comment rulemaking model 
outlined in this paper.  G/TFA/W/6  
 
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  technology, agencies now also post  proposed rules on the single US  Federal Government port al for 
Federal Register notices4, regulations. gov, and on their own websites.  
 
The APA requires agencies usually to hold proposed rules open  for comment for a period that 
"affords interested persons a reasonable and meaningful opportunity to partici pate in the 
rulemaking process ". In practice, this normally ranges from between 30 to 60 days to much long er 
for more complicated rules.5 Further, as noted above, "interested persons"  means effectively any 
person at all, regardless of whether the person is in the Unit ed States.  
 
Under the APA, the agency must provide the public with sufficient information about the proposal 
to fairly apprise interested parties of the subjects and issues involved, so that the public may 
present responsive data or arguments. Accordingly,  the notice usually includes several e ssential 
pieces of information:  
 
• the draft text of the proposed rule;  
• a preamble explaining the need for the rule and the specific efforts made by the agencies 
to formulate the rule to meet that need; and  
• a plain langu age explanation of the rationale for the proposed approach, including a  
summary of the factual or scientific basis for the rule.  
 
In keeping with evidence -based decision -making requirements, in addition to the proposed text of 
the regulation, the informati on on which the agency relied to support its proposal must also be  
submitted for public comment. Therefore, the public is provided an opportunity to comment on any 
scientific or  economic analysis relied upon. In addition, US  agencies are required to consid er 
whether a proposed regulation may have significant adverse economic effects on a substantia l 
number of small enterprises. If so, regulators must publish for comment a description of the 
anticipated direct economic impacts of the proposal on small enterp rises and consider potential 
steps to minimize such adverse economic impact, consistent with legitimate regulatory objectives . 
 
Public Com ments Considered and Analyzed : Once public comments are submitted in response 
to a notice, regulators are required to consider and analyze any significant comments timely 
received from all interested stakeholders, from any source, without discrimination. This means that 
regulators may need to clarify or even change the rule to address substantive iss ues presented by 
the comments. If they do not do so, the y must later explain the Agency' s rationale for disagreeing 
with the comment or the rationale for how the issue was otherwise addressed. This occurs when 
the agency summarizes and provides responses to significant comments  at the time the final rule 
is published.  
 
While reviewing what can often be thousands of comments may present a daunting challenge, the 
exercise is a technical one that  applies regulatory expertise. Each comment is considered on its 
own merits, in terms o f the information or questions posed, rather than, for example, based on the 
importance or status of the author, or the number of people supporting it.  
 
Issuance of Final Rule – Accountability : The final rule must be published in the Federal 
Register at le ast 30 day s before it comes into effect. The notice must restate the "basis and 
purpose" of the rule. As noted above, all significant comments received are addressed by the 
agency and published at the end of the final regulation, including:  
 
• a summary of c omments received;  
• written responses to comments, which elaborate why the agency accepted or rejected 
each of the comments received; and  
• a description of the resulting changes (if any) in the final rule.  
 
The APA requires that the final rule be a logical outgrowth of the original proposal and the public 
comments, and that the final rule be rationally related to the available information in the 
administrative record, which includes timely received public comments.  
 
Judicial Review : As specified in the APA, after a final rule is pub lished (along with the agencies'  
extensive explanations), affected parties may challenge the legality of a regulation in  court on the 
                                                
4 See APA, 5 U.S.C.  §553(b).  
5 See APA, 5 U.S.C.  §553( c). G/TFA/W/6  
 
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  basis that it is " arbitrary, capricious, an abuse of discretion or otherwise not in accordance wi th 
law". 
 
4  EXAMPLES – CUSTOMS RULEMAKING  
As stated above, governmental agencies publish notices of proposed rulemaking and solicit 
comments from the public. The public comm ents may shape the final rule. Below are some 
examples when U S Customs and Border Protection (CBP) revised a proposed rule based on 
comments received regarding the needs of small and medium enterprise.  Each involved licensing 
customs brokers.  
 
Example – Age Requirement for Customs Brokers . In one example, CBP propos ed a change 
which would have raised the age requirement for a person to take  a customs brokers exam  from 
18 years of age to 2 1 years of age. This would align with the age req uirement for obtaining a 
broker's license . However, CBP received a number of comme nts on the proposed rule objecting to 
the change, and specifically raising concerns that raising the age requirement to 21 would inhibit 
the career potential of individuals who can currently take and pass the examination and 
subsequently apply to obtain a customs broker 's license promptly upon turning 21. In the 
explanation accompanying the final rule, CBP noted that after further considering the age limit 
issue, CBP agreed with the comments that the age requirement should not be changed because it 
would in crease costs and burden traders and customs brokers. Under the final rule, the age 
requirement to take a customs brokers exam remained 18 years of age.  
 
Example – Criteria for Sharing Client Information . In another example, CBP published a 
proposed rule re garding "Permissible Sharing of Client Records by Customs Brokers ". In it, CBP 
proposed amending CBP regulations to allow brokers, upon the client' s consent in a written 
authorization, to share client information w ith related business entities. CBP receive d numerous 
comments, the majority of which expressed concern that the proposed rule did not serve the 
interests of the importing public and that it was better and less costly for traders if the brokers 
worked with their clients and made case -by-case determ inations on sharing of client information. 
Ultimately, CBP published a withdrawal of notice of proposed rulemaking . CBP explained that the 
proposed rule was withdrawn to permit further consideration of the relevant issues involved in the 
proposed rulemakin g as reflected in comments received.  
 
5  PERSPECTIVE AND RECO MMENDATIONS  
This submission has outlined the key features of the US Administrative Procedures Act of 1946, as 
amended, which provides the legal basis and processes through which the United States 
implements fundamental oblig ations of TFA Articles 1 and 2.  Key among the features of the APA 
are a set of external procedures  to open participation to interested persons in the review and 
analysis of draft regulations, and a matching set of internal procedu res to channel the received 
public input into accountable, working -level government deliberations.  Togeth er these "notice and 
comment"  procedures allow persons who care about policy and regulatory outcomes to have a 
predictable, structured, and non -discrim inatory opportunity to provide input in to the decision -
making process.  
 
The APA' s notice and comment procedures function alongside a vibrant community of business 
associations and other non -government organizations (NGOs) that help organize often widely 
dispersed interests that might not otherwise participate dire ctly in rulemaking procedures. US  
small businesses, which typically do not have the time, personnel, or resources to monitor 
regulatory changes, account for over 50% of the membership of some of th e best-known  business 
associations and chambers of commerce. These associations serve as key intermediary institutions  
that connect policymaking to the vast network of small businesses throughout the country, and 
thereby facilitate the submission of practical suggestions for modification and improvement into 
the regulatory process.  
 
The APA similarly presents an enabling and accountable framework in which unnecessary obstacles 
to small business and entrepreneurial development, trade, and investment ma y be identified, 
assessed, and "weeded -out" before  they become the topic of international concern. Notice and 
comment, there fore, may be seen to foster public (and international) trust  in regulatory decision -
making.  That is, the public, having collaborated in the development of regulations, may better 
support the ultimate results of agenc y decision -making.  Regulators, likewise,  can better explai n G/TFA/W/6  
 
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  their actions to the public. The act of publishing in the final regulation how an agency took into 
account the written input rece ived from the public serves to "complete the circle"  of openness and 
accountability. After 70  years of expe rience of c onducting federal rulemakings, "notice and 
comment"  continues to serve as one of the  primary drivers  for advancing " evidence -based 
decision -making ", improved regulatory outcomes, and compliance with WTO  Agreement 
obligations –across all the agenc ies of the federal government.  
 
The United States recommends to the Committee that Members are invited to likewise share their 
views and experiences concerning the importance of greater transparency and improved 
governance with a view toward full TFA imple mentation and achieving its aims of further 
expediting the movement, release and clearance of goods, including goods in transit.  
 
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