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Spurring global growth via a new Trade Facilitation Agreement

Klaus Tilmes's picture

As the global economy struggles to emerge from its chronic slow-growth stall, policymakers are increasingly focused on an energetic opportunity to help jump-start economic growth: the adoption of the landmark Trade Facilitation Agreement (TFA) that is now nearing ratification and implementation. By helping reduce trade costs and by helping enhance customs and border agency cooperation, a recent WTO report has found, the successful implementation of the TFA’s provisions could boost developing-country exports by between $170 billion and $730 billion per year. The OECD has calculated that the implementation of the TFA could reduce worldwide trade costs by between 12.5 percent and 17.5 percent.
 
Buoying the spirits of those who hailed the broad support for TFA at December’s ministerial conference of the World Trade Organization (WTO) in Nairobi, 68 countries have already ratified the agreement. The number of county-by-country ratifications is fast approaching the total of 107 required for the TFA to go into effect. Adopted in December 2013 at the WTO’s conference in Bali, the TFA is the WTO’s first-ever multilateral accord, having won approval from all 162 WTO member nations. The agreement contains provisions for expediting the movement, release and clearance of goods traveling across borders. It also sets out measures to promote cooperation among customs and border authorities on customs compliance issues.

A recent seminar at the World Bank Group – convened by the Trade Facilitation Support Program (TFSP) of the Trade and Competitiveness Global Practice (T&C) – explored the provisions of the TFA and learned of the increasingly active role of the private sector in supporting the TFA’s enactment. Awareness and momentum are building as a new coalition of private-sector firms – the Global Alliance for Trade Facilitation – mobilizes business support for TFA’s effort to speed and strengthen cross-border commerce. As the seminar heard from Norm Schenk, who serves as the chairman of the International Chamber of Commerce’s (ICC) Commission on Customs and Trade Facilitation, members of the alliance plan to meet in Washington this week to explore strategies for promoting the TFA’s adoption.

As a mechanism for business engagement in the TFA process, the Geneva-based coalition was launched as a platform for public-private cooperation to advance the implementation of key provisions of the TFA, said Schenk, who in addition to his ICC role is the vice president of global customs policy and public affairs for the express delivery firm UPS. Organizations supporting the alliance include the ICC, the World Economic Forum and the Center for International Private Enterprise. The alliance also seeks synergies with the work of such international bodies as the World Customs Organization, the WTO and United Nations Conference on Trade and Development (UNCTAD).

The alliance aims to build a broader understanding of the benefits of trade facilitation; establish multi-stakeholder dialogues on trade; mobilize public-private partnerships by engaging local businesses and associations; provide technical and financial assistance in support of capacity-building; and pursue benchmarking and evaluation based on established business metrics.
 
Launched by T&C in 2014, the TFSP now offers support to almost 50 countries that have committed to implementing reforms to align with the TFA. By helping developing countries implement trade facilitation reforms, the TFSP aims to stimulate increased cross-border trade and investment, thus spurring job creation in the economies of all trading nations. As the TFSP’s leader, Bill Gain, told the seminar, the program is central to the WBG’s support for implementation of the TFA, complementing the WBG’s broader efforts on trade facilitation. Total WBG support for trade facilitation – including both “hard” and “soft” infrastructure – is currently more than $7 billion.

The TFSP has worked with client countries that are focused on such priorities as setting up or strengthening national trade facilitation committees; conducting legal analyses of gaps in the way their national regulations would comply with the TFA; strengthening specific measures like advance rulings, post-clearance audits and simplified procedures for expedited shipments; and implementing national “trade portals.” The TFSP is supported by seven donor partners: the European Union, the United Kingdom, Norway, Switzerland, Australia, Canada and the United States.
 
As the TFA advances toward adoption, T&C and the TFSP are committed to helping client countries anticipate how to implement its provisions, and are eager to continue a wide-ranging dialogue with the Global Alliance for Trade Facilitation. Three ideas of where we could focus our collaboration include:

  • Data, analytics and diagnostics. Through the TFSP, we have conducted detailed assessments of the gaps that need to be addressed for the full implementation of the TFA in 41 countries, based not just on reviews of legislation but on operational assessments of what is required. The Global Alliance, through its private-sector focus, could be in a strong position to complement this with data gathered by private-sector operators on trade facilitation performance at the country level. That could help analyze the problems that need to be faced, and it could also support the continuing monitoring of reform.
  • Supporting reforms to implement the TFA at the country level. Diagnostics and analytics are the first step. The real challenge is implementing lasting reform at the country level. We could work with the Global Alliance to pilot collaboration at the country level, building on our respective strengths, to support reform.
  • Improving global collaboration and advocacy on the TFA. The World Bank Group, along with the WTO and a number of other international organizations, was a founding member of the “Annex D” group of organizations supporting the implementation of the TFA. The informal group collaborates on assistance at the country level, disseminates information about experiences in implementing TFA reforms, and advocates for effective implementation. Working with the Alliance on this global agenda related to the TFA could help strengthen our respective efforts.

 

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