Brussels, 08/03/2013 (Agence Europe) - The European Commission is committed to favouring a WTO agreement on trade facilitation - the advantages of which would particularly benefit developing countries.
Besides certain elements of the agricultural chapter and the chapter on special and differentiated treatment including the needs of the least developed countries (LDCs), trade facilitation (regulations and formalities, simplification of customs procedures) is one of the important sections of the Doha Round negotiations which the WTO member countries will tackle at their next WTO ministerial conference in Bali on 3-6 December, ahead of partial agreements (see EUROPE 10794). And the EU intends to support the conclusion of an agreement on an essential chapter for developing countries - countries to which the Doha Round (which was initiated in 2001 and which has been blocked since 2008) is expected to be dedicated.
Trade facilitation refers to measures aimed at simplifying, modernising and harmonising merchandise import, improving tax collection at the border, and export and transit procedures - particularly customs requirements. Possible measures include simplifying rules, reducing and standardising customs forms, and computerisation. A WTO agreement on facilitation would create an international framework for reforms on this area.
Currently, a gap separates developed countries and developing countries with regard to border procedures. On average, OECD countries demand five documents at customs and it takes them ten days to clear goods at a cost of about €735 per container. In contrast, African countries need on average twice as many documents, up to 35 days to clear exports and 44 days to clear imports, at an average cost per container of €1285 and €1535 respectively. The OECD estimates that reducing global trade costs by 1% would increase world income by more that $40 billion, 65% of which would go to developing countries.
Several developing countries have already carried out reforms. For a modest investment of about €2-8 million, the benefits can be huge. According to the OECD's Global Aid for Trade Review 2011, customs reform in Cameroon increased revenues by 12%. In Mozambique, where goods now clear customs in two to five days compared to 30 days previously, customs reform increased revenues by 50%. In sub-Saharan Africa, cutting time spent at the border by 5% could achieve a 10% increase in intra-regional trade and clearly reduce revenue losses from inefficient border procedures - revenue losses which can exceed 5% of GDP. Furthermore, the costs of implementing the reforms for trade facilitation are relatively modest, although costs will vary from country to country. The World Bank estimates costs ranging from $3 to $11 million, and the OECD from $3.5 to $19.7 million.
In a press release on 8 March, European Commissioner for Trade Karel De Gucht says he “sees only good opportunities” in concluding a WTO agreement on this chapter. “Trade facilitation is about better customs procedures, cutting red tape, fighting corruption, and cutting costs for business. Cutting the cost of trade by just 1% would increase worldwide income by over €30 billion and two thirds of this would go to developing countries. Getting agreement in the WTO on trade facilitation would also send a powerful signal about the strength of the multilateral trade system and its ability to produce tangible results for the international community”, De Gucht states. “Making it easier and cheaper to trade will help developing countries to better integrate in the regional and global trade system. This will contribute to facilitate trade development and diversification, (…) and the wider sharing of the benefits”, says European Commissioner for Development Andris Piebalgs, promising EU support for an agreement in Bali.
Trade facilitation falls under aid for trade, which covers all financing for trade or trade-related activities. The EU and its member states are the largest provider of aid for trade in the world (30% of the $10.7 billion provided by the rich countries). (EH/transl.fl)