The multilateral trade system reached a major milestone on Wednesday 22 February, with the entry into force of the WTO trade facilitation agreement (TFA) – which was concluded at the WTO ministerial conference in Bali in 2013. The TFA contains a package of rules to simplify and ease customs procedures, and to increase the participation of developing countries in world trade. When fully implemented, it could cut trade costs by 14.3% and increase the volume of world trade in goods by $1 trillion per year.
On Wednesday, Rwanda, Oman, Chad and Jordan deposited their TFA ratification instrument with the WTO, binging the number of member countries that have now ratified this agreement to 112 – in other words, two ratifications more than the number required (110, or at least two thirds of the 164 member countries) to ensure the agreement's effective entry into force.
Comprising 12 articles, the TFA prescribes a number of measures to increase the transparency and predictability of cross-border trade and to ensure a less discriminatory economic environment. Its provisions are aimed at improving the availability and publication of information on procedures and cross-border practices, and at strengthening traders' rights of appeal, reducing charges and formalities relating to the import and export of goods, accelerating clearance procedures and improving conditions on the freedom of transit of goods. The TFA also provides for measures to ensure effective cooperation between customs and other authorities on trade facilitation and respect for customs requirements.
The TFA allows developing countries and the least developed countries (LDCs) to set their own timetable for implementation, according to their capacities. A mechanism for the TFA has been created so that they can receive the necessary help for taking full advantage of the agreement and contributing to its full implementation by all the WTO member countries.
According to a study carried out by the WTO in 2015, full implementation of the TFA is expected to lead to an average fall in trade costs of 14.3%, largely to the benefit of developing countries. The TFA is also expected to cut the time for importing goods by over a day and a half (-47% in relation to the current average time) and by nearly two days for exporting goods (-91% in relation to the current average time). Implementation of the TFA is also expected to help new companies export for the first time, enabling a 20% increase in the number of new products exported by developing countries (+35% for LDCs).
The TFA "would boost global trade by up to 1 trillion dollars each year, with the biggest gains being felt in the poorest countries. The impact will be bigger than the elimination of all existing tariffs around the world", says WTO director-general, Roberto Azevêdo.
"Better border procedures and faster, smoother trade flows will revitalise global trade to the benefit of citizens and businesses in all parts of the world. Small companies, that have a hard time navigating daily bureaucracy and complicated rules, will be major winners", says European Commissioner for Trade Cecilia Malmström.
The TFA will enable transparency to be strengthened, SME participation in global value chains to be stimulated, and risks of corruption to be reduced, the Commission states.
The EU has mobilised €400 million to help developing countries implement the necessary reforms to come into line with the TFA rules, and to ensure their increased participation in world value chains, the Commission concludes. (Original version in French by Emmanuel Hagry)