The final countdown has begun for enactment of the World Trade Organization’s Trade Facilitation Agreement, forecast to boost global merchandise exports by $1 trillion annually by slashing costs and cutting red tape at the border.
The number of countries ratifying the TFA reached 100 on Nov. 29 when Dominica and Mongolia finalized their approval.
Just 10 more ratifications from members, representing two-thirds of WTO members, are needed to bring the TFA into force.
According to a 2015 study from WTO economists, full implementation of the TFA would reduce members’ trade costs by an average of 14.3 percent, with developing countries having the most to gain. The TFA also has the ability to reduce the time to import goods by over a day and a half, while also reducing time to export by almost two days, representing a reduction of 47 percent and 91 percent, respectively, over the current average.
Concluded at the WTO’s 2013 Bali Ministerial Conference, the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.
Besides benefiting existing traders, implementing the TFA is expected to help new firms export for the first time. If the TFA is fully implemented, developing countries could increase the number of new products exported by as much as 20 percent, with least-developed countries likely to see a much bigger increase of up to 35 percent, according to the WTO study.
The U.S. is among the 98 previous countries to accept the TFA, including major trading powers China and the European Union.
At a meeting of the Preparatory Committee on Trade Facilitation last week, the chair of the committee, Mariam Salleh of Malaysia, said, “intense efforts are finally about to bear fruit.”
The TFA broke new ground for developing countries and LDCs in the way it will be implemented. For the first time in WTO history, the requirement to implement the agreement was directly linked to the capacity of the country to do so. In addition, the agreement states that assistance and support should be provided to help them achieve that capacity.