The Trade Facilitation Agreement that World Trade Organization members concluded in 2013 “is global trade's equivalent of the shift from dial-up Internet access to broadband” and could have a bigger impact on international trade than the elimination of all remaining tariffs, according to the WTO’s annual World Trade Report. The TFA will take effect once it has been ratified by two-thirds (approximately 126) of the WTO’s 191 members, and Pakistan recently became the 51st to take this step.
The TFA aims to standardize, streamline and accelerate customs processes around the world, thus helping to expedite the movement, release and clearance of goods and thereby significantly lower the costs of trade. Specific disciplines in the TFA relate to the publication and availability of information, the opportunity to comment before entry into force of new and amended laws and regulations, advance rulings, procedures for appeal, non-discrimination and transparency, fees and charges, the release and clearance of goods, border agency cooperation, the movement of goods, import/export/transit formalities, freedom of transit and customs cooperation. WTO Director-General Roberto Azevedo said the majority of TFA benefits will accrue to developing and least-developed countries and also provides them with the flexibility to tailor their commitments and implementation schedules according to their specific needs and capacities.
According to the report, full implementation of the TFA could reduce WTO members’ trade costs by an average of 14.3 percent, including 18 percent for manufactured goods and 10.4 percent for agricultural products. Goods exports could rise by up to $1 trillion per year, including $730 billion for developing economies alone, resulting in the creation of between 20 and 30 million new jobs. Perishable agricultural goods and intermediate manufactured goods are likely to see the biggest boost.
The report also highlights previously unseen benefits of the TFA, especially for developing and least-developed countries. One is economic diversification, with the number of new products exported increasing by as much as 20 percent for developing countries and 35 percent for LDCs. Access to new markets could increase by 30 percent for developing countries and 60 percent or more for LDCs. Improvements in trade facilitation structures may also help these countries improve their participation in global value chains, attract more foreign direct investment, reduce the scope for corruption and increase the amount of revenues collected.