The Agreement on Trade Facilitation was adopted at the World Trade Organization’s 9th Ministerial Conference in Bali, Indonesia, in December 2013. This Agreement is the first major agreement to have been reached by WTO Member States since the conclusion of the Uruguay Round 20 years ago.
Barely was the ink dry on the Uruguay Round of multilateral trade negotiations concluded in 1993 than some WTO Member States were already thinking about the next round. Amongst the issues that featured in this thinking was trade facilitation. The uncertainty over how long it will take to clear a border crossing creates unpredictability, and adds cost to business that are eventually passed on to consumers in countries where consumers are least able to afford them. Uncertainty in supply chains also acts as a disincentive to potential business investors, who rely on efficient supply chains to minimise inventory costs. Companies have to tie up capital in extra holding costs above the levels that should be necessary. This is especially true for businesses in developing countries, which face these delays and uncertainties on a daily basis.
Inefficient border procedures also add costs to the very authorities whose job it is to control the borders. Over-zealous inspection can actually delay revenue collection. When authorities are intent on maximizing collection from import duties and other border taxes by checking every consignment that passes across the border, they cause queues to form at border points; with faster traffic-flows, revenues could be collected more efficiently post-clearance from compliant traders.
Trade facilitation aims at simplifying not only the documentation required to clear goods, but also the procedures employed by border agencies. Focusing on the biggest risks allows border agencies to speed up the flow of goods across the border, and increases the collection of duties. Trade facilitation has been described as a classic ‘win-win’ subject for developing and developed countries, since there should be no losers. Yet some developing countries have been concerned about the potential costs of implementing trade facilitation commitments, and have sought commitments from developed countries and other donors to assist in the implementation process.
WTO members finally agreed to add trade facilitation to the Doha Development Agenda in 2004. The Agreement reached at Bali in late 2013 provides a framework of rights and obligations that should see reform of border procedures around the world, if legitimate requests from developing countries for technical assistance are met.
The agreement has the potential to be of particular benefit to traders in developing countries, who continually face lengthy and costly border delays. It will be important for business in developing countries to monitor its implementation in the countries with which they trade. This simple guide aims at helping business understand the obligations that developing countries have accepted – or will in due course accept, so that they can work in partnership with governments to arrive at outcomes that will benefit governments and traders alike.
Find the guide here.