WTO sees up to $3.6 trillion boost to trade from TFA deal

The Trade Facilitation Agreement (TFA) sets forth a series of measures for facilitating the movement of goods across borders inspired by best practices from around the world. It is the first multilateral trade agreement to be concluded since the World Trade Organization (WTO) was established 20 years ago.

Initially it was thought that the benefits of the treaty could reduce trade costs by more than 14 percent for low-income countries and 13 percent for upper income countries. Once the new rules come into effect, it will cut red tape at the borders, standardize customs procedures such as waiting times, lessen the potential for corruption, and hasten foreign direct investment into weaker economies. Recent calculations by the WTO however have estimated that it could add close to $3.6 trillion to the $19,002 billion annual global merchandise exports. That will do more to boost trade than if all the world’s import tariffs were removed, cutting costs 9.6 to 23.1 percent.

“You could say that it’s global trade’s equivalent of the shift from dial-up internet to broadband,” WTO Director-General Roberto Azevedo said.

The agreement, which was created in December 2013, will come into full force when two-thirds (or 106) of the 161 WTO members have ratified it. An amendment protocol for the TFA was adopted by the General Council in November 2014 to bring he TFA into the WTO’s legal framework. Hong Kong was the first member state to accept the agreement and to date 50 members have ratified it. Azevedo hopes that the agreement would conclude by the end of 2016.

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National Sovereignty and the Goal of Self-Preservation /International Marketing 10th edition/

A country’s self-preservation is most threatened when its national sovereignty is at stake. Sovereignty is the complete control exercised within a given geographic area, including the ability to pass laws and regulations and the power to enforce them. Governments or countries frequently view the existence of sovereignty as critical to achieving the goal of self-preservation. Although sovereignty may be threatened by a number of factors, it is the relationship between a government’s attempt to protect its sovereignty and a company’s efforts to achieve its own goals that are of primary interest to us.

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Sovereignty supremacy of authority or rule free from external control

Subsidiaries or branch offices of international companies can be controlled or influenced by decisions made at headquarters, beyond the physical or legal control of the host government. Therefore, foreign companies are frequently viewed as a threat to the host country’s national sovereignty.

(It is important to recognize in this context that perceptions on the part of host countries are typically more important than actual facts.)

Many attempts at restricting foreign firms are now discouraged under agreements established by the WTO. Still, these agreements exclude a number of sensitive areas. Countries often limit foreign ownership of newspapers, television, and radio stations for reasons of preserving national sovereignty. They fear that if a foreign company controlled these media, it could influence public opinion and limit national sovereignty. Internet businesses can be especially vulnerable to government censorship. Google’s YouTube has been banned or temporarily blocked in China, Turkey, and Thailand in response to postings deemed insulting or threatening by the national governments of those countries. Google concedes that balancing free expression and local laws is a delicate task.

The whole book is available here.