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Now that the Trade Facilitation Agreement has entered into force...
By Anabel González, Senior Director of the World Bank Group Global Practice on Trade and Competitiveness.
The entry into force of the WTO Trade Facilitation Agreement on February 22 is a remarkable achievement. The TFA spearheads a global effort to reduce trade costs, helping countries to connect to the global economy. This is particularly relevant for low-income countries who need trade to reduce poverty and nevertheless face costs that are on average three times higher than those of advanced economies.
Entry into force of the TFA is also important as it strengthens the multilateral trading system; and marks a new way of expanding the WTO rulebook while building capacity in developing countries.
Many countries have already made progress towards implementation of the TFA provisions, with support from the World Bank Group, the WTO, and other partners.
The central vehicle for the WBG’s support has been the Trade Facilitation Support Program (TFSP), launched in June 2014 and co-financed by Australia, Canada, the European Union, Norway, Switzerland, the United Kingdom and the United States. Since its launch, over 60 countries have reached out for technical assistance and support to implement the TFA. To date, Bank Group teams have met with several dozen interested countries and have begun working directly with 32 countries:
23. Saint Lucia
A key feature of the TFSP has been its focus on assisting countries to design practical reform strategies, including the development of detailed reform sequencing plans that accord with country priorities, available resources and local implementation capacities.
Early results achieved by the TFSP are promising. For example, Bangladesh, Botswana, and Malawi have launched trade information portals with the aim of increasing transparency and predictability and ultimately boosting trade, investments and growth in their respective economies. The portals utilize a generic software platform developed by the World Bank Group that is populated with information in an easily searchable form and provides all regulatory information on cross-border trade including laws, regulations, prohibitions, restrictions, technical standards, applicable tariffs, fees, procedures for license and permit application and clearance, copies of all forms and plain language instructions.
The TFSP is also supporting Timor Leste, Swaziland, Lesotho, Nepal, Cambodia and Bangladesh to undertake Time Release Studies that help identify key bottlenecks that impact the time it takes for goods to move across borders.
Hard data on trade facilitation performance matters. As a result of data obtained through these studies, Bangladesh has slashed the time to trade at the Port of Chittagong by 23% and Timor Leste has reduced clearance times by 40%. Likewise, by cutting costs related to advance declaration requirements, Madagascar has saved the private sector 10 million euros as a result of eliminating fees for submission of the Advance Cargo Declaration. Many other countries supported by TFSP-financed activities, are improving their risk management practices to enhance the targeting of high-risk cargo while speeding up the clearance of low-risk shipments.
While individual reforms such as these are very positive and deliver immediate benefits to the trading community, global experience suggests that realizing sustainable trade facilitation gains requires comprehensive “whole-of-border” reform initiatives and effective cooperation, information sharing, and genuine collaboration among all border management agencies. Establishing practical mechanisms for inter-agency cooperation is critical for the effective implementation of the TFA.
That is why a major focus of the TFSP is directed toward strengthening inter-agency coordination and enhancing public/private sector dialogue on trade facilitation matters through the establishment of National Trade Facilitation Committees. While customs officials are usually more aware of the practical implications of the TFA, many other border management agencies, including Health, Quarantine, and Standards, have had less exposure to the TFA and the wider trade facilitation reform agenda and still have much work to do to implement modern, automated and risk-management based processes and procedures in line with WTO TFA commitments. It is therefore important that all border management agencies work together to develop a common vision and a well sequenced series of reform priorities and actions.
The challenges faced by countries will vary – but these measures are critical and among the most common to be tackled. Now that the TFA has entered into force, there will be a new momentum behind efforts to implement it fully and effectively – and the Bank Group stands ready to be a central part of this effort.