WTO trade facilitation pact could boost exports by up to $1trn
Implementation of the World Trade Organization’s Trade Facilitation Agreement (TFA) has the potential to increase global merchandise exports by up to US$1trn, a new report has revealed, with developing countries set to reap significant benefits.
The WTO’s flagship World Trade Report, published in Geneva this week, estimates developing countries' exports could increase by $170bn and $730bn per annum. Developed economies' exports are estimated to increase by $310bn and $580bn per annum.
The TFA was agreed by WTO members at a ministerial conference in Bali in December 2013, and is the first multilateral agreement successfully negotiated in the organisation's 20-year history. Earlier this month, the pact was ratified by 50 of the group's members, the most recent being the 28 EU countries and Thailand.
However, the TFA will only enter into force once it has been formally accepted by two-thirds of the WTO’s 160 member countries.
The report is the first detailed study of the potential impacts of the TFA based on a full analysis of the final agreement text, the WTO says.
Other projections from the study include an overall boost to world export growth of up to 2.7% per annum, and a boost to global GDP growth of 0.5% per year.
“The world is more connected than ever before,” said director general Roberto Azevêdo. “More and more developing countries are seeking to join global trade networks. Yet, all too often, outdated and uncoordinated customs processes slow down the movement of goods and raise costs to prohibitive levels.
"By standardising, streamlining and speeding-up customs processes around the world, the WTO's Trade Facilitation Agreement will help to solve this problem. It is global trade's equivalent of the shift from dial-up internet access to broadband - and it will have a similar impact.”
Trade facilitation is critical to reducing trade costs, which remain high despite the steep decline in the cost of transportation, improvements in information and communication technology, and the reduction of trade barriers in many countries. Full implementation of the TFA could reduce trade costs of members by an average of 14.5%, the report notes.
It could help to increase customs duties and other taxes collected at the border, on which many least developed countries (LDCs) are dependent for their revenues.
The report also estimates that developing countries could increase the number of new products exported by as much as 20% with LDCs likely to see a much bigger increase of up to 35%. Developing countries are expected to enter an additional 30% more foreign markets and LDCs a further 60% more.
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