In 2017, the World Trade Organization (WTO) ushered in a new age of global interconnectivity with the Trade Facilitation Agreement (TFA), a global system of trade rules that assists countries in developing their trade capacities. By removing trade barriers, improving collaboration with the private sector, and speeding up customs procedures, the TFA promotes the overall productivity, transparency, and ease of international commerce. Moreover, the increased access to inputs and supply chain integration provide a virtuous cycle that contributes to further economic vitality.
Watch the CLDP Short below to learn more about WTO accession and TFA implementation.
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n today’s interconnected economy, the speed and ease with which goods cross borders is essential to the growth and prosperity of both local and global marketplaces. But burdensome customs requirements present real challenges to companies of all sizes, particularly for small and medium-sized companies trying to operate in the international market.
To improve the flow of goods internationally, the World Trade Organization, which operates the global system of trade rules and helps developing countries build their trade capacity, developed the Trade Facilitation Agreement, or “TFA”, to ease the cross-border movement of goods by cutting costs and simplifying trade procedures. The TFA has four central pillars:
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transparency;
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simplification;
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harmonization; and
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standardization.
The TFA is designed to expedite, streamline, and coordinate trade procedures across countries, thereby enhancing predictability and lowering trade costs globally. According to the WTO, full implementation of the TFA will reduce trade costs by an average of 14.3 percent and boost global trade by up to $1 trillion per year, with developing nations reaping the greatest benefits.
By cutting unnecessary “red tape” or burdensome border procedures, the TFA provides a significant, sustained boost to international trade, particularly in developing nations with transparency requirements that address corruption.
The TFA also increases private sector input in the regulatory process by requiring governments to collaborate with traders in developing regulations related to international trade, which strengthens trade from existing exporters and encourages entry into the marketplace from local and informal traders.
Additional benefits include improved infrastructure at ports of entry, faster delivery of time-sensitive goods like agricultural products, increased access to foreign direct investment, and more efficient revenue collection for governments.
Whether exporting or importing goods, trade facilitation benefits all countries by improving access to production inputs from abroad and supporting greater participation in global value chains.
To alleviate concerns for the anticipated regulatory, operational, and political costs of implementation, the TFA uniquely offers member countries the flexibility to determine their own implementation schedules, based on their technical and financial capacity. Additionally, members can request technical assistance and capacity building support from other members for effective TFA implementation.
By broadening global markets and eliminating red tape at the borders, the TFA is a win-win for all economies and their consumers overseas. It’s not too late to ratify the Trade Facilitation Agreement and reap the benefits of engaging in smoother trade practices.
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