Inefficient trade procedures mean that importers pay more for goods traded and exporters receive less in return for their products. However, when a country improves its trade procedures to reduce trade costs to zero, it will disappear. As a result, consumers in importing countries benefit from lower prices and exporters get higher prices for their production. Trade facilitation contributes to a significant improvement in the incomes of importers and exporters by improving their terms of trade and creating a win-win situation. By ratifying the TFA, countries have embarked on a series of reforms aimed at reducing border bureaucracy, from unlocking and unlocking assets to enhanced cooperation between border authorities. It is estimated that the implementation of TFA reforms could reduce trade costs by an average of 14.5% and create about 20 million jobs – the vast majority in developing countries. Three years have passed since the World Trade Organization (WTO) Trade Facilitation Agreement (TFA) came into force. The aim of the TFA is to increase the speed and efficiency of cross-border trade procedures while reducing costs. Full implementation of the TFA could reduce global trade costs by 10-18% (OECD, 2018) and increase export earnings by up to $3.6 trillion per year (WTO, 2015). The provisions of the TFA SDT have introduced a new paradigm into multilateralism and concentrated trade agreements, from liberalisation to development. Indeed, the TFA echoes the programme`s 2030 slogan, “Leave No One Behind,” by linking the implementation of legally binding commitments to the ability of developing countries to do so. In addition, the agreement requires donors to provide TACBs.
The 2015 World Trade Report uses a CGE (Computable General Equilibrium) simulation model to estimate TFA`s export and GDP gains. As has already been said, the expected trade increases are between $750 billion and $1 trillion per year, with larger values that correspond to faster and more comprehensive implementation (see Table 1). Other estimation techniques, known as “gravity models,” provide even greater estimates of expected benefits, provided the implementation is complete, suggesting that the CGE estimates may be somewhat conservative. Reducing international trade prices is helping to improve the competitive conditions between large and small businesses. The OECD reaffirms that measures such as streamlining procedures, automating the border process, simplifying tariffs or consulting with traders have the most differentiated effects on SMEs compared to large enterprises (Lepez Gonzalez, J. and S. Sorescu, 2019). This is why countries need to encourage more SMEs to respond to trade facilitation reforms. Article 23 of the TFA requires each WTO member to establish or maintain a “national trade facilitation committee” comprising government authorities, customs and businesses. These committees play a central role in supporting effective implementation of ADTs to maximize the benefits of governments, businesses and consumers.
As you prepare for a marathon, you will train harder in areas where you are below average. Similarly, developing countries and LDCs need to pay close attention to international trade players, who are often not taken into account, such as SMEs and SMEs. The WTO estimates that direct exports account for only 7.6% of total manufacturing SME sales in developing countries (WTO, World Trade Report, 2016). Unlike the TFA, regional trade agreements (ATRs) that deal with trade facilitation generally do not contain s-D provisions and implementation aid. These omissions reduce the likelihood that trade facilities will be implemented in ATRs in the poorest countries, where they are probably most needed.