Entry into Force of WTO Trade Facilitation Agreement a “Watershed Moment” for World Trade
Feb 24, 2017
Earlier this week, Chambers Ireland and our colleagues in the International Chambers of Commerce(ICC) welcomed the entry into force of the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) — a landmark global trade agreement which could provide a boost to global trade flows of over US$1trillion.
More than two-thirds of WTO member states have now ratified the agreement, with Chad, Jordan, Oman and Rwanda the latest countries to do so as part of an almost two-year process. Reaching this threshold means the TFA now becomes an official part of the multilateral trading system which covers more than 96% of global GDP.
The TFA is the first multilateral trade agreement to enter into force in over two decades and aims to make trade easier and simpler by cutting red-tape at borders. The reality today is that many small businesses find themselves unable to trade internationally due to complex customs requirements. By cutting unnecessary red-tape at borders, the TFA will have a transformational effect on the ability of entrepreneurs in developing countries to access global markets. In addition the TFA can help ensure that, for the first time, all companies—regardless of size or location—can benefit from global trade. The entry into force of the agreement could not come at a more important moment given the imperative to make global growth more inclusive.”
The ICC, and chambers of commerce all over the world, has long been a leading proponent of the TFA, playing a key role in the 2013 negotiations that led to the agreement and working closely with the WTO and other international organizations to coordinate and support the deal’s implementation.
The implementation of the TFA will have significant potential to enhance the competitiveness of local business communities in global markets while enhancing government revenues and boosting Foreign Direct Investment (FDI). The WTO estimates that:
- The TFA could increase developing countries’ exports by up to US$730 billion per year.
- Around 20 million jobs are estimated to be created by the implementation of the TFA — the overwhelming majority in developing countries.
- The TFA could reduce total trade costs by more than 14 % for low-income countries and more than 13 % for upper middle-income countries by streamlining the flow of trade across borders.
- The TFA would have a positive and sustainable impact on government revenue collection by increasing trade volumes and reducing corruption at borders.
The ICC is actively supporting the implementation of the TFA through the Global Alliance for Trade Facilitation—a major public-private partnership supported by a number of donor governments and international businesses. The Alliance is currently rolling out trade facilitation projects in Colombia, Ghana, Kenya and Vietnam based on TFA standards.