Implementing the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) could increase the value of global exports by up to $1 trillion a year, according to a study.
The report is the first detailed study by the WTO into the potential effects of the TFA, which aims to standardise, streamline and speed up customs processes around the world.
The WTO said “fuller, faster” implementation of the agreement would increase the value generated and the TFA could result in a 0.5 per cent boost to global annual GDP.
The report said developing countries would benefit most from the TFA and they are expected to enter 30 per cent more foreign markets as a result of the agreement, with a 20 per cent increase in the number of new products exported.
The WTO said the agreement would help firms in developing countries enter supply chains because “timeliness and predictability in the delivery of intermediate goods are essential to the successful management of global value chains”.
The report said the TFA would reduce trade costs among members by an average of 14.5 per cent and cut the risk of corruption. “There is evidence to show that the likelihood to engage in fraudulent practices at the border is higher the longer the time needed to clear goods,” said the report.
“By simplifying trade procedures and reducing the time to move goods across borders, the TFA will increase the volume of goods flowing through customs, reduce the scope for corruption and increase the amount of revenues collected.”
Director-general of the WTO Roberto Azevêdo, said: “The world is more connected than ever before. 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 Yet, all too often, outdated and uncoordinated customs processes slow down the movement of goods and raise costs to prohibitive levels.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.”
The TFA will come into force once two thirds of WTO members have ratified it. So far 51 countries, including the European Union, out of 161 members have done so.