The WTO must focus on the developing world and make Trade Facilitation a reality in 2013

The last week has seen both the EU and, more surprisingly, China emerge as vocal supporters of a Trade Facilitation Deal for the WTO. This deal will be negotiated at the WTO Ministerial in Bali in December and is considered central to unlocking the Doha Round.

Member states are currently in the process of negotiating rules that will “expedite the movement, release and clearance of goods” as well as enhance “technical assistance and support for capacity building, developing provision for effective cooperation between customs authorities.” These negotiations are expected to take the Doha agenda forward by specifically focussing on the need for differential treatment for developing and least-developed countries, stating that “countries will not be expected to undertake investments in infrastructure projects beyond their means.”

The concern surrounding developing countries’ capacity to implement any commitments that form part of this deal is widespread, but a joint announcement from the EU this week goes some way to assuage these fears. Trade Commissioner De Gucht and Development Commissioner Andris Piebalgs have stated that the EU’s Aid for Trade commitments stand ready to support specific and targeted requests for support for trade facilitation from developing nations. Other countries will need to make similar assurances if the hoped-for deal is to have its desired impact.

However, if the statistics are to be believed, LDCs stand to benefit significantly from such a deal provided that the necessary support is woven into the agreement.  Administrative inefficiencies are endemic in LDCs and are often more costly than tariff barriers to their domestic economy. Simplifying customs procedures, improving border infrastructure and tax collection, and cutting red tape would increase developing countries’ capacity to trade and integrate into global value chains.

The World Bank estimates that for every dollar spent on such reforms in developing countries, there is a return of around $70 in economic benefits. Outgoing WTO Director General Pascal Lamy maintains that cutting the red tape involved in getting goods to market could stimulate the global economy by up to $1 trillion (roughly the same figure that would result from the removal of all remaining tariffs) and EU Trade Commissioner has said that by cutting the cost of trade by just 1%, worldwide income would be increased by over $40 billion, over two thirds of which would go to developing countries.

A current lack of investment in infrastructure and technology has created a stark contrast between OECD and African border procedures. For a container to pass between OECD countries, it takes on average 5 customs documents, 10 days and 735 euros, whereas taking the same container from one African country to another requires twice as many documents, takes 3 times as long and costs at least double the price. A Trade Facilitation Deal in December could go a long way towards closing these gaps, helping developing countries to boost their economies and participate in international markets.

Read the EU joint press release here

Summary

A current lack of investment in infrastructure and technology has created a stark contrast between OECD and African border procedures. For a container to pass between OECD countries, it takes on average 5 customs documents, 10 days and 735 euros, whereas taking the same container from one African country to another requires twice as many documents, takes 3 times as long and costs at least double the price. A Trade Facilitation Deal in December could go a long way towards closing these gaps, helping developing countries to boost their economies and participate in international markets.

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By | 2016-03-28T14:35:43+00:00 March 15th, 2013|Uncategorized|Comments Off on The WTO must focus on the developing world and make Trade Facilitation a reality in 2013

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