Geneva: The Trade Facilitation Agreement (TFA) concluded in 2013 will help reduce trade cost for its member countries, spur global export between US$1.8 trillion and US$3.6 trillion, providing a badly needed boost to the global economy, the World trade Organisation (WTO) said in its World Trade Report.
The TFA has the potential to reduce trade costs by a significant amount and thereby increase both global trade and output, according to the WTO report released in Geneva Monday.
"This agreement (TFA) aims to standardise, streamline and speed-up customs processes around the world, helping to expedite the movement, release and clearance of goods. In doing so, it will significantly cut the costs of trade," WTO Director-General Roberto Azevedo said.
All too often, outdated and uncoordinated customs processes slow down the movement of merchandise and raise trade costs to prohibitive levels especially in developing and least-developed countries, he said.
"By tackling these problems, the TFA will have a big impact on global economy," he said when launching the report.
According to the Malaysian (Bernama) news agency, this year's report focused on the benefits and challenges of implementing the WTO's TFA.
In the report, WTO said the full implementation of the TFA would have the ability to reduce members’ trade costs by an average 14.3 per cent.
The range of trade cost reduction will be between 9.6 per cent and 23.1 per cent with African countries and less developed countries are expected to see the biggest average reduction in trade costs in excess of 16 per cent from the full implementation of the TFA, it said in the World Trade Report.
The TFA also has the ability to reduce time to import by over a day-and-a half (a 47 per cent reduction over the current average) and time to export by almost two days (a 91 per cent reduction over the current average), it said.
WTO said by reducing both the variable and fixed costs of exporting, trade facilitation increased the export of those firms already involved in international trade, while enabling new firms to export for the first time.
Furthermore, the trade and output gains are bigger with full and accelerated implementation of the TFA.
The trade body said the results obtained from computable general equilibrium (CGE) model simulations predicted export gains from the TFA of between US$750 billion and over US$1 trillion per annum.
"Full implementation of the TFA has the potential to increase global exports between US$1.8 trillion and US$3.6 trillion. In both cases, the magnitude of the gains is larger with full and accelerated implementation of the TFA," said WTO in the report.
Since trade costs are among the shaping factors of global trade, implementation of the TFA not only gave a badly needed boost to the global economy at the present, but had the ability to give a significant lift to its trajectory and to carry it forward in the future, it said.
Over the 2015-30 horizon, implementation of the TFA can add up to 2.7 per cent a year to world export growth and more than half a per cent a year to world GDP growth, it said.
However, the key to reaping all these benefits is full and speedy implementation of the TFA, Azevedo opined.
To recap, members have agreed on a road map for the TFA’s entry into force.
First milestones were reached when delegations concluded the legal review of the Bali text and adopted the amendment protocol in 2013, which cleared the way for the domestic ratification process to commence.
Some members have already deposited their acceptance instruments, bringing the TFA closer to the ratification threshold of two-thirds of the WTO membership required for it to take legal effect.
"We need to see far speedier ratification of the agreement than we have seen thus far, so that we can quickly turn to the task of implementation," he added.
QNA
