WTO trade deal to make cross-border shipping easier

WTO trade deal to make cross-border shipping easier

WTO Director General Roberto Azevedo announces the implementation of the Trade Facilitation Agreement. Credit: WTO


An ambitious trade deal ratified by 110 countries and aimed at streamlining the cross-border movement of cargo, clarifying import-export processes, and simplifying customs procedures has now gone live.

The World Trade Organization’s Trade Facilitation Agreement came into force Thursday after ratification by another four nations took it past the required 110-member threshold that trigged its implementation. By easing the flow of trade across borders, the agreement is expected to reduce total trade costs by more than 14 percent for low-income countries and by more than 13 percent for upper middle income countries.

WTO director general Roberto Azevedo called the Trade Facilitation Agreement the biggest reform of global trade this century. "The agreement aims to streamline, simplify, and standardize customs procedures. By doing so, it will help to cut trade costs around the world,” he told reporters at a press conference in Geneva.

“The cumulative impact is striking. By 2030 the agreement could add 2.7 percentage points per year to world trade growth and more than half a percentage point per year to world GDP growth. This impact would be greater than the elimination of all existing tariffs around the world.”

Joakim Reiter, deputy secretary general of the United Nations Conference on Trade and Development, or UNCTAD, said the agreement was “a huge step forward in making trade around the world cheaper, easier, and faster.”

“Red tape, incompatible systems across borders, opaque ways of collecting revenue and ensuring other compliance controls, lengthy waiting times that leave food rotting before it can be traded, poor roads, crumbling ports — all hamper international trade, wasting billions of dollars and exacting a heavy price on those developing and least developed countries that can least afford it,” UNCTAD said in a statement.

The agency said the cost of trade for developing countries was estimated to be on average 1.8 times higher than for developed countries.

The freight forwarding community has welcomed the news that comes soon after the Trump administration in the United States scrapped the 12-nation Trans Pacific Partnership trade deal in favor of engaging directly in bi-lateral negotiations rather than participating in multilateral trade deals.

“This agreement aims to simplify and clarify international import and export procedures, customs formalities, and transit requirements. It should make trade-related administration easier and less costly, thus helping to provide an important and much needed boost to global economic growth,” said Robert Keen, director general of the British International Freight Association.

“If better border procedures and faster, smoother trade flows result from the agreement and help to revitalize global trade, BIFA members, which facilitate much of the UK’s visible trade, will benefit.”

Ratifications of the Trade Facilitation Agreement by Chad, Jordan, Oman, and Rwanda allowed the deal to reach the pre-determined threshold of 110 WTO members that were required for its immediate entry into force.

Spread out over 12 articles, the agreement outlines measures to improve transparency and predictability of trading across borders and to create a less discriminatory business environment, the WTO said in a statement. Its provisions include improvements to the availability and publication of information about cross-border procedures and practices, improved appeal rights for traders, reduced fees and formalities connected with the import and export of goods, faster clearance procedures and enhanced conditions for freedom of transit for goods.

The agreement also contains measures for effective cooperation between customs and other authorities on trade facilitation and customs compliance issues.

Azevedo said the deal would boost global trade by up to $1 trillion each year, with the biggest gains being felt in the poorest countries. “The impact will be bigger than the elimination of all existing tariffs around the world,” he said.

Global forwarder association FIATA said the freight industry understood the need for harmonized rules and streamlined processes to keep trade barriers low and facilitate the movement of goods. It hailed the new deal as a great achievement for the WTO and the international trading community.

“As the coin turns to implementation, FIATA and its members in 160 countries stand ready to play its part and collaborate with all governments as appropriate,” said FIATA’s Customs Affairs Institute Chairman Steve Morris.

“We firmly believe that our sector must remain agile and nimble, able to deal with the ever increasing level of challenges international trade presents. The power of the regulator will be best exercised in seeking greater harmonization of standards and procedures,” the association said in a public statement.

Keen said the world has benefited immeasurably from liberalized trade, with consumer choice being enriched in many countries, and outsourced production has brought employment to developing economies throughout the world. Although not mentioning the United States or the United Kingdom by name, he noted the anti-free trade sentiment that was taking hold.

“Of course, of late, some nations have made it clear that they intend to scale down multi-country free trade deals and switch to bilateral relationships, marking a return to the bad old days of protectionism,” he said.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.