January 07, 2014

ITC Business Guide on the New Trade Facilitation Agreement


What is the trade facilitation agreement?

The Agreement on Trade Facilitation was adopted at the World Trade Organization’s 9th Ministerial
Conference in Bali, Indonesia, in December 2013. This Agreement is the first major agreement to have been reached since the creation of the WTO almost 20 years ago.

The Agreement on Trade facilitation aims at simplifying not only the documentation required to clear goods, but also the procedures employed by border agencies. Focusing on the biggest risks allows border agencies to speed up the flow of goods across the border, and increases the collection of duties. Trade facilitation has been described as a classic ‘win-win’ subject for developing and developed countries, since there should be no losers.

The Agreement reached at Bali in late 2013 provides a framework of rights and obligations that should see reform of border procedures around the world, together with a mechanism to satisfy legitimate requests from developing countries for technical assistance.

How will this agreement help business?

Trade facilitation is important to business because it can have a major impact on bringing down trade transaction costs. Goods delayed at the border for days (or even weeks) slow trade flows and add costs to business that are often passed on to consumers. Trade transaction costs are highest in developing countries, which are least able to carry this burden.

The agreement has the potential to be of particular benefit to traders in developing countries, who continually face lengthy and costly border delays. Depending on the specific country’s implementation of the trade facilitation agreement, the removal of these barriers to trade could reduce total trade costs by 10% in advanced economies and by 13-15.5% in developing economies.

What should business do to make sure the agreement benefits them?

It will be important for business to monitor its implementation in the countries with which they trade. The ITC guide aims at helping business understand the obligations that developing countries have accepted - or will in due course accept, so that they can work in partnership with governments to arrive at outcomes that will benefit governments and traders alike.

When will business benefit from the effects of the trade facilitation agreement?

Most likely, the benefits materialize in two years. It is estimated that the agreement could increase exports of developing countries by approximately US$570 billion and exports of developed countries by US$475 billion. Trade facilitation improvements could result in global job gains of 21 million, with developing countries gaining over 18 million jobs and developed countries increasing their workforce by 3 million.

What does the ITC Guide explain?

The guide aims at explaining what the main provisions of the agreement are, how it is intended to ease border border controls for business, and how business can ensure its voice is heard in the way governments implements the obligations and specific commitments they have undertaken in the Agreement on Trade Facilitation.

What is the ITC?

The International Trade Centre (ITC) is the joint agency of the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD).

How does the ITC help business?

ITC actively engages the private sector within the multilateral trading system and is committed to building export success for small and medium sized enterprises (SMEs) in developing and transition countries.

The International Trade Centre (ITC) is ready to work with SMEs in developing countries to increase their knowledge of the new rules and the benefits available to them. It will also assist developing country governments with the preparation of print and online communication materials to inform SMEs of the new rules, under the transparency provision of the agreement.

Where can the complete 30 page guide be found?

Download PDF Version of this Article
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