Attempting to accelerate the movement of goods within the supply chain while ensuring full compliance with government regulations is a complex affair.
This delicate balance of forces becomes more noticeable in developing countries, which can be reluctant to ease on regulations. Indeed, such countries are often badly equipped to fight the actions of trading partners who pay less import duty or dump substandard goods. If you consider that certain countries rely on import duties to finance up to 45% of their annual budget, it’s no surprise governments are reluctant to take any risks.
As the World Customs Organization points out, trade facilitation reform can also help to improve revenue collection by increasing the rate of compliance and reducing opportunities for corruption.
Following many years of discussions, the members of the World Trade Organization finally agreed in 2013 to a landmark global agreement known as the Trade Facilitation Agreement. The TFA aims to speed up customs procedures, provide clarity, efficiency and transparency in the supply chain and reduce bureaucracy and corruption. It is estimated that this agreement could reduce the cost of doing trade by over 14% and help developing countries increase exports by 20%.
The Global Alliance for Trade Facilitation was launched in Nairobi in December 2015. Its objective: to provide on-the-ground, pragmatic and focused assistance to developing countries that had committed to doing something about efficiency in the supply chain. This trade-led initiative comes on the back of the ratification by many countries of the TFA. The Alliance is the first initiative of its kind to formally bring together both the public and the private sectors in a joint effort to make trade flows simpler and more transparent.
One of the challenges of the Alliance is to identify (1) countries that are truly committed to trade facilitation and (2) projects that will make a tangible difference. Make no mistake, while the private sector is committed to making TFA a success, it is expecting clear and measurable results in terms of reduction of clearance times and opaque bureaucracy.
For all these reasons, the Alliance has co-published the Global Enabling Trade Report 2016 with the World Economic Forum. Among a multitude of indicators, the report is publishing for the first time a comparison of countries’ self-assessment of trade performance (broken down into TFA components) against commitments to the WTO. The aim is to offer a base for analysis, showing clearly where governments need to focus to achieve TFA ambitions.
The Global Enabling Trade Report goes beyond metrics related to border-crossing efficiency, and provides insight into other essential related components: transportation, communications and IT infrastructure, for example. It provides a 360 degree view of the trading environment in 136 countries around the world. The Global Alliance looks forward to using the report as a tool for meaningful public-private dialogue to ensure governments and the private sector work hand-in-hand to deliver trade facilitation reforms that enable trade, for companies big and small.