Global Benefits of the Trade Facilitation Agreement
The Trade Facilitation Agreement (TFA) came into effect on Feb. 22, 2017, after ratification by the World Trade Organization (WTO). According to the WTO, the TFA contains provisions allowing for “expediting the movement, release and clearance of goods, including goods in transit.” The agreement was created to benefit both wealthy, developing and underdeveloped countries that wish to engage in trade and commerce.
According to an article in The Economist, the TFA is designed to cut trading costs in developing countries by implementing more efficient processes and eliminating unnecessary obstacles prior to export clearance.
For example, individuals in sub-Saharan Africa must go through an excessive amount of barriers to get an item exported, including going through up to 200 hours of regulations and inspections. In comparison, wealthier countries may face up to only 15 hours of regulations and inspections.
According to the WTO, full implementation of the TFA “could reduce trade costs by an average of 14.3 percent and boost global trade by up to $1 trillion per year, with the biggest gains in the poorest countries.”
The TFA is divided into different sections and categories, each made up of substantive provisions. For example, section one of the agreement contains provisions necessary for expediting the movement and clearance of goods. Section two, however, consists of special provisions that would allow for developing and underdeveloped countries to benefit from trade facilitation upon receiving special assistance from member organizations that are involved in its implementation.
The member organizations that are involved in assisting developing and underdeveloped countries include the WTO, World Customs Organization and the United Nations Conference on Trade and Development.
The TFA will result in a heightened level of exports taking place out of developing and underdeveloped countries. Furthermore, a rise in trading expenditures will have a positive global effect on countries such as the U.S.
– Lael Pierce