Developing countries should continue trade-easing reforms in wake of WTO deal

05 January 2018

The Trade Facilitation Agreement commits World Trade Organization members to streamlining cross-border trade, but reforms can go further, UNCTAD report says.

New UNCTAD research reveals how nearly 60 countries have prepared the ground to cut red tape and streamline revenue collection in the year since the World Trade Organization's Trade Facilitation Agreement (TFA) entered into force in February 2017, but says such reforms should go beyond TFA compliance.

The TFA obligates most of the world's trading nations to recognize trade-easing measures in international law and so reduce the loss to developing countries of billions of dollars that lengthy waiting times, ungathered income and spoiled goods can cause.

UNCTAD estimates that the cost of cross-border trade for developing countries is on average 1.8 times higher than for developed countries.

"Article 23.2 of the TFA stipulates the obligation for countries to set up or maintain a coordination mechanism that will support the implementation of the trade facilitation provisions included in the agreement," UNCTAD trade facilitation specialist and main author of the study Arántzazu Sánchez said.

"The inclusion of this article represents an official acknowledgement of the importance of coordination and cooperation among relevant stakeholders, including customs authorities and businesses trading across borders, in making trade facilitation reforms happen," she added.

Beyond compliance

While the inclusion of trade facilitation committees in a WTO agreement is a novelty, in reality these kinds of bodies have existed for more than six decades, Ms. Sánchez said.

Using updated information about 59 countries covered by UNCTAD's online repository of National Trade Facilitation Committees (NTFCs), the new report offers in-depth analysis of the operation of NTFCs and how they interpret and apply Article 23.2.

Among other findings, the report concludes that NTFCs should work beyond compliance with the TFA, and that reforms should not end once its provisions are in place.

"By defining a broad scope of action from the beginning, NTFCs will remain flexible to promptly adapt to changes that new regional and international agreements and priorities might bring in the future," Ms. Sánchez said.

Providing quantitative and qualitative analysis of existing NTFCs, the report also presents, for the first-time, data on women's participation in National Trade Facilitation Committees as part of UNCTAD's ongoing work on trade and gender mainstreaming.

In addition, the report includes a discussion on the basic structure of the NTFCs around the world such as their composition, level of institutionalization, sources of finance, frequency of meetings and modes of communication. It also discusses the factors that can ensure the successful functioning of NTFCs, and the obstacles that they face in their work.

Empowerment programme

The report complements UNCTAD's recent research work, especially its report on National Trade Facilitation Bodies in the World, published in 2015.

This made 10 recommendations:

  • Be smart when setting up the objectives and scope of a national trade facilitation body

  • Make it official - give the national trade facilitation body a strong legal backing

  • Set clear rules - define terms of reference in a comprehensive and inclusive way

  • Provide the national trade facilitation body with a permanent secretariat

  • Meet regularly

  • Be inclusive - trade facilitation is a cross-divisional and cross-sectoral endeavour

  • Take every opportunity to raise awareness about trade facilitation

  • Provide the national trade facilitation body with the necessary resources

  • Establish monitoring and evaluating mechanisms to measure results

  • Always involve the private sector

Since 2015, UNCTAD has been able to validate these recommendations as part of its trade facilitation capacity building and technical assistance programmes, in particular the Empowerment Programme for National Trade Facilitation Committees, which, at the end of 2017, had been deployed in around 20 countries.

For more than 40 years, UNCTAD has supported national trade facilitation bodies in least developed and developing countries with technical assistance and capacity building. UNCTAD's Trade Facilitation Section, Trade Logistics Branch, Division on Technology and Logistics continues to provide support in this field, in close collaboration with other development partners, notably the UN Economic Commission for Europe and the International Trade Centre. Countries interested in technical assistance or capacity building activities in this field are invited to contact: