Trade and Facilitation Agreement: An Overview
The trade and facilitation agreement is a crucial component of international trade agreements. This agreement intends to streamline the movement of goods across international borders by reducing red tape and making the process of customs and trade facilitation easier and more efficient.
In essence, the trade facilitation agreement (TFA) aims to simplify and standardize customs procedures and make them more transparent. This is beneficial for both importers and exporters as it reduces transaction costs, increases predictability, and enhances business opportunities.
The World Trade Organization (WTO) has been working on this agreement for over a decade. The TFA was first agreed upon at the WTO`s 2013 Bali Ministerial Conference and entered into force in 2017. As of May 2021, 164 out of 164 WTO members have accepted the agreement.
Some of the key provisions of the TFA include:
• Simplifying customs procedures: The agreement requires countries to automate customs procedures, including the submission of documents and payment of fees.
• Enhancing transparency: The TFA requires countries to publish their laws and regulations related to customs procedures and make them easily accessible to traders.
• Improving cooperation: The agreement promotes cooperation between customs officials of different countries to facilitate the movement of goods across borders.
• Providing assistance to developing countries: The TFA provides technical assistance and capacity building to developing countries to help them implement the agreement.
The TFA is expected to have significant benefits for businesses engaged in international trade. According to estimates by the WTO, implementation of the TFA could reduce trade costs by up to 14.3 percent. This could add up to $1 trillion to the global economy and create 20 million new jobs in developing countries.
Moreover, the agreement could have a positive impact on small and medium-sized enterprises (SMEs) that often face significant trade barriers due to limited resources and lack of expertise. The TFA simplifies customs procedures, which reduces the cost of doing business for these SMEs. This, in turn, can help SMEs expand their customer base and increase their profits.
In conclusion, the trade and facilitation agreement is an essential component of international trade agreements. Its implementation will streamline customs procedures, enhance transparency, and promote cooperation between countries. These measures will reduce transaction costs, increase predictability, and enhance business opportunities. Moreover, the TFA will have a significant positive impact on the global economy and help small and medium-sized enterprises (SMEs) expand their customer base and increase their profits.