The World Trade Organisation’s first multilateral trade agreement came into force on 22 February. The Trade Facilitation Agreement, which was ratified by 112 member countries, is designed to expedite the movement, release and clearance of goods across borders and represents a unique new phase for global trade facilitation reforms. It aims to significantly boost commerce between trading nations, particularly for developing countries. Unlike traditional WTO agreements, the Trade Facilitation Agreement will allow for developing countries to set their own implementation timetables, ensuring that they are able to reap its full benefits. The agreement could see developing countries enter up to a third more foreign markets, making them ‘less vulnerable to external economic shocks,’ as WTO’s director general, Roberto Azevedo, put it in a recent statement on the matter.
The Trade Facilitation Agreement aims to cut the cost of trading by up to 14.3 percent, in ‘the biggest reform of global trade in a generation,’ according to Azevedo. The treaty could also provide a platform for SMEs to play a greater role within the international supply chain, giving firms around the world a platform to export for the first time. ‘It can make a big difference for growth and development around the world. Now, working together, we have the responsibility to implement the agreement to make those benefits a reality,’ said Azevedo.
Liam Fox, the UK’s international trade secretary, has welcomed the announcement of the Trade Facilitation Agreement, saying that that the removal of barriers could benefit the UK economy by up to £1 billion.
‘The UK has long supported initiatives that will make trade across borders easier, but despite the work that has already been done on border controls until now goods have continued to be delayed at borders slowing trade flows and adding costs to business which in turn might be passed on to consumers,’ he said. ‘We welcome this WTO success story.’
Beyond the United Kingdom, the ramifications of the treaty could significantly boost total global trade by as much as £70 billion per year. Estimates have shown that the TFA is expected to increase world trade growth by 2.7 percent per year, and could add to the world GDP growth by over half a percent by 2030.
WTO members concluded negotiations on the Trade Facilitation Agreement at the Bali Ministerial Conference in 2013, a treaty that was part of a wider ‘Bali Package,’ a trade agreement aimed at lowering global trade barriers. The TFA is the first multilateral trade agreement of its kind to be reached since the founding of the organisation in 1995.