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WTO’s Trade Facilitation Agreement enters into force

During Wednesday,  Chad, Jordan, Oman and Rwanda ratified the Trade Facilitation Agreement (TFA), which means the agreement now has reached the pre-determined threshold of 110 WTO members required for its immediate entry into force. 

The purpose of the TFA is to significantly simplify and modernize customs procedures around the world. Customs procedures are often a costly and bureaucratic process and the TFA will especially help small businesses to access new export opportunities. This will in turn allow SMEs to play a significant role in increasing developing countries' involvement in global value chains. The TFA is estimated to reduce global trade costs by an average of 14.3 percent. African countries and least-developed countries are predicted to enjoy the biggest benefits from the agreement. Full implementation has also been found to potentially reduce the average import process time by 47 percent. Cuts in export time will be even more dramatic. Current estimates predict a 91 percent reduction of the current average. By making trade-related administration easier and less costly, the TFA will provide an important and much needed boost to the global economic growth. The TFA is expected to increase exports from existing traders while also enabling new firms to export for the first time. On top of that, the TFA is forecasted to add up to 2.7 percent a year to world export growth and more than 0.5 percent a year to world GDP growth over the next 15 years. 

Trade facilitation is one of the EU’s aid programming priorities. Roughly 30 percent of EU trade-related support include some aspect of trade facilitation. EU customs authorities will also play a leading role in the implementation of the agreement, acting both as a leading example and as an engine for further progress in trade facilitation within the EU and at international level.

Trade Commissioner Cecilia Malmström commented on the news by saying, "Better border procedures and faster, smoother trade flows will revitalize global trade to the benefit of citizens and businesses in all parts of the world. Small companies, that have a hard time navigating daily bureaucracy and complicated rules, will be major winners."

Tags: free trade, WTO

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