International trade just became faster, easier and less expensive.
The Trade Facilitation Agreement goes into force today. The deal, which has been in the works since 2013, promises to cut through existing red tape associated with importing and exporting goods all over the world. The move is expected to boost global trade by $1 trillion per year as the process becomes more transparent, predictable and less discriminatory.
“This is fantastic news for at least two reasons. First, it shows members’ commitment to the multilateral trading system and that they are following through on the promises made in Bali,” said WTO Director-General Roberto Azevêdo. “Second, it means we can now start implementing the Agreement, helping to cut trade costs around the world. It also means we can kick start technical assistance work to help poorer countries with implementation.”
With acceptance by Rwanda, Oman, Chad and Jordan, the WTO reached the two-thirds threshold it needed for the TFA to become the first multilateral deal to enter into force in the 21-year history of the organization.
Once the TFA is implemented, it will save a significant amount of time. The deal will snip almost two days out of the export process, which can currently take anywhere from six to 86 days. Time to process imports, which take four or as many as 130 days now, will drop by more than a day.
Costs associated with trade are expected to drop by 14.3 percent on average, with developing countries receiving the biggest benefit.
Overall, the WTO anticipates trade will increase as new companies find it easier to launch into the sector and developing nations find it less difficult to participate. Least-developed countries could see increases of up to 35 percent.
To help developing and least-developed countries take full advantage of the TFA, the WTO created a facility to aid them in understanding, implementing and funding the reforms. These countries have a window for implementing TFA provisions, which can occur over time in three waves.
The 12 articles of the TFA include provisions for improved communications about cross-border trade, better appeals rights, fewer fees and easier cooperation between customs officials and other groups that oversee trade and customs compliance.