The conclusion of the Trans-Pacific Partnership negotiations may have received most of the media coverage, but other crucial elements of the international trade agenda still need attention. At the top of many governments’ and global traders’ lists of priorities is trade facilitation.
At December’s World Trade Organization ministerial in Nairobi, Kenya, the landmark Trade Facilitation Agreement was center stage when donor countries (including the U.S., Canada, Germany and the U.K.) joined the World Economic Forum, Center for International Private Enterprise, and International Chamber of Commerce to officially launch the Global Alliance for Trade Facilitation, focused on TFA implementation capacity-building.
Robust implementation of the TFA will provide greater transparency and predictability in international trade, expedite movement, release and clearance of goods, and create greater cooperation among members on customs issues. According to the WTO, full implementation of the TFA could reduce trading costs by an average of 14.3 percent. Implementation is expected to lower transaction costs for small and medium-sized enterprises by solidifying more transparent, harmonized and simplified cross-border trading rules. The Peterson Institute for International Economics estimates the agreement will boost world GDP by nearly $1 trillion annually.
By late November, 52 WTO members — including the U.S., the EU, Nicaragua, Botswana, Pakistan and Panama — had ratified the TFA. However, two-thirds of WTO’s 162 members must complete domestic ratification processes before the TFA can enter into force, so there is still a way to go. While Nairobi was initially targeted as the milestone for entry into force, a more realistic goal of 2016 is perfectly feasible, to be followed by the much longer process of robust implementation to secure the greatest benefits.