Leveraging WTO commitments to boost intraregional trade in West Africa
Trading with one’s neighbours can be an important driver of value addition and job creation irrespective of a country’s level of development. But across much of the developing world – especially in Africa – levels of intraregional trade are low compared to those in Europe and North America. In the West African Economic and Monetary Union, a regional economic community comprising Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger and Togo, trade among the bloc’s members in 2014 accounted for a mere 13% of their total international commerce.
This situation is not for want of regional policy initiatives in favour of integration. Like other regional economic communities within Africa, the WAEMU countries (often referred to by their French acronym, UEMOA) have taken important steps to establish a common external tariff and customs code with the ultimate goal of establishing a single regional market.
Despite significant progress, however, companies in the region have struggled to trade more with each other across borders. A major reason for this is high trading costs. According to the World Bank Doing Business – Trading Across Borders indicators, conducting trade transactions in the WAEMU region is 15% more expensive than the world average and almost four times costlier than in advanced economies. Weak physical infrastructure, together with the high expenses and long delays associated with crossborder operations, discourages intraregional trade.
To address these challenges, WAEMU members in 2013 launched an ambitious trade facilitation programme with a view to ease intraregional goods trade by simplifying and harmonizing cross-border procedures and requirements. After World Trade Organization (WTO) members adopted the Trade Facilitation Agreement (TFA) in Bali in December 2013, the WAEMU secretariat and its member governments decided to accelerate those efforts.The response
Since early 2014, ITC has supported the WAEMU secretariat and its member states’ pursuit of a regionally harmonized and coordinated implementation of the TFA, with a view to achieving economies of scale while establishing a more predictable trading environment across the region. This has involved working towards region-wide consensus among public and private sector stakeholders from all WAEMU member states on modalities for implementing the TFA.
Under the TFA, developing countries need to divide their future obligations into three categories: Category A commitments, which they already implement or will do so immediately upon the agreement’s entry into force; Category B commitments, for which they require additional time; and Category C commitments, for which they require both time and technical or financial assistance.
While most governments will implement the TFA at the national level, ITC worked with WAEMU on an alternative path: implementing selected Category B and Category C measures region-wide, backed by a coordinated effort to raise the technical and financial assistance WAEMU members require.
Even for individual governments, categorizing TFA obligations and quantifying technical assistance needs is not straightforward as many developing countries have sought and received external technical assistance for the process. For the WAEMU bloc, ITC developed a conceptual framework to help the secretariat and member states identify measures suitable for a coordinated approach.
TFA obligations will be implemented regionally if they meet the following criteria: one, a majority of WAEMU countries place them in categories B or C; two, implementation would require the regional legal framework to be amended; three, they support the ‘corridor’ framework for regional integration; and four, if money and resources could be saved by implementing regionally instead of at the national level.
Starting in June 2014, ITC supported the WAEMU secretariat to assess members’ TFA compliance, identifying gaps as well as best practices. They then assessed common technical and financial needs for TFA implementation in the region, developing detailed project proposals for the implementation of Category C measures in six of the bloc’s eight countries.
Region-wide implementation is not appropriate for all TFA measures, so ITC proposed a four-tiered scheme for the degree of cooperation on each obligation. The most basic tier, regional cooperation, involves information sharing across the WAEMU. The next level, regional harmonization, would include the development of WAEMU-wide guidelines leaving individual countries to determine when and in what order to implement measures. Regional coordination, the third level, would give the WAEMU secretariat regionwide oversight to ensure synchronous implementation. Only for the top tier would there be full regional implementation, with the WAEMU secretariat directly responsible for implementing measures on behalf of member governments.The results
WAEMU members have reached consensus both on the
principle of regional TFA implementation and on a set of
measures to implement in a harmonized manner. At a March
2016 regional event organized by ITC in Dakar, public- and
private-sector stakeholders from all WAEMU countries agreed
on nine TFA measures for coordinated implementation. These
include the TFA rules on publishing border procedures on the
internet so that businesses can easily find them, establishing
enquiry points for traders and ensuring border agency
coordination. Other measures selected include the TFA’s rules for how customs authorities manage risks related to goods transit and procedures for determining ‘authorized economic operators’ who qualify for speedier border clearance.
Following the regional workshop, the WAEMU adopted a series of recommendations including one to establish, with ITC support, a regional trade facilitation committee – a region-wide analogue of the national committees required under the TFA – to coordinate and oversee the implementation of the chosen measures.
ITC will work to support the creation of national and regional trade facilitation committees, governance structures that will facilitate the implementation of the TFA at both levels. In particular, it will seek to ensure adequate private-sector participation on those committees so that the problems businesses encounter on the ground factor into policy reforms. ITC will also build a strong network of trade facilitation experts within the region to ensure sustained support for smooth border processes.
In addition, ITC will work with the WAEMU secretariat to replicate across the bloc best practices identified during the TFA compliance assessment. One example of such practices is electronic certificates of origin; currently, some members of the bloc still issue physical certificates for traded merchandise.
WAEMU’s collective approach to TFA implementation could ultimately be emulated by other regional economic communities.