Partnership between ITC, WEF and Bain & company showcases the benefits of trade facilitation
(Geneva/Davos) – The International Trade Centre (ITC), the World Economic Forum (WEF) and Bain & Company today unveiled two joint reports elaborating on the benefits that countries would gain from implementing effective trade facilitation procedures under the World Trade Organization’s Trade Facilitation Agreement (TFA).
The positive impact of more streamlined customs and border procedures on the competitiveness and investment attractiveness of countries is well known, but the reports also highlight some of the challenges that some developing countries could face in implementing the WTO rules and provides some insight into where focused assistance could be needed.
Arancha González, ITC Executive Director, said: ‘Especially in developing countries, partnerships between the public and private sectors are needed for trade facilitation to deliver real and sustained economic growth. These two reports provide important guidelines for how policy makers and business can collaborate to ensure transformation on the ground that provides tangible benefits for the cost of doing business and trading.
‘Enabling Trade: Catalysing Trade Facilitation Agreement Implementation in Brazil’, provides an insight into how an emerging economy like Brazil is implementing the TFA. The report examines the supply chain barriers that companies face in Brazil and how the ‘Single Window’ project, a single entry point for customs issues, could be used to solve many of these issues. Currently, the average time for exports is 13 days and for imports it stands at 17 days. When compared to the global average of 21.8 days for export and 24.6 days for import and the developing country average of 22.8 days for export and 26.1 days for import Brazil’s performance is relatively better. According to Fundacao Getulio Vargas, a Brazilian think-tank, improved procedures could result in potential cost savings of US$ 1.5 billion annually and could add US$ 24bn to Brazil’s gross domestic product.
In the report, the country’s trade-facilitation approach is analysed and recommendations are drawn from the experience which could assist other developing countries in their efforts.
The report’s analysis of the ‘Single Window’ in Brazil suggests that solutions and approaches may vary according to country characteristics but that there are a number of best practices that all countries could rely to successfully implement a Single Window, including the creation of an overall government-led structure that would encompass project enforcement, private-sector involvement and effective governance arrangements.
In the report’s foreword, Carlos Barreto, Secretary, Federal Revenue Authority of Brazil, and Daniel Godinho, Secretary of Foreign Trade at Brazil’s Ministry of Development, Industry and Foreign Trade, recognized that ‘trade facilitation is the most fundamental tool for taking international trade to the next level’, given the ‘potential [it has] to make foreign trade more dynamic, allowing private operators to save time and money, with positive impacts on boosting exports and economic growth as a whole.’
The second report ‘Enabling Trade: Increasing the Potential of Trade Reforms’ takes many of the lessons from the specific country focus of Brazil and sets out the actions needed to maximize the benefits of implementing the trade facilitation reforms. It argues that the sector-specific approach applied by some governments may not be enough to realize the full potential that trade facilitation can bring to competitiveness. Instead, the report argues that a ‘horizontal’ approach covering every step of entire supply chains is required if reforms are to have a sustainable impact.
The report further notes that to effectively facilitate trade, there needs to be collaboration among individuals, firms and government representatives. It suggests that governments that pursue trade facilitation through a ‘horizontal’ approach are those most likely to achieve success.
This approach, the report suggests, involves identifying industries with the highest potential for export success, and then taking an end-to-end view of each industry’s value chain. This allows a focus on the specific trade barriers that should be addressed to allow the industry to reach a ‘tipping point’ where it becomes competitive, thus enabling and easing the flow of goods and services across borders.
By drawing on findings from sector-specific studies from Brazil, Nigeria and other countries, the report argues that the private sector and government can create a virtuous cycle for trade if the right combinations of policies are in place.
Download Enabling Trade: Catalysing Trade Facilitation Agreement Implementation in Brazil
Download Enabling Trade: Increasing the Potential of Trade Reforms
Note to the editor:
ITC is the joint agency of the World Trade Organization and the United Nations. ITC assists small and medium-sized enterprises in developing and transition economies to become more competitive in global markets, thereby contributing to sustainable economic development within the frameworks of the Aid-for-Trade agenda and the Millennium Development Goals.