Export Diversification Effects of the Wto Trade Facilitation Agreement

Export Diversification Effects of the WTO Trade Facilitation Agreement

The World Trade Organization (WTO) Trade Facilitation Agreement (TFA) came into force on February 22, 2017, and it promises to bring significant benefits to countries around the world. The agreement primarily aims to simplify and standardize customs procedures to reduce trade barriers and make cross-border trade easier and faster. This, in turn, is expected to increase export diversification and help countries integrate into the global economy.

Export diversification is crucial for countries to reduce their reliance on a narrow range of products and markets and spread their risk across multiple products and destinations. The TFA is expected to facilitate export diversification by reducing the cost and time of trade, making it easier for businesses to explore and enter new markets.

One of the key provisions of the TFA is the establishment of a single-window system, which enables traders to submit all trade-related documents through a single electronic interface. This simplifies the documentation process, reduces bureaucracy and corruption, and speeds up customs clearance. The single-window system is expected to reduce the time and cost of trade and encourage small and medium-sized enterprises (SMEs) to participate in cross-border trade.

Another provision of the TFA that is expected to promote export diversification is the requirement for countries to provide advance rulings on the classification and valuation of goods. This provides greater predictability for traders and reduces the risk of goods being held up at the border due to customs disputes. This also makes it easier for businesses to plan their export strategies and explore new markets.

The TFA also requires countries to establish and maintain a national trade facilitation committee, which brings together public and private stakeholders to improve the efficiency and effectiveness of trade processes. This committee can help identify and address bottlenecks and barriers to trade, leading to faster, more efficient cross-border transactions.

The TFA also requires countries to provide technical assistance and capacity building to support the implementation of trade facilitation measures. This is particularly important for developing countries, which may lack the resources and expertise to implement complex trade facilitation measures. Technical assistance can help countries build the necessary infrastructure, train customs officials, and develop the legal framework required to implement the TFA.

In conclusion, the TFA is expected to have a significant positive impact on export diversification by reducing the cost and time of trade, simplifying customs procedures, and making it easier for businesses to explore and enter new markets. The establishment of a single-window system, advance rulings, national trade facilitation committees, and technical assistance are expected to make cross-border trade faster, more predictable, and more efficient, helping countries to integrate into the global economy and reduce their reliance on a narrow range of products and markets.