Magazine article International Trade Forum

Trade Facilitation: Trade Competitiveness and the Development Dimension

Magazine article International Trade Forum

Trade Facilitation: Trade Competitiveness and the Development Dimension

Article excerpt

As early as the mid-1990s, the United Nations Conference on Trade and Development (UNCTAD) documented what later became widely acknowledged--that administrative and procedural transaction costs constitute between 3% and 6% of the value of internationally traded goods. With tariff reductions already implemented in most trading nations, in the context of multilateral and regional trade agreements, prospects for further reductions in trade transaction costs and hence increased competitiveness now rest largely upon transport and trade facilitation reforms.

Recognizing its importance for trade, UNCTAD has, for over 40 years, highlighted the development dimension of trade facilitation.

Trade facilitation reforms and development

Trade facilitation reforms are good for development because many trade facilitation measures have a direct link to different aspects of human and institutional development. They increase the transparency of administrations and help to build trust with business sectors, they improve governance and make public resources more effective and more efficient, they strengthen capacities, increase fiscal revenues, and help to bring informal sectors into the formal economy.

The overall concept of trade facilitation encompasses the standardization, harmonization and simplification of trade procedures and documentation. Behind this general description lies an often complex combination and sequence of transformations, each of which benefits from and supports human and institutional development.

For example, if a country already has a modern financial system, it is easier to introduce customs or transit guarantee schemes that operate via the banking system. Electronic payments, and the electronic submission of information to customs, are easier to introduce if a legal and regulatory framework for electronic documents and signatures is already in place. And implementing measures such as online enquiry points or the publication of trade-related regulations on the web is far less problematic if e-governance is developed, or if the country has a high level of Internet penetration.

By putting in place national trade facilitation reforms supported by external financial and technical assistance, developing countries have the opportunity to modernize their international trade and transport sectors, contributing to the promotion of trade and investment promotion. At the same time, this support will also directly contribute to different development objectives. For example, investments in information and communications technologies enhance Internet connectivity between traders and government agencies, and also strengthen the private sector's capacity to obtain and share information online. Measures currently being discussed at the World Trade Organization (WTO) that relate to consultations, appeal procedures, enquiry points and publications will improve trust and governance. The simplification of procedures and formalities will help to free up public resources, moving them away from repetitive bureaucratic tasks, in order to be able to strengthen regulatory and public planning functions.

Furthermore, there is a pro-poor human dimension in trade facilitation. …

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