Significance of Trade Facilitation Negotiations at the WTO
The significance of trade facilitation negotiations at the WTO is inscribed in paragraph 27 of the Doha Ministerial declaration where Members agreed to trade facilitation negotiations so as to; expedite the movement, release and clearance of goods including goods in transit, and enhance technical assistance and capacity building in this area. Members agreed to review and as appropriate, clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994. Within the framework of trade facilitation negotiations, WTO members agreed to identify needs and priorities of Members, in particular developing and least-developed countries. Noting the significance of trade facilitation, members committed to ensuring adequate technical assistance and support for capacity building in the area of trade facilitation.
The trade facilitation negotiations was motivated by the fact that barriers to trade were on the increase even when tariffs were steadily being dismantled through rounds of trade negotiations. The non-tariffs barriers became a bigger hindrance to trade much more than it had been thought of tariffs. Members realized the significance of trade facilitation by observing that the global trade system lacked transparency and predictability because of application of inefficient trade facilitation measures by a number of countries. It was noted that a number of countries have inefficient cross border procedures characterized by lack of automation and use of Information technology. Member countries lack institutional cooperation and coordination and have excessive documentation requirements at customs. In addition countries are faced with poor infrastructure and have laws and regulations which make transport and transiting barriers to trade.
Although the level and effect of barriers to trade due to inefficient trade facilitation measures differ between countries, a report by WTO indicates that on average countries have for any single consignment, 20-30 different institutions involved in customs processes and about 40 customs documents required for customs clearances. For all the 40 documents, about 200 data elements are required with 30% of which repeated in the documents and 60-70 % re-keying of original data.
African countries are particularly faced significant trade facilitation inefficiencies. Transport costs are very high, with land-locked countries being even worse off. In the SADC (Southern Africa Development Cooperation) region alone transport costs amount for approximately 20 -30 % of the costs of goods
The above significant trade facilitation inefficiencies and many others combined negatively impact trade and undermine the benefits of trade liberalization. The significance of trade facilitation is also founded in the realisation that such barriers to trade lead to; reduction of Government revenue, diversion of trade flows, increased consumer prices, limitation of a countries integration in international in production supply chains, increased trade transaction costs, reduction in foreign direct investment, break down in trade competitiveness and general lack of business opportunities.
It is on the basis of the above that countries agreed to trade facilitation negotiations so as to create an environment free of barriers to trade in Member States. The trade facilitation negotiations are aimed at; expediting the movement, release and clearance of goods (including goods in transit), enhancing technical assistance and capacity building support to developing countries and promoting effective cooperation between customs or any other appropriate authorities on trade facilitation and customs compliance issues
Significantly the results of trade facilitation negotiations are expected to take into account the principle of special and differential treatment to developing countries. Developing countries are not expected to implement commitments beyond traditional transition periods. The extent and timing of entering into trade facilitation commitments is to be related to the implementation capacities of developing and Least Developed Countries (LDCs). Developing countries and LDCs will not be obliged to undertake investments in infrastructure projects beyond their means. LDCs will only be required to undertake trade facilitation commitments to the extent consistent with their individual development, financial and trade needs or their institutional capabilities.
