For the first time in the World Trade Organization's (WTO) nineteen-year history, all 159 members managed to reach an agreement on 6 December 2013 at the 9th WTO Ministerial in Bali, Indonesia. To read ICC's full report on the potential payoffs from the Bali deal, and the ICC World Trade Agenda, please click on the document below.
Payoff from the World Trade Agenda 2013
The Agreement on Trade Facilitation, which was adopted at the WTO's 9th Ministerial Conference in Bali, Indonesia, in December 2013 is the first major agreement to have been reached since the creation of the WTO almost 20 years ago.
The Agreement aims at simplifying not only the documentation required to clear goods, but also the procedures employed by border agencies. Focusing on the biggest risks allows border agencies to speed up the flow of goods across the border, and increases the collection of duties. It has been described as a classic 'win-win' subject for developing and developed countries, since there should be no losers.
Benefits of this deal are far-reaching for business. The deal could potentially halve the average cost of shipping merchandise across borders from 10% of the goods value to just 5% and boost trade by enough to create 21 million jobs, of which 18 million will be in developing countries. Experts also estimate a
boost of $1 trillion dollars annually for the global economy.
Trade facilitation is important to business because it can have a major impact on bringing down trade transaction costs. Goods delayed at the border for days (or even weeks) slow trade flows and add costs to business that are often passed on to consumers.
The agreement has the potential to be of particular benefit to traders in developing countries, who continually face lengthy and costly border delays. Depending on the country's implementation of the trade facilitation agreement, the removal of these barriers to trade could reduce total trade costs by 10% in advanced economies and by 13-15% in developing economies.
The trade facilitation agreement will, therefore, have a real impact on the global economy in terms of jobs and
opportunity. Cutting red tape at borders and in customs will speed up
supply chains and make it easier for smaller companies and developing
countries to integrate into international trade. The deal will also boost the
ability of developing economies to provide food security to their poorest
The International Trade Centre (ITC) has produced a Business Guide on what this agreement will mean
in terms of practical implications and how business can work in partnership
with governments to best implement the obligations and specific commitments
undertaken in the Agreement on Trade Facilitation. A copy of the guide can be accessed here.
Peterson Institute for International Economics, Washington, DC