Trade facilitation

Trade facilitation

"See also Trade Facilitation and Development."

Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives. Business costs may be a direct function of collecting information and submitting declarations or an indirect consequence of border checks in the form of delays and associated time penalties, forgone business opportunities and reduced competitiveness.

Understanding and use of the term “trade facilitation” varies in the literature and amongst practitioners. "Trade facilitation" is largely used by institutions which seek to improve the regulatory interface between government bodies and traders at national borders. It is defined by the WTO as: “The simplification and harmonisation of international trade procedures” where trade procedures are the “activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade”.

In defining the term, many trade facilitation proponents will also make reference to trade finance and the procedures applicable for making payments (e.g. via a commercial banks). For example UN/CEFACT defines trade facilitation as "the simplification, standardization and harmonisation of procedures and associated information flows required to move goods from seller to buyer and to make payment".

Occasionally, the term trade facilitation is extended to address a wider agenda in economic development and trade to include: the improvement of transport infrastructure, the removal of government corruption, the modernization of customs administration, the removal of other non-tariff trade barriers, as well as export marketing and promotion.

The World Bank defines "trade facilitation" as encompassing transport as well as the wider environment in which trade transactions take place. This includes transparency and professionalism in customs and regulatory environments, as well as harmonization of standards and conformance to international or regional regulations [ [,,contentMDK:20696563~menuPK:1743267~pagePK:64168182~piPK:64168060~theSitePK:1697658,00.html "Trade Costs and Facilitation: The Development Dimension," Project Description] , The World Bank. ] .

Examples of regulatory activity in international trade

Fiscal:Collection of customs duties, excise duties and other indirect taxes; payment mechanisms

Safety and security:Security and anti smuggling controls; dangerous goods; vehicle checks; immigration and visa formalities

Environment and health:Phytosanitary, veterinary and hygiene controls; health and safety measures; CITES controls; ships’ waste

Consumer protection:Product testing; labelling; conformity checks with marketing standards (e.g. fruit and vegetables)

Trade policy:Administration of quota restrictions; export refunds

Trade Facilitation Indicators

Although most trade procedures are embedded in international trade regimes, the application of trade procedures will vary significantly from country to country. Practitioners will often hold that no two cross-border environments are alike and operations between one trade transaction and another will vary significantly. Subsequently, comparative research is riddled with methodological difficulties and it is difficult to quantify and compare the trade performance of one country or region to another.

However, by analyzing multiple sets of indicators provided by the freight forwarding and logistics industry -- such as average customs clearance times, port performance statistics, and the availability of regulatory and standards-related information -- a World Bank funded study attempted a general assessment on the quality of an economy's trading environment. To this end, the World Bank's [,,menuPK:1697684~pagePK:64168176~piPK:64168140~theSitePK:1697658,00.html Trade Costs and Facilitation Project] has compiled a comprehensive [,,contentMDK:20697834~menuPK:1743333~pagePK:64168182~piPK:64168060~theSitePK:1697658,00.html database of trade- and logistics-related indicators,] and has also created its own [,,contentMDK:21166326~pagePK:64214825~piPK:64214943~theSitePK:469382,00.html trade facilitation indicators] , which illustrate the potential impact of various trade facilitation reforms on trade flows across 75 countries in global trade, considering four important categories: port efficiency, customs environment, regulatory environment, and service sector infrastructure. [ [,,contentMDK:20697834~menuPK:1743333~pagePK:64168182~piPK:64168060~theSitePK:1697658,00.html "Assessing the Potential Benefit of Trade Facilitation: A Global Perspective " John S. Wilson, Elizabeth Mann and Tsunehiro Otsuki, World Bank Policy Working Paper #3324, February 2004] ]

Recent Issues in Trade Facilitation

Trade facilitation has been at the forefront of recent trade policy dialogue as developing countries look for ways to bolster their economic growth through increased trade performance. This trend is likely to continue in light of the recently stalled talks on the Doha Development Agenda. To this end, the World Bank has recently published a set of research briefs, which draw on recent trends and analyses of trade facilitation reforms and opportunities across different regions and sectors of the global economy. []

* [ “Transparency Reform Could Raise Trade by $148 Billion in APEC,”] John S. Wilson, Benjamin Taylor; Trade Facilitation Research Brief, The World Bank. 2008.

* [ “Deeper Integration in ASEAN: Why Transport and Technology Matter for Trade,”] John S. Wilson, Benjamin Taylor; Trade Facilitation Research Brief, The World Bank. 2008.

* [ “Trade Facilitation and the Doha Agenda: What Matters for Development,”] John S. Wilson, Benjamin Taylor; Trade Facilitation Research Brief, The World Bank. 2008.

* [ “Trade Facilitation Reform Promises Large Gains to Trade in Mexico,”] John S. Wilson, Benjamin Taylor; Trade Facilitation Research Brief, The World Bank. 2008.

* [ “Harmonized International Standards Do Matter to Developing Country Exports,”] John S. Wilson, Benjamin Taylor; Trade Facilitation Research Brief, The World Bank. 2008.


External links

Trade Facilitation: A Review [] A Working Paper prepared by Dr Andrew Grainger

[ Trade Costs and Facilitation: The Development Dimension] : A World Bank research project on trade facilitation and development.

Global Facilitation Partnership [] : A collaborative tool for practitioners and policy makers involved in trade facilitation and transport facilitation (TTF).

EUROPRO [] : An umbrella body for European trade facilitation committees and other like-minded, non-profit-making bodies.

SITPRO [] : United Kingdom's Trade Facilitation Agency dedicated to making international trade simpler by cutting red tape.

World Customs Journal [] : Special Issue on Trade Facilitation (free access)

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