SBF applauds the WTO Trade Facilitation Agreement coming into force23 February 2017 [Singapore] - The World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) came into force yesterday, with more than two-thirds of WTO’s 164 Members having ratified the said Agreement. A landmark global trade agreement, the TFA is the first multilateral trade agreement to enter into force in over two decades. This development means that the TFA now becomes an official part of the multilateral trading system covering more than 96% of global GDP. It is a positive development that boosts international trade which continues to be threatened by rising trade protectionism and political isolation.
Negotiations for the TFA concluded in December 2013 by WTO members. It seeks to reduce trade compliance costs with provisions for expediting the movement, release and clearance of goods, including those in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It addresses two basic business concerns which represent substantial costs to companies’ import and export transactions:
- Lack of transparency and predictability on trade measures imposed by countries; and
- Cumbersome trade-related procedures and excessive documentary requirements.
Based on calculations made by the Organisation for Economic Cooperation and Development using its 2015 Trade Facilitation Indicators, implementing the TFA could bring down worldwide trade costs by between 12.5% and 17.5%, with low and lower middle income countries having the biggest reductions in trade costs. The TFA could provide a boost to global trade flows of over US$1 trillion, and add 0.34% to 0.54% a year to world GDP growth, equivalent to $350 billion to $550 billion.
On what the TFA means to the Singapore business community, Mr Ho Meng Kit, CEO of the Singapore Business Federation (SBF), said, “Our latest SBF National Business Survey 2016/2017 identified unclear rules and regulations as the top challenge businesses face when they expand overseas, cited by 46% of respondents. The TFA will bring about more transparent, predictable and efficient customs procedures and lower compliance costs, lowering barriers for our companies to venture into foreign markets. For instance, the TFA requires WTO members to publish information on their respective import and export procedures and documentary requirements, which must be easily available online. This would considerably reduce the time, effort and resources for companies to obtain this information prior to exportation and importation.”
Mr Ho added, “How successful the TFA will be lies in its implementation. Beyond the 112 members that have ratified it, representing about 65% of Singapore’s total trade in 2015, we hope that all WTO members, particularly our ASEAN partners, will come on board. We see the WTO TFA as complementary to the ASEAN Trade Facilitation Work Programme, so it will contribute towards realising the ASEAN Economic Community (AEC) Blueprint 2025. SBF looks forward to partnering the Government and other stakeholders within and outside Singapore to raise awareness and prepare our companies for the implementation of the TFA.”