1. Background: Trade Facilitation Agreement
• The Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO) was agreed at the 9th Ministerial Conference of the WTO in Bali, Indonesia, in December 2013.
• It formally entered into force on 22nd February 2017. So far, 110 out of the 164 WTO Members have ratified the Agreement.
• The TFA contains provisions aimed at reducing the costs of trade by expediting the import, export and transit procedures, including the movement, release and clearance of goods.
• The provisions of the TFA are distributed over 12 articles.
• The scope covers:
• Improvements in transparency and predictability of trading across borders;
• a non-discriminatory business environment;
• improvements to the availability and publication of information about cross-border procedures and practices;
• improved appeal rights for traders;
• fees and charges, only for services rendered;
• faster clearance procedures;
• enhanced conditions for freedom of transit for goods;
• measures for effective cooperation between customs and other authorities on trade facilitation and customs compliance issues.
a. The TFA and the Categories of Commitments (A, B and C)
• While Developed Countries shall implement ALL the provisions of the TFA immediately, Developing Countries shall stage their implementation of the TFA as follows:
• Category A Commitments – to be implemented immediately;
• Category B Commitments – subject to capacity-building support and hence to be notified at a later date;
• Category C Commitments – subject to capacity-building support and hence to be notified at a later date.
b. Estimated Benefits and Advantages
• Although estimates vary, the OECD (2013) places the reduction of trade costs of full TFA implementation at an average of around 14% for low-income countries and 13% for upper middle income countries.
• The TFA is also expected to help new firms export for the first time.
• When fully implemented, developing countries are predicted to increase the number of new products exported
• Global trade is estimated to be boosted by up to 1 trillion dollars each year. The impact is estimated to be greater than the elimination of all existing tariffs around the world.
1. Global, Multilateral, Bilateral and Private Sector Support Available for African Countries’ Implementation of the TFA
• World Bank Group – Trade Facilitation Support Program (TFSP).
• WTO – “Trade Facilitation Agreement Facility” (TFAF)
• UNCTAD – Automated System for Customs Data (ASYCUDA) programme and Trade Portals.
• World Customs Organization (WCO) – long standing technical assistance programmes for African customs authorities.
• Bilateral Programmes:
• TradeMark East Africa
• European Commission
• World Economic Forum – “Global Alliance for Trade Facilitation”; leveraging partnerships with the private sector.
1. Africa and the Trade Facilitation Agreement (TFA)
c. Domestically: Africa and the TFA
• So far, this month, March 2017, 19 of the 441 African member states of the WTO have ratified the TFA. Seventeen (17) have neither notified their Category A, B and C commitments, nor have they ratified the TFA.
• In this start-up phase, most of the trade facilitation projects required by African Countries and Nigeria, included, are centered on:
the formation of national trade facilitation committees to drive the process;
A package of legal reforms;
• customs operations; customs modernisation; customs cooperation; and, coordinated border management,
• establishment of one-stop border posts,
• establishment of authorised economic operator schemes
• These are areas where technical assistance, support and establishment of partnership would be required from development partners. Yet, African countries would need to deploy more resources themselves.
d. Continentally: – The WTO Trade Facilitation Agreement and the Negotiations for the Continental Free Trade Area for Africa (CFTA Negotiations)
• The WTO Trade Facilitation Agreement is one of the Central Pillars in the negotiations for the Continental Free Trade Area for Africa (the CFTA negotiations).
• In the initial stage, currently, under way, the CFTA negotiations include: i) liberalization of trade in goods; ii) liberalization of trade in services; and, iii) the Agreement / Protocol for the Continental Free Trade Area.
• The Draft Chapter on Customs Procedure and Trade Facilitation is one of the most important Chapters in the Draft CTFA Agreement under preparation.
• Nigeria is playing a strong leadership role in the CFTA Negotiations. In Nigeria’s participation at the CFTA negotiations, Nigeria is stressing several key points:
• First, the goal of trade facilitation in Africa is customs modernization. As the maxim is stated: “trade and governance intersect at borders”. The purpose of customs modernization and improved border governance is to significantly reduce trade transaction costs, improve competitiveness and business opportunities, increase trade and investment flows and, on this basis, construct regional value and supply chains.
• Second, simplify and harmonise standards and bring them into line with international best practices and trade procedures, pursuant to the WTO TFA.
• Third, better collection, presentation, communication and processing of data for the movement of goods in international trade.
• Fourth, for Africa, collectively, the concrete Trade Facilitation problems to solve, revolve around: poor management, lack of transparency uncertainty, shifting away from the analogue economy to the digital economy; establishing proper governance at chaotic border-crossing procedures; and, raising the level of cooperation and coordination amongst customs administrators.
• Fifth, lack of progress or the non-implementation of far-reaching trade facilitation goals for Africa would carry significant costs. Principally, these would include, prohibitive and non-competitive costs vis-à-vis other regions in processing fees, cargo handling charges; market depreciation, loss of business opportunity from trade transactions in Africa, exclusion from value chains; and, development foregone.
• Sixth, trade facilitation reforms constitute the trigger for serious regional integration in Africa. These reforms hold the key to boosting intra-African Trade beyond its very low current level of 19%. These reforms would establish the conditions for economic modernization and integration in Africa; reduce trade transaction costs, improve competitiveness and business opportunities, accelerate trade and investment flows and, lead to enhancement of regional value and supply chains.
• Seventh, Africa needs to accelerate rapidly in implementing a strong agenda on Trade Facilitation, based on the WTO TFA.
1. Nigeria and the Trade Facilitation Agreement:
• Nigeria’s Federal Executive Council (FEC), in a Session chaired by President Buhari ratified the TFA on 25th of August 2016. On 20th January 2017, on the margins of the World Economic Forum (WEF), in Davos, I was honoured to deposit with Director-General Roberto Azevedo, “Nigeria’s Instrument of Acceptance of the WTO Trade Facilitation Agreement”.
• Nigeria has notified Category A commitments. There is National Trade Facilitation Committee at work. We have to accelerate and we have work to do. I invite all of Nigeria’s Partners to join us in this exercise.
• Domestically, in Nigeria, the implementation of the WTO Trade Facilitation Agreement is inseparable and organically linked to the President Buhari’s own Initiative on an Enabling Environment to improve the Ease of Doing Business in Nigeria.
• On the basis of this Initiative, the “Presidential Enabling Business Environment Council” (PEBEC) was established and functions pro-actively.
• The PEBEC is one of the Initiatives by Government to fight institutional corruption, improve economic governance, modernize the Nigerian economy and connect it to regional and global value chains.
• The real value of the WTO Trade Facilitation Agreement goes well beyond the codification of international best practices. It provides the trigger for national governments to pursue wide-ranging reforms for improving and modernizing the domestic economy, aligning them with international standards and, hence, creating the efficiencies that generate welfare gains, creating jobs and accelerating economic growth.
• Nigeria is implementing the Enabling Business Environment Project in stages. At this stage we are focused on enacting a package of laws that:
• Establishes the Single Window and the functionality of “One Government”;
• Expedites the movement and clearance of goods: imports and exports, goods in transit.
• Grants Visas on Arrival (Movement of Natural Persons).
• The coming into force of the WTO Trade Facilitation Agreement (TFA) is a key contribution from the rules-based Multilateral Trading System to support the domestic policy reforms by governments to modernize and update their economies, expand job opportunities and attract investments. These reforms will provide a platform to connect to regional and global value chains and hence accelerate growth and development.
• The TFA is positive for Development.