Advertisement

Africa and the WTO Trade Facilitation Agreement: State of Play, Implementation Challenges, and Policy Recommendations in the Digital Era

  • Mena HassanEmail author
Chapter
  • 21 Downloads
Part of the Advances in African Economic, Social and Political Development book series (AAESPD)

Abstract

It is becoming more evident that better market access conditions alone do not translate directly into increased trade opportunities for African countries. A greater obstacle than tariffs is the high cost of moving goods across Africa’s borders. In addition to supply-side capacity constraints, behind the border barriers and non-tariff measures (NTMs) are increasingly hampering African trade, whose share in world merchandise trade remains a measly 2.7% in 2018. With the aim of lowering transaction costs for businesses and to help expedite the clearance and release of goods across borders, in 2013, Members of the World Trade Organization (WTO) have successfully concluded a new multilateral Agreement on Trade Facilitation, the first since the Uruguay Round twenty years before. The Trade Facilitation Agreement (TFA) entered into force in February 2017, with over two-thirds of the membership ratifying the Agreement. On September 1, 2019, there are 35 African countries out of 41 who have ratified the TFA. According to the OECD and WTO, estimates show that the full implementation of the TFA could reduce trade costs by an average of 14.3% and boost global trade by up to US$ 1 trillion per year, with the biggest gains in the poorest countries. While there are benefits for African countries to implement the TFA sooner rather than later, many will require substantial technical assistance and capacity building (TACB) support to properly implement the trade facilitation measures in the TFA. Equally as important, the need for African policymakers is to recognize the political economy aspects of the implementation challenges, which are intertwined in trade facilitation domestic reform. This chapter will first address some of the key challenges facing African countries’ trade potential and the benefits accruing from facilitating their trade. Then, a brief description of the TFA and its novel provisions will be outlined as well as the status of implementation of African countries. Finally, the constraints related to the implementation of trade facilitation measures are addressed and in conclusion, some policy recommendations.

Keywords

Trade facilitation WTO Trade policy Non-tariff measures (NTMs) Trade and development Africa Developing countries Least developed countries (LDCs) 

References

  1. Anderson JE, van Wincoop E (2004) Trade costs. J Econ Lit 42:691–751CrossRefGoogle Scholar
  2. Arvis J-F, Raballand G, Marteau J-F (2007) The cost of being landlocked: logistics costs and supply chain reliability. World Bank Policy ResearchGoogle Scholar
  3. Baldwin RE (1970) Nontariff distortions of international trade. Brookings Institution WashingtonGoogle Scholar
  4. Bhagwati JN (1980) Revenue seeking: a generalization of the theory of tariffs. J Polit Econ 88:1069–1087Google Scholar
  5. Bhagwati JN (1982) Directly unproductive, profit-seeking (DUP) activities. J Polit Econ 90:988Google Scholar
  6. Butterly T (2003) Trade facilitation in a global trade environment. In: Trade facilitation: the challenges of growth and development. United Nations, New York and GenevaGoogle Scholar
  7. Deardorff AV, Stern RM (1997) Measurement of nontariff barriers A1.159 WP 395. Available at SSRN: https://ssrn.com/abstract=54045 or https://doi.org/10.2139/ssrn.54045
  8. Dee P, Ferrantino M (2005) Quantitative methods for assessing the effects of non-tariff measures and trade facilitation. APEC Secretariat and World Scientific, SingaporeGoogle Scholar
  9. Djankov S, Freund C, Pham CS (2010) Trading on time. Rev Econ Stat 92(1):166–173CrossRefGoogle Scholar
  10. Duval Y (2006) Cost and benefits of implementing trade facilitation measures under negotiations at the WTO: an exploratory survey. Asia-Pacific Research and Training Network on Trade Working Paper Series, No. 3 (January)Google Scholar
  11. Fontagné L, Fouré J, Beverelli C, Keck A (2015) Medium-run impacts of a multilateral Trade Facilitation Agreement. WTO Working Paper, GenevaGoogle Scholar
  12. Freund C, Rocha N (2010) What constrains Africa’s exports? Policy Research Working Paper No. 5184. World Bank, Washington, DCGoogle Scholar
  13. Ganne E (2018) Can Blockchain revolutionize international trade? World Trade Organization, GenevaGoogle Scholar
  14. Grainger A (2012) Trade facilitation. In: Heydon K, Woolcock S (eds) The Ashgate research companion to international trade policy. Ashgate, UK, pp 127–142Google Scholar
  15. Grossman GM, Elhanan H (1995) Trade wars and trade talks. J Polit Econ 103(4):675–708Google Scholar
  16. Grossman GM, Rossi-Hansberg E (2008) Trading tasks: a simple theory of offshoring. Am Econ Rev 98(5):1978–1997CrossRefGoogle Scholar
  17. Hassan M (2015) A WTO agreement on trade facilitation: can it really facilitate trade? PhD thesis, University of St. Gallen. Viewed at http://verdi.unisg.ch/www/edis.nsf/SysLkpByIdentifier/4279/$FILE/dis4279.pdf
  18. Hoekman B, Nicita A (2008) Trade policy, trade costs, and developing country trade. World Bank Policy Research Paper 4797, The World Bank, Washington, DCGoogle Scholar
  19. Hummels DL, Schaur G (2010) Hedging price volatility using fast transport. J Int Econ 82(1):15–25CrossRefGoogle Scholar
  20. Hummels DL, Schaur G (2013) Time as a trade barrier. Am Econ Rev 103(2): 2935Google Scholar
  21. Koopman R, Wang Z, Wei S-J (2012) Estimating domestic content in exports when processing trade is pervasive. J Dev Econ Elsevier 99(1):178–189CrossRefGoogle Scholar
  22. Krueger A (1974) The political economy of the rent seeking society. Am Econ Rev 64:291–303Google Scholar
  23. Laird S, Yeats A (1990) Policy issues involving nontariff trade barriers. In: Quantitative methods for trade-barrier analysis. Palgrave Macmillan, LondonGoogle Scholar
  24. Laniel DJ (2009) Trade in intermediary goods and industrial development. The Broker: Connecting World of Knowledge, October 7Google Scholar
  25. Leontief W, Strout A (1963) Multi-regional input-output analysis. In: Barna T (ed) Structural interdependence and economic development. St Martins Press, London, pp 243–259Google Scholar
  26. Limão N, Venables AJ (2001) Infrastructure, geographical disadvantage, transport costs and trade. World Bank Econ Rev 15:451–479CrossRefGoogle Scholar
  27. Lukaukas A (2013) The political economy of protectionism. In: Laukaukas A, Stern R, Zanini G (eds) Handbook of trade policy for development. Oxford University Press, UKCrossRefGoogle Scholar
  28. McLinden G (2011) World Bank gap assessment study. In: Symposium on practical experience of implementing trade facilitation reforms, including their costs and benefits, Geneva. Available online at http://www.wto.org/english/tratop_e/tradfa_e/case_studies_e/wb_pres_e.ppt
  29. Mupela E, Szirmai A (2012) Communication costs and trade in Sub-Saharan Africa. UNU MERIT Working Paper Series No. 2012-060Google Scholar
  30. Nkuepo HJ (2012) Reducing non-tariff barriers to trade in Africa. Bridges Afr Rev 1(3):260–278Google Scholar
  31. Norbäck J-P, Persson L, Douhan R (2014) Entrepreneurship policy and globalization. J Dev Econ Elsevier 110(C):22–38Google Scholar
  32. OECD (2012) The costs and challenges of trade facilitation measures. OECD, ParisGoogle Scholar
  33. OECD (2014) OECD trade facilitation indicators: calculating the potential impact of the WTO Trade Facilitation Agreement on trade costs. OECD, ParisGoogle Scholar
  34. Portugal-Perez A, Wilson JS (2012) Export performance and trade facilitation reform: hard and soft infrastructure. World Dev Elsevier 40(7):1295–1307CrossRefGoogle Scholar
  35. Sourdin P, Pomfret R (2012) Trade facilitation: defining, measuring, explaining and reducing the cost of international trade. Edward Elgar Publishing, UK and USACrossRefGoogle Scholar
  36. Staiger RW (2012) Non-tariff measures and the WTO. Geneva, World Trade Organization, Working Paper ERSD 2012-01Google Scholar
  37. TradeMark Southern Africa (2010) Chirundu one stop border post: progress report and lessons learned, NovemberGoogle Scholar
  38. World Bank (2006) Needs, priorities and costs associated with technical assistance and capacity building for implementation of a WTO Trade Facilitation Agreement: a comparative study based on six developing countries. International Trade Department Working Paper, November, The World Bank, Washington, DCGoogle Scholar
  39. World Bank (2019a) Doing business 2019: going beyond efficiency. World Bank, Washington, DCGoogle Scholar
  40. World Bank (2019b) Logistics performance index. World Bank, Washington, DCGoogle Scholar
  41. WTO (2012) World trade report 2012: trade and public policies: a closer look at non-tariff measures in the 21st century. WTO, GenevaGoogle Scholar
  42. WTO (2015) World trade report 2015: speeding up trade: benefits and challenges of implementing the WTO Trade Facilitation Agreement. WTO, GenevaGoogle Scholar
  43. WTO (2019) Trade policy review: east African community. WTO document, WT/TPR/S/384, WTO, GenevaGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Trade Policy Analyst, World Trade Organization (WTO)GenevaSwitzerland

Personalised recommendations