WTO Trade Facilitation Agreement: Biz must prepare to capture benefits

By Shannine Daniel 

Sri Lanka’s Permanent Representative to the World Trade Organisation (WTO) in Geneva Ambassador R.D.S. Kumararatne recently stated that Sri Lankan authorities involved in the export and import trade as well as private businesses need to be ready to capture the benefits of the World Trade Organisation (WTO) Trade Facilitation Agreement once it is implemented. 

He made the following observation at a discussion on the WTO Trade Facilitation Agreement recently held in Colombo, also mentioning that necessary requirements of the agreement need to be met before hand. 

“The most important element of the TFA that was identified is the implementation of a single window in order to improve private Sri Lankan businesses. Sri Lanka Customs is already working on an efficient single window and is getting border control authorities involved in the process,” stated Kumararatne.

“The TFA not only facilitates the single window concept but by getting the relevant authorities involved, encourages increased efficiency and cooperation among these institutions,” he added. 

Kumararatne stated that this institutional mechanism is established through a national committee of trade facilitation which involves all the institutions of the import and export trade including the private sector. 

“The role of the national committee is very important because they are the officers who go through the agreement to identify and quantify technical and capacity development assistance to Sri Lanka for effective implementation of the Trade Facilitation Agreement,” Kumararatne further stated.

As the locally-based organisation, they have to cooperate with the WTO Mission in Geneva, which is currently working with the WTO, World Bank Group, International Trade Centre, Global Alliance for Trade Facilitation through World Economic Forum, UNIDO and World Customs Organisation to do the same, he said. 

The TFA consists of three sections; Section I contains provisions for expediting the movement, release and clearance of goods, Section II contains special and differential treatment provisions for developing and least-developed countries aimed at helping them implement the provisions of the agreement and Section III contains institutional arrangement and final provisions.

It is expected to benefit global trade while mainly supporting developing and least developed countries. Small economies such as Sri Lanka will be able to improve their competitiveness in the global market and attract foreign direct investment through the application of simplified border control measures in supporting trade.

Kumararatne stressed that the main objective behind the Agreement is to streamline, harmonise and modernise customs procedures as well as to set out measures for effective cooperation between the authorities involved in the Trade Facilitation measures. 

“This usually depends on such things as the infrastructure, technology utilised and the border control procedure. The success of the border procedure will depend on the efficiency of the government and private agencies who are involved in trade,” he said. 

He went on to say that the OECD Trade Policy working paper published in 2011 identified that a 1% reduction in trade costs could generate an income of about $ 40 billion. 

Since Sri Lanka is a lower middle income country, Kumararatne noted that through effective border control measures a reduction of 15% could be expected. 

“If we can reduce the trade costs further then the volume of income generated would be much greater. Particularly in a country like Sri Lanka when it comes to exports we need to improve our competitiveness by improving our productivity. Since most of our industries depend on imported goods we are constrained by the means of improving our competitiveness, therefore reducing the cost of transaction will really help us improve,” he opined. 

According to World Trade Report 2015 of the WTO, the full implementation of the TFA is expected to facilitate increasing trade flows and GDP by reduced trade times and costs; times to export could be reduced up to 91% while the time to import could be reduced up to 47%. 

“When the efficiency is improved exporters will benefit by reduced trade times and costs and the Government can benefit from better compliance, by the exports when the documents are processed,” Kumararatne added.

He asserted that the private sector is especially important in this regard because it can identify that which is lacking and take care of the existing ‘gaps’. 

On a further note he also stated that improved cooperation between the customs and the other authorities is also a major factor, along with enhanced technical capacity. 

“When the efficiency of the institution dealing with the process is improved the technical assistance and capacity needs to be in place otherwise the expected results will not be achieved and we will not receive the full benefits of the TFA,” Kumararatne stressed. 

Pix by Upul Abayasekera