Trade facilitation agreement would add billions to global economy, says OECD


03/05/2013 -  Multilateral agreement to cut red tape in international trade would dramatically reduce trading costs and add a substantial boost to the global economy, according to new OECD research.


The OECD Trade Facilitation Indicators estimate that comprehensive implementation of all measures currently being negotiated in the World Trade Organization’s Doha Development Round would reduce total trade costs by 10% in advanced economies and by 13-15.5% in developing countries.  Reducing global trade costs by 1% would increase worldwide income by more than USD $40 billion, most of which would accrue in developing countries, according to the OECD.


“Trade facilitation is about easing access to the global marketplace,” OECD Secretary-General Angel Gurría said. “Complicated border processes and excess red tape raise costs, which ultimately fall on businesses, consumers and our economies. The trade facilitation negotiations offer countries a golden opportunity to reduce or eliminate these bottlenecks, cut the cost of trading, boost the flow of goods and reap greater benefits from international trade,” Mr Gurría said.


The 16 new trade facilitation indicators correspond to the main policy areas under negotiation at the WTO, including the availability of trade-related information, the simplification and harmonisation of documents, the streamlining of procedures and the use of automated processes and advance rulings.


The Indicators estimate the impact of addressing specific hurdles in the trade and border procedures in 133 countries while guiding governments as they prioritise trade facilitation actions. The Indicators also offer a roadmap for the technical assistance and capacity-building efforts needed to ensure that emerging and developing economies make the most of trading opportunities.


OECD analysis shows that trade facilitation not only benefits importers. By reducing trade costs, facilitation also helps boosts exports significantly,  thus allowing firms greater participation in the global value chains that characterise international trade.


Some of the key findings of this work also include the following:


  • In some African countries, revenue losses from inefficient border procedures are estimated to exceed 5% of GDP;
  • Harmonising and simplifying documents would reduce trade costs by 3% for low-income countries and by 2.7% for lower middle-income countries;
  • Streamlining procedures would bring further trade cost reductions of 2.8% for upper middle-income countries, 2.2% for lower middle-income countries and 1% for advanced economies;
  • Automating processes would reduce trade costs by more than 2% for all countries studied;
  • Ensuring the availability of trade-related information would generate cost savings of 2% for advanced economies, 1.4% for lower middle-income countries and 1.6% for low-income countries.


The OECD work on trade facilitation indicators (TFIs) was undertaken to measure the relative economic and trade impact of trade facilitation measures currently under negotiation in the World Trade Organization (WTO) on trade flows and trade costs in all WTO member countries. Individual country analyses are available here.


Further information on the OECD Trade Facilitation Indicators is available from Evdokia Moïsé, Senior Trade Policy Analyst, Development Division, OECD Trade and Agriculture Directorate (mobile: +33 6 79 67 36 59) or the OECD Media Office (tel.: +33 1 45 24 97 00).


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