Global Alliance for Trade Facilitation streamlines international trade

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

  • The Global Alliance for Trade Facilitation supports trade reform in developing and least developed countries (LDCs), bringing government and business together in public-private partnership to make cross-border trade simpler, faster, and more cost-effective.
  • The Alliance has now successfully delivered 14 projects, supporting developing countries and LDCs in fulfilling their commitments under the World Trade Organization’s Trade Facilitation Agreement.
  • By the end of 2022, Alliance initiatives had achieved an initial 10-times return on investment, saving US$ 60 million in seven project countries.
  • The Alliance has engaged 41 global business Partners and 704 local MSMEs in its activities, resulting in US$ 11 million in-kind private sector contributions.

The impact on improving trade efficiencies.

The Alliance supports countries in implementing the World Trade Organization’s Trade Facilitation Agreement (TFA), which entered into force in February 2017. In voting for the landmark Agreement, WTO members realised its potential for driving inclusive economic growth while also recognising that some countries would require help in implementing all its provisions.

By cutting red tape, emphasising digitalisation, and delivering other best practices, Alliance projects empower businesses to trade more easily. More seamless, transparent, predictable processes also allow countries to better deploy scarce resources in safeguarding their borders and their people. The WTO has estimated that implementation of the TFA between 2017-2019 increased global trade by US$ 231 billion, with developing countries and LDCs posting most gains.

Micro, small and medium enterprises (MSMEs), many of them women-owned or led, stand to benefit most from trade facilitation. For example, in theory e-commerce enables any business with the right product at the right price to sell anywhere in the world, but most MSMEs remain excluded from this burgeoning US$ 6.3 trillion marketplace that now accounts for around 20% of total retail sales.

Recognising the added barriers to global trade faced by women – who are more likely to be involved in MSMEs unable to access global trade networks – gender mainstreaming is core to every Alliance project.

The Alliance is led by the World Economic Forum, the Center for International Private Enterprise (CIPE) and the International Chamber of Commerce (ICC), in cooperation with German development agency Gesellschaft für Internationale Zusammenarbeit. It is funded by the governments of the United States, Canada, and Germany.

‘The world can be very complicated, and trade can be very difficult. When it comes to finding the right information, some MSMEs just can’t reach out – they are in mid-ocean. Trade facilitation changes will help everyone.’— Sopha Soeng, General Manager, Sela Pepper Co Ltd., Cambodia

Time and cost: the challenges of global trade.

WTO members are reported to be on track to meet around 90% of their TFA commitments by 2030 but the head of the organisation recently noted that ‘large gaps’ still separate LDCs and land-locked developing countries from that level of fulfilment, urging more assistance.

Red tape at borders and cumbersome, manual processes continue to ramp up the time and cost of doing business and deny MSMEs – and their countries – the benefits of global trade.

Outdated processes and sociopolitical upheaval also increase food spoilage at ports and delay vital medical supplies from reaching vulnerable populations.

Our approach to addressing global challenges.

The Alliance is engaged in supporting governments and businesses in implementing solutions to counter unnecessary waste, bolstering food security, and improving health outcomes. To contextualise the impact of waste, we can look back at a 2008 study that estimated ‘as much as half of all food grown is lost or wasted before or after it reaches the consumer’.

The Alliance is also partnering with the International Plant Protection Convention (IPPC) Secretariat, supporting countries in adopting electronic phytosanitary, or ePhyto, certificate exchange through the IPPC ePhyto Hub. Replacing manual, paper-based procedures mitigates loss, error and fraud. It also slashes the time and cost of trade in agricultural products, while strengthening plant health protection and consumer safety. According to the ILO, 28% of the world’s employed worked in agriculture in 2019, and the sector continues to be an important source of employment and growth for developing countries.

Specific improvements have also been seen in some countries. In Mozambique, the Alliance supported government agencies and the private sector in digitalising processes to speed up imports of childhood vaccines and rapid test kits for the early detection of HIV and malaria. Streamlining import processes also increases resilience against future adverse events.

‘The Alliance is doing some impressive work in the healthcare space, tackling trade facilitation challenges put forth by its partners and truly making an impact in the world.’
— – Susie Hoeger, Senior Director, Global Trade Compliance & Policy, Abbott Laboratories

In Colombia the Alliance supported the Customs Administration in partnership with the private sector to establish an Advanced Ruling mechanism that provides predictability and transparency for importing businesses. The mechanism has been rolled out in the auto parts sector, an industry responsible for 25,000 direct jobs and 10,000 indirect.

And in Cambodia the Alliance project is cutting clearance times for trade in small packages through the implementation of a digital solution. This will provide greater opportunities for MSMEs in accessing the US$ 6.3 trillion global e-commerce market.

“The Alliance has been a driver of the public-private interaction and has been a key factor in the strengthening of trust between the different trade actors in Colombia. These real, two-way discussions are the key to understanding the needs and wants of businesses and developing meaningful solutions.”— – Ingrid Diaz, Customs Director, Colombia Customs and Tax Administration (DIAN)

The Alliance collaborated with the World Customs Organization and the National Center for Disaster Preparedness at Columbia University in organising a tropical cyclone simulation session to gauge how well these new procedures would work during an emergency. Participants regarded them as helpful in identifying the requirements for faster clearance and suggested improvements, including additional training and scenario-planning events. Simulation was quickly overtaken by reality as Tropical Cyclone Batsirai, a Category 4 hurricane swept towards the island.

“We recognise that trade facilitation is an important facet of disaster resilience, serving as a lifeline for communities affected by disasters, with cascading impacts beyond the directly impacted areas. In a world of growing consequences from trade disruptions, and increasing disasters disrupting trade, the integration of resilience more centrally to trade strategies will benefit greatly from the work of [the Alliance].”— Jeff Schlegelmilch, Director, National Center for Disaster Preparedness, Columbia Climate School, Columbia University

As one of the three host organisations, the Forum is supporting the Alliance in fulfilling its mission. This multi-stakeholder collaboration with ICC and CIPE makes public-private partnership the cornerstone of every Alliance project, bringing governments and businesses together in tackling identified barriers to trade.

The Alliance measures its impacts, both quantitative and qualitative, to demonstrate the effectiveness of its collaborative approach.

Aside from working with governments and the private sector in trade modernization, the Alliance is always looking for agile, innovative solutions for tackling problems. In this vein, in partnership with the United Nations Conference on Trade and Development (UNCTAD), in September 2022, the Alliance hosted the inaugural Trade Facilitation Innovation Days, aimed at reinvigorating and reimagining ways of streamlining cross-border trade.

The online initiative attracted almost 700 participants in over 100 countries, including trade facilitation experts, government officials, border agents, logisticians, academics, and other specialists.

The event encouraged participants to find ways of tackling many of the lingering frustrations and complexities traders still encounter at borders. Delegates discussed new technologies, environmental risks, e-commerce access and TFA impacts, proposing innovative ideas and solutions. The strength of the proposals generated has encouraged organisers to commit to a follow-up in 2023.

Get involved.

The Alliance is always interested in hearing from corporate partners in emerging markets. If your business can bring a solutions-oriented approach to facilitating trade in a particular region, we want to hear from you.

The Alliance is part of the Forum’s Centre for Regions, Trade and Geopolitics which is bringing over 130 leading global companies together with policymakers for action-oriented exchange on building resilient, sustainable and inclusive trade and investment.

The Alliance provides a platform for businesses of all sizes to participate in trade facilitation initiatives, streamlining border processes for everyone’s benefit.

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