On Second Thought
with Jerry Cook
In my recent columns, I have discussed how existing trade facilitation tools can help companies, especially small and midsized enterprises (SMEs), engage in growing global markets. I also urged the United States and other members of the World Trade Organization to finalize and implement a WTO trade facilitation agreement before the end of 2013.
Well, our negotiators came through! Despite low expectations and steep odds, WTO members at their December ministerial in Bali, Indonesia, finalized a trade facilitation agreement that should, if implemented, provide a big boost to trade, jobs and incomes worldwide.
This is a major victory not only for the WTO but for the international trade community. The historic event ushers in a new chapter for the WTO and creates further opportunities for trade liberalization and the reduction of trade barriers. Hats off to WTO Director General Roberto Azevêdo and WTO member governments for their leadership and hard work in creating a comprehensive consensus agreement.
The trade facilitation discussion began at the WTO’s Singapore ministerial in 1996. Members felt the WTO would be a good forum to address trade facilitation measures as part and parcel of global trade talks, which previously had focused on formal barriers like tariffs and quotas, with commitments to be enforced through WTO dispute settlement.
The Bali agreement is a binding promise for all WTO members to expedite movement, release and clearance of goods, and to cooperate on customs issues. This agreement will significantly decrease transaction costs for SMEs. It will create a more transparent, harmonized and simplified way to trade across borders. It also simplifies access to customs documents, regulations and makes available other documents that will allow for further engagement on trade.
The global business community pushed hard for a trade facilitation agreement, and we could not be more pleased with the results. Peter Robinson, president of the U.S. Council for International Business, predicted that the agreement “will add billions of dollars to global GDP and create millions of jobs.” Terry McGraw, chairman of McGraw Hill Financial, who chairs the International Chamber of Commerce (ICC), said the agreement “breaks through the logjam that has bottled up trade agreements for the last decade, and paves the way for future agreements that will further increase global growth and job creation.”
A study by the Peterson Institute for International Economics, commissioned by ICC, estimated that a WTO trade facilitation agreement could deliver global job gains of 21 million, with developing countries gaining more than 18 million jobs and developed countries increasing their workforce by 3 million. The report estimates that potential trade expansion from a far-reaching trade facilitation agreement could translate to world GDP increases of $960 billion annually. That’s a tremendous boost for a global economy that still seems stuck in the doldrums.
This was a truly global effort, and we will need to continue pushing forward toward implementation. Now is not the time to take our foot off the gas pedal. We must carry the momentum into the new year as we collectively step into this new trade chapter.
Members of the WTO have committed to streamline and expedite movement of goods, release time and cooperation on customs issues. We need to ensure that implementation in every country is swift and countries’ customs administrations simplify and automate document procedures for clearance of goods. This will create lower transaction costs and faster movement of goods across the border.
Continued commitments from member developing countries will be imperative in the collective movement toward a harmonized customs process. The WTO needs to monitor how countries are implementing the agreement and assist those struggling to follow proper procedures.
More broadly, our political leaders and trade negotiators must carry forward this newfound momentum on global trade. We need to conclude an ambitious and comprehensive Trade-Pacific Partnership, which will open up new markets around the Pacific. We must move forward with the Transatlantic Trade and Investment Partnership with Europe to cement and deepen the world’s largest two-way commercial relationship.
Perhaps most importantly, the U.S Congress needs to re-establish Trade Promotion Authority, without which we cannot negotiate in good faith or expect our trading partners to do the same.
So our plate is full, but the victory in Bali provides important forward momentum. Let’s capitalize on this new dawn for international trade to move ahead with a broad and ambitious agenda!
Jerry Cook is vice president of international at HanesBrands, Inc., and chairs the Customs and Trade Facilitation Committee of the U.S. Council for International Business. He can be reached by email.