TWN Info Service on WTO and Trade Issues (Mar17/05)
3 March 2017
Third World Network
WTO Trade Facilitation Agreement enters into force
Published in SUNS #8409 dated 24 February 2017
Geneva, 23 Feb (Kanaga Raja) -- The WTO's Trade Facilitation Agreement (TFA)
has come into force, after it received four more ratifications on Wednesday,
thus bringing it over the required threshold of 110 members for it to enter
The TFA needed ratification by at least two-thirds of the WTO's 164 members
accepting the Protocol of Amendment before it can be inserted as among the
agreements in Annex 1A of the Marrakesh Treaty to make it binding on those
The Protocol of Amendment inserting the TFA into Annex 1A of the WTO Agreement
was adopted by members at a General Council meeting on 27 November 2014 (see
SUNS #7927 dated 1 December 2014).
According to a WTO press release, Rwanda, Oman, Chad and Jordan submitted their
ratifications on Wednesday, bringing the total number of ratifications over the
required threshold of 110 members for the TFA to enter into force.
The WTO Secretariat, citing a 2015 study carried out by WTO economists, said
that full implementation of the TFA can reduce trade costs by an average of
It also said that by 2030, implementation of the TFA could add up to 2.7% a year
in global export growth, and more than 0.5% to world GDP growth.
[In an article titled ‘Trade facilitation may result in trade hallucination'
published in SUNS #7837 dated 4 July 2014, Jeronim Capaldo, a senior researcher
in the Globalisation programme at the Global Development And Environment
Institute (GDAE), a research institute at Tufts University, had argued that
official estimates (by the International Chamber of Commerce, OECD et al) of
benefits of Trade Facilitation from trade expansion, job gains and income tend
to overstate the benefits and ignore its costs. "When all underlying
assumptions are brought to light, expecting large gains appears unreasonable.
And estimated employment benefits may easily turn into net losses," he
The WTO press release cited Director-General Roberto Azevedo as saying:
"This is fantastic news for at least two reasons. First, it shows members'
commitment to the multilateral trading system and that they are following
through on the promises made in Bali. Second, it means we can now start
implementing the Agreement, helping to cut trade costs around the world. It
also means we can kick start technical assistance work to help poorer countries
"This would boost global trade by up to 1 trillion dollars each year, with
the biggest gains being felt in the poorest countries. The impact will be
bigger than the elimination of all existing tariffs around the world," he
At a media briefing on Wednesday, Director-General Azevedo said that in 2013,
slightly over three years ago, "we did something that the WTO had never
done before. We delivered a new multilateral trade deal - the Trade
"It was a major breakthrough and it took a lot of hard work, it took a lot
of flexibility, creativity and political will," he added.
The DG said that the agreement was open for ratifications in November 2014 and
that on Wednesday morning he received ratifications from Rwanda, Oman, Chad and
Jordan, which brings the total number of ratifications to 112, crossing the
required legal threshold of two-thirds of the WTO membership (for it to enter
"Therefore, I am very happy to announce that the WTO Trade Facilitation
Agreement has now entered into force, and this is fantastic news," said
By ratifying the agreement, he said the WTO members have shown their commitment
to the multilateral trading system. They have followed through on the promises
made when this deal was struck in Bali about three years ago.
"By bringing the deal into force, we can now begin the work of turning the
benefits of the agreement into reality."
According to the DG, estimates show that the full implementation of the
agreement could reduce the trade costs globally by an average of 14.3%.
Developing and least developed countries in particular would stand to gain the
most from full implementation of the agreement as they tend to have a higher
level of trade costs. It will help these countries to diversify their trade, he
Developing countries could increase the number of products they export by 20%
while the Least Developed Countries (LDCs) could see an increase of up to 35%.
In addition, developing countries could enter a third more foreign markets than
they do today on average while LDCs could access 60% more markets making these
countries less vulnerable to external economic shocks.
The cumulative impact of all this is quite striking. By 2030, the agreement
could add 2.7 percentage points per year to world trade growth, and more than half
a percentage point per year to global growth of GDP, Azevedo maintained.
This impact would be greater than the elimination of all tariffs existing
around the world today, he further claimed.
He went on to thank all the WTO members that have ratified the deal so far
"for helping us reach this historic moment, this historic milestone for
"The Trade Facilitation Agreement is the biggest reform of global trade
this century. So it sends a message about the power of trade to support jobs
and growth around the world in developed and developing countries alike."
Also speaking at the media briefing, the Chair of the WTO General Council,
Ambassador Harald Neple of Norway, said that this is indeed a defining
achievement for the WTO.
"This is really a historic milestone for the multilateral trading system,
the TFA being the first multilateral agreement since the WTO's inception."
The Chair of the WTO Preparatory Committee on Trade Facilitation, Ambassador
Mariam MD Salleh of Malaysia, joined the DG and General Council Chair in
welcoming the occasion of the entry into force of the Trade Facilitation
"This groundbreaking treaty will usher in a new era for trade facilitation
reforms all over the world," she said.
Asked when going forward, if there are any other issues where multilateral
agreements like the TFA could be reached in the near or medium term or whether
plurilateral agreements are the best way forward, Azevedo said that what
determines the approach of any negotiation are the members themselves.
They are the ones who try to get critical mass behind an initiative and those
initiatives are sometimes advanced faster and others less fast.
Looking at it from the perspective of the Director-General of the organisation
and also from a global economy perspective, he said, the multilateral
agreements tend to have a bigger impact.
They tend to benefit more, they tend to have a much bigger multiplier effect,
"so to the extent that we can we should always try and strive to get
agreements of a multilateral shape where everybody is on board."
If that is not possible, there are (other) avenues available to members and
they have been explored before, he said, pointing to the recent expansion of
the Information Technology Agreement (ITA), which was a plurilateral
engagement, and negotiations on the Environmental Goods Agreement (EGA),
another plurilateral undertaking.
"What I also emphasise is that I urge members who decide to go on a
non-multilateral avenue to keep the doors open for all members who want to
participate to be in a position to do so," so that it is an open-ended
exercise where everybody who wants to sit at the table will have a chance to do
Asked if there is a ‘stick' associated with the TFA (as opposed to the ‘carrot'
of reducing trade costs etc) and whether disputes will arise if one country
accuses another of not conforming to the standards of the agreement, Azevedo
said that the Trade Facilitation Agreement is a covered agreement, and
therefore like every other agreement of the WTO, is also subject to dispute
"But to be frank with you, I don't think we need a ‘stick' here. I think
the ‘carrot' is big enough. It's a win-win for everyone."
The fact that "we managed to get 112 countries to sign up ... it's a sign
that this is perceived as a win by the vast majority of the WTO, if not all WTO
members," he maintained.
But clearly it is the advantages of cutting costs, of being more efficient in
connecting with the world which is the incentive for people to participate, he
Asked what message this agreement sends to the Trump administration, the DG
said that he did not hear anybody say that they were for higher trade costs.
"No one anywhere in the world, and this is what this agreement is about.
This agreement is about lowering trade costs."
He said as far as he knew, all WTO members are in favour of that, regardless of
what their domestic situation is at any point in time.
"I might remind you that the United States was one of the first Members to
ratify this agreement," the DG said, adding that the United States was
also very much engaged in pushing for the conclusion of this agreement, and
"I don't see why that would change at this point in time."
Asked to comment on the fact that for many years developing countries have been
saying that the TFA has to be balanced with a broader agreement including
reduction in agricultural subsidies, Azevedo said: "I don't think that we
need any kind of trade-off or any kind of linkage to anything else" to
realise that issues like agricultural subsidies must be at the centre of the
agenda, and have to be at the centre of the agenda.
"They are at this point in time at the centre of the agenda. What is
difficult at this point in time is finding a way forward, finding a solution or
a path that would allow us to converge in any kind of direction that leads to
the reduction of those distortions and those subsidies."
"I think members are quite clear and they are very vocal on all sides that
agricultural issues and the core Doha issues need to advance and need to make
progress. That was actually part of the ministerial declaration in Nairobi
where they say these issues are not over. We need to continue negotiating and
talking about them, and that is what we are doing. But it's tough," said
Asked to comment on the fact that on 7 June 2012, he had said amongst others
that for Brazil and many others, trade facilitation is not a self-balancing
issue and that stand-alone outcomes for trade facilitation are simply not
realistic, Azevedo said, "I also told my mother once that I would never
date girls. I suppose I am entitled to evolve."
He maintained that it was not ‘Mr Azevedo' who said those things but ‘the
Brazilian ambassador' (Azevedo was the Brazilian ambassador at that time).
Between that time and the conclusion of the Trade Facilitation Agreement, there
were intense negotiations which tried precisely to balance and to find the kind
of equilibrium that maybe the Brazilian ambassador said was missing at the
beginning of that process, he added.
He said Brazil concluded the (TFA) agreement - it was not ‘Mr Azevedo' any
longer, it was the Brazilian government - and ratified the agreement, in record
time by the way, given the Brazilian methodology or process for ratification.
"So I don't think there is any inconsistency whatsoever in any of the
things I said before and where we are today," Azevedo maintained.
On the issue of the figures cited on trade facilitation, the DG said that
"the numbers were not created by us."
They were the result of two different models that were developed and those
numbers in fact are modest. They are conservative and are in the middle of the
range, which is consistent with the numbers of independent studies that we have
seen out there.
"Some are even greater than ours, " he said. "When I asked my
economists to work on that, I specifically told them that I wanted numbers that
were sensible and that they could defend to any economist who would criticise,
that we could put the studies and show how those numbers were reached, and we
are very, very comfortable with the numbers that we have on the table
Asked about the fact that the Trump administration is now re-evaluating its
participation in multilateral agreements and whether it would be a bad idea for
the US to leave the WTO, Azevedo said: "I don't want to comment on any
particular country's views or comments because in particular as far as trade is
concerned, I am yet to have any kind of conversation with the new administration."
"I think the trade team is still being put in place. We still don't have a
USTR, for example. So I think we are ready to have a conversation any time they
want. We will be available for that. I am quite confident that the WTO offers
tools to address many of the concerns that have been expressed recently. I am
absolutely confident that other WTO members would like to engage in a
constructive way, trying to find a path forward like we always have."
The WTO is about convergence, it is about understanding different views and
trying to find common ground. "I don't think that we are facing anything
that is unmanageable because different views and different opinions have been a
part of our work on a daily basis."
In response to another question about Trump's policies, Azevedo said: "I
honestly don't know what kind of trade policy will come. I honestly don't. I
have heard as far as the US is concerned, I have heard concerns about unfair
trade. I don't know any WTO member who is for unfair trade."
"I have heard complaints, for example, about the balance of agreements
that were struck in the past. This is not the first time I hear that either. I
have been doing trade for a long time, much longer than I expected at first.
And I have seen situations like this arise over and over again where
unpredictability or uncertainty prevail, especially in transition when you have
one administration giving space to another administration that has different
views about how to conduct economic and trade policy."
"And over time we always managed to find a way of moving forward bearing
in mind that positions evolve over time ... I don't think we are seeing
anything now that would preclude us from making that kind of progress
again," said the DG.
Meanwhile, other organisations such as the UN Conference on Trade and
Development (UNCTAD) and the International Trade Centre, as well as bodies such
as the International Chamber of Commerce and the Global Alliance for Trade
Facilitation welcomed the entry into force of the TFA.
In a press release, Joakim Reiter, Deputy Secretary-General of UNCTAD, said:
"We welcome the entry into force of the Trade Facilitation Agreement as a
huge step forward in making trade around the world cheaper, easier and
"New technologies and institutional reforms can improve governance, reduce
entry barriers and pull the informal sector into the formal sector. And with
less paperwork to dodge, and fewer palms to grease, public revenues go up. This
generates new resources for spending on essential services," he added. +