ICC calls on gov’t to ratify trade agreement

Cabinet is expected to ratify the World Trade Organisation’s Trade Facilitation Agreement (TFA) for onward approval by Parliament -- to harmonise and simplify cross-border and Customs measures so as to improve trade among other international economies, the Coalition for Trade Facilitation, a business-led initiative has hinted B&FT.

B&FT has gathered that the special technical committee set up to study the agreement has completed its work and submitted it to cabinet for onward submission to Parliament for approval.

The trade facilitation agreement, which will be binding on all 159 member-states at the level of all border agencies and not just Customs authorities, is a classic ‘win-win’ outcome. Research suggests that improved border and Customs measures could trigger a 60-80% increase in cross-border SME sales in most economies. It is encouraged that 63 countries have now ratified the agreement -- which is expected to reduce worldwide trade costs by some 17%.

Despite the huge attention given to cost of ports and border controls over the last 10 to 15 years, goods continue to be delayed at the ports and borders for days or even weeks -- slowing trade flows and adding costs to business that are often passed on to consumers. One of the main outcomes of the World Trade Organisation’s 9th Ministerial Conference in Bali, Indonesia, in December 2013 was an agreement on trade facilitation. 

Secretary-General of the International Chamber of Commerce Coalition, Emmanuel Doni-Kwame -- speaking at the Coalition’s Stakeholder Workshop to discuss Ghana’s position on the Trade Facilitation Agreement and recommend categories to consider for immediate ratification and implementation -- explained that the uncertainty over how long it will take to clear a border-crossing creates unpredictability and adds cost to business that are eventually passed on to customers in countries where consumers are least able to afford them. 

Uncertainty in supply chains also acts as a disincentive to potential business investors, who rely on efficient supply chains to minimise inventory costs; adding that companies have to tie-up capital in extra holding costs, above levels that should be necessary. This is especially true for businesses in developing countries, which face these delays and uncertainties on a daily basis.

He indicated that inefficient border procedures also add costs to the very authorities whose job it is to control the borders. “Over-zealous inspection can actually delay revenue collection. When authorities are intent on maximising collection from import duties and other border taxes by checking every consignment that passes across the border, they cause queues to form at border points; with faster traffic-flows, revenues can be collected more efficiently post-clearance from compliant traders,” he stated.

 “Focusing on the biggest risks allows border agencies to speed up the flow of goods across the border, and increases the collection of duties. Trade facilitation has been described as a classic ‘win-win’ subject for developing and developed countries, since there should be no losers. 

“Yet some developing countries have been concerned about the potential cost of implementing trade facilitation commitments, and have sought commitments from developed countries and other donors,” he said.

He indicated that the agreement has the potential to be of particular benefit to traders in developing countries, who continually face lengthy and costly border delays. It will be important for businesses in developing countries to monitor its implementation in the countries with which they trade, he added.

“This agreement-guide aims at helping business understand the obligations that developing countries have accepted --- or will in due course accept, so that they can work in partnership with governments to arrive at outcomes that will benefit governments and traders alike,” Mr. Doni-Kwame said.  

The immediate past-President of the Ghana Institute of Freight Forwarders (GIFF) who now chairs the Trade Facilitation Commission of ICC Ghana, Joseph Agbaga, said trade facilitation requires efforts from both the shipping community and regulatory agencies to ensure a win-win situation for all parties involved.

He said: “Inefficient border procedures add cost to both the shipping community and the regulators of trade. Over-zealous inspection can delay revenue collection as it causes delays and queues at entry ports.

“Trade facilitation aims at simplifying not only documentation required to clear goods, but also procedures employed by border agencies. Trade facilitation is best described as a win-win subject for developing and developed countries.”

Mr. Agbaga argued that the ongoing review to the TFA will help to facilitate trade to ensure a win-win situation to the shipper and the regulatory bodies, and downplayed the current happenings whereby consumers have to bear those costs arising from delays in clearance processes.

“The TFA has the potential to be of particular benefit to traders in developing countries who continually face lengthy and costly border delays. 

“For instance, focusing on the biggest risk allows border agencies to speed up the flow of goods across borders, increase collection of duties, and reverse the situation whereby companies have to tie up capital in extra holding costs above the level that should be necessary,” he noted. 

Some participants, including policymakers and industry players in the sector, raised concerns that Ghana may be losing out on business to other countries which have already signed the agreement.

Titus Glover, Member of Parliament for Tema East, in his submission called for setting up a Trade Commission Bureau to help address Trade Facilitation issues.

Professor Gyan Baffour, ranking member for trade and industry, was concerned about Perishable Goods and why the lack of time to address issues of perishable goods -- since any trade agreement should focus on the country’s exports.

George Kwame Aboagye, a member of the parliamentary select committee on trade, was also concerned about slow implementation of the Single Window that is captured in the agreement.

Some officials from the Ministry of Trade and Customs complained about the lack of adequate and accurate information from the Private Sector, and the need for institutional capacity building. 

The Coalition for Trade Facilitation, which is being supported by the Business Sector Advocacy Fund (BUSAC), has provided a unique platform to leverage business and also research into current business processes in the domestic and international trade and lead reforms. 

The Coalition includes the World Trade Centre Accra, Association of Ghana Industries, Ghana Employers Association, Ghana Institute of Freight Forwarders, Ghana Shippers Authority, Federation of Association of Ghanaian Exporters, Ghana Union of Traders Association, and the Ghana National Cargo Transporters Association among others, with support from the Business Sector Advocacy Fund (BUSAC).