Ratify trade facilitation agreement to boost export revenue

The Coalition for Trade Facilitation, a business-led initiative, says speedy ratification and implementation of the Trade Facilitation Agreement (TFA) could raise the country’s export revenue. 

 

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 9^th Ministerial Conference in Bali, Indonesia, in December 2013 has been an agreement on trade facilitation. 

Speaking at the first meeting in Accra, Secretary-General of the new alliance under the International Chamber of Commerce (ICC Ghana), Mr. Emmanuel Doni-Kwame explained that ratification and implementation of the trade facilitation agreement is important to business, because it can have a major impact on bringing down trade transaction costs and raising the country’s export revenues.

Total export revenues for the three major commodities -- cocoa, oil and gold -- amounted to US$8.2billion for the period between January and September 2014. This reduced by US$2.4billion to US$5.8billion for the same period in 2015, and it is expected to fall further this year.

Mr. Doni-Kwame confirmed that a trade facilitation agreement is important because it can have the major impact on bringing down trade transaction costs. It essentially concerns the cost of clearing goods for import and export. 

“The need for change is vital in this era of globalisation, wherein there is a need to be constantly updated on new developments within the existing multilateral arrangements which have an impact on the country’s economic development.

“Trade facilitation agreement will enhance an efficient logistics chain, impact the manufacturing and agro-based industries which create real jobs, impact trading relationships; and impact our mining, oil and gas businesses, and livelihoods.

“Our efforts at trade facilitation must be geared toward attainment of the blue economy; it must be underpinned by an economic paradigm-shift that is geared toward generating more revenue, creating jobs, and being competitive in the global market,” he said.

He further explained that goods delayed at the country’s borders for days, or even weeks, slow trade flows and add costs to business that are often passed on to consumers; adding that it is widely recognised that private-sector engagement will be critical for successful implementation of the TFA. 

The alliance is the first initiative to provide a national platform that brings business closer to the process of enacting reforms under the agreement.

The Alliance will collaborate with all stakeholders, Ministry of Trade & Industry and the Parliament of Ghana to ratify the TFA and also provide inputs into the development of a roadmap for its implementation.

He said: “The Alliance will support government to drive reforms aimed at positioning Ghana to capitalise more widely on international trade and investment opportunities, since the private sector can play a vital role in helping to shape policy and other improvements so that they have the greatest national impact”.

He explained that ICC Ghana strongly supports ratification and implementation of the TFA, and is encouraged that 63 countries have now ratified the agreement -- which is expected to reduce worldwide trade costs by some 17 percent. 

“The Alliance for Trade Facilitation with support from the Business Sector Advocacy Fund (BUSAC) has provided a unique platform to leverage business, and also to research into the current business processes in our domestic and international trade and lead reforms. 

“It is important that business and the general trading public understands what the agreement provides for and how the implementation process can be influenced, hence the coming together with initial support from BUSAC.” 

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 amongst others, with support from the Business Sector Advocacy Fund (BUSAC).

Research suggests that improved border and Customs measures could trigger a 60-80% increase in cross-border SME sales in most economies.

The removal of these barriers to trade as captured in the agreement is expected to reduce total trade costs by 10%. Also, the requirement to implement the Agreement is directly linked to the capacity of the country to do so. In addition, the Agreement states that assistance and support will be provided to help developing countries achieve that capacity.

Trade transaction costs are highest in developing countries, which are the least able to carry this additional burden.

These costs affect small and medium-sized enterprises (SMEs) disproportionately. They often lack the means and capacity to comply with complex rules and high cost of compliance with Customs and border procedures; and other non-tariff measures represent significant charges in relation to their smaller volumes of trade. This makes them uncompetitive as suppliers and hampers their integration into regional and global value chains.

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.

The Chief Executive Officer of the Ghana Shippers Authority, Dr. Kofi Mbiah, in a recent media interaction called for the simplification, harmonisation, standardisation and modification of procedures in the trade, transport and logistics industry.

“Our time for trade facilitation is now; therefore, players in the industry need to adopt effective policies and put in place the necessary schemes, structures and systems that build confidence and predictability in the business community.

“Players must also strive for creditability and transparency in their decision-making processes, and by doing so they can experience the growth they crave,” he said.