Trade Facilitation and It's Benefits

 

The primary goal of trade facilitation is to help make trade across borders (imports and exports) faster, and cheaper and more predictable, whilst ensuring its safety and security. In terms of focus, it is about simplifying and harmonizing formalities, procedures, and the related exchange of information and documents between the various partners in the supply chain.

There are great potential gains from trade facilitation for both governments and the business community. Public entities will profit in terms of enhanced trade tax collection, better use of resources and increased trader compliance. A more efficient and transparent delivery of public services will allow the administration to maintain high security levels and effective government control, while diminishing opportunities for corruption.
Traders will gain in terms of higher predictability and speed of operations and lower transaction costs, resulting in more competitive exports on global markets.

When policymakers talk about “trade facilitation”, they are referring to a specific set of measures that streamline and simplify the technical and legal procedures for products entering or leaving a country to be traded internationally. As such, trade facilitation covers the full spectrum of border procedures, from the electronic exchange of data about a shipment, to the simplification and harmonization of trade documents, to the possibility to appeal administrative decisions by border agencies.

In a globalised world where goods often cross borders many times as both intermediate and final products, trade facilitation helps lower overall trade costs and increase economic welfare, in particular for developing and emerging economies.

Trade facilitation benefits businesses and consumers alike, and helps tackle corruption

Whether exporting or importing goods, trade facilitation benefits all countries by allowing better access for businesses to production inputs from abroad and supporting greater participation in global value chains (GVCs). Countries where inputs can be imported and exported in a quick and reliable manner are also more attractive locations for foreign firms seeking to invest and offer consumers lower prices, higher quality products, and a greater array of goods.

Trade facilitation also helps more – and smaller – firms participate in trade. Addressing unnecessary costs related to trade procedures is essential for firms to take full advantage of new market openings. This is especially true for micro, small and medium sized enterprises for which the costs of trading can be disproportionately large.

In addition, trade facilitation is critical for perishable agricultural products and for high-tech manufacturing components, both of which are highly sensitive to delays. Moreover, trade facilitation is becoming more important in the digital era. The growing numbers of parcels crossing international borders is both increasing demand, and creating new challenges, for trade facilitation.

Finally, not only does simplification of trading procedures promote economic efficiency, but it also removes incentives and opportunities for border-related corruption, thus supporting good governance and integrity.