Adapting to the “new normal”: building back better with digital and sustainable trade facilitation
Countries across the globe have made progress on digitalizing international trade formalities during the COVID-19 pandemic, but stronger efforts are needed to facilitate trade for small and medium-sized enterprises and other groups and sectors with special needs, according to a report launched today by the United Nations regional commissions.
The report is based on the Fourth United Nations Global Survey on Digital and Sustainable Trade Facilitation, jointly conducted by the Economic Commission for Africa, the Economic Commission for Europe, the Economic Commission for Latin America and the Caribbean, the Economic and Social Commission for Asia and the Pacific and the Economic and Social Commission for Western Asia.
The Survey covers the trade facilitation measures in the World Trade Organization (WTO) Trade Facilitation Agreement as well as digital trade facilitation measures associated with the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific, a UN treaty that entered into force in February 2021. Based on the 2021 Survey covering 144 countries, the report shows that the global average implementation rate of general and digital trade facilitation measures stands at 65 per cent. Despite the severe impact of COVID-19 on international trade, trade facilitation has made significant progress over the past two years. The overall implementation rate of measures increased by more than five percentage points between 2019 and 2021.
“Countries should continue and sustain efforts to strengthen cooperation to adapt to the increasingly digital global economy while leaving no one behind,” said Armida Salsiah Alisjahbana, United Nations Under-Secretary-General and Executive Secretary of ESCAP. “I encourage all leaders to take advantage of all available global and regional mechanisms to make progress, such as the WTO Trade Facilitation Agreement as well as the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific, which is an enabling and forward-looking UN treaty that entered into force last year.”
The report also shows that WTO TFA-related measures are relatively well-implemented globally. In addition, progress towards paperless and cross-border paperless trade is particularly noticeable, with the implementation of ‘Paperless Trade’ standing at 64 per cent, having increased by 6 percentage points since 2019. However, the implementation of ‘Cross-Border Paperless Trade’ is still low, at 38 per cent, with bilateral and subregional paperless trade systems remaining mostly partial or used on a pilot basis.
The report finds that digital trade facilitation measures serve as a great catalyst for trade cost reduction. Empirical evidence shows that full digital trade facilitation implementation beyond the WTO TFA commitments could cut the average trade cost by more than 13 per cent, 6.7 percentage points more than that could be expected from meeting requirements of the WTO TFA. Countries need to work together to develop and put into place the legal and technical protocols required for the seamless exchange of regulatory and commercial data and documentation. In this regard, the report suggests that regional and subregional initiatives – such as the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific, the expansion of the Association of Southeast Asian Nations (ASEAN) Single Window Agreement, and the African Continental Free Trade Area Agreement – could support countries in gradually moving to less paper and then to paperless and cross-border paperless trade by providing a dedicated, inclusive and capacity-building intergovernmental platform. To the extent possible, implementation of such measures should be based on international recommendations, standards and tools developed by United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT), United Nations Commission on International Trade Law (UNCITRAL), World Customs Organization and other relevant organizations, in cooperation with the private sector.
The report highlights the low implementation rates of sustainable trade facilitation measures, or measures targeted at specific sectors and groups of traders. While measures for the agriculture sector have been comparatively well-implemented, trade facilitation measures aimed at small and medium-sized enterprises as well as women in business face significant challenges, with average implementation rates of 41 and 31 per cent, respectively.
The COVID-19 pandemic has revealed many weaknesses in the trading system. The survey results show that most countries have implemented short-term crisis measures. However, the overall implementation level of measures in the ‘Trade Facilitation in Times of Crisis’ section stands at 41 per cent, essentially because many countries still lack long-term trade facilitation plans to enhance preparedness for future crises. The report suggests that continued and sustained efforts should be made to strengthen cooperation further, make trade information transparent, and enhance the capacity of countries to contribute to recovery and safeguard against future crises adequately.