Title: Alliance for Trade Facilitation
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Global
Overall term: 2021 to 2024
Cross-border trade stimulates economic growth. It is therefore in the joint interest of business and governments to reduce trade barriers. Many developing countries and emerging economies are greatly encumbered by trade constraints resulting from complicated customs documents and border procedures that lack transparency. On top of this, the high cost of managing and monitoring the transaction of goods makes it even more difficult for the local economy to access global markets. International companies thus have little incentive to invest and create jobs in countries with an unfavourable trade and investment climate.
In 2013, aiming to make the international movement of goods more transparent and straightforward, members of the World Trade Organization (WTO) concluded a Trade Facilitation Agreement (TFA). The TFA has huge potential. It could reduce global trade costs by up to 17 per cent, with a corresponding positive impact on employment and poverty reduction. In order for this to succeed, close cooperation between policy-makers and business is required.
The cross-border movement of goods in developing countries and emerging economies is simpler, faster and more cost-effective.
The German Alliance for Trade Facilitation and the Global Alliance for Trade Facilitation bring together companies, associations and governmental institutions to work on implementing the TFA, combining development cooperation goals with the interests of business.
In both alliances, partners are working to implement trade facilitation measures that lead to a measurable reduction in the time required for customs procedures and the movement of goods. The resulting reduction in transaction costs benefits international companies and, above all, the partner countries themselves. Local suppliers are strengthened and integrated into global supply chains, thus boosting the development of new markets. The alliances therefore make a significant contribution towards the implementation of the TFA and the 2030 Agenda. Together, the two alliances are implementing projects in more than 20 countries worldwide.
The projects that have been completed show measurable results. In Montenegro, for example, the volume of express goods reaching the end customer on the day they arrive in the country has now doubled. This has inspired other Western Balkan countries to introduce similar customs reforms.
In Colombia, the time taken for low-risk shipments of food and beverages to clear the border has been reduced strongly from up to two days to three hours, enabling importers to save USD 8.8 million in 18 months. The project is fostering trust and understanding between the government and businesses, and is this paving the way for collaboration on other reforms.