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 has been an agreement on trade facilitation.
The trade facilitation agreement, which will be binding on all 159 member-states of the WTO 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 encouraging that 63 countries have now ratified the agreement -- which is expected to reduce worldwide trade costs by some 17%.
Managing Director of WTC Accra, 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 minimize inventory costs adding that companies have to tie up capital in extra holding costs above the 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 maximizing 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 could be collected more efficiently post-clearance from compliant traders,” he stated.
Trade facilitation, Mr. Doni-Kwame explained is aimed at simplifying not only the documentation required to clear goods , but also the procedures employed by border agencies.
“Focusing on the biggest risks allows border agencies to speed up the flow of goods across the border, and increases the collection of duties.
Yet some developing countries have been concerned about the potential costs 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 lenghthy and costly border delays. It will be important for business in developing countries to monitor its implementation in the countries with which they trade.
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 the regulatory agencies to ensure a win-win situation for all parties involved.
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 happening whereby consumers have to bear those costs arising from delays in clearance processes.
Some participants including policy makers 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.
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 includes the International Chamber of Commerce Ghana, 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).