Red tape in the crosshairs as EU targets global WTO deal

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The European Commission is pushing to secure a World Trade Organisation (WTO) agreement that would cut red tape in trade and increase worldwide income by over €30 billion. Two thirds of this would go to developing countries.

Development Commissioner Andris Piebalgs and Trade Commissioner Karel De Gucht have joined forces to help secure a WTO Trade Facilitation Agreement as part of global efforts to increase trade's contribution to development, the European Commission announced on 8 March.

The EU's support follows demands from Least-Developed Countries (LDCs) for help with the deal, which could be agreed at the WTO's 9th Ministerial Conference in Bali next December.

On average, Organisation for Economic Cooperation and Development (OECD) members demand five documents at customs and it takes them 10 days to clear goods, at a cost of about €735 per container.

By contrast, African countries require on average twice as many documents, up to 35 days to clear exports and 44 days to clear imports, at an average cost per container of €1,285 for exports and €1,535 for imports. The OECD estimates that reducing global trade costs by 1% would increase world-wide income by more than US$40 billion, 65% of which would go to developing countries.

Businessmen told EurActiv that trade in many developing countries is affected by corruption. Usually a foreign trader will hire a local freight-forwarding company that pays “baksheesh” for every rubber stamp obtained.

Getting agreement in the WTO on trade facilitation would send a powerful signal about the strength of the multilateral trade system and its ability to produce tangible results for the international community, Trade Commissioner Karel De Gucht was quoted as saying.

"Trade facilitation is about better customs procedures, cutting red tape, fighting corruption, and cutting costs for business. Cutting the cost of trade by just 1% would increase worldwide income by over €30 billion and two thirds of this would go to developing countries,” De Gucht said.

Development Commissioner Andris Piebalgs added that making it easier and cheaper to trade will help developing countries to better integrate into regional and global trade systems.

“I therefore invite our partners to formulate trade facilitation plans with clear, specific and targeted requests for support. Within its overall Aid for Trade commitments, the EU stands ready to contribute its fair share and provide continued and substantial support for trade facilitation,” the Development Commissioner said.

'Trade facilitation' means measures aimed at simplifying, modernising and harmonising merchandise import, and improving border tax collection, export and transit procedures, especially customs requirements. Possible measures include simplifying rules, standardising and reducing the number of custom forms, and computerisation. The WTO Trade Facilitation Agreement could create an international framework for reforms.

The EU hopes that such a deal could be adopted at the WTO's 9th Ministerial Conference in Bali, Indonesia on 3-6 December 2013.

Timeline: 
  • 3-6 December 2013: WTO's 9th Ministerial Conference in Bali, Indonesia.
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