Thursday, July 31, 2008
London — The Doha Development Round at the World Trade Organisation (WTO) has taken its last breath but Africa’s trade and prosperity can forge ahead without it because countries are implementing their own reforms to boost trade unilaterally.
Alec van Gelder, Network Director of International Policy Network, says "reforms to simplify customs procedures and remove other administrative barriers can be even more beneficial to growth and prosperity: Africans must seize these opportunities in spite of the failure to reach an agreement through the WTO."
Since 2000, global trade flows have increased by 70% to US$14 trillion, according to the WTO. Annual foreign direct investment flows are up 25%, to US$1.5 trillion. And the global economy has expanded by 30%, to US$54.4 trillion.
"Dropping the tariffs that were being discussed at the WTO is an important way to boost trade but, crucially, countries can move quickly on these important reforms on their own accord without waiting for more complicated negotiations in Geneva," van Gelder adds.
A 2004 World Bank study of 75 countries found that if "below average" performers on key trade facilitation metrics could raise their scores "halfway to the average" score, world trade would increase by US$377 billion, or about 9% a year. By comparison, the World Bank’s most optimistic estimate of the impact of Doha was US$277 bn per year. In other words, such unilateral measures have the potential to achieve more than even the most optimistic estimates of what Doha would have achieved.
In the past three years, 55 countries have implemented 68 reforms to help streamline trading procedures. For instance, Rwanda partially privatised its customs bonded warehouse facilities, which sparked construction of new warehouses and a 40% reduction in storage fees. If the time it takes for imports and exports to pass customs and other administrative obstacles in South Africa could be reduced to average OECD levels, South African trade with the rest of the world could increase by US$36 billion annually.
But there is still room for improvement: in developing countries the average customs transaction involves 20 to 30 parties and requires 40 separate documents to complete, a 2004 UN study showed.
Alec van Gelder adds, "Cutting tariffs would boost trade and is desirable, but there are clearly other things that can be done that would increase trade flows and encourage entrepreneurs everywhere to produce better, cheaper goods and services, thereby improving the lives of billions of people. Removing these non-tariff barriers to trade is a priority now that multilateral negotiations have been put on ice."
Click here to download a copy of "While Doha Sleeps: Securing Economic Growth Through Trade Facilitation", by Daniel Ikenson
International Policy Network is a London-based charity and think-tank which promotes markets and their underlying institutions in global policy debates