WEF identifies trade facilitation challenges

Trade facilitation is a severely neglected element of the trade agenda, according to the World Economic Forum’s (WEF’s) Summit on the Global Agenda. The costs of poor trade facilitation – which include inefficiencies in trade infrastructure, logistics, trade administration and regulation – are high. Empirical evidence suggests that in many countries, especially developing countries, they exceed the costs imposed by more traditional trade barriers such as tariffs and trade-distorting subsidies. Investing in better trade facilitation practices is therefore a win-win solution for all. The summit identified three main trade facilitation challenges: correcting inefficient administration and regulation at the border; increasing private sector competition in trade logistics; and traderelated capacity building, particularly infrastructure, in developing countries. It was noted that policy decisions taken in other areas can also affect the ease with which trade flows across borders – climate change, security, and environmental and social standards for example. These policies should be designed with the costs they impose on trade in mind. The current financial, food and energy crises are exacerbating the costs of poor trade facilitation. For example, trade finance costs (letters of credit) have exploded and the market has become severely illiquid. Major food exporters have resorted to export restrictions, raising anxieties about food security.