Africa and the WTO Trade Facilitation Agreement: State of Play, Implementation Challenges, and Policy Recommendations in the Digital Era

Abstract

It is becoming more evident that better market access conditions alone do not translate directly into increased trade opportunities for African countries. A greater obstacle than tariffs is the high cost of moving goods across Africa’s borders. In addition to supply-side capacity constraints, behind the border barriers and non-tariff measures (NTMs) are increasingly hampering African trade, whose share in world merchandise trade remains a measly 2.7% in 2018. With the aim of lowering transaction costs for businesses and to help expedite the clearance and release of goods across borders, in 2013, Members of the World Trade Organization (WTO) have successfully concluded a new multilateral Agreement on Trade Facilitation, the first since the Uruguay Round twenty years before. The Trade Facilitation Agreement (TFA) entered into force in February 2017, with over two-thirds of the membership ratifying the Agreement. On September 1, 2019, there are 35 African countries out of 41 who have ratified the TFA. According to the OECD and WTO, estimates show that the full implementation of the TFA could reduce trade costs by an average of 14.3% and boost global trade by up to US$ 1 trillion per year, with the biggest gains in the poorest countries. While there are benefits for African countries to implement the TFA sooner rather than later, many will require substantial technical assistance and capacity building (TACB) support to properly implement the trade facilitation measures in the TFA. Equally as important, the need for African policymakers is to recognize the political economy aspects of the implementation challenges, which are intertwined in trade facilitation domestic reform. This chapter will first address some of the key challenges facing African countries’ trade potential and the benefits accruing from facilitating their trade. Then, a brief description of the TFA and its novel provisions will be outlined as well as the status of implementation of African countries. Finally, the constraints related to the implementation of trade facilitation measures are addressed and in conclusion, some policy recommendations.KeywordsTrade facilitationWTOTrade policyNon-tariff measures (NTMs)Trade and developmentAfricaDeveloping countriesLeast developed countries (LDCs)