Trade facilitation: a priority for the continent?

19 July 2016

The 2030 Sustainable Development Agenda recognises the important role that trade can play as a driver of sustainable and inclusive development. For this potential to materialise in Africa, however, the continent will have to tackle a pervasive challenge: steep trade costs. In a globalised and networked economy, where new modes of production such as global value chains have become prevalent, addressing this issue is all the more essential for developing countries.

While the thickness of borders does not constitute the only reason why trade costs are so high in Africa, they certainly are an important part of the equation. The “Trading Across Borders” indicators of the World Bank’s Doing Business database clearly indicate that sub-Saharan Africa is the region where the time and cost of both import and export processes are the highest. Trade facilitation has thus progressively emerged as a priority for African countries, but on a continent totalling 54 countries and more than 100 bilateral national borders, the scale of the work that needs to be completed is enormous.

In this context, various African governments are putting in place trade facilitation initiatives, some with striking success. The WTO’s Trade Facilitation Agreement (TFA), which is gradually moving towards implementation, could also prove instrumental in helping reduce trade costs on the continent, in particular thanks to its innovative approach to special and differential treatment. So what are the expected impacts of the TFA for African countries, especially least developed countries (LDCs)? And how could African governments enhance the effectiveness of their trade facilitation efforts? This issue seeks to bring forward elements of a response to these questions.

In the first article, Jaime de Melo and Laurent Wagner look specifically at LDCs and examine how the TFA could help those countries reduce trade costs. They highlight that although not a panacea, the TFA could produce significant benefits for LDCs if fully implemented.

This article is complemented by another contribution, in which Ilmari Soininen looks at trade facilitation through the lens of public service delivery. Through this analysis, the author offers recommendations aimed at strengthening African governments’ ability to reduce trade costs through trade facilitation.

This issue also contains a piece drawn from the work of the E15 Initiative’s Expert Group on Global Value Chains (GVCs). In this article, Sherry Stephenson presents a number of options on how the global trade system can promote the effective integration and upgrading of countries in GVCs.

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