Implementing the WTO Trade Facilitation Agreement (TFA) could reduce worldwide trade costs by anywhere from 12.5% to 17.5%, according to the updated 2015 OECD Trade Facilitation Indicators (TFIs). The OECD TFIs are designed to inform governments on potential measures to improve border procedures, reduce trade costs, boost trade flows and reap greater benefits from international trade. The Indicators identify areas for action and enable the potential impact of reforms to be assessed after implementation.
The TFA creates a significant opportunity to improve the speed and efficiency of border procedures, thereby reducing trade costs and enhancing participation in the global value chains that characterize international trade. The 2015 OECD TFIs find that countries which implement the TFA in full will reduce their trade costs by between 1.4 and 3.9 percentage points more than those that do only the minimum that the TFA requires. The opportunities for the biggest reductions in trade costs are greatest for low and lower middle income countries.
The 2015 OECD TFIs cover 152 countries across different geographical regions and levels of development. Using cost estimates from the updated ESCAP-World Bank Trade Costs Dataset, they provide the most current assessment of the potential impact of implementing the measures included in the TFA. They also allow countries to identify their strengths and weaknesses in trade facilitation, prioritize areas for action and mobilize technical assistance and capacity building in a more targeted way.
The OECD TFIs measure the actual extent to which countries have introduced and implemented trade facilitation measures in absolute terms, but also their performance relative to others, using a series of quantitative measures on key areas of the border process.