45159 Trade Issue Brief WORLD BANK, WASHINGTON, DC July 2008 Benjamin J. Taylor and John S. Wilsoni Trade Facilitation and the Doha Agenda: What Matters for Development ii The establishment of a mechanism to coordinate and monitor the progress of trade facilitation efforts complements the success of a new agreement on trade facilitation in the Doha Development Agenda. Better coordination among donors to channel aid-for-trade funds more effectively to recipient countries can help ensure that new trade-related assistance is most effective in meeting the goals of reducing barriers and expanding trade. New disciplines in the World Trade Organization on trade facilitation can be helpful in increasing transparency, lowering trade costs, and expanding trade opportunities for all members. The much larger agenda, however, is outside of the WTO framework and mandate. Sustained progress in development requires continued progress at the national level in ensuring the rule of law, removing barriers to trade, investing in regulatory reform, and upgrading infrastructure to lower trade costs. New aid-for-trade facilitation, tied to concrete and achievable goals, can also support progress (Finger and Wilson 2006). Increasing the Capacity to Participate to assess each developing member's trade facilitation needs through a self-assessment process. According to The Uruguay Round of WTO negotiations went the official project description (WTO 2007), needs beyond regulations aimed specifically at international assessments will be conducted by the recipient member trade, and into behind-the-border institutions and on a voluntary basis with guidance provided by the regulations, such as technical and sanitary standards Secretariat. The resulting report will detail information and protection of international property. Although on technical assistance requirements of recipient these matters affect international trade, they are members and will provide a basis for the eventual anchored in the institutional structures of domestic implementation of any results of WTO negotiations. economies. Agreements in these areas are therefore An initial pilot assessment was carried out for Zambia different from traditional agreements to reduce or in February/March 2007, and an official first round of eliminate barriers, and require that countries' assessments is currently underway (WTO Press 2007). regulations be held to a common standard. Furthermore, implementation of the obligations often Aid-for-Trade in the Development Context requires programs of institution building that may involve significant investment in facilities, equipment, Although formalizing trade capacity assessments may and staff training. Such investment exceeds the annual prove useful in increasing accountability among development budget of many poorer WTO members. developing members for the aid they receive, diverting Without additional help from the developed world, resources to the creation of an entirely new monitoring developing countries would risk finding themselves in platform within the WTO would likely be inefficient. breach of legal obligations they could not fulfill. Furthermore, attempts to bring trade facilitation assistance within the WTO negotiation framework (by In addressing new talks on trade facilitation, the making aid conditional on binding implementation WTO--in conjunction with the World Bank, commitments) may prove ineffective given the amount UNCTAD, OECD, WCO, and IMF--piloted a project of aid-for-trade that is being supplied to countries by A new agreement at the WTO would have the potential donors and multilateral institutions. to increase transparency and also strengthen developing members' institutions involved in border Over the past seven years, the amount of technical control and customs. Moreover, targeted new aid-for- assistance and capacity building to help developing trade facilitation--in the broader development countries has increased by 50 percent. The World context--provided to countries that demonstrate the Bank Group alone provided aid-for-trade averaging capacity to absorb and benefit from such new USD3.1 billion a year to low-income countries during assistance could compliment and bolster the energy 2002 to 2005. In addition to the concessional loans that a new WTO agreement promises. and grants given to low-income countries, the World Bank Group has provided an increasing amount of Further Reading nonconcessional loans to middle-income countries; in 2007, it lent USD4.9 billion for trade-related assistance Abe, Kazutomo, and John S. Wilson. 2008. "Welfare and (World Bank 2008). Income Gains with Improved Transparency in APEC: What's at Stake." World Bank, Washington, DC. CHART 1: TRADE-RELATED AID FROM ALL Finger, J. Michael, and John S. Wilson. 2006. DONORS 2003-2005, (MILL US$) "Implementing an Agreement on Trade Facilitation: What Makes Sense?" World Bank, Washington, DC. 3500 3000 World Bank. 2008. "Fact Sheet: The World Bank Group and Policy-Making 2500 Aid for Trade." World Bank, Washington, DC. 2000 World Bank PRESS RELEASE 1500 Trade and Press/2008/121/PREM 1000 Business Development "World Bank Group President Announces More Aid for 500 Trade." 0 2003 2004 2005 World Trade Organization. 2007. "World Trade Organization Trade Facilitation National Needs Assessment Project Description." Aside from lending, the World Bank Group's recent World Trade Organization PRESS RELEASE work program in trade facilitation has included Press/493 24 September 2007 development of trade facilitation indicators, supply- "The Separate Customs Territory of Taiwan, Penghu, chain efficiency indicators, and trade cost indicators. Kinmen and Matsu Offers CHF62,000 to the WTO Development Programme." Going Forward World Trade Organization PRESS RELEASE In light of the amount of resources allocated to trade Press/492 24 September 2007 facilitation and trade capacity monitoring by other "The United Kingdom Offers GBP200,000 to the WTO institutions, it may be more efficient for the WTO to Development Programme." conduct basic assessments of needs through already- i established review and assessment procedures, such as The findings, interpretations, and conclusions expressed in the Trade Policy Review Mechanism. Doing so would this paper are entirely those of the authors. They do not be less unwieldy than creating an entirely new necessarily represent the view of the World Bank, its platform, and the WTO would have its own unique Executive Directors, or the countries they represent. assessment mechanism, which, some might argue, ii This brief draws on research under a project on Trade would provide for a greater sense of accountability Facilitation and Economic Development at the World Bank, among members in meeting obligations. What is most with support of the U.K. Department for International important is that the decided platform should allow for Development. It is also aligned with work under the Multi- early detection of any and all possible implementation Donor Trust Fund Trade Project on "Trade Costs and delays with respect to trade facilitation reforms. Facilitation." 2