The implementation of WTO's Trade Facilitation Agreement (TFA) is likely to reduce transaction costs worldwide by 12.5-17.5 per cent with developing nations accruing "greatest" benefits, think tank OECD today said.
Members of World Trade Organization, including India, last year adopted the first worldwide trade reform, TFA, after years of stalemates and deadlocks.
The pact contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
"Implementing the WTO TFA could reduce worldwide trade costs by anywhere from 12.5 per cent to 17.5 per cent...With the greatest benefits accruing in developing countries," Organisation for Economic Co-operation and Development (OECD) said in a statement.
The 2015 OECD Trade Facilitation Indicators stated that countries that implement the TFA in full will reduce their trade costs by anywhere from 1.4 to 3.9 percentage points more than those which only implement the minimum requirements.
"The greatest opportunities for reductions in trade costs are in low and lower middle income countries," said OECD, a grouping of 34 countries.
Trade costs include all tariff and non-tariff costs including transport, border-related and local distribution costs from foreign producer to final user in the domestic country.
"As G-20 economies seek to achieve an additional two per cent of GDP growth by 2018, facilitating a more open flow of goods and services across international borders should be a key contributor to this target," OECD Secretary-General Angel Gurria said.
The new trade facilitation indicators will help countries benchmark their performance and identify areas of priority action where great rewards can be reaped with little effort, Gurria added.
The statement further said that significant financial assistance is available to help countries implement the pact.
"Nearly USD 1.9 billion has been disbursed in aid for trade facilitation since 2005, with annual commitments up eight-fold between 2005 and 2013," it added.
