Economic nationalism bad for trade

By Guest writer

We are now in the fourth year of the Great Recession. So far, the economies belonging to the World Trade Organization (WTO) have resisted the kind of widespread protectionism that would make a bad situation much worse.

But protectionist pressures are building as weary politicians hear more and more calls for economic nationalism.

The WTO’s best defense of open trade is a good offense. A new WTO Trade Facilitation Agreement would be a win-win for all: increasing developing countries’ capacity to trade, strengthening the WTO’s development mandate, and helping fuel global economic growth.

Helping traders

More than a decade after the launch of the Doha Round, this agreement could be a down payment on the commitment WTO members have made to linking trade and development.

Developing countries stand to gain the most from improving trade facilitation. The right support will help traders in poorer countries compete and integrate into global supply chains.

There are rich opportunities for gains. Inefficiencies in processing and clearing goods put traders in developing countries at a competitive disadvantage. Outdated and inefficient border procedures and inadequate infrastructure often mean high transaction costs, long delays, opportunities for corruption, and an additional 10 to 15 percent to the cost of getting goods to market —even more in landlocked countries. 

World Bank research suggests that for every dollar of assistance provided to support trade facilitation reform in developing countries, there is a return of up to $70 in economic benefits. A significant impact occurs when funds are directed at improving border management systems and procedures: the very issues covered by the trade facilitation negotiations.

Efficiency and transparency projects supported by development banks and bi-lateral donors have made a dramatic difference. In East Africa, procedural improvements reduced the average clearance time for cargo crossing the Kenya-Uganda border from almost two days to only 7 hours.

In Cameroon, some of our organizations have worked with the World Customs Organization to help the customs authority reduce corruption and increase collection of revenues – estimated to be over $25 million a year. On the Lao-Vietnam border, a sub-regional cross-border transport agreement has cut cargo transit times from four hours to just over one hour.

A new customs component to a highway project between Phnom Penh and Ho Chi Minh City helped increase the total value of trade through the Moc Bai-Bavet border by 40 percent over three years.  In Peru, some of our Banks have worked with international freight forwarders to connect rural, remote villages and small businesses to export markets through national postal services resulting in more than 300 small firms becoming exporters, most for the first time.

Recommended Videos

Boxing bouts fade in coast

The importance of public speaking

Wakulima wahamasishwa kuhuzu mradi wa maziwa

Walimu waendeleza mgomo wao