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Christian Friis Bach

Bach's Blog

The Executive Secretary's Blog

Cutting red tape for free trade

I clearly remember when the agreement establishing the World Trade Organization (WTO) was signed in Marrakech in April 1994. It was a historic moment, and I was lucky to be present as one of only a few civil society representatives. Since then, the results have been remarkable. The WTO has been a strong driver towards free trade and a bulwark against protectionism in times of economic hardship with its unique dispute settlement system.

The economic benefits have been substantial and, perhaps, the political benefits have been even larger. When countries cannot try to address problems through, often counter- productive, border measures and tariff barriers, they are forced to cooperate in order to solve them instead. This is the political effect of free trade. 

Therefore, it is of deep concern that the WTO trade negotiations have not progressed significantly on trade liberalization for years – although some positive steps will be made during  this week’s negotiations in Nairobi. The lack of substantive progress deprives the world of a key driver towards economic progress and international cooperation.

At the same time, even though countries have not agreed to slash tariff rates substantially, they have agreed to cut red tape and bureaucracy through the WTO Trade Facilitation Agreement agreed last year. This is important. The Global Enabling Trade Report 2014, published by the World Economic Forum, estimates that ambitious improvements in this area could add some US$ 1.2 trillion to the global GDP by 2020.

We must do our very best in the UNECE to support implementation of the agreement. This is why we have entered into a strong partnership with UNCTAD and ITC in support of the agreement. Our three organizations are a perfect match. In UNECE we have developed 480 trade facilitation standards under the auspices of the global body UN/CEFACT. In UNCTAD they have an excellent programme for capacity building in countries. And ITC delivers strong results for trade facilitation by engaging the private sector and, especially, SMEs.

ITC and UNCTAD have strongly supported and now joined the United Nations Trade Facilitation Implementation Guide, and have supported Recommendation 4 on National Trade Facilitation Bodies  (which are a requirement under the WTO TFA).  Our organizations are working hand in hand to help countries and companies tackle all aspects of the trade facilitation challenge.

The benefits can be substantial. Using UNECE’s Recommendation 33  on the Single Window for clearing exports and imports can greatly reduce the time needed for trade transactions, cutting in half (or often more!) the time needed for document preparation and handling. Today, 73 economies around the world have established a national Single Window using UN/CEFACT recommendations. From Kyrgyzstan and Thailand to Mozambique and Senegal it has created faster and more predictable trade, generated savings and increased revenues. Using the UN Layout Key  as well as other UN/CEFACT standards and codes such as  codes for units of measurement, codes for transport modes  and UN/LOCODE  for destinations can greatly simplify and align customs declarations.

It may sound technical, but it works.

Having done my Ph.D. on how to add up tariff rates and worked for years using international trade models, I am a dedicated and convinced free trader. If we cannot agree to cut tariff rates, then let us at least speed up our efforts to cut red tape and remove bureaucracy. Together with UNCTAD and ITC we are more than ready to do our part. 

 


If you wonder why the animal accompanying my blog is a cow, it is because cows are fascinating animals; the cows of our host country, Switzerland, are famous for their quality; and because I am still a farmer, and miss the cows I had in Denmark. Now I got one back.