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Pascal Lamy, Director General of the World Trade Organisation. [Getty Images]
During his speech at the Chittagong Chamber of Commerce in Bangladesh yesterday, Lamy said that a multilateral agreement on trade facilitation would expedite the transfer of goods through borders and would enhance the ease of doing transparent business around the world.
He said fundamental facilitating activities such as fee payments; “risk management; electronic payment; expedited shipments; authorised traders; single windows; and advance rulings” would not only make trade quicker, but also less costly.
Lamy has in recent weeks warned that unless economic powers find some middle transition to overcome some of the roadblocks between developed and developing nations at the World Trade Organization (WTO), the world could return to fierce competitive bilateralism.
The latest disagreement appears to have arisen between India and richer nations over IT and environmental goods pacts.
With negotiations at the Doha Round of talks stalled for over a decade, a group of developed countries have taken a detour and are turning to developing countries to accept sectoral pacts.
In a recent speech, Lamy said that some developed countries were experiencing low GDP – or even retracted economic – growth coupled with high unemployment which made them very wary of dealing with emerging markets.
“The result has been that multilateral rule-making on issues ranging from trade governance to climate change, already struggling prior to the crisis, has come to a near halt,” Lamy had said.
But with multilateral trade facilitation, which could remove border tariff and customs procedures, everybody stands to gain.
Lamy says that while $2 trillion dollars are spent on cross-border trade, some 15 per cent of that goes to tariffs.
“Globally, removing these barriers to trade and cutting red tape in half, which is what a multilateral Trade Facilitation Agreement could deliver, could stimulate the US 22 Trillion dollar world economy by more than US 1 trillion dollars,” Lamy said.
Citing research and statistics recently released by the World Economic Forum at Davos, Lamy said that reducing barriers, most of which are regulatory, to trade in supply chains could increase world GDP by 6 times more than just eliminating tariffs.
“Simply reducing this red tape by half would have the economic effect of removing all tariffs. The income creating impact of that is further multiplied for goods and services in regional and global value chains, which may have to cross different borders several times in their production and distribution cycle,” he added.
Source: Agencies
