Nigeria recently in Davos, Switzerland, ratified the Trade Facilitation Agreement of the World Trade Organization, making it the 107th WTO member to do so.
The country’s instrument of acceptance was submitted to the WTO by the Minister of Industry, Trade and Investment, Mr. Okechukwu Enelamah, a statement from the ministry said. Enelamah handed over the instrument at a meeting with the WTO Director-General, Roberto Azevêdo, on the sidelines of the World Economic Forum in Davos.
Only three more ratification from member countries are needed to achieve the two-third threshold required to bring the treaty into force. Concluded at the WTO’s 2013 Bali Ministerial Conference, the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit, says the African Press Organization.
The agreement sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
It also contains provisions for technical assistance and capacity building in this area, and has the potential to increase global merchandise exports by up to one trillion dollars. A 2015 study by WTO economists cited by APO states that full implementation of the TFA would reduce members’ trade costs by an average of 14.3 per cent, with developing countries having the most to gain.
It would also reduce the time to import goods by over a day and a half, while also reducing time to export by almost two days, representing a reduction of 47 per cent and 91 per cent respectively over the current average. Nigeria submitted its Category A notification to the WTO on Nov. 10, 2014, outlining which substantive provisions of the TFA it intends to implement when it takes effect. Enelamah said that Nigeria’s ratification of the treaty was a reflection of its commitment to the WTO and a rules-based economy.
“It is evidence of President Muhammadu Buhari’s commitment to rapidly implement his presidential initiative on the creation of an enabling environment for business.“Nigeria would like to see a strengthened WTO that reflects the development principles of developing countries like Nigeria and we commend the effectiveness of director general Azevêdo in this regard,” he added.
Other African countries that have ratified the TFA are Botswana, Niger, Togo, Côte d’Ivoire, Kenya, Zambia, Lesotho, Mali, Senegal, Swaziland, Gabon, Ghana and Mozambique.
“The TFA broke new ground for developing and least-developed countries in the way it will be implemented. “For the first time in WTO history, the requirement to implement the agreement was directly linked to the capacity of the country to do so.“In addition, the agreement states that assistance and support should be provided to help them achieve that capacity,’’ APO said.
It added that TFA was also created at the request of developing and least-developed country members to help ensure that they receive the assistance needed to reap its full benefits.
The Federal Government is expected to take the advantage of Nigeria’s membership of the World Trade Organization to impact positively on nation’s economies through increase in the volume of trade and Foreign Direct Investment inflow.
It is also expected to the advantage of increased technical assistance and support from the multinational trading system and donor countries in the areas of capacity-building, infrastructure development, enhanced foreign exchange earnings, and market access for the countries’ exportable commodities through removal of technical and non-technical barriers to trade.
The World Trade Organization (WTO) is an intergovernmental organization which regulates international trade. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948.
The WTO deals with regulation of trade between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants’ adherence to WTO agreements, which are signed by representatives of member governments; and ratified by their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (1986–1994).
The WTO is attempting to complete negotiations on the Doha Development Round, which was launched in 2001 with an explicit focus on developing countries.
As of June 2012, the future of the Doha Round remained uncertain: the work programme lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round is still incomplete. The conflict between free trade on industrial goods and services but retention of protectionism on farm subsidies to domestic agricultural sector (requested by developed countries) and the substantiation of fair trade on agricultural products (requested by developing countries) remain the major obstacles.
This impasse has made it impossible to launch new WTO negotiations beyond the Doha Development Round.
As a result, there have been an increasing number of bilateral free trade agreements between governments. As of July 2012, there were various negotiation groups in the WTO system for the current agricultural trade negotiation which is in the condition of stalemate.
The WTO’s predecessor, the General Agreement on Tariffs and Trade (GATT), was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation – notably the Bretton Woods institutions known as the World Bank and the International Monetary Fund.
A comparable international institution for trade, named the International Trade Organization was successfully negotiated. The ITO was to be a United Nations specialized agency and would address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. But the ITO treaty was not approved by the U.S. and a few other signatories and never went into effect. In the absence of an international organization for trade, the GATT would over the years “transform itself” into a de facto international organization.
The WTO agreements recognize the link between trade and development and contain special provisions for developing countries. More than two-thirds of WTO members are classified as developing countries. At the Doha Ministerial Conference, in November 2001, Trade Ministers launched the Doha Development Agenda.
With this Agenda, WTO members have placed development issues and the interests of developing countries at the heart of the WTO’s work. In the Hong Kong Ministerial Declaration of 2005, members emphasized the central importance of development to the Doha Round. At the same time, the Aid for Trade Initiative was launched, designed to help developing countries build supply-side capacity in order to expand trade. At the Bali Ministerial Conference in December 2013, ministers adopted a number of decisions under the developmental pillar, including those aimed at boosting least-developed countries’ trade.
The WTO agreements include numerous provisions giving developing and least-developed countries special rights or extra leniency — “special and differential treatment”. Among these are provisions that allow developed countries to treat developing countries more favourably than other WTO members.
The General Agreement on Tariffs and Trade (GATT, which deals with trade in goods) has a special section (Part 4) on Trade and Development which includes provisions on the concept of non-reciprocity in trade negotiations between developed and developing countries — when developed countries grant trade concessions to developing countries they should not expect the developing countries to make matching offers in return. Both GATT and the General Agreement on Trade in Services (GATS) allow developing countries some preferential treatment. Other measures concerning developing countries in the WTO agreements include;
•Extra time for developing countries to fulfill their commitments (in many of the WTO agreements)
•Provisions designed to increase developing countries’ trading opportunities through greater market access (e.g. in textiles, services, technical barriers to trade)
•Provisions requiring WTO members to safeguard the interests of developing countries when adopting some domestic or international measures (e.g. in anti-dumping, safeguards, technical barriers to trade)
• Provisions for various means of helping developing countries (e.g. to deal with commitments on animal and plant health standards, technical standards, and in strengthening their domestic telecommunications sectors).
The WTO Secretariat has special legal advisers for assisting developing countries in any WTO dispute and for giving them legal counsel. The service is offered by the WTO’s Training and Technical Cooperation Institute.
Developing countries regularly make use of it. Furthermore, in 2001, 32 WTO governments set up an Advisory Centre on WTO law. Its members consist of countries contributing to the funding, and those receiving legal advice.
All least-developed countries are automatically eligible for advice. Other developing countries and transition economies have to be fee-paying members in order to receive advice. The least-developed countries receive extra attention in the WTO. All the WTO agreements recognize that they must benefit from the greatest possible flexibility, and better-off members must make extra efforts to lower import barriers on least-developed countries’ exports. Since the Uruguay Round agreements were signed in 1994, several decisions in favour of least-developed countries have been taken. Meeting in Singapore in 1996, WTO ministers agreed on a “Plan of Action for Least-Developed Countries”.
This included technical assistance to enable them to participate better in the multilateral system and a pledge from developed countries to improved market access for least-developed countries’ products.
A year later, in October 1997, six international organizations — the International Monetary Fund, the International Trade Centre, the United Nations Conference for Trade and Development, the United Nations Development Programme, the World Bank and the WTO — launched the “Integrated Framework”, a joint technical assistance programme exclusively for least-developed countries.
In 2002, the WTO adopted a work programme for least-developed countries. It contains several broad elements: improved market access; more technical assistance; support for agencies working on the diversification of least-developed countries’ economies; help in following the work of the WTO; and a speedier membership process for least-developed countries negotiating to join the WTO.
At the same time, more and more member governments have unilaterally scrapped import duties and import quotas on all exports from least-developed countries.
Over three-quarters of WTO members are developing or least-developed countries. All of those in the queue to join are likewise developing countries. Whether the interests of developing countries are well enough served in the WTO is a subject of continuing debate. But even the most critical developing countries acknowledge that the system offers them benefits. In fact, few economists dispute that properly handled, trade is essential for development.
All WTO agreements contain special provisions for developing countries, including longer periods to implement agreements and commitments, measures to increase their trading opportunities and support to help them build the infrastructure for WTO work, handle disputes, and implement technical standards. Least-developed countries receive special treatment, including exemption from many provisions.
The needs of developing countries can also be used to justify actions that might not normally be allowed under the agreements – for example, governments giving certain subsidies.
And the negotiations and other work launched at the Doha Ministerial Conference in November 2001 include numerous issues that developing countries want to pursue. Finally, although the WTO is not an aid agency, it does have a role to play, particularly as a forum and clearing house for information on trade-related development aid.
The debate over whether developing countries need aid or trade is at an end, today, there is widespread recognition that developing countries need both. But WTO agreements do not guarantee increased trade flows: they provide opportunities. Some countries are better placed than others to grasp those opportunities. Some need help: “Aid for Trade” and various other tools are aimed at enhancing the capacity of developing countries to participate more effectively in the global marketplace.
The WTO is the coordinating agency for the Aid for Trade programme and as such regularly brings donors, development agencies, recipient governments and the private sector together. This dialogue helps to highlight what is being provided and what is needed while encouraging the development of more suitably designed projects. Both donor and recipient countries have responded to these efforts.
Donor countries have committed an average of $40 billion a year to trade-related development programmes while recipient countries have had success in pinpointing the specific areas where aid is needed and in mainstreaming trade into their development strategies. Achieving higher living standards, full employment and sustainable development is the aim of the WTO’s member governments, as expressed in the WTO’s founding Marrakesh Agreement. The means for achieving this include the “substantial reduction of tariffs and other obstacles to trade”.
This process of trade opening takes place in the framework of WTO rules, which take into account the fact that some countries are better equipped than others to open their markets widely. Some countries, for instance, have a more advanced legal, regulatory and physical infrastructure than others.
Generally speaking, it is easier for developed countries to open their markets than for many developing countries. As a result, average tariffs (import duties) in developed countries, at least for manufactured goods, are much lower than in developing countries — although this is not true in every case or for every product.
Ayobolu, a public affairs analyst contributed this piece from Lagos State.