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July 16, 2013

Trade Facilitation as Growth Tool

By Edward Gresser


Edward Gresser

Director, ProgressiveEconomy
GlobalWorks Foundation
Washington, DC
July 17, 2013

Summary: The phrase ‘trade facilitation’ evokes images of paperwork, quiet bureaucrats, the roar of cargo-jet takeoffs, and the clank of moving cranes – that is, routine policy implementation on one hand, and private business on the other, both to be managed by specialists. But as ProgressiveEconomy’s new paper, Trade Facilitation As Growth Tool, explains, it is also a policy matter, where simple reforms can give new energy to one of the administration’s central economic goals – sparking growth through exports.

Two reports this year – the World Bank’s annual Trading Across Borders and a joint World Bank/World Economic Forum study entitled Enabling Trade – explain why. The first, looking at container shipping paperwork and cost, shows that (at least for users of the Port of New York/New Jersey) exporters find high port costs in the United States as big an obstacle as the entire European tariff system. The second uses a computer model to predict that worldwide logistical reform could add 2.8 percent to America’s GDP and $200 billion to America’s exports – six times the benefit of eliminating all world tariffs. With this in mind, the Obama administration and Congress can do two big things to ease exports and help make the domestic economy more efficient by reducing the cost of trade:

1.   At home: Update the Customs Modernization Act to ensure that all exporters can file their cargo manifests and paperwork on-line rather than on paper, and create a “single window” for exporters to use. With this, they would need to file documentation covering the value of exports, compliance with sanctions or other regulations, and so forth only once – rather than as, at present, up to 48 times to cover all the agencies regulating trade. This would reduce the overhead cost of running federal agencies; reduce costs to importers and thus improve prices for families; and cut export costs for businesses in generally, and help small businesses in particular.

2.   Abroad: Conclude a WTO Trade Facilitation Agreement this winter. This would ensure that all WTO members post their customs documents on-line, agree to rapid processing for goods whose shippers provide early cargo information, reduce unnecessary bureaucracy, and improve transparency at seaports and airports. These steps in turn will promote global growth, expand trade among poor countries, and ease exporting from the United States.

To view the full paper in .pdf format, click here:  Trade Facilitation As Growth Tool