Trade facilitation pact seen to benefit agri sector

The Philippine agriculture sector stands to significantly benefit from the country’s ratification of the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA), which is expected to substantially reduce the cost of trading globally.

Once the TFA has been ratified by all WTO members, local products, particularly agricultural goods, are expected to have better chances of competing in the global arena as the agreement calls for the removal of subsidies that often give some countries an unfair competitive advantage.

The Philippines, however, has yet to ratify the TFA as it was still being reviewed by at least two more agencies, Trade Secretary Adrian S. Cristobal Jr. said.

“But we’re confident that the TFA will be ratified. It will be very good for our micro, small and medium sized enterprises. There are countries that provide subsidies for products that they export to other markets. This becomes a disadvantage to developing countries who also export to the same markets … So one of the agreements [under the TFA] is to eliminate those export subsidies and under that scenario, you’ll have a more level, a fairer playing field for all countries exporting,” Cristobal said.

The Department of Trade and Industry (DTI) had targeted to ratify the TFA before the 10th WTO Ministerial Conference (MC10) held in Kenya in December last year.

The agency, however, failed to submit the “instrument of acceptance.” This means the member has already submitted proof it will ratify an agreement.

The TFA formed part of the Bali Package adopted by the WTO members at the 9th ministerial conference held in Bali, Indonesia, in December 2013.

Trade facilitation refers cutting red tape in government and streamlining customs and port procedures, among other initiatives. Thus, the agreement is seen to create a significant opportunity to further improve the speed and efficiency of border procedures, and consequently, ease the non-tariff barriers and enable the smaller enterprises to tap growing opportunities in the regional and global trade.

Once fully implemented, trade facilitation measures are estimated to have the greatest impact in terms of improvements in the area of formalities (simplification of trade documents; streamlining of border procedures; and automation of the border process), generating cost savings of 2.8 percent to 4.2 percent.

For lower middle income countries, which include the Philippines, streamlining border procedures are estimated to have the greatest impact (3.9 percent), while harmonizing and simplifying trade documents and automating trade and customs procedures will reduce costs by 3.5 percent and 2.9 percent, respectively.

As of Jan. 11 this year, 66 WTO members have already ratified the TFA.

WTO director general Roberto Azevedo, during his visit to Manila last year, had asked the Philippines for support to ratify the TFA.

“The challenge now, as far as the TFA is concerned, is ratification. Two-thirds of WTO members must ratify the agreement for it to come into force. Some members have already done so, but we need to accelerate the process. I am therefore urging the Philippines, like I have been doing with all other members, to take the necessary steps to ratify this agreement, and thereby seize the benefits it offers,” Azevedo earlier said.