Speakers at the APEC capacity-building workshop on the Trade Facilitation Agreement of the WTO for micro, small and medium sized enterprises. (Photo: VNA))HCM City (VNA)- The World Trade Organisation (WTO) Trade Facilitation Agreement (TFA)will help micro, small- and medium-sized enterprises (MSMEs) furtherdiversify exports and expand markets, as well as improve GDP growthin Vietnam, experts said at a seminar held in Ho Chi Minh City on June 13.
Representatives fromAPEC-member economies, including government officials, MSME policy-makers, theprivate sector, and MSMEs discussed the benefits of the agreement at atwo-day APEC capacity-building workshop.
Nguyen Khuong Duy,a lecturer at Bocconi University in Italy, explained that tradefacilitation means “simplification, harmonisation and automation of theprocedures applied to international trade, particularly the requirements andformalities related to imports and exports, with a view to further expeditingthe movement, and the release and clearance of goods, including goods intransit.”
Dr Rajan Sudesh Ratna,economic affairs officer at the UN’s Economic and Social Commissionfor Asia and the Pacific, noted that these procedures are an importantissue for the world trading system.
Nguyen Pham Nhu Ha, ofthe General Department of Vietnam Customs’ Customs Control and SupervisionDepartment, said MSMEs played a key role in Vietnam’s economy, accountingfor more than 97 per cent of the country’s total enterprises.
MSMEs contribute 31 percentto the country’s GDP, 33 percent to the national revenue, and generate 62 percentjobs for employees, she said. “However, MSMEs are small scale with lesscapital, with a lack of financial and marketing support.”
Other challenges includelimited access to law, regulations related to imports and exports, and lack ofknowledge of procedures, including declaration, classification, valuation, ruleof origin and others.
Conway Beddie, principalassistant director of Multilateral Trade Policy and Negotiation Divisionat the Malaysian Ministry of International Trade and Industry, said thatchallenges faced by MSMEs included access to finance, technology, innovationand R&D, highly skilled labour and red tape.
Beddie said the TFAwould benefit MSMEs by reducing trade costs, including simplificationand standardisation of customs procedures. It wouldalso expedite movement, release and clearance of goods, and reduce redtape.
Other benefits includeaccess to transparent information as well as opportunities to participate inthe policy-making process.
Dr Mohammad Saeed,senior advisor of Trade Facilitation and Policy for Business at theInternational Trade Centre, said the five main types of trade costs includedtariffs, standards, documentation, border costs and logistics costs.
Inefficiency-relatedtrade costs were a particularly stringent and unpredictable problem, whichapplied to all products, both imports and exports, he said, adding thatfirms from developing countries were more affected.
Logistics costs arehigher in developing countries (26 percent compared to 14 percent in moredeveloped countries).
“MSMEs are particularlyvulnerable to border inefficiencies. Regulatory burdens hit MSMEs twice as hardas larger firms,” he said. “Removing supply chain barriers has a larger effectthan removing tariffs.”
The TFA, which tookeffect in 2017, seeks to expedite the movement, release and clearance of goodsacross borders globally.
It opens a new phase fortrade facilitation reform worldwide and creates a significant boost forcommerce and the multilateral trading system as a whole.
Implementation of theTFA is expected to cut members’ trade costs by an average of 14.3 percent, withdeveloping countries having the most to gain, according to a study conducted in2015 by economists from WTO.
The TFA is also likelyto reduce the time needed to import goods by over a day and a half and toexport goods by almost two days, representing a reduction of 47 percent and 91 percent,respectively, over the current average.
Implementing the TFA isalso expected to help new firms export for the first time.
In addition, once theTFA is fully implemented, developing countries are expected to increasethe number of new products exported by as much as 20 percent, with the leastdeveloped countries likely to see an increase of up to 35 percent, according tothe WTO study.
The agreement allowsdeveloping and least-developed countries to set their own timetables forimplementing the TFA depending on their capacities.
A trade facilitationagreement facility was created at the request of developing and least-developedcountries to help ensure they receive the assistance needed to reap the fullbenefits of the TFA.
Developed countries havecommitted to immediately implement the agreement, which sets out a broad seriesof trade facilitation reforms. With 12 articles, the TFA prescribes measures toimprove transparency and predictability of trading across borders and to createa less discriminatory business environment.
The TFA’s provisionsinclude reduced fees and formalities connected with the import/exportof goods, faster clearance procedures and enhanced conditions for freedom of transitfor goods.
The agreement alsocontains measures for effective cooperation between customs and otherauthorities on customs compliance.
The workshop wasorganised by the Ministry of Industry and Trade, APEC Secretariat, Institutefor Development Studies and HCM City International Integration SupportCentre.-VNA
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