Let us adopt a harmonised ‘Made in the World’ label

The World Customs Organisation has played an important role in the activities of the WTO, both in its regular work as well as on the on-going Doha Development Agenda negotiations.

Since 2001, WTO members have covered significant ground towards a comprehensive Doha agreement that deals with well over 20 topics ranging from services to fisheries subsidies.

The negotiations in around 80per cent of the issues being discussed have reached a level of maturity that would allow us to conclude within a very short period of time. It is also a known fact that unfortunately progress has stalled because of disagreements in the key area of market access for industrial products among a few members.

Since April, I have been consulting members on the elements of a smaller package which could be harvested by the end of the year, to focus as a priority on the least-developed members of the WTO. It is a concrete deliverable on the development dimension of the Doha Round. It would also be a signal of confidence in the rest of the package to come at a later stage, when the negotiating priorities of a few of our members would be better aligned.

One area which is being discussed as part of the December package is trade facilitation. The WCO is a good place to discuss the tremendous value that a trade facilitation deal could have for our trading communities and in particular for many of our SMEs.

According to a recent OECD study, implementation of the Trade Facilitation measures discussed in Geneva could reduce total trade costs by almost 10 per cent.

The scope for improvement is considerable for all parties involved. For OECD countries it currently takes on average about four separate documents and clearing the goods in an average of ten days at an average cost of about $1,100 per container.

By contrast, in sub-Saharan Africa almost double the number of documents are required and goods take from 32 days (for exports) to 38 days (for imports) to clear at an average cost per container of between $2,000 (for exports) and $2,500 (for imports).
The overall world champion at trade facilitation is Singapore, where four documents are required and goods are cleared in, at most, five days at an average cost of around $456 per container.

According to recent research, every extra day required to ready goods for import or export decreases trade by around 4per cent.
Handicapping the world’s least competitive producers and poorest consumers with additional costs of $1,000 per container exported or imported is clearly absurd.

The trade barriers they face in their main export markets are, in most cases, far less significant by comparison. And for many of them the costs of poor trade processing has a bigger impact than their tariffs on the domestic price of imported goods. The trade facilitation deal is therefore one simple step to reduce the costs of trading and also to boost trade.

As we progress in the completion of a new WTO Trade Facilitation Agreement, we look forward to the continuation of our close co-operation. Currently, the WTO is developing a more focused technical assistance to help with the implementation.

This program will also help countries to obtain better targeted technical assistance and support for training appropriate to their own needs. Support from the WCO will be crucial to the successful and timely implementation of this program.

Let me also mention the Harmonised System (HS), a very important instrument for the WTO. It is the nomenclature used by WTO members for the purpose of scheduling their concessions on goods.

In addition, the HS has been used in some agreements (for example the Agreement on Agriculture and the Information Technology Agreement) to delineate product coverage.

Origin of goods

One area of critical importance to our work, particularly in the context of the current phase of the DDA negotiations, an area in which the WCO has substantial technical expertise is the preferential rules of origin.

The WCO has recently established a database of preferential rules of origin which covers only rules of origin of FTAs or other preferential schemes like the GSP. This database allows users to compare different rules of origin of similar goods. This has a significant potential to simplify the task of exporters in developing countries, particularly the least-developed.

The latter have consistently called for a simplified system of rules of origin that would allow them to understand and comply with rules of origin requirements and this database is a positive step towards this goal.

Another area that we could strengthen our co-operation is in the area of measuring trade flows in value added, instead of gross numbers as is the case today.

Business increasingly locates the different stages of its activities in a way that optimizes its value-addition chain. The “Made in a particular country” label on the back of a product should really read: “Made in the World”.

This new global reality forces us to re-examine how we analyse and measure international trade. At present, international trade flows are computed by attributing the full commercial value of a product to the last country of origin. This needs to change. The numbers we have today do not fully reflect the real picture of international trade in a globalized world. I believe there is a lot that we can do on this front.

Lamy is the WTO director-general.