Since the conclusion of the WTO Trade Facilitation Agreement, trade facilitation reforms have helped to reduce trade costs by 4.5% on average and to increase global trade in goods by up to 16% in some regions. The impacts are strongest for developing countries, particularly low-income and lower-middle income economies, and for manufacturing sectors such as chemicals, electrical equipment, machinery, paper and wood products, and textiles.

The number of parcels crossing international borders is both increasing demand and creating new challenges for trade facilitation. Administrative processes, risk management, standards, and issues around revenue collection affect the cost and length of time that parcels spend at the border. Digitalising processes and streamlining procedures can help border agencies deal with rising workloads and enhance parcel trade by up to 6%, thus enabling firms (particularly SMEs) and consumers to benefit from this type of trade.

Trade facilitation is critical during a crisis to ensure the smooth movement of essential goods – such as medical, agricultural and food products – across borders. Digitalisation was key in supporting the many efforts made to facilitate trade during the COVID-19 crisis, with measures such as “green lanes” for streamlining border controls or exchanging specific trade documents electronically. Many of these reforms are win-win and have outlasted the pandemic.

An acceleration of trade facilitation reforms can support trade and supply chain resilience, notably by supporting diversification in supply chains as a risk management strategy. Trade facilitation policies are also found to improve existing trade relationships, which can be important for supply chains where changing suppliers during a shock can be more challenging (due to customisation, for instance).

Trade facilitation reforms are not only efficiency-enhancing for firms of all sizes, but they promote more inclusive outcomes by helping to level the playing field between large and small firms, with women entrepreneurs disproportionately represented among SMEs. Of the range of trade facilitation policies, measures such as streamlining of procedures, automation, simplification of fees, or consultations with traders have the largest differentiated impacts on SMEs relative to larger firms.

Firms are increasingly being requested to track and provide information on their environmental and social sustainability footprint, including across the entirety of their supply chain. This can have implications for reporting and verification at the border. In this context, trade facilitation policies, including digital tools, can help seek synergies between trade compliance procedures and further streamlining of border processes.