The bilateral approach
The U.S. initiated discussions centered on FTAs with the European Union and the Trans Pacific Partnership (TPP). The pending negotiations for a U.S. agreement with the TPP could be the most promising opportunity to gain access to the emerging economic markets in the Asia Pacific area and boost competitiveness in the region.
In the area of trade facilitation, TPP took a comprehensive approach to analyzing the bottle necks of supply chains. For example, TPP negotiators look at trade barriers within supply chains that affect goods flows from where a product is produced to where it is imported, sold and how it is ultimately used by consumers. Key to this analysis is reducing barriers at borders, including expediting low-value shipments; providing for greater pre-clearance and greater transparency; and providing opportunities for trade capacity building programs.
The agreement also seeks to address impediments to the growth of service industries in the Asian-Pacific market place, particularly for companies that compete with state-owned enterprises and existing domestic monopolies. Interestingly enough, it was the potential benefits that emerged from the TPP discussions that warranted the U.S. to aggressively seek an agreement with their largest trading partner—the European Union (EU).
The U.S. trade relationship with the 27 countries within the European Union could be the largest trade relationship in the world. However, impediments remain. Today, many European goods shipped by trusted traders are still held at U.S. borders. Additionally, many U.S. companies do not have full access to European markets.
There is a growing movement to establish a more harmonized trade relationship between the EU countries and the U.S. to allow companies to conduct business in mirrored regulatory regimes; and reduce importing and exporting red tape that currently makes cross-border trading difficult and costly.
The multilateral approach
According to the Organisation for Economic Co-operation and Development (OECD), border-related costs could total as much as 15 percent of the value of the goods being traded. Given this reality, there is growing pressure within the World Trade Organization (WTO) and many countries to develop a multi-country trade facilitation agreement, which would address supply chain issues such as expedited clearance; customs broker management; pre-arrival processing; and risk management. The benefits could improve global supply chains by making it simpler to collect, process and communicate trade data that is required for importation and exportation. While the larger economies greatly support this effort, there is still concern by developing countries that the potential mandates included in such an agreement would hold them responsible for implementing improvements their governments may not be able to deliver.
The evidence exists to justify these reforms. But there is still the need to steer the political conversation on transforming trade facilitation from an intangible idea toward an actionable agenda item under the umbrella of economic stimulus.
Dr. Eugene Laney has 20 years of experience in public and governmental affairs. In his current role as Vice President of International Trade Affairs for DHL Express USA, he ensures corporate compliance with regulatory requirements and tracks international trade and cargo security issues for the global market leader in the express and logistics industry.