Reducing Wait Times at Customs to Boost Trade: How Implementing the Trade Facilitation Agreement Can Expand Trade among AfCFTA Countries?

Abstract

Abstract All WTO members participate in the Trade Facilitation Agreement (TFA), a rules-based bottom-up approach built on monitorable provisions (e.g., the publication of information, advance rulings, appeal or review of decisions, transparency and border agency cooperation) aimed at reducing time in customs. The paper draws on the OECD indicators of the state of implementation of provisions in the TFA summarised in a TFI (Trade Facilitation Index) to estimate the reduction in waiting time at customs for a large sample of 160 countries. Implementing the TFA could be a significant complement to the African Continental Free Trade Area (AfCFTA)'s objectives. The paper's estimates suggest that a realistic implementation of TFA measures could reduce time in customs for imports by 3.7 days and by 1.9 days for exports. Using extraneous estimates from customs-level transactions, this translates to a reduction tariff Ad-Valorem Equivalent (AVE) in the range 3.5%–7% for imports and 8% extra growth for exports. The large differences in interests across AfCFTA participants—landlocked-coastal, resource-rich and resource-poor, large-small—suggest large gains from reducing tariffs on intra-African trade. However, tariff reductions face the zero-sum hurdle of negotiations involving rent transfers across and within countries. By avoiding rent-transfer issues, this paper suggests that taking seriously the TFA provisions would be a powerful complement to the AfCFTA's tariff-reduction agenda.