Rethinking Trade Facilitation

Speech by Norbert Barthle, Parliamentary State Secretary to the Federal Minister for Economic Cooperation and Development, at the High-Level Forum of the German Alliance for Trade Facilitation, 9 September 2019 in the Museum for Communication, Berlin

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Ladies and gentlemen,

I am delighted to welcome you to the first High-Level Forum of the German Alliance for Trade Facilitation here at the Museum for Communication in Berlin. The venue for our meeting is quite fitting, for communication – the process by which information is exchanged between individuals, even over long distances and across frontiers – is a basic human need and a key precondition for our modern way of life.

Trade, too, is a form of communication or, at least, exchange. In fact, it is a vital requirement for economic activity and prosperity in our ever more inter-connected world. In recent times, however, this idea of trade as a key aspect of human interaction, as a necessary requirement for the development of individuals, businesses and nations, has been pushed further and further into the background.

The term "trade" has become an object of heated ideological and geo-political debate. Today we even speak of "trade wars". But we here in this room all have in common that we want to facilitate trade – and we want to do this in a way that will serve people and facilitate fair exchange.

For us at the BMZ, a fair system of world trade is one of the main pillars of our development policy. Such a system is vital if we want to realise the 2030 Agenda for Sustainable Development, or even our Marshall Plan with Africa.

A recent study carried out in Ghana has shown very clearly that the greater the number of businesses – especially small and medium-sized ones – engaging in export and international trade, the greater the number of jobs that can be created. And the higher the wages that can be paid. Small and medium-sized enterprises in Ghana that have managed to expand into export markets were able to increase the employment they can offer by 15 per cent.

A precondition, however, is that all businesses have the opportunity to participate in international trade. And that everyone benefits from the resultant increase in levels of prosperity. To achieve this, it is extremely important to dismantle trade barriers.

Non-tariff barriers, in particular, are a considerable hindrance to cross-border trade. In fact, a study carried out by Germany's ifo Institute has found that, over the past decade, non-tariff barriers have been responsible for around 16 per cent of lost global trade. Trade barriers such as complex customs regimes, or practices that are not transparent and therefore prone to corruption, are especially hard on many developing countries and emerging economies. And high transaction costs make it difficult for domestic firms to access global markets.

On the other hand, there is little incentive for international companies to invest, and therefore create jobs, in a country where the business and investment climate is unfavourable. That is why facilitating export opportunities for local businesses and streamlining customs procedures in developing countries and emerging economies is an important adjustment which can help enhance economic development.

And we all know that a shipping container held up by customs authorities for three weeks or even more is costly. Flows of goods are the lifeblood of a globalised world. If the free flow is obstructed, there is a danger of the system seizing up and collapsing.

This is where the Alliance for Trade Facilitation comes in. Alliance members work together to lower trade costs by helping to simplify and speed up customs procedures. And we have found partners around the world, as many countries have come to realise what added value our Alliance can deliver. For instance, we are currently engaged in a collaborative project with Indonesia's Ministry of Trade, and will soon be taking on similar projects with Thailand and Ukraine, for example.

And the projects we have completed show us that the Alliance's approach works. Thus, for example, reforms initiated in Montenegro and Serbia have helped to cut down the amount of time needed for customs clearance. In fact, the number of express deliveries clearing customs within an hour has more than doubled – from formerly 25 per cent to around 55 per cent. We want this example to serve as a model which can be copied elsewhere. And we want to continue to expand the Alliance's activities, and to try out new innovative approaches.

Introducing digital technology can be extremely effective here. That is why we are currently working on developing an integrated block chain solution to help Morocco's customs authorities determine the tariff value of goods. This will bring transparency to customs procedures and foster trust in the system among all those involved. This is because the parties concerned – in other words, customs officers, traders and third-party logistics providers – can access data relating to shipments of goods and can process this data in a system that is open to scrutiny and easy to understand. This not only makes the customs clearance process easier but also acts as an effective deterrent to corruption and illegal trading.

This is state-of-the-art development cooperation! But we cannot do it by ourselves – nor do we want to. That is why, when the Alliance for Trade Facilitation was set up in 2016, it was designed right from the outset to involve multiple actors. Companies, associations and government institutions – from Germany and our partner countries – are working together to remove bureaucratic obstacles and realise the World Trade Organization's Trade Facilitation Agreement.

Germany's Alliance is active wherever the interests of German, international and local businesses and governments coincide in a given partner country. And the aim is always to create added value for everyone – added value that will benefit people generally. More than 40 companies are already actively involved in the Alliance.

Mobilising and getting the private sector involved is crucial, if the Alliance is to work. The huge knowledge that businesses have of the ‘ins and outs' of trade practices and customs procedures is invaluable when it comes to implementing such trade facilitation measures.

And, if I may say so with a nod to you, Mr Ogilvie (as a member of the DHL Management Board), that is why the support of companies like Deutsche Post/DHL is so very important. I would like to thank you especially for making today's event in this beautiful venue possible.

The theme of today's meeting is "Rethinking Trade Facilitation". This is meant as an invitation to all the partner countries, businesses, industry federations, public institutions and the many other actors with whom we work to come up with and try out new solutions, and to develop them further as we go along. The German Alliance for Trade Facilitation offers a suitable framework for this. In fact, the Alliance brings together German and international businesses, and the strengths they have to offer, with representatives of business and politics from partner countries. I am happy to see such successful working relationships and am grateful for the committed work that many of you are doing in the projects being implemented by the Alliance. By working together we are making a major contribution to sustainable development.

To those of you who haven't taken the plunge yet I should like to say: Make use of this opportunity!

Tell us about your own experiences with complex and drawn out customs procedures and non-transparent processes. Then work with us and our competent partners to provide innovative solutions to the problems you have experienced. Get involved in the projects being carried out by the Alliance! Or help to initiate new reform measures!

Africa, in particular, is a continent of opportunity, as the minister always says and I agree with him. And this applies to trade as well. The African free trade zone that is currently in the making could give a whole new momentum to economic activity on the continent, pushing it forward and creating a huge new market. We here in Germany, in Europe, must not miss such a historic development! As far as trade facilitation in Africa is concerned, we still have a lot of work to do! But, together, we can – and will – meet this challenge. And I look forward to the new solutions we may develop here at today's event.

Thank you very much for listening and I look forward to finding solutions together!

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