Facilitation 2.0 in Regional Trade Agreements: Enabling Trade in the Digital Age

One year on from its entry into force, the World Trade Organization (WTO) Trade Facilitation Agreement (TFA) has allowed for sustained momentum on the trade policy reform agenda. However significant, the TFA in its current form extends only to trade in physical goods and is insufficient for the features of the new economy, missing a large part of what increasingly matters to production models and development policy today. Simplified and harmonised procedures in key areas, namely investment, services, and e-commerce are the next step in ensuring that the WTO effectively responds to 21st century economic and developmental imperatives.

This dialogue introduced participants to the concept of Facilitation 2.0 by identifying its components and discussing how each one of them plays a crucial role in the new economy. It then sought to identify relevant provisions in the context of regional trade agreements (RTAs). Four studies were presented on trade-facilitating provisions under RTAs as related to goods, investment, services, and e-commerce, and their connection with WTO covered agreements.

Discussions around existing measures on the four components of Facilitation 2.0 sought to identify areas of convergence and divergence; WTO-plus and WTO-extra elements; remaining facilitation challenges and trade costs; and low-hanging fruit for further rule-making. The discussions also looked at the impact of new technologies on logistical infrastructure, including alternative modes of payment and blockchain, as potential new solutions to facilitate trade.

Participants noted the development potential of Facilitation 2.0 – where big gains are possible, for example, in rural areas in terms of infrastructure related to Internet access, payments and delivery, de minimis for low-value shipments, and coordination between postal and border agencies. In view of the importance of domestic institutions for the effective implementation and enforcement of facilitation measures that deliver on their developmental promise, discussions further drew on the experience of RTAs regarding governance, the rule of law, inter-agency cooperation, and institutional reform.

Main takeaways

• Facilitation 2.0 can be a path to speeding up convergence of the Internet of rules, updating frameworks to regulate emerging technologies and touching on areas that include interoperability as well as use of algorithms and data.
• If a country has committed to action or reform in the context of an RTA, it can be beneficial to bring this to the multilateral level – i.e. get other members to commit to something you have already committed to. This will involve an exercise in deciphering which obligations in regional facilitation agreements are difficult to apply on a non-discriminatory basis (and thereby likely to generate higher costs).
• Facilitation 2.0 will need to make data “granular,” parsing through what constitutes restriction and what are necessary measures, based on in depth assessment of specific impacts for countries implementing these measures, with a view to capitalising on the asset value of data, ensuring the right to regulate is preserved and the role of data in trade is unimpeded.
• The development dimension is essential for engaging a significant number of members into a negotiating process. The experience of the TFA is one to look at – it allows for practical differentiation among countries and has mobilised significant financial and technical resources from donor countries and international organisations.
• There is a need for real experiments in the world to develop a history of what works. Developing countries facing the digital divide can observe developed country attempts at regulating the digital economy, learn, and then leapfrog to the most robust solutions that emerge.
• The ecosystem that develops around facilitation agreements ensuring that governments are committed to implementation is as important as the provisions themselves.

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The event built on previous ICTSD dialogues and research on these topics. Related opinion pieces include Facilitation 2.0: Enabling trade in the digital age and From Facilitation 2.0 to trade policy 3.0: Opportunities to expand and extend the rules of global trade.

This meeting is part of the RTA Exchange dialogue series aimed at constructing better trade and investment agreements for sustainable development at the regional and multilateral levels.