We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is Trade Facilitation?

By Ray Hawk
Updated: Feb 25, 2024

Trade facilitation is a process of analysis of trade restrictions at borders and ports and due to restrictive regulations, in order to streamline the process of trade and reduce unnecessary costs built into the system between nations. The World Bank attaches great importance to trade facilitation, with 80 projects underway to streamline trade practices in developing and other nations. A significant component of trade facilitation is that of trade finance, or improving upon payment procedures so that goods can move from sellers to buyers more quickly.

Movement of goods across borders has been studied extensively by the World Bank and resulted in four key indicators as to how trade is restricted. Two of these trade infrastructure indicators are known as hard indicators; restrictions of inadequate infrastructure such as ports, roads, and bridges; and limited telecommunications and information technology abilities. The other two key indicators, considered soft infrastructure, include border and custom controls, including domestic transportation and import/export procedures, and the general business and government regulatory climate in a nation involving issues of transparency and corruption.

International trade is seen as a key method for developing nations to advance their economies and educate their people. Therefore, trade facilitation projects play a key role in efforts involving such organizations as the International Monetary Fund (IMF), World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD), the World Customs Organization (WCO), and the United Nations Economic Commission for Europe (UNECE). As of the fiscal years 2004-2006, trade facilitation programs were under the direction of the World Bank in 22 Sub-Saharan countries in Africa, two countries in the Middle East, two in South Asia, one in East Asia and the Pacific region, four in Eastern Europe and Central Asia, and three in Latin America and the Caribbean, totaling a combined international expenditure of $1.92 billion US Dollars (USD).

One of the complexities involved in making trade facilitation reforms work is that it must involve cooperation from three directly affected entities, defined as government agencies, services providers, and traders. Broken down further, this can involve dozens of different organizations in government, including ministers of finance, customs, agriculture, and quarantine agencies. Service providers can include customs brokers, freight transporters, and so on, and the actual traders themselves span a spectrum covering everything imported or exported by a nation. This interconnected practice makes public and private cooperation essential to the reforms that trade facilitation is attempting.

The focus on trade facilitation began to take greater shape in 2001 with what is known as the Doha Development Round, a conference in Doha, Qatar, by members of the WTO, whose aim was to lower trade barriers across borders. Subsequent meetings continued until 2008, when negotiations broke down over issues relating to the reform of agricultural import practices. Though negotiations continued on a more narrow basis between the US, China, and India, agreeing to further trade facilitation reforms has stalled.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
Share
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.