PRESS/95
9March1998
RUGGIERO CRITICIZES "INVISIBLE" TRADE BARRIERS
WTODirector-GeneralRenatoRuggiero,inopeningtheWTOSymposiumonTradeFacilitation
today (9March), criticized "invisible" trade barriers -excessive documentation requirements and
procedural delays facing businesses inmoving goods across borders -thathesaidareadding costs
totraders, consumers andnational economies, andcreating "anoverall negative trading environment".
Hesaidthatastheclassical trade barriers -tariffs andquantitative restrictions -havecome
down tothelowest levels everasaresult oftheUruguay Round, attention hasturned towhathecalled
"invisiblecosts"resultingfromdocumentationrequirements,proceduraldelays,andlackoftransparency
andpredictability intheapplication ofgovernment rules andregulations.
Mr.Ruggiero saidhecalled these costs"invisible" because theyarenotpartofgovernments '
actual commercial policy, butthat"they aresurely notinvisible fortraders andconsumers". Hesaid
thatinmany cases, these "invisible" costs exceed theactual levelofduties paidontheproducts.
Headded that"astariffs andtraditional non-tariff measures have been sharply reduced
everywhere, procedural barriers tocross-border transactions have become crucial determinants of
investment decisions byforeign investors".
Mr.Ruggiero expressed confidence thattheSymposium "willplace WTO Members inabetter
position tomove tothephase ofanalytical work ontrade facilitation, inorder toassess thescope for
WTO rules inthisarea".
TheWTO hasbrought some 300traders andgovernment policymakers together toidentify
problems hampering movement ofgoods across borders ataSymposium onTrade Facilitation on9-10
March 1998 initsnewconference centre. Itisaninitiative oftheWTO Council forTrade inGoods,
which wasinstructed bytheSingapore Ministerial Conference “toundertake exploratory andanalytical
work, drawing onthework ofother relevant international organizations, onthesimplification oftrade
procedures inorder toassess thescope forWTO rules inthisarea”.
Some oftheworld 'sleading corporations arepresenting thepractical problems traders face
when moving goods across borders. Among thepanellists attheSymposium arerepresentatives from
theUnited States 'Federal Express, General Motors, General Electric Information Systems andMattel;
theNetherlands 'Shell; Switzerland 'sGondrand AG;India'sLemuir Group; United Kingdom 'sSITPRO
andMarinade Ltd.; Xerox Brazil; theBank ofBotswana; andMalaysia 'sMultimedia Development
Corporation. Alsoparticipating arethefollowing industry groups: theFederation ofGerman Industries,
French Wine andSpirits Exporters, Federation ofDutch Entrepreneurs andtheBritish
Services Association.
NGO participants include theInternational Chamber ofCommerce, International AirTransport
Association (IATA), International Chamber ofShipping, International Road Transport Union, the
International Union ofRailways, Lima Chamber ofCommerce, Zimbabwe National Chamber of
Commerce andFIATA.
Attached isthefulltextofMr.Ruggiero 'sspeech.
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"Iwould liketowelcome youtotheWTO Symposium onTrade Facilitation.
Thisyearwearecelebrating thefiftieth anniversary ofthemultilateral trading system. The
system embodied intheGATT earlier andnowintheWTO hasbrought unprecedented prosperity to
theworld through progressive liberalization oftrade ingoods andservices. Fifty years ago,tariffs
inindustrial countries wereonaverage around 40percentforindustrial products. Once theresults
oftheUruguay Round willbefullyimplemented, these tariffs willhavedropped tolessthan4per
centonaverage fordeveloped countries. Some 40percentofimports intothese markets willthen
beentirely dutyfree.
Inaddition tosubstantially lower tariffs, wehaveinrecent years experienced adramatic decrease
intheuseofquantitative restrictions asameans ofcommercial policy. Intwoproduct groups, textiles
andclothing andagriculture which haduntil1994thelargest incidence ofsuchrestrictions, these have
either beeneliminated orareintheprocess ofbeing eliminated asaresult oftheUruguay Round.
Great strides havebeentaken intheGATT andtheWTO inreducing thetrade impediments inthe
areas ofcustoms valuation, import licensing, standards andtechnical regulations andsanitary and
phytosanitary measures.
Falling trade barriers havestimulated aphenomenal growth ininternational trade. Between
1948 and1997, world merchandise exports increased atanaverage annual rateof6percentinreal
terms, multiplying thevolume oftransactions 14times. Total output, bycomparison, expanded at
anannual average rateof3.7percentandgrew by5.5times. Since themid-1980s andespecially
throughout the1990s, while large parts oftheindustrialized countries havebeenexperiencing low
growth inoutput, trade growth hasbeenconstantly high.
Forbusiness, lower market access barriers increasingly facilitated global sourcing.
Theprocess ofincreasing economic integration hasalsobeenhelped bythelowered barriers
toforeign direct investment inmany countries, which alsohasincreased manifold overthelastdecades.
Further stimulus toglobal economic integration hasbeen provided bytherevolution in
information technology, which enables corporations tomanage farflung operations, andincrease trade
through electronic commerce. Falling costsoftransportation haveboosted tradeinmerchandise further.
Astheclassical trade barriers aredisappearing lessvisible barriers produced byinefficient
administration andorganization ofthetrade transaction process arebeing exposed tothepublic view.
Attentionhasturnedtothe"invisible"costsonaccountofdocumentationrequirements,procedural
delays,oralackoftransparencyandpredictabilityintheapplicationofgovernmentrulesandregulations.
Icallthese costs"invisible" astheyarenotpartofgovernments 'actual commercial policy. They are
surely notinvisible fortraders andconsumers. Estimates ofthesecostsvary, depending onthevariables
usedfortheircalculation. Yet,inmany cases, itisevident thattheyexceed theactual levelofduties
paidontheproducts concerned.
Administrative barriers forimports andexports arecertainly noteffective instruments of
restrictive tradepolicy. Excessive documentation requirements andoutdated andslowprocedures are
crude, imprecise, andindiscriminate measures which hinder alltrade andcreate anoverall negative
trading environment. National economic policy objectives areoften adversely affected. Forexample,
acarefully devised tariffstructure withlowtariffs forintermediate goods toboost thecompetitiveness
ofthedomestic industry could befrustrated, ifadministrative barriers addadditional costsontheimport
ofthese goods. Unlike customs duties, which benefit thegovernment budget, theinvisible costs of
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administrative barriers aregenuine deadweight losses, benefitting nobody andachieving nomeaningful
policy objective.
Today businesses compete inaworld where barriers totradeandinvestment aredisappearing,
thereby making capital andtechnology more mobile. Global economic integration haschanged the
nature oftheinternational market place. Industries establish themselves inplaces where theycanoperate
most efficiently. Theavailability ofahigh-quality physical andsocial infrastructure isthestarting
point fortheirdecision onlocation. Themacroeconomic environment, allowing business tooperate
inrelative freedom isofutmost importance forbusiness decisions. Business musthaveaccess tomarkets
worldwide, bothfortheirinputs andexports. Astariffs andtraditional non-tariff measures havebeen
sharply reduced everywhere procedural barriers tocross-border transactions have become crucial
determinants ofdecisions byforeign investors.
AtthefirstMinisterialmeetingoftheWTOatSingaporeinDecember1996,Ministersmandated
theCouncil forTrade inGoods "toundertake exploratory andanalytical work, drawing onthework
ofother relevant international organizations, onthesimplification oftradeprocedures inorder toassess
thescope forWTO rules inthisarea."
Since Singapore, exploratory work hasbeencarried outthrough abackground noteprepared
bytheWTO Secretariat onwork already doneorbeing doneonthesubject oftradefacilitation inother
international organizations, including non-governmental organizations. Thebackground notedescribes
thework ofmore than15organizations which aredealing withawide range ofaspects relating to
thesimplification oftrade procedures.
AfterpreliminarydiscussionsintheCouncil,itwasfeltbymanyMembersthatmoreinformation
andadeeper understanding ofthenature ofadministrative barriers tocross-border transactions was
needed before anymeaningful analysis could beundertaken. Therefore itwasdecided toholda
Symposium onTrade Facilitation intheWTO.
Ihavefullconfidence thatthepresentations anddiscussions inthese twodayswillplace WTO
Members inabetter position tomove tothephase ofanalytical work ontrade facilitation, inorder
toassess thescope forWTO rules inthisarea.
Iwishyouasuccessful symposium."
END