This new global trade agreement could boost American businesses

Whereas many still view past trade negotiations as insufficient to help American workers, a jewelry maker in Georgia, a child-proof bottle maker in California, and a fashion designer in New York are all making plans to sell their products to 220 countries and territories, where 95 percent of all consumers live. The march toward a powerfully interconnected, global marketplace of goods and ideas seems, in many regards, as overwhelmingly unstoppable as the internet itself that is helping to fuel it.

Even with talk of backsliding in international trade, one of the most significant — and least publicized — global trade deals in decades recently went into force. On Feb. 22, the World Trade Organization (WTO) ratified a groundbreaking Trade Facilitation Agreement (TFA) through a total of 112 of its member countries, including the United States. Increased focus on bilateral deals may be intended to draw companies to innovate, create and invest here in America, but critical, multilateral trade deals are still possible.

{mosads}The TFA is living proof that there is a global desire to make trade flows easier rather than harder. Equally certain is that small and medium-sized businesses here in the U.S. and abroad, powered by e-commerce, have irreversibly altered the way we think about cross-border transactions. Today, according to the International Trade Administration, 98 percent of the approximately 300,000 U.S. companies that export are small and medium-sized businesses that have tapped into the power of web-based tools and advanced logistics technology to reach the consumers who live beyond our borders.

Anything that adds cost, delay, and complexity to the movement of goods across borders has a devastating effect on the thousands of entrepreneurs and their employees who rely on the international sales, along with the ability of larger companies to compete with their global counterparts. All sectors, including manufacturing, retail, agriculture, and services, depend on efficient global trade flows.

Therefore, the TFA goals of simplifying the logistics of trade have the potential to boost output and drive growth, by making it easier, faster and more affordable to move goods across borders. The WTO’s research indicates that the TFA could reduce global trading costs by nearly 14.5 percent, create up to 20 million jobs and add more than $1 trillion to global trade flows. The agreement will help realize these goals by streamlining Customs processes and procedures, providing transparency and predictability in border clearance and the release of goods, and ultimately increasing the movement of goods around the world.

At its heart, the TFA is about how goods are processed at borders and transported between different nations and broadly how the cross border movement can be made simpler, faster, and less costly. The WTO countries agreed to prioritize the implementation of advanced goods process automation, adoption of cooperative rules, regulatory harmonization, and customs data exchanges between countries.

Critical for smaller companies, the TFA also includes a provision to expedite the processing of low-value shipments. Currently, many countries require duties and taxes on very low-value goods, which interrupts their transit and adds cost. Many of these items are part of the rapid growth of global e-commerce activity, and the TFA encourages countries to adopt higher thresholds. The agreement also encourages countries to adopt trusted trader or authorized operator programs, which allow frequent traders to agree to provide governments with supply chain information in exchange for either expedited clearance or reduced fines and penalties.

Finally, the TFA contains special provisions to help developing countries modernize their customs infrastructure through public- and private-sector funding. This could substantially help developed markets — like the U.S. — receive the same standards for their exports that they offer imports. While some may believe that multilateral deals are less advantageous to American companies, the fact is that U.S. companies stand to benefit the most from a more uniform and standardized global trade environment.

As the United States reexamines its approach to trade, including modernizing the North American Free Trade Agreement, the question should be how we can help U.S. companies and employees tap into and benefit from the positive effects of technological innovations, advances in transportation, and a massive online global marketplace. Here’s hoping that the Trade Facilitation Agreement is a sign of good things to come.

Greg Hewitt is chief executive officer of DHL Express USA.

The views expressed contributors are their own and are not the views of The Hill.