Maersk Group begins implementation of TFA to add $1trn to global GDP annually
Maersk Group, the Danish Shipping conglomerate, has said that the desire to enhance trade facilitation in the shipping and logistics supply chain prompted it join the Global Alliance for Trade Facilitation in December 2015.
The Alliance, enables the company to accelerate trade facilitation reforms through the support of the implementation of the World Trade Organisation (WTO) Trade Facilitation Agreement (TFA), said Soren Skou, CEO of Maersk Group while presenting a paper titled ‘Maritime Trade Facilitation and Economic Development in Africa,’ at the just concluded Association of African Maritime Administrations (AAMA) 2017 conference held in Abuja recently.
Skou, who was represented by David Skov, head of APM Terminals in Africa, Middle East and India, also disclosed that when fully implemented, the TFA will minimise supply chain barriers to boost global trade, contribute to development, investment, market integration, education and employment generation.
“By WTO estimates, full implementation of the TFA can add $1 trillion to the global GDP annually and also create 21 million new jobs globally. Maersk Group will use its expertise to support the implementation of TFA and to add value to global and regional trade,” he added.
A research by the United Nations Conference for Trade and Development (UNCTAD) shows that African countries rate lowest in the implementation of trade facilitation measures as recorded by the WTO’s category ‘A’ notifications under the agreement.
According to Skou, poor implementation of trade facilitation measures in African seaports is responsible for Africa’s low trade integration, which is hindering the economic potential and growth of the continent.
“Africa has a roughly comparable size in terms of population and output as India, yet African countries are separated by 104 international borders between them. Facilitating cross border trade is critical to economic integration. Trade facilitation is also necessary for overseas trade and also relevant for the participation of African countries in global value chains including trading manufactured goods,” he further noted.
“International trade is predominately seaborne and has a direct relationship on the growth of any economy especially that of developing economies in Africa. It is therefore important that African economies to actively engage in international trade, increase efficiency of their ports and border processes, reduce import and export bottlenecks to enable efficient and effective across border trade,” the Maersk Group boss advised.
Skou, who observed that implementation of some trade facilitation reforms also have regional dimension, pointed to the need for collaboration among African countries in implementing processes that would lead to regional integration.
“Today, Customs processes involve large amounts of documentation processes that are not digitalised. This and lack of coordination between private and government actors adds unnecessary waiting time and delays to traded goods, resulting in added inventory costs and through the risk of penalties for importers and exporters.
“Maersk Group has fronted several studies on how optimisation of documentation processes, elimination of tariffs and investment in infrastructure can remove bottlenecks, increase competitiveness, jobs, tax and reinvestments.
He said that enabling trade is one of the most important contributions of Maersk Group to the society. “Our know-how and investments in port developments and roads in both mature and emerging markets are considerable catalysts for growth.
Citing example, he added that in Kenya, more than 30 individuals or organisations were involved in 200 interactions during the documentation process of moving one box of avocados from Kenya to Holland. “Maersk is now working with partners in the region to showcase how digital processes would reduce these costs.
“In India the indirect and hidden costs of trade across several sectors, accruing from delays and unreliable transportation services, amount to as much as 38-47 percent of total transport and logistics costs. Here, each container transported to and from India, has high variation in lead times of 38-66 hours. Reducing these indirect costs of trade by 10 percent has the potential to generate additional exports of 5-8 percent.
“Recently, the Government in India started a Direct Port Delivery initiative which has guaranteed at least 30 percent of the cargo arriving in Mumbai, are cleared within 48 hours. We are also optimistic that the Presidential Enabling Business Environment Council’s (PEBEC) reforms in Nigeria will result in improved trade facilitation,” he added.
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