Co-authored by Michael DeSimone, CEO, Borderfree
The WTO talks in Bali last month brought good news for business and consumers worldwide. New trade liberalization measures will lower barriers to global commerce, bringing a much-needed boost to economic development in established and emerging markets alike. As support for global cooperation has declined in recent years, the Bali Package also gives hope to those who believe that nations, companies, and global institutions can work effectively across borders to foster economic growth.
But Bali is only the beginning. We need to build on this momentum and continue to finalize deals that foster trade, increase cross-border commerce, and enhance development -- especially in emerging markets -- at a time when the global economy is still struggling to recover from a deep Great Recession.
The WTO's objectives in Bali reflect the pragmatic, consensus-building measures needed to facilitate trade in today's global economy, including speeding up customs procedures; making trade easier, faster and cheaper; providing clarity, efficiency and transparency in trade rules; reducing bureaucracy and corruption; and making greater use of technological advances to automate information processing and improve communication. To take just one example, the agreement calls for the establishment of a global de minimis, the value level below which shipments are exempt from duties, taxes, and formal entry requirements. A global de minimis will greatly ease the administrative burden for merchants doing business across multiple countries, helping them grow more efficiently while making their goods available to more consumers worldwide.
We should now seize the moment and pursue additional opportunities to liberalize global trade and cross-border commerce. Three such opportunities could be particularly significant.
First, the Trade Facilitation and Trade Enforcement Reauthorization Act of 2013 (S. 662) has been awaiting a vote by the U.S. Senate since March. The bill includes provisions such as raising the current U.S. de minimis to $800 and establishing duty-free treatment for goods exported and returned to the U.S. The latter is especially important for U.S. merchants, who would then be able to offer free returns for overseas customers without having to absorb the cost of tariffs for returned goods -- which, after all, would not have been imported in any meaningful sense anyway. Overseas customers would gain convenience, reassurance, and increased access to U.S. brands.
Second, while the Bali package shows that, contrary to popular belief, multilateralism is still alive, the U.S. is simultaneously pursuing bilateral and regional economic agreements as well. As part of its ongoing efforts to complete Free Trade Agreements (FTAs) with countries around the world, the U.S. is currently involved in negotiations for a Trans Pacific Partnership (TPP) agreement to establish a free trade area among 12 countries in the Pacific. The deal would include trade facilitation measures, lower tariffs and establish a region-wide de minimis standard.
Third, the U.S. has been working with the E.U. to complete a Transatlantic Trade and Investment Partnership (TTIP), a trade and investment agreement designed to drive growth and create jobs in both continents. In addition to reducing tariffs, TTIP would allow for mutual recognition between U.S. and European regulatory authorities, which could substantially reduce transaction costs for companies doing business in the U.S. and Europe. According to the European Commission, TTIP alone could boost the EU's economy by €120 billion ($164 billion); the US economy by €90 billion ($123 billion); and the rest of the world by €100 billion ($137 billion).
In today's interconnected global economy, governments should continue to pursue valuable multilateral trade solutions, while advancing other options. The Bali Package proves the tremendous potential of multilateral talks to start addressing pressing trade challenges. Global commerce companies need to extend this potential by continuing to work with national governments and institutions such as the WTO to identify areas of growth, find private market-oriented solutions, and advance the cause of trade for the benefit of businesses and consumers wherever they are. The sky is the limit, and in this case -- even beyond.