NDSU research examines WTO trade agreement

A new study conducted by researchers at North Dakota State University’s Center for Agricultural Policy and Trade Studies reveals that the World Trade Organization’s Trade Facilitation Agreement, though widely expected to streamline global trade, presents mixed impacts on agri-food global value chains.

The research, authored by Carlos Zurita and Sandro Steinbach, provides one of the first empirical evaluations of how TFA implementation between importers and exporters affects cross-border agricultural trade.

The TFA, which entered into force in February 2017, was designed to cut red tape and enhance customs efficiency worldwide. Yet, the study suggests that implementation costs and institutional capacity, rather than the existence of the agreement itself, could determine its effectiveness.

“The agreement was never a one-size-fits-all solution,” said Steinbach. “Our findings show that while some TFA provisions can facilitate trade, others, especially those requiring significant infrastructure investments, can actually slow down participation in agri-food value chains for developing economies, at least in the short run.”

Key Findings from the Study:

• Higher levels of common TFA implementation do not increase agri-food GVC flows. When countries jointly implemented over 50% of the agreement’s provisions, the study observed a decline in GVC participation, suggesting that higher levels of implementation may impose administrative burdens that outweigh immediate trade benefits.
• Only 3 out of 12 TFA articles (Art. 6, 7, and 9) are positively associated with agri-food trade flows, reflecting their relatively low implementation costs and operational simplicity.
• Five articles are negatively associated with GVC flows due to high implementation costs. For example, Article 10, which requires countries to establish a single window system for submitting trade documentation, was found to have a negative short-term effect due to high upfront investment costs, ranging from $4 to $22 million.
• Positive effects of TFA implementation often reflect WTO membership, not TFA measures. Since all TFA signatories are also WTO members, short-term TFA gains may be driven by trade facilitation rules already in place under existing WTO commitments. Broader Implications.

The study emphasizes that while trade facilitation may increase GVC integration through reduce trade cost, it may also entail major implementation costs and challenges. In some cases, these costs could reduce benefits in the short run. For countries with limited resources, prioritizing lower-cost reforms may offer a more realistic path to trade integration.

The findings also provide timely insights as policymakers negotiate new trade agreements and revisit existing commitments under the WTO framework.

“This research adds important nuance to the ongoing conversation about trade facilitation,” Zurita said. “It shows that well-intended reforms can have unintended consequences if implementation challenges are not fully addressed.”

Read the full summary online. Contact Steinbach at sandro.steinbach@ndsu.edu.