Why Does Trade
Facilitation Matter?

In this evaluation, trade facilitation is defined as “streamlining and harmonizing the activities, practices and formalities required for international trade and associated payments and border logistics while safeguarding legitimate regulatory and policy objectives.”

As tariffs and explicit quotas have been lowered under the World Trade Organization (WTO), attention has increasingly turned to non-tariff impediments that add to the cost and disrupt the flow of trade.

Lowering the cost of international trade can promote growth and, with the help of complementary policies, facilitate the achievement of the World Bank Group's twin goals of reducing extreme poverty and promoting shared prosperity.

 

The World Bank Group has played a leading role in trade facilitation reform over the past 12 years, having identified lowering trade costs as a crucial means to promote its development agenda.  Among its contributions, the Bank Group has been a leading technical partner to the WTO during the Trade Facilitation Agreement (TFA) process throughout the evaluation period. 

Main Findings

Over the evaluation period, the World Bank Group has demonstrated leadership in facilitating trade through its

  • broad scope of work: (893 interventions of all types) in addition to Advisory and Analytic work, generally targeting countries with the greatest bottlenecks,
  • results, in its contribution to a substantial reduction of international trade costs, and its
  • creation of global public goods through thought leadership, convening power, and its trade facilitation indicators - which contributed to a positive dynamic in reforms.

More about the Questions that Guided this Evaluation
More about the Extent and Nature of World Bank Group Engagement in Trade Facilitation (Chapter 2)

Findings: What Has—and Has Not—Worked for Trade Facilitation

Most World Bank Group projects supporting trade facilitation reforms achieved their development objective, and all three institutions exceeded their corporate scorecard targets. 

  • The World Bank’s investment lending appears to be substantially more effective than its policy operations.
  • At the trade facilitation intervention level, the overall success rate averaged 79 percent.

While the World Bank Group’s achievements have contributed to lower trade costs and have generated associated benefits, a rigorous analysis suggests a more nuanced picture of what World Bank Group interventions work, where, when, and in what combinations:

  • Successful trade facilitation reforms benefit from support to complementary areas of intervention and support over time. Yet, few projects are designed with such a systematic approach.
  • In a context with diverse agency incentives and objectives, strong political support and active coordination play a pivotal role in ensuring the necessary level of integrated activity and information exchange to make trade facilitation successful. Yet, in practice, the World Bank Group has not systematically applied its tools for engaging with and coordinating among diverse stakeholders.
  • Many trade regulations are intended to serve socially beneficial purposes such as enhancing public health, safety, and the environment, or reducing informality and corruption. However, insufficient attention has been paid to such objectives and only compliance costs are routinely monitored.
  • Current sets of trade facilitation indicators generated and/or used by the World Bank Group each have their strengths, but also have weaknesses. Having two different rating systems can confuse or frustrate counterparts and clients.

More about how IEG assessed the Impact of the Bank Group’s Trade Facilitation Interventions

More about the Effectiveness of World Bank Group Support for Trade Facilitation (Chapter 3)

Building on What Works

To build on its successful experiences in trade facilitation, IEG recommends that the World Bank Group should:

Promote an approach of complementary (simultaneous and/or sequential) interventions in trade facilitation reforms in countries where trade is a client priority and World Bank Group has a comparative advantage, substantiated by consistent diagnostics, to enhance the effectiveness of reforms.

Identify and mitigate political economy constraints to trade facilitation reform implementation through systematic application of its tools for stakeholder analysis and consultation (including public-private dialogue).

Systematically apply a risk-based approach to identify and monitor the public policy objectives of trade regulations relating to public health, safety, the environment, good governance, formality and the rule of law and specifically identify the stakeholders potentially impacted by the reforms and the extent of the impact.

Rationalize its own two major trade facilitation indicator sets to build on the virtues of each and to enhance their responsiveness to implemented reforms.

More about the Factors Influencing Performance of Trade Facilitation Reforms (Chapter 4)

See all Conclusions and Recommendations (Chapter 5)