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The TFA is the unheralded global trade deal that deserves more attention

Frank Appel is Chief executive officer of Deutsche Post DHL Group.

Multilateralism seems down and out. So does trade liberalization. Any suggestion that the United Nations or World Trade Organization may bring about meaningful progress increasingly falls on disbelieving ears.

As nationalism seems to be on the rise, it is worth recalling that, a few decades ago, it was mainly countries in the developing world that resisted more openness to trade. Instead, they sought their salvation in the pursuit of national economic solutions. Before long, many of them recognized they had manoeuvred themselves into a dead end and changed course.

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Now that the roles are somewhat reversed, and the temptation to opt for national solutions has become more prominent among OECD countries, all of us are well advised to remember the most profound lesson of the 20th century – that nationalism is not the road to salvation.

To be sure, the pace of globalization has been rapid. The resulting feeling of nervousness is therefore comprehensible. But globalization has also provided many people, especially those living in developing countries, with more opportunities to lead a better life and participate in the global economy. As a result, the global economic pie is not shrinking, but expanding.

To maintain progress, we need to rely on countries' willingness to undertake domestic reforms and to continue on a path of global integration. In tandem, they advance human welfare. Given the present unease, it is almost to be expected that no one really notices when significant progress is being achieved on the world stage. This is such a moment.

Remember all the attention that was justifiably paid to the Paris Agreement on climate change? There was a global countdown to the point when the required number of countries ratifying the deal was reached. That day, Oct. 5, 2016, made global news headlines.

There is, however, no drum roll whatsoever for the ratification of the Trade Facilitation Agreement (TFA), struck in 2013. Now that two-thirds of WTO members (110 countries) have ratified the agreement, it just entered into force.

However, perhaps because of its technocratic name, the TFA fails to spark enthusiasm. Even observers interested in global trade have often little idea of what this acronym stands for.

Yet, this is a big deal, especially for many developing countries. Properly understood, the TFA is key to creating a level playing field for small and medium-sized businesses operating there.

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In a nutshell, the TFA aims at promoting global inclusion. It does so by tackling a lot of the inefficiency as well as rent-seeking behaviour at the border in a sizable number of countries.

Even in today's global economy, many entrepreneurs in developing countries cannot fully tap their cross-border potential owing to red tape and complex procedures at the border.

Look at the world from the perspective of one of these many millions of merchants: On the one hand, the world of e-commerce and the power of the Internet promises them direct access to the global market – and hence a vastly larger number of potential customers than they can find in their home market. On the other hand, they continue to confront a veritable "wall" of obstacles that stands in their way. Removing that wall is the principal goal of the TFA.

The lack of transparent rules and the persistent requirement for paper documents are simply intolerable in the age of digitalization and smartphones and in a world that is moving to same-day delivery.

In a further key step toward the democratization of trade, e-commerce is of particular importance for so-called "micro entrepreneurs." It enables them to access products and far-away markets that have been closed off to them in the past.

Overcoming these hurdles to global trade through steps such as the digital transformation of border procedures – by embracing transparent and simple rules – is what the Trade Facilitation Agreement is all about.

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Granted, this is not an earth-shaking deal. As a matter of fact, there are no more earth-shaking deals to be had. We live in an era in which we must take a lot of little steps to make progress. If we achieve no more via the adoption of the Trade Facilitation Agreement than giving countries from Rwanda and Sri Lanka to Kyrgyzstan and Jamaica a real shot at becoming an integral part of the global economy, we should be proud of that. This is ultimately what the democratization of global trade is all about.

And if these countries attract more foreign direct investment and develop into regional hubs through more transparency and efficiency, it would come as no surprise. One can only hope that their neighbours will see that as an incentive to do likewise. That is what triggers a strengthening of the regional economy.

If the TFA, by relying on IT-empowered automation and transparent regulation, reduces transaction costs that currently still take a sizable cut out of the pockets of entrepreneurs, especially those running micro, small and medium-sized enterprises, then everyone should be eager to achieve that. In fact, countries embracing transparent rules – and hence efficiency – are bound to see higher public revenue from the increased volume of regional (and global) trade links.

And if the TFA finally makes borders and long distances – still the biggest impediment to the growth opportunities of many developing countries – less of a factor in global trade, then we should all welcome that as well.

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