Trade Facilitation Facility
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With the lowering of traditional market access barriers, high trade transaction costs have become one of the most important obstacles that developing countries face in benefiting from globalization. The ability to move goods and services across borders rapidly, cheaply, and above all predictably is a critical determinant of export competitiveness. The trade facilitation agenda, which focuses on measures to reduce the cost of trading across borders, represents a significant opportunity for countries to realize their economic development and poverty reduction goals.
The Trade Facilitation Facility (TFF) is a multi-donor trust fund that was launched in April 2009 to help developing countries improve their competitiveness through concrete improvements in their trade facilitation systems and by reducing trade costs. It is designed to respond rapidly to government requests for assistance in improving infrastructure, institutions, services, policies, procedures, and market-oriented regulatory systems that enable firms to conduct international trade on time and at lower costs. The TFF brings together expertise from across the World Bank Group to scale up the institution’s trade facilitation-related activities to support trade for development. The TFF can also play an important role in helping developing countries implement trade facilitation provisions of international trade agreements, including a WTO Trade Facilitation Agreement, and sup-porting regional trade institutions across the world. This new program makes an important contribution to assisting developing countries in this time of economic crisis.
Focus of Activities: TFF projects will take action to initiate and sustain reforms that lead to concrete - and measurable - trade facilitation improvements. TFF assistance will be delivered through technical advisory services and through building capacity for project preparation. Examples of expected TFF activities include support for implementation of regulatory and policy reforms, new border management systems, and modernization of standards and technical control systems. The TFF will also support small investments (e.g., around $1-2 million) as well as build capacity to prepare larger infrastructure projects that address critical trade bottlenecks (for example, those identified in trade facilitation audits, WTO needs assessments, and Integrated Framework action matrices). The TFF will finance activities at global, regional, and national levels.
Eligibility: The TFF will focus initially on low-income countries and countries in sub-Saharan Africa. Work in lower-middle income countries is eligible where this addresses trade facilitation problems of neighboring low-income countries (for example, transit, corridor or other regional trade facilitation projects). See < http://go.worldbank.org/K2CKM78CC0> for the current classification of countries into income categories. As resources in the TFF increase, it is expected that eligibility will be expanded to other developing countries.
Organization and procedures: The TFF is managed by a dedicated team of trade facilitation experts in the World Bank’s International Trade Department. The TFF will respond on a rolling basis to requests from governments and regional organizations (e.g., ASEAN, COMESA, SADC, etc.). Decisions on approving proposals will be made through a fast-track process. Depending on the nature of assistance requested, the implementation period for TFF projects could be short-term (e.g., two–three months), medium-term, or long-term (e.g., two years). The execution of TFF projects will largely be undertaken by country teams in the World Bank’s Regional departments, but also by other units such as FIAS, the International Trade Department, and the Transport Department. Projects can also be executed by governments and other recipients. A joint donor-World Bank/IFC steering committee will oversee the TFF program.
Coherence with other Aid for Trade Activities: The TFF is linked to the Aid for Trade agenda and other initiatives to fight poverty through the engine of international trade. It can provide critical inputs into the design of trade-related investment projects funded by bilateral donors, regional development banks, IDA/IBRD, and developing countries’ own budgets. In least-developed countries, for example, the TFF complements the Enhanced IF by providing additional resources to help LDC governments address trade facilitation priorities in IF action matrices. The TFF will also address regional trade externalities (e.g., those related to transit through gateway countries) or support projects in non-LDCs that provide demonstration effects for IF countries--activities that are beyond the scope of the IF. The TFF will also complement existing trust funds at the World Bank and IFC. Many of these cover a broad range of trade issues. These other funding sources support primarily research and analytical work that has been important in expanding knowledge about trade issues. The TFF will use that knowledge to fill the gap between identifying trade facilitation constraints and helping governments design projects and policies to overcome those constraints. The World Bank Aid for Trade Coordination Council will coordinate the TFF, the Multi-Donor Trust Fund for Trade and Development, and other aid for trade trust funds that may be established at the World Bank to ensure that these programs complement each other.
Funding Support: The TFF aims to mobilize an initial $40 million in trust fund resources over the next four years. Sweden and the United Kingdom have committed to providing support for the TFF and discussions are currently (as of August 2009) underway with the Netherlands.
Last updated on Apr 31, 2009