Columbia International Affairs Online: Working Papers

CIAO DATE: 08/2014

Trade Hallucination: Risks of Trade Facilitation and Suggestions for Implementation

Jeronim Capaldo

June 2014

Global Development and Environment Institute at Tufts University


The WTO Agreement on Trade Facilitation crowned a year of big numbers. Official predictions put expected gains to $1 trillion but ignored its costs.

When all assumptions underlying official figures are brought to light, large expected gains appear unreasonable. At the same time, estimated employment benefits may easily turn into net losses.

With fundamental uncertainty surrounding its effects, implementing trade facilitation without enhancing systems of social protection would be ill advised. Indeed, the net effect of trade facilitation may depend on the social policies it is complemented with.

While trade facilitation may bring extra business to import-export firms, it is not a feasible or sustainable growth strategy for all countries and it cannot be expected to deliver growth to the global economy.