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Full implementation of the World Trade Organisation’s (WTO) trade facilitation agreement (TFA) could reduce global trade costs by up to 17.5%, according to the OECD.

The 2015 OECD trade facilitation indicators (TFIs) have determined that developing countries have the greatest opportunities for trade cost reduction through the TFA, as most upper middle and high income countries already implement “best endeavours”, and therefore have less room for improvement.

Additionally, the TFIs have found that countries that fully implement the TFA will cut costs (including transport, border-related and local distribution costs) by 1.4 to 3.9% more than those that only apply the minimum requirements.

The potential cost reduction from full implementation of the TFA at 16.5% for low income countries, 17.4% for lower-middle income countries, 14.6% for upper-middle income countries and 11.8% for OECD countries.

However, if countries stick to the mandatory provisions of the agreement only, the potential reduction goes down to 12.6%, 13.7%, 12.8% and 10.4% respectively.

According to the OECD, it is in the area of formalities (simplification of trade documents, streamlining of border procedures and automation of the border process) that countries can make the most savings through the TFA – between 2.8% and 4.2%.

“As G20 economies seek to achieve an additional 2% of GDP growth by 2018, facilitating a more open flow of goods and services across international borders should be a key contributor to this target,” OECD secretary general Angel Gurría says.

Launched in December 2013, the TFA aims to expedite the movement, release and clearance of goods across borders, and sets out measures for co-operation between customs and other appropriate authorities on trade facilitation and customs compliance issues.

The TFA was formally adopted by the WTO general council in November 2014, but will only enter into force once two thirds of WTO members have ratified it domestically.

To date, four of the 160 WTO members — Hong Kong (China), Singapore, the United States and Mauritius — have secured domestic acceptance of the TFA, and another 17 have started the process (Chile, China, Colombia, El Salvador, the European Union, Georgia, Korea, Mexico, Morocco, Nicaragua, Norway, Saudi Arabia, Chinese Taipei, Japan, New Zealand and Switzerland).