MENA countries have streamlined their trade process in the last two years, OECD says

The MENA region’s trade facilitation reforms have improved over the last two years following the supply chain disruptions brought on by covid-19, according to a recently released OECD report (pdf). The region has made improvements in several areas of trade since 2020, including transparency and predictability, automating and streamlining procedures, and border agency cooperation. However, many MENA countries are still falling behind in terms of implementing regulatory frameworks, automating trade processes, and border cooperation.

What are trade facilitation indicators (TFIs)? The TFIsidentify and monitor areas for reform in order to expedite the movement, release, and clearance of goods at the border as well as policy efforts addressing supply chain challenges. The TFIs cover four policy areas: Transparency and predictability; automating and streamlining procedures; border agency cooperation — which involves institutional frameworks, mechanisms, trade agreements and IT systems for internal and external border agencies; and governance and impartiality.

The MENA region is doing well in the four policy areas: Most MENA countries’ TFIs have been valued above the average score of 1 on a scale of 0-2, according to the OECD. The value also reflects the extent to which the countries implement the TFIs. Those leading in TFI reforms over the past two years — in order — were Bahrain, Kuwait, Algeria, Qatar, the UAE, Oman, Jordan, Israel, Lebanon, and Morocco.

One in five economies in MENA have worked on simplifying and harmonizing trade documents, according to the report. One in three economies in the region has made progress in terms of streamlining and simplifying fees and charges related to trade procedures, the report added. Trade fees and charges were strong points for the region, with a high score of 1.79, while documentation earned a score of 1.6.

GCC countries are likely leading the pack: While the report does not mention which countries in the region are ahead in terms of transparency, predictability, and streamlining of trade procedures, various World Trade Organization (WTO) policy reviews and OECD reports have pointed to the efforts made in the GCC to make trade easier and more accessible.

It all comes down to reducing red tape + expediting procedures: Bahrain, for example, was said to be “continuously working to reduce red tape” to construct a transparent business environment, according to its WTO Trade Policy Review (pdf) in 2021. The country — along with Saudi Arabia and the UAE — has also implemented customs pre-clearance at the border to allow importers to complete custom procedures and payments prior to the arrival of the goods. Qatar is also striving to boost its transparency through the launch of its online government, legal, and e-commerce portals, as well as restructuring the ministries and agencies concerned with trade and investment, according to the WTO Qatar Trade Policy Review (pdf). The UAE also launched a Customs Gateway project in 2020, which enables authorities to request advance rulings on tariff classification, rules of origin, and customs valuation.

Other strengths in the region: Information availability and involvement of the trade community earned scores of 1.6. Appeal procedures in the region earned a score of 1.5.

The MENA region has seen heterogenous performance when it comes to governance and impartiality, which looks at indicators like transparency in customs structures and functions, accountability and ethics policies, according to the OECD. The region’s score for governance and impartiality was exceptionally high, at a little below 1.8.

The MENA region is still lagging behind in automation and streamlining procedures with a TFI score of 1.3 out of 2 for automation and 1.25 for procedures in 2022, with some countries weighing on the region’s collective performance. MENA countries — aside from the UAE and Israel — are below average performers with respect to digital trade development, according to an Economic Research Forum working paper (pdf). The underlying constraint holding back countries, particularly in North Africa, is digital infrastructure, according to the paper. GCC countries have more e-infrastructure, in comparison to other MENA countries who rely more on human capital, the paper suggests.

Border agency cooperation is another weak spot for the region: The region’s lowest scores were in the areas of internal and external border cooperation, with internal border cooperation earning a score of 1.3 and external cooperation higher by a small margin, at a little less than 1.4 — though both are still above average scores.

MENA countries are also still lagging in implementation: Despite the efforts and notable progress MENA countries have made to enhance their TFIs, the report says that there is a discrepancy between regulatory frameworks and implementation. The score for MENA countries’ implementation of regulatory frameworks is 1.1, according to the report, signaling that the region as a whole has had trouble with automating trade procedures.