Trade facilitation is a concept directed towards reducing the complexity and cost of the trade transaction process and ensuring that all these activities take place in an efficient, transparent and predictable manner. Trade facilitation comprises the whole trade chain from exporter to importer, including transportation and payment, with emphasis on the border-crossing and the agencies involved there.

According to the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT), “trade facilitation” is defined as the simplification, standardization and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payment.

The figure below shows an overview of possible parties involved in the trade chain:

It is difficult to put a price on the benefits of trade facilitation – both for business and for governments. A study by the United Nations Conference on Trade and Development (UNCTAD), shows that a typical trade transaction passes through 27 to 30 parties – including brokers, banks, carriers, sureties and freight forwarders. At least 40 documents are needed, not only for government authorities but also for related businesses. Over 200 data elements are typically requested, of which 60 to 70 percent are re-keyed at least once, while 15 percent are re-typed 30 times.

An OECD  study concludes that estimates of trade transaction costs range from 2 to 15 percent of the total transaction value and that an approximate estimate for world trade is 550 billion dollars each year. This result in an enormous amount of time and money wasted and is hampering business, stifling growth and holding back economic development, particularly in developing countries.

Simple international trade procedures, based on global standards and recommendations, are considered very important by all countries. Landlocked countries are particularly vulnerable, since they depend on the trade procedures of their neighbours. Small and medium sized enterprises also stand to gain more from trade facilitation efforts since the costs of complying with cumbersome procedures are proportionally higher for them.