Current WTO Negotiations on Trade Facilitation

1
Current WTO Negotiations on Trade Facilitation

• Dr. Mrs. Vijaya Katti,
• Professor Chairperson
• Management Development Programme
• Indian Institute of Foreign Trade
• New Delhi, India

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The Evolving Definition of Trade Facilitation

• OECD Simplification and standardization of
  procedures and associated information flows
  required to move goods internationally from
  seller to buyer and to pass payments in the other
  direction.

3
Contd

• UN/CEFACT the simplification, standardization
  and harmonization of procedures and associated
  information flows required to move goods from
  seller to buyer and to make payment

4
Contd

• APEC The use of technologies and techniques
  which will help members to build up expertise,
  reduce costs and lead to better movement of goods
  and services.

5
Contd

• WTO-so far, no clear definition on the term
  Trade Facilitation. However, it is understood
  that
• Trade Facilitation means systematic
  rationalization of procedures and documentation
  for international trade.
• Issues covered under GATT Art. V, VIII X.

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Existing WTO rules on trade facilitation

• GATT 1994
• Article V Freedom of Transit
• Article VIII Fees and Formalities connected
  with Importation and Exportation
• Article X Publication and Administration of
  Trade Procedures

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Article V Freedom of transit

• Most convenient routes

• No discrimination

• Removal of unnecessary delays/restrictions

• No duties.

8
Article VIII Fees Formalities Connected with
Import/Export

• Fees should reflect cost for services rendered

• Reduce number and kind of fees

• Simplify formalities documents

• No penalty for minor errors.

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Article X Publication Administration of Trade
Regulations

• Publication

• Administration of laws

• Appeals.

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Other WTO Agreements

• Agreement on the Implementation of Article VII
  GATT 1994 (Customs Valuation)
• Agreement on Preshipment Inspection
• Agreement on Import Licensing Procedures
• Agreement on Rules of Origin
• Agreement on Technical Barriers to Trade
• Agreement on Sanitary and Phytosanitary Measures

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Trade Facilitation Under WTO

• Trade facilitation was added to the WTOs agenda
  at the first Ministerial Conference Singapore in
  December 1996
• The Council for Trade in Goods mandated to
  undertake exploratory and analytical work on
  the simplification of trade procedures in order
  to assess the scope for WTO rules in this area.
  
• Substantial exploratory and analytical work since
  then.
• The main objective to identify the principal
  obstacles encountered by traders in cross-border
  transactions and to develop possible ways to
  overcome those barriers.

12
Contd

• Doha Ministerial Declaration of 2001 agreed to
  start negotiation after the 5th Ministerial
  Conference on the basis of an explicit consensus
  on modalities of negotiations. Till that period
  review and clarification work to be undertaken
  (of Articles V, VIII and X).
• Cancun Ministerial Conference of 2003 ended in
  failure on account of lack of explicit consensus
  on Singapore Issues.

13
Contd

• Intensive negotiation took place between 22nd to
  31st July, 2004 in Geneva.
• The Annex D modalities of GC Decision of 1st
  August, 2004 was a result of such negotiation and
  took on board most of the concerns of DCs.
• A Core Group consisting of countries like India,
  Malaysia, Philippines, Jamaica, Egypt,
  Bangladesh, Indonesia, etc. highlighted the
  concerns of DCs regarding cost implication,
  technical assistance, SDT provisions and customs
  cooperation mechanism.

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Trade Facilitation in the WTO Framework
Agreement, July 2004

• WTO member States agreed
• to launch negotiations on trade facilitation,
  aiming at the establishment of an agreement to
  further expedite the movement, release and
  clearance of goods, including goods in transit by
  clarifying and improving relevant aspects of GATT
  Articles V, VIII X.
• To ensure technical assistance and support for
  capacity building.
• Negotiations should aim at effective cooperation
  between Customs or any other appropriate
  authorities on TF and Customs compliance issues.

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Elements of Annex D

• Negotiations
• To clarify and improve Articles V,VIII and X.
• To aim at enhancing technical assistance and
  support for Capacity Building.
• To aim at provisions for effective cooperation
  between customs authorities on TF and customs
  compliance issues.

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Modalities set out in Annex D

• S D treatment

• Results of the negotiations shall take principle
  of SD treatment fully into account.

• Should extend beyond traditional transition
  periods for implementing commitments.

• Extenttiming of entering into commitments shall
  be related to the implementation capacities of
  developing and least developed countries.

• Developing least developed countries are not
  obliged to undertake investments in
  infrastructure projects beyond their means.

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Contd...

• Technical assistance and support for capacity
  building

• Support and assistance also to help implement the
  commitments, in accordance with their nature
  scope.

• Support for infrastructure development in certain
  cases.

• Linkage between provision of assistance and
  implementation requirement.

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What to expect during negotiation?

• Proposals made during clarification process can
  be taken as a guide.
• Proposals made recently by EC, Canada, Japan,
  Korea, and USA on Article X is broadly a repeat
  of the proposals made during the study process.

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Proposals ConcerningGATT Article V

• Customs procedures documentation requirements

• Non-discriminatory treatment

• Fees and charges and securities

• Cooperation

• Technical assistance, capacity building, S D.

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Proposals ConcerningGATT Article VIII

• General provisions to make Art VIII more
  operational

• Specific provisions regarding fees and charges

• Specific provisions regarding data and
  documentation requirements and procedures

• Specific provisions regarding customs and
  related import and export procedures

• Provisions related to collateral or monetary
  security

• Injection of GATT/WTO principles

• Technical assistance, capacity building, S D.

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Proposals concerningGATT Article X

• Publication and availability of information

• Consultative/feedback mechanisms and minimum
  time periods before entry into force

• Review and appeal procedures and due process

• Technical assistance, capacity building, S D.

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Identified Trade Facilitation Principles

• Simplification/Standardization
• Transparency/Cooperation/Due process
• Non-discrimination

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Important Proposals Made - Simplification

• Use of risk assessment
• Single Window
• Border agency coordination
• Authorised trader system
• Fees be relatable to service provided-not ad
  valorem
• Automation of customs including payment of
  duties or other fees and charges
• Establish, notify, reduce standard processing
  time for goods release
• Acceptance of commercially available information

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Transparency

• Publication of all border related laws,
  regulations, administrative guidelines, decisions
  and rulings of general application information
  on customs and other border related agency
  processes conditions for different form of
  customs treatment appeal procedures fees and
  charges customs and other agencies management
  plans.
• Make such information readily available
  (Gazettes, Websites)
• Stakeholders participation in rule making
  (establish a regular consultative mechanism
  minimum time period to comment on proposed rules,
  comments be discussed time gap between
  publication of rules and their implementation)

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Contd

• Enquiry point
• Provide for a two-stage legal right of appeal
  against customs and other agency rulings
• A standard time period should be set for
  resolution of minor appeals at administrative
  level
• Procedures of appeals should be easily
  accessible, including to SMEs

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Contd

• Costs of appeal should be commensurate with costs
  involved in providing for appeals
• When a disputed decision is under appeal, goods
  should normally be released and duty payment be
  kept in abeyance
• Advance Ruling for classification and rate of
  duty for domestic importer and foreign
  exporter/producer in a fixed time frame be valid
  for a given time (as already provided under ARO
  for origin)
• Special Provisions for Express Consignments

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Non-discrimination

• Rules and procedures for trade should not
  discriminate between or among goods/or modes of
  transport, including for transit
• Consistency and predictability
• Use existing international standards
• Development of common data set/minimum
  information

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Contd

• Whether transit of oil and gas through pipeline
  could come under Article V (in addition to air,
  road, rail and boat).
• Non-discrimination between individual carriers
  and types of consignments for transit procedures.
• Simplification of documentary and data
  requirement.
• Fees and charge be as per an indicative list of
  services.

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Example of possible RulesThe E.U. Proposal

• Documentation for Import, Export Transit
• Avoid unecessary procedural obstacles
• Adopt international standards
• Create reduced data set, plus simplified,
  standardized documentation
• Single window
• Automated EDI-based systems

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Example of possible RulesThe E.U. Proposal

• Customs border crossing procedures
• IT-based systems across Customs
• Application of modern Customs techniques
• One stop clearance/release facilities
• Absolute time limit for Customs release
• Cooperation between traders Customs
• Databases of WTO members imp/export requirements
• Coordinated long-term T.A. to improve
  administrations.

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Way Ahead

• Negotiations are likely to gather speed in next
  few months.
• Effort would be draw up an outline for the
  agreement by July 05.
• Most proposals during earlier phase came from
  demandeurs of TF.
• Proposals also need to be made/tailored to the
  needs of DCs.

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Issues Raised

• Are rules/regulations easily available?
• Transit problems?
• What mechanisms for customs cooperation?
• Inputs of trade and industry vital through
  survey/seminars/interactive sessions etc.
• Coalition building/information sharing vital
  between developing countries
• Important role of the Core Group

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Some Possible Proposals

• Should there be disciplines for SPS procedures
  under the cover of GATT Article VIII4?
• These can be
• Uniform Customs clearance procedures in all
  Members of a Customs Union.
• In a Customs Union, there should be uniform
  standards of maximum residue level for
  pesticides, antibiotics etc.
• No destruction of consignments rejected on
  account of high pesticide residue level or
  presence of pathogens
• Transparency concerning rapid alerts should
  include a requirement of publication of final
  result.

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Contd

• An appeal mechanism be provided at the
  administrative level and then at judicial level
  for rejection of consignments of grounds of
  pesticide residue or other SPS considerations.
• Can proposal of single window system of
  document filing within country be extended to
  cover one time filing of data at country of
  export which would then get transmitted either
  electronically or in paper format to the customs
  administration of the importing country? This can
  address some concerns of under-valuation.

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TF What a Country can do?

• Work on harmonization and recognized practices.
• Stimulate business process re-engineering.
• Do the home work e.g. establish a national
  Customs transit regime
• Prepare for negotiations and beyond, taking
  advantage of available TA (Technical Assistance)
  and support to CB (capacity building).

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Thank You