Bridges Weekly Trade News Digest • Volume 11 • Number 44 • 19th December 2007

Trade Facilitation Meeting Looks At Customs Fees And Formalities

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Discussions in the WTO Negotiating Group on Trade Facilitation last week focused mainly on reforming multilateral rules for trade-related fees and formalities to ensure that they do not serve as an undue obstacle to commerce.

The talks on cutting red tape and other obstacles to the trade and transit of goods have proceeded more smoothly than other issues in the troubled Doha Round negotiations. During the latest round of talks, held from 10-13 December, discussions remained at a general level in open-ended working sessions led by Chair Ambassador Eduardo Ernesto Sperisen-Yurt (Guatemala) in the mornings. Discussions in the afternoons were textual and saw more intensive engagement from Members. Many of the discussions were held in informal mode, and the meeting closed in a plenary session on 14 December with Members reporting on the results of the week’s work and the Chair adding his own observations.

In addition to trade-related fees and formalities (GATT Article VIII), Members are mandated to clarify GATT articles on the freedom of transit for goods from other Member states (Article V), and transparency in the administration of trade regulations (Article X).

Although negotiators acknowledge that even trade facilitation has been affected by the impasse on agriculture and industrial goods trade, they have been discussing potential additions to WTO law, often revising their proposals in response to each others’ concerns.

Japan and Mongolia stir debate on judicial appeal

With regard to how trade regulations are administered, Japan and Mongolia called for extending the right of administrative and judicial appeal to any person or company that receives a decision from customs or other relevant border agencies - even those located abroad (TN/TF/W/116.Rev.1, available at http://docsonline.wto.org).

A developing country trade delegate said that Members were divided regarding the submission. Although many foreign exporters already benefit from this in practice, most developing country Members were reluctant to frame this as a right, suggesting that exporters’ interests could be adequately represented by domestically-based importing entities.

Mixed response to international standard requirement

A submission on international standards from Mongolia, Norway, South Africa and Switzerland (TN/TF/W/131/Rev.1) also met with a mixed reception. The submission proposed requiring Members to “use relevant international standards or parts thereof as a basis for their laws, regulations and administrative procedures that lay down requirements for formalities and procedures in connection with importation, exportation or transit.”

It also encouraged Members to use regional standards for these procedures if they were a more efficient means to facilitate international trade.

In a concession to developing countries, the proposal specified that Members not be required to use relevant international standards if doing so would pose fundamental technological problems, or if such procedures would not fulfill the objectives of a trade facilitation agreement.

Speaking to Bridges, a delegate expressed three concerns regarding the proposal: first, if an international standard was not binding when agreed upon, how could it become the basis for binding commitments in the WTO? Second, if the breadth of a standard extended only to a few Members, how could it be extended to all WTO Members, particularly if they were not ready to sign on to the standard when it was formulated? Third, what was the point in negotiating on trade-related formalities within the WTO if the idea was to accept all related international standards? Brazil, Canada, and India reportedly raised similar concerns during the meeting.

Angola submitted a proposal on the ‘pre-shipment inspection’ of goods, which refers to the practice of governments employing private companies on the territory of other countries to verify details such as the price, quantity and quality of goods destined for import (TN/TF/W/162). In response to an earlier submission by the EU and Taiwan (TN/TF/W/108), Angola’s submission stated that it was pointless and unwise to ask Members to commit to eliminate pre-shipment inspections without a demonstrated capacity to conduct such tasks at home, or at least firm commitments by exporting countries to provide them the technical assistance necessary to do so. The submission proposed reviewing the WTO Agreement on Pre-Shipment Inspection, which aims to ensure that such inspections do not lead to discriminatory trade practices, to identify potential improvements. Angola pointed out that the majority of Members that use mandatory pre-shipment inspection are least developed countries (LDCs), and that they do so to safeguard public health, environmental protection, and tariff revenue. It also noted that more than half of the pre-shipment inspection programmes that existed when the WTO was created in 1995 have since been gradually phased out on a voluntary basis.

S&DT, technical assistance remain contentious

Sources said that discussions on special and differential treatment (S&DT) as well as technical assistance and capacity building (TACB) did not see much movement.

The trade facilitation mandate is unique in that developing countries will not be required to implement commitments unless they receive the technical assistance necessary to do so. Thus, how to determine capacity acquisition - at which point commitments would become binding - has been a significant issue in the negotiations. According to a trade delegate, TACB has been the most contentious aspect of the talks.

Differences remain on issues such as whether concrete time-frames and deadlines for implementation are desirable. The Tanzanian delegation told the meeting that assessing trade facilitation-related needs should not become an end in itself, expressing hope that some gaps would be immediately addressed by donors.

Lesotho raised the issue on behalf of the group of least-developed countries at the General Council session on 18 December. It said that despite constructive discussions on various proposals and potential legal text, the LDC Group felt that the issues of S&DT and TACB remained unresolved, since it was still unclear how S&DT and TACB would function. This in turn made it hard for LDCs to engage in discussions on other trade facilitation proposals. TACB should be demand-led, needs-based and user-driven, stressed Lesotho. It should amount to more than mere workshops.

However, various other delegations, mostly developed countries, consider that the nature of future trade facilitation obligations would have to become clearer in order for Members to agree on TACB. Progress on elements of a trade facilitation deal, sources suggested, would be helped by a breakthrough in the agriculture or industrial goods negotiations early next year.

Discussions on freedom of transit as well as further discussions on transparency are expected to take place in early February 2008, with a formal meeting of the negotiating group later that month. A subsequent round of discussions on all areas under the trade facilitation mandate would then help lay the groundwork for the preparation of a draft agreement, one official said.

ICTSD reporting.