ICTSD MEMBERS DRAFT ARTICLES FOR FUTURE AGREEMENT ON TRADE FACILITATION

International Centre for Trade and Sustainable Development, UK
June 15 2006

The outlines of a future WTO draft agreement on trade facilitation are
starting to take shape, as Members proposed text for several potential
articles during the 6-7 June meeting of the negotiating group.

The trade facilitation negotiations aim to simplify customs
procedures and cut commerce-related red tape, as well as to enhance
developing countries’ ability to participate in international goods
trade. The July 2004 Framework (WT/L/579) specified that developing
and least-developed countries would not have to implement future
trade facilitation obligations unless they received the technical
assistance necessary to do so. During the recent meeting, a loose group
of developed and developing countries responded to this unprecedented
link by outlining a possible mechanism through which developing
countries could seek and receive technical assistance before having
to comply with new commitments.

Members are specifically mandated to clarify three articles of the
General Agreement on Tariffs and Trade (GATT) 1994: freedom of transit
for goods from other Member states (Article V), trade-related fees
and formalities (Article VIII), and transparency in the regulation
and administration of trade regulations (Article X).

Proposals suggest text for future agreement

Many of the papers tabled during the meeting built upon already-revised
submissions to propose specific wording for different sections of a
future agreement on trade facilitation. Several of them emphasised that
general exceptions to WTO rules would also apply to the disciplines
proposed.

For instance, the EU, Korea, and Switzerland (TN/TF/W/107) tabled
a series of prospective rules governing the type and amount of
trade-related fees and charges governments could levy, specifying
that they must not exceed the approximate cost of the import- or
export-related service they ostensibly pay for.

In an attempt to get countries to speed up customs clearance times,
EU, Japan, Korea, Mongolia, and Taiwan proposed rules that would
require them to periodically calculate and publish the length of their
average periods for releasing goods, and commit to trying to reduce
them. This provoked a response particularly from Australia and India,
which said that they did not want any such commitment to be mandatory.

Japan, Mongolia, and Switzerland (TN/TF/W/114) tabled a series of
potential disciplines that would require Members to clearly publish all
trade-related laws and regulations. Their proposal lists the precise
kinds of information that governments would be required to provide,
and calls for the establishment of enquiry points where traders from
any country would be able to find out about documentation and other
requirements. Along with Korea, they also put forward draft articles
(TN/TF/W/115) that would require Members to allow traders and other
governments to comment on new or amended trade-related procedures, and
publish adopted rules well in advance of their entry into force. The
four countries jointly submitted another textual proposal (TN/TF/W/115)
on ‘pre-arrival processing,’ which provides for customs and other
border agencies to accept and examine import-related documentation
submitted by traders before the goods arrive, in order to expedite
their eventual clearance.

With regard to the transit of goods from other WTO Members —
a key problem for landlocked countries — Armenia, the EU, the
Kyrgyz Republic, Macedonia, and Moldova (TN/TF/W/113) put forward
comprehensive disciplines to regulate how governments treat such
goods. Specifically, they wanted countries to treat goods from all
Members equally for transit purposes. Many Members were uncomfortable
with the notion of according traders who would likely be from
other countries the freedom to choose transit routes. They also
criticised the proposal’s call for goods in transit to be treated
identically to domestic merchandise. One delegate told Bridges that
locally-manufactured products might not require the sort of mandatory
inspections which could be necessary for foreign goods.

Other potential rules proposed included disciplines from the EU,
Switzerland, and Taiwan (TN/TF/W/109) that would oblige countries
to provide expedited inspection clearance to "authorised traders"
that meet certain criteria for past compliance. The EU and Taiwan
(TN/TF/W/108) outlined a procedure for the progressive elimination of
‘pre-shipment inspections,’ which refers to requirements that the
quality, quantity, or price of goods be verified before they can
be exported.

New Zealand (TN/TF/W/111) tabled a provision that Members would
have to apply objective criteria for the tariff classification of
goods to ensure that they are not "arbitrary or unjustifiable," and
"do not constitute a disguised restriction" to trade. It suggested
that classifying all tariffs on the basis of the World Customs
Organisations’ HS Convention would achieve this.

Mechanism proposed for implementation

An informal group of developed and developing countries co-sponsored
an informal ‘non-paper’ that spelled out a multi-stage process for
the implementation of a future agreement on trade facilitation,
specifically with regard to commitments that some Members might be
unable to put into place on their own.

Canada, Chile, China, the EU, Guatemala, Honduras, Japan, Mexico,
Pakistan, Paraguay, Sri Lanka, and Uruguay proposed that developing
countries should, as soon as the agreement enters into force, formally
commit to obligations conforming to measures that they already had
in place and implement any minimal set of ‘core’ disciplines that
might arise from the new rules.

The paper provides for developing countries to notify the WTO of
any obligations that would require additional time or technical
assistance to implement, after identifying them through a ‘capacity
self-assessment.’

Developing countries would not have to implement obligations
requiring additional time until the end of the period specified in
their notification.

For measures that would be impossible to implement without technical
assistance, the paper would have developing countries formulate a
‘capacity-building plan’ in cooperation with donors and international
organisations, and notify it along with specific implementation
periods. At the end of the implementation period for such a plan, a
developing country would have to verify whether it had indeed acquired
the capacity to implement a particular obligation, and, if so, notify
its newly-acquired ability to the WTO. Following this, it would become
subject to legal challenge on the basis of the commitments in question.

In cases where Members disagree with another’s assessment of its
capacity to implement an obligation, the paper specifies that
"a mechanism is to be developed" to resolve their differences. It
also provides for ‘multilateral dialogue’ on countries’ initial
notifications of specific needs.

Sources report that interventions on the proposed mechanism were
largely positive, with Barbados, Bolivia, India, New Zealand, and
the US welcoming the proposal.

Comprehensive text likely in July

One trade diplomat described prospects for a comprehensive text on
trade facilitation by July as good, since text-based proposals have
now been made on roughly half the issues in the negotiations. The
delegate suggested that Members are aware that they need to bring
all of the text-based proposals together in a single document; some
have wondered aloud whether the WTO Secretariat could do so, as it
did for an earlier compilation of Members’ less-evolved submissions
(now TN/TF/W/43/Rev.7).

One delegate expressed doubt that all delegations were in a position
to submit proposals in the form of draft legal text, but suggested
that the simple fact that Members had already started text-based
discussions was notable. The negotiator acknowledged the concern
among some developing and least-developed countries that trade
facilitation negotiations were almost proceeding ‘too speedily,’ and
said that an agreement would have to wait for a deal on agriculture
and industrial tariffs. Another trade diplomat said that if ministers
and senior trade officials scheduled to meet at the end of June made
a breakthrough in these two areas, Members would probably call upon
the Secretariat to draft a comprehensive trade facilitation text
based on their submissions.

Sources report that Chair Tony Miller (Hong Kong) suggested that he
was not planning to come forward with a comprehensive text of his
own, as some of his counterparts in other negotiating areas have been
asked to do. He urged Members to keep producing text-based proposals
until the end of June, ahead of an informal meeting of the negotiating
group scheduled for 10-11 July.

ICTSD reporting.

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