Multilateral Aspects of Trade Facilitation and the Doha Round
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1 World Bank and EU Seminar on Trade Facilitation in East Asia 3-5 November 2004 Shanghai, China Multilateral Aspects of Trade Facilitation and the Doha Round Xiaobing Tang Counsellor Market Access Division WTO Secretariat
2 Overview A Some background B. Basic principles of the GATT/WTO & Trade Facilitation C. Doha mandate D. Key issues involved E. What does WTO add in Trade Facilitation? F. Current status of work: the July Package 17/11/2004 WB-EU.TF.Shanghai 2
3 A. Some background! Within the framework of the WTO, so far, there has been no clear definition on the term Trade Facilitation.! However, as defined by some other IOs, it means systematic rationalization of procedures and documentation for international trade, in other words, to make trade procedures as efficient as possible through the rationalization of procedures, documentation, and information flows. 17/11/2004 WB-EU.TF.Shanghai 3
4 A. Some background (cont d) " With more and more industrial products sold throughout the world are assembled in one country from components manufactured in several others, the increased reliance on just-in-time production and just-in-time delivery makes justin-time customs clearance a major issue for business. " Customs needs to modernize to manage the exponential growth in volumes of cross-border trade in goods. " Cumbersome customs procedures should be cupped with in particular. " SMEs, particularly in developing countries stand to suffer most. " Most important for investment decision makers are to ensure a reliable, low-cost flow of raw materials and components into and out of a manufacturing facility. Efficient customs procedures have become a national competitive advantage, especially in terms of attracting foreign direct investment. 17/11/2004 WB-EU.TF.Shanghai 4
5 A. Some background (cont d) " In reality, trade facilitation is complex and technical. It touches on many fields of expertise - transport, technology, customs procedures, security and risk assessment, government revenue collection, statistics, trade, etc. " It is obvious, simplification and modernization will not be achieved if all those involved do not work together to make proper use of their strengths and resources, or capacity building. " Furthermore, trade facilitation is important on its own right - to business, to governments, to consumers. It requires practical impact assessment rather than theoretical debates. 17/11/2004 WB-EU.TF.Shanghai 5
6 A. Some background (cont d)! Trade facilitation was added to the WTO s agenda at the first Ministerial Conference held in Singapore in December 1996:! The Council for Trade in Goods then was 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.! A great deal of such exploratory and analytical work has been undertaken since then.! The main objective has been to identify the principal obstacles encountered by traders in cross-border transactions and to develop possible ways to overcome those barriers. 17/11/2004 WB-EU.TF.Shanghai 6
7 B. Basic principles of GATT/WTO & trade facilitation " Trade without discrimination " Transparency of a member s trade policy " Trade liberalization - gradual or complete removal of existing impediments to trade through reduction/elimination of tariffs and disciplining non-tariff barriers 17/11/2004 WB-EU.TF.Shanghai 7
8 B. Basic principles of GATT/WTO & trade facilitation (cont d) " Within the broad legal framework of the WTO, many GATT provisions are related to trade facilitation (GATT Articles I, II, III, V, VII, VIII, IX, X, XI, XIII, etc.) " A number of specific agreements negotiated during the Uruguay Round are directly relevant to trade facilitation (Agreements on TBT, Import Licensing Procedures, Customs Valuation, Preshipment Inspection, Rules of Origin and SPS) 17/11/2004 WB-EU.TF.Shanghai 8
9 B. Basic principles of GATT/WTO & trade facilitation (cont d) " Some common features of trade facilitation of these agreements:! Transparency - publication of laws and regulations prior to application (e.g. all agreements)! Non-discrimination - fair and equitable administration of procedures (e.g. import licensing, rules of origin, PSI)! Judicial review- right to appeal administrative decisions (e.g. customs valuation, import licensing, PSI) 17/11/2004 WB-EU.TF.Shanghai 9
10 B. Basic principles of GATT/WTO & trade facilitation (cont d) " Certain specific features of trade facilitation of these agreements:! Simple procedures and forms (e.g. import licensing)! Advance rulings (e.g. rules of origin)! Basic single window concept (e.g. import licensing)! Release of goods upon posting guarantee (e.g. customs valuation)! Enquiry points (e.g. TBT, SPS)! Use of existing international standards (e.g. TBT, SPS) 17/11/2004 WB-EU.TF.Shanghai 10
11 C. Doha Mandate " 27. Recognizing the case for further expediting the movement, release and clearance of goods, including goods in transit, the need for enhanced technical assistance and capacity building in this area, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on the modalities of negotiations. In the period until the Fifth Session, the Council for Trade in Goods shall review and as appropriate, clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 and identify the trade facilitation needs and priorities of Members, in particular developing and least-developed countries. We commit ourselves to ensuring adequate technical assistance and support for capacity building in this area. 17/11/2004 WB-EU.TF.Shanghai 11
12 C. Doha mandate (cont d) " In the time until the 5th Ministerial Conference, paragraph 27 sets out an extensive work programme. The Council for Trade in Goods was not only mandated to:! review and, as appropriate, clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994, but also to! identify the trade facilitation needs and priorities of members, in particular developing and least-developed countries. " Furthermore, it was also committed to ensuring technical assistance and support for capacity building in this area. 17/11/2004 WB-EU.TF.Shanghai 12
13 D. Key issues involved " Existing WTO Rules on Trade Facilitation GATT 1994:! Article V Freedom of transit! Article VIII Fee and formalities connected with importation and exportation! Article X Publication and administration of trade regulations 17/11/2004 WB-EU.TF.Shanghai 13
14 D. Key issues involved (cont d)! GATT Article V: Main obligations # Freedom of transit through the territory of each Member for traffic through the most convenient routes for transit # Traffic in transit shall not be subject to any unnecessary delays or restrictions exempt from customs duties, from all transit duties or other charges imposed in respect of transit, except charges for transportation or those commensurate with administrative expenses entailed by transit or with costs of services rendered # All charges reasonable, having regard to conditions of traffic # MFN treatment for traffic in transit with respect to all charges, regulations and formalities 17/11/2004 WB-EU.TF.Shanghai 14
15 D. Key issues involved (cont d)! GATT Article VIII: Main obligations # All fees and charges imposed on or in connection with importation and exportation must : Limited in amount to approximate cost of services rendered Not represent an indirect protection to domestic products Not represent a taxation of imports for fiscal purposes # Recognition that number and diversity of such fees and charges should be reduced # Recognition that incidence and complexity of import and export formalities; and Import and export documentation requirements should be minimized, and decreased/simplified # No substantial penalties for minor breaches of customs regulations or procedural requirements 17/11/2004 WB-EU.TF.Shanghai 15
16 D. Key issues involved (cont d)! GATT Article X: Main obligations # Promptly publish all laws, regulations, judicial decisions and administrative rulings affecting imports and exports so as to enable government and traders to become acquainted # Measures imposing a new or more burdensome requirement, restriction, or prohibition on imports, or on the transfer of payments, shall be published before enforcement # Uniform, impartial, and reasonable administration of laws, decisions and rulings affecting imports and exports # Members must maintain or institute judicial, arbitral or administrative tribunals or procedures for the purpose, inter alia, of the prompt review and correction of administrative action relating to customs matters 17/11/2004 WB-EU.TF.Shanghai 16
17 D. Key issues involved (cont d) " Main problems identified! excessive documentation requirements! burdensome border-crossing procedures! lack of automation and insignificant use of information technology! lacking transparency and predictability 17/11/2004 WB-EU.TF.Shanghai 17
18 D. Key issues involved (cont d) " Other problems and issues identified! Corruption! Human resource problems! Physical infrastructure problems 17/11/2004 WB-EU.TF.Shanghai 18
19 D. Key issues involved (cont d) " Consequences! Higher costs for business! Higher costs for consumers! Less trade! Less investment! Less government revenue 17/11/2004 WB-EU.TF.Shanghai 19
20 D. Key issues involved (cont d)! Proposals concerning Article V # Customs procedures and documentation requirements Limitation, simplification, standardization of customs procedures and documentation requirements Review and removal of unnecessary or overburdensome procedures Promotion of use of transit instruments # Non-discriminatory treatment Non-discrimination between modes of transport in relation to transit procedures Non- discrimination between individual carriers in relation to transit procedures Non-discrimination between type of consignment National treatment 17/11/2004 WB-EU.TF.Shanghai 20
21 D. Key issues involved (cont d)! Proposals concerning Article V (cont d) # Differentiation of transshipment and nontransshipment # Fees and charges Clarification of fees and clearer definition of terms Notification of fees and charges # Securities # Co-operation Co-operation among customs authorities Harmonization of transit policies Information sharing among customs authorities # S & D treatment # Technical assistance and capacity building 17/11/2004 WB-EU.TF.Shanghai 21
22 D. Key issues involved (cont d)! Proposals concerning Article VIII # General provisions to make Article VIII more operational Scope and coverage Geographical coverage Non-discrimination Transparency and predictability Avoidance of unnecessary procedural barriers Abolishment of procedure or requirement in case of changed circumstances or less trade restrictive alternative International standards and instruments Special and differential treatment # Specific provisions regarding fees and charges Interpretation of paragraph 1 (a) Commitment regarding paragraph 1 (b) 17/11/2004 WB-EU.TF.Shanghai 22
23 D. Key issues involved (cont d)! Proposals concerning Article VIII (cont d) # Specific provisions regarding data and documentation requirements and procedures Simplification, reduction and standardisation of documentation and data requirements and procedures Introduction of uniform domestic customs code Acceptance of commercially available information Single, one-time presentation to one agency # Specific provisions regarding customs and related import and export procedures Simplified/standardised trade and/or clearance procedures Use of international standards Special procedures for authorized traders Risk assessment and/or advanced control techniques Automation Non-discrimination Streamlining of operations and enhancement of transparency 17/11/2004 WB-EU.TF.Shanghai 23
24 D. Key issues involved (cont d)! Proposals concerning Article VIII (cont d) # Specific provisions related to collateral or monetary security # Cooperation and coordination among different authorities; communication with traders Border agency coordination Convergence of official controls User agency communication # Injection of basic GATT/WTO principles into specific provisions of GATT Article VIII Formalities and Documentation Requirements Least Trade Restrictiveness/Necessity Use of International Standards/Harmonization Review Simplicity/Modernization 17/11/2004 WB-EU.TF.Shanghai 24
25 D. Key issues involved (cont d)! Proposals concerning Article VIII (cont d) # Use accepted GATT/WTO principles as reference for legal interpretation and guideline for matters not specifically covered by Article VIII s provisions # Technical assistance and capacity building # Special and differential treatment 17/11/2004 WB-EU.TF.Shanghai 25
26 D. Key issues involved (cont d)! Proposals concerning Article X # Publication and availability of information Publication and making available of all information regarding border crossing trade/border rules and procedures]/international trade and customs administration Identification of elements that should be provided in laws and regulations Identification of the means to publicize the laws and regulations Formulation and publication of administrative guidelines Advance rulings Establishment of enquiry points/trade desks/single national focal points Legal basis for administrative actions, decisions or rulings Notification of core Measures 17/11/2004 WB-EU.TF.Shanghai 26
27 D. Key issues involved (cont d)! Proposals concerning Article X (cont d) # Consultative/feedback mechanisms and minimum time periods before entry into force Provide for opportunity for all stakeholders/interested parties to consult and comment on proposed rules and procedures before their formal adoption/implementation Adequate time periods for such comment Allow for reasonable/adequate (standard) time periods between adoption and entry into force of regulations Publication of reasoned motivations for a proposed measure Review and update of primary legislation # Review and appeal procedures and due process Non-discriminatory, legal right of appeal Mechanism for goods to be released and possibility for duty payment to be left in abeyance in certain situations # S & D treatment # Technical assistance and capacity building 17/11/2004 WB-EU.TF.Shanghai 27
28 D. Key issues involved (cont d)!transparency # Publication and availability of information on laws, regulations and administrative policies and procedures # Accessibility of such information # Specific provisions regarding fees and charges # Specific provisions regarding data and documentation requirements and procedures # Specific provisions regarding customs and related importation and exportation procedures # Specific provisions related to collateral or monetary security 17/11/2004 WB-EU.TF.Shanghai 28
29 D. Key issues involved (cont d)!non-discrimination # Injection of GATT/WTO principles, such as, MFN, national treatment # Least trade restrictiveness/necessity # Differentiation of transshipment and nontransshipment # Rules and procedures relating to trade should not discriminate between or among goods and/or modes of transport!communication and consultation # Consultation/feedback mechanisms and minimum time-period before entry into force 17/11/2004 WB-EU.TF.Shanghai 29
30 D. Key issues involved (cont d)!harmonization and standardization # Customs procedures and documenation requirements for transshipment # Fees and charges and securities for transshipment # The implementation to the greatest extent possible of procedures and obligations based upon international trade instruments and rules!simplification and modernization # Simplification of border-related rules and procedures to achieve their legitimate objectives in a practicable and efficient way 17/11/2004 WB-EU.TF.Shanghai 30
31 D. Key issues involved (cont d)!consistency and predictability # Rules and procedures should be applied in a consistant and predictable manner # There should be clear and precise procedural guidance based upon standard policies and operating procedures and be applied in a nondiscretionary and uniform manner!protection and compliance # Rules and procedures should provide for an appropriate balance among facilitation, enforcement and health, safety and protection against unlawful activiteis 17/11/2004 WB-EU.TF.Shanghai 31
32 D. Key issues involved (cont d)!due process # Review and appeal procedures and the process!enforcement commitments!cooperation # Cooperation and coordination among different authoritie # Communication with traders!technical assistance and capacity building! Special and differential treatment 17/11/2004 WB-EU.TF.Shanghai 32
33 D. Key issues involved (cont d)! Pre-Cancun position of proponents (Colorado Group supported by some members) # To negotiate a mandatory or binding agreement on trade facilitation, building upon: GATT Articles V, VIII and X WTO principles (non-discrimination, transparency, due process, etc.) Technical assistance and capacity building, and S & D treatment 17/11/2004 WB-EU.TF.Shanghai 33
34 D. Key issues involved (cont d)! Pre-Cancun position of many developing members # General support of trade facilitation, but concern of additional rules may exceed the implementation capacities of some members and cause concerns over dispute settlement # Commitments to meet capacity-building needs may prove to be insufficient # preference for trade facilitation work to take place at the national, bilateral or regional rather than the multilateral level # In addition, they are of the view that if problems with trade facilitation measures are related to lack of capacity to implement rather than a lack of commitment, noncomplying countries should not be penalized 17/11/2004 WB-EU.TF.Shanghai 34
35 D. Key issues involved (cont d) " Key elements discussed:! Modalities! Scope! Outcome of the negotiations! Implementation matters! DSU applicability! Horizontal/vertical (bundling/unbundling)! Linkages! S & D treatment! Technical assistance and capacity building 17/11/2004 WB-EU.TF.Shanghai 35
36 E. What does WTO add in trade facilitation? " WTO is the unique forum for global trade rulemaking and liberalization where trade agreements are negotiated by Members to:! Ensure that tariff bindings are not circumvented;! Limit friction among member governments; and! Minimize the trade restricting and trade distorting effects of non-tariff measures 17/11/2004 WB-EU.TF.Shanghai 36
37 E. What does WTO add in trade facilitation? " The WTO, as an organization establishing rules for international trade, is the only international organization with a sufficiently broad mandate to cover all aspects to border management baring on international trade. " National, bilateral and regional initiatives cannot deliver comprehensive reform necessary to ensure all members benefit from trade facilitation. In the absence of a coherent multilateral framework, bilateral and regional initiatives risk delivering, over the longer term, a fragmented or piecemeal approach to trade facilitation, and militate against the wider sharing of trade facilitation benefits. 17/11/2004 WB-EU.TF.Shanghai 37
38 F. Current status of work: the July Package " After several months of consultations, the WTO General Council adopted a decision on Doha Work Programme on 1 August Paragraph g of the Decision states:! Trade Facilitation: taking note of the work done on trade facilitation by the Council for Trade in Goods under the mandate in paragraph 27 of the Doha Ministerial Declaration and the work carried out under the auspices of the General Council both prior to the Fifth Ministerial Conference and after its conclusion, the General Council decides by explicit consensus to commence negotiations on the basis of the modalities set out in Annex D to this document.! Relationship between Trade and Investment, Interaction between Trade and Competition Policy and Transparency in Government Procurement: the Council agrees that these issues, mentioned in the Doha Ministerial Declaration in paragraphs and 26 respectively, will not form part of the Work Programme set out in that Declaration and therefore no work towards negotiations on any of these issues will take place within the WTO during the Doha Round. 17/11/2004 WB-EU.TF.Shanghai 38
39 F. Current status of work: the July Package (cont d) " Annex D Modalities for Negotiations on Trade Facilitation! 1. Negotiations shall aim to clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 with a view to further expediting the movement, release and clearance of goods, including goods in transit.* Negotiations shall also aim at enhancing technical assistance and support for capacity building in this area. The negotiations shall further aim at provisions for effective cooperation between customs or any other appropriate authorities on trade facilitation and customs compliance issues. # * It is understood that this is without prejudice to the possible format of the final result of the negotiations and would allow consideration of various forms of outcomes. 17/11/2004 WB-EU.TF.Shanghai 39
40 F. Current status of work: the July Package (cont d) " Annex D Modalities for Negotiations on Trade Facilitation! 2. The results of the negotiations shall take fully into account the principle of special and differential treatment for developing and least-developed countries. Members recognize that this principle should extend beyond the granting of traditional transition periods for implementing commitments. In particular, the extent and the timing of entering into commitments shall be related to the implementation capacities of developing and least-developed Members. It is further agreed that those Members would not be obliged to undertake investments in infrastructure projects beyond their means. 17/11/2004 WB-EU.TF.Shanghai 40
41 F. Current status of work: the July Package (cont d) " Annex D Modalities for Negotiations on Trade Facilitation! 3. Least-developed country Members will only be required to undertake commitments to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capabilities.! 4. As an integral part of the negotiations, Members shall seek to identify their trade facilitation needs and priorities, particularly those of developing and leastdeveloped countries, and shall also address the concerns of developing and least-developed countries related to cost implications of proposed measures. 17/11/2004 WB-EU.TF.Shanghai 41
42 F. Current status of work: the July Package (cont d) " Annex D Modalities for Negotiations on Trade Facilitation! 5. It is recognized that the provision of technical assistance and support for capacity building is vital for developing and least-developed countries to enable them to fully participate in and benefit from the negotiations. Members, in particular developed countries, therefore commit themselves to adequately ensure such support and assistance during the negotiations.* # *In connection with this paragraph, Members note that paragraph 38 of the Doha Ministerial Declaration addresses relevant technical assistance and capacity building concerns of Members. 17/11/2004 WB-EU.TF.Shanghai 42
43 F. Current status of work: the July Package (cont d) " Annex D Modalities for Negotiations on Trade Facilitation! 6. Support and assistance should also be provided to help developing and least-developed countries implement the commitments resulting from the negotiations, in accordance with their nature and scope. In this context, it is recognized that negotiations could lead to certain commitments whose implementation would require support for infrastructure development on the part of some Members. In these limited cases, developed-country Members will make every effort to ensure support and assistance directly related to the nature and scope of the commitments in order to allow implementation. It is understood, however, that in cases where required support and assistance for such infrastructure is not forthcoming, and where a developing or least-developed Member continues to lack the necessary capacity, implementation will not be required. While every effort will be made to ensure the necessary support and assistance, it is understood that the commitments by developed countries to provide such support are not open-ended. 17/11/2004 WB-EU.TF.Shanghai 43
44 F. Current status of work: the July Package (cont d) " Annex D Modalities for Negotiations on Trade Facilitation! 7. Members agree to review the effectiveness of the support and assistance provided and its ability to support the implementation of the results of the negotiations.! 8. In order to make technical assistance and capacity building more effective and operational and to ensure better coherence, Members shall invite relevant international organizations, including the IMF, OECD, UNCTAD, WCO and the World Bank to undertake a collaborative effort in this regard.! 17/11/2004 WB-EU.TF.Shanghai 44
45 F. Current status of work: the July Package (cont d) " Annex D Modalities for Negotiations on Trade Facilitation! 9. Due account shall be taken of the relevant work of the WCO and other relevant international organizations in this area.! 10. Paragraphs of the Doha Ministerial Declaration shall apply to these negotiations. At its first meeting after the July session of the General Council, the Trade Negotiations Committee shall establish a Negotiating Group on Trade Facilitation and appoint its Chair. The first meeting of the Negotiating Group shall agree on a work plan and schedule of meetings. 17/11/2004 WB-EU.TF.Shanghai 45
46 F. Current status of work: the July Package (cont d) " Key elements of the July Package on trade facilitation! An agreement to commence negotiations! Negotiations are aimed at: # clarifying and improving three existing GATT Articles with a view to expediting the movement, release and clearance of goods across borders, including goods in transit; # enhancing technical assistance and support for capacity building in this area; # provisions for effective co-operation between customs or any other appropriate authorities on trade facilitation and customs compliance issues; 17/11/2004 WB-EU.TF.Shanghai 46
47 F. Current status of work: the July Package (cont d) " Key elements of the July Package on trade facilitation! S & D treatment for developing and LDC members # It extends beyond the granting of traditional transition periods for implementing commitments # The extent and the timing of entering into commitments shall be related to their implementation capacities # They are not required to undertake investment in infrastructure projects beyond their means # LDCs are only required to undertake commitments to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capacities # An agreement to identify their TF needs and priorities and to address their concerns related to cost implications of proposed measures 17/11/2004 WB-EU.TF.Shanghai 47
48 F. Current status of work: the July Package (cont d) " Key elements of the July Package on trade facilitation! Techncial assistance and capacity building # Recognition of the vital importance of TACB for developing and LDC countries to enable them to fully participate in and benefit from the negotiations and developed countries committed themselves to adequately ensure such support and assistance during the negotiations # Support and assistance should also be provided to help developing and LDC countries implement the commitments resulting from the negotiations, in accordance with their nature and scope # Recognition of the linkage between the implementation of certain commitments resulting from the negotiations and the required support for infrastructure development on the part of some Members 17/11/2004 WB-EU.TF.Shanghai 48
49 F. Current status of work: the July Package (cont d) " Key elements of the July Package on trade facilitation! Techncial assistance and capacity building # Developed countries, in these limited cases, will make every efforts to ensure support and assistance directly related to the nature and scope of the commitments in order to allow implementation # However, it is understood that in cases where required support and assistance for such infrastructure is not forthcoming, and where a developing country and LDC continues to lack the necessary capacity, implementation will not be required # It is also understood that the commitments by developed countries to provide such support are not open-ended 17/11/2004 WB-EU.TF.Shanghai 49
50 F. Current status of work: the July Package (cont d) " Key elements of the July Package on trade facilitation! Techncial assistance and capacity building # An agreement to review the effectiveness of the support and assistance and its ability to support the implementation of the results of the negotiations # In order to make TACB more effective and operational and to ensure better coherence, relevant IOs, including IMF, OECD, UNCTAD, WCO and the World Bank are invited to undertake a collective effort in this regard. # Due account shall be taken of the relevant work of the WCO and other relevant international organizations in this area 17/11/2004 WB-EU.TF.Shanghai 50
51 F. Current status of work: the July Package (cont d) ON 12 October 2004, the Trade Negotiations Committee established the Negotiating Group on Trade Facilitation and appointed Ambassador Noor of Malaysia as its Chairperson The first meeting of the newly established Negotiating Group on Trade Facilitation will Soon be held to discuss its work plan and schedule of future meetings 17/11/2004 WB-EU.TF.Shanghai 51
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