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WTO DDA Negotiations

Short guide to Trade Facilitation

Proposals

Revision September 2011

NOTE: This is a short guide to trade facilitation proposals discussed in the WTO negotiations. It is intended to give a short summary of the proposals and the most relevant outstanding issues contained in the draft negotiating text (WTO document TN/TF/W/165/Rev.10). It does not constitute a legal interpretation of the proposals or of the EU views of those proposals. Contents: I. TRADE FACILITATION PROVISIONS..................................................................2 II. INSTITUTIONAL ARRANGEMENTS.................................................................10 III. CROSS-CUTTING MATTERS ............................................................................10 IV. SPECIAL AND DIFFERENTIAL TREATMENT...............................................10

DDA – Trade Facilitation Negotiations

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I. TRADE FACILITATION PROVISIONS Reference: TN/TF/W/165/Rev.10, Section I: Articles 1-12 A. PUBLICATION AND AVAILABILITY OF INFORMATION 1. Publication Objectives: All Members are required to publish all laws, regulations, judicial decisions and administrative rulings related to importation, exportation and transit. They must be administered in a uniform, impartial and reasonable manner. This expands the scope of current GATT Article X. Remaining issues: Detail of information to be covered. 2. Internet Publication/Establishment of Official Website Objectives: Members to publish information regarding customs procedures and documentation/forms in internet. Remaining issues: Scope of what has to be published on internet. possible exceptions to this requirement. 3. Establishment of Enquiry Points Objectives: Members should set at least one enquiry point to answer queries, within a reasonable time, from interested parties. When a payment is required to answer queries, such fees must not exceed the cost of the service rendered. Remaining issues: definition of interested parties, fees that may be charged, drafting. 4. Notification Objectives: Members must notify to the future WTO Trade Facilitation Committee where the sources of information can be found, and the contact details of their enquiry points. Remaining issues: None. B. PRIOR PUBLICATION AND CONSULTATION 1. Interval between Publication and Entry into Force


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Objectives: Members must allow a reasonable interval between the publication and entry into force of new or amended legislation or procedures, to allow traders to prepare for compliance. Remaining issues: To which extent there could be exceptions to this rule. 2. Opportunity to Comment on New and Amended Rules Objectives: interested parties must be given an opportunity and a reasonable period to comment on proposed changes of legislation or procedures. Remaining issues: To which extent there could be exceptions to this rule, whether interested parties only covers persons within the Member in question, the scope of rules and regulations subject to this requirement. 3. Consultations Objectives: Members shall hold regular consultations between their border agencies and traders, e.g. on customs procedures, charges, practical questions regarding border management etc. Remaining issues: None. C. ADVANCE RULINGS 1. Provision of Advance Rulings Objectives: Upon request by an applicant, Members must issue advance rulings within a certain period. If an authority revokes an advance ruling it will notify the applicant in writing, setting out the reasons for this decision. Except if it would disclose confidential information, advance rulings should be made available to other traders. Remaining issues: whether to set a maximum period for issuing an AR, who is eligible to apply for an AR, the right of authorities to revoke the ruling with retroactive effect (in case of decision based on wrong information), the legal status of AR, appeal provisions, the coverage of advance rulings beyond goods classification and origin (for which advance rulings are already required under the Agreement on rules of origin). D. APPEAL PROCEDURES 1. Right of Appeal Objectives: Members must allow independent, non-discriminatory administrative and judicial appeals of decisions by border agencies, without penalty. Traders must be able to receive information (e.g. reasoning and applicable laws) regarding decisions taken.


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Remaining issues: should administrative appeal be mandatory, should there be set time periods for appeal and for correction of successfully appealed decisions, drafting to adapt requirements to Members’ different judicial systems. 2. Appeal Mechanism in a Customs Union Objectives: Appeal of decisions by a Member of a customs union should be decided at the customs union level and be binding on authorities throughout the customs union. Remaining issues: No agreement on the concept since the proposals are not consistent with constitutional setting of those Members of a customs union (e.g. in the EU case it is not envisaged that appeals against decision by a customs official in a Member State would be heard directly at the Customs Union level and appeal tribunals only have authority within their jurisprudences). E. OTHER MEASURES TO ENHANCE IMPARTIALITY, NON-DISCRIMINATION AND TRANSPARENCY 1. Import Alerts/Rapid Alerts Objectives: The proposal sets requirements for the application of an import alert system, with regard to alert notifications as well as inspections following an alert. In particular, such a system must be based on uniform standards and conducted in a uniform manner. Remaining issues: It is still discussed whether this provision belongs in a TF agreement at all (given the overlaps with SPS). There is also the question whether any such rules should not cover all Members rather than just those with a formal import alert system. 2. Detention Objectives: Importers must be informed by the authorities about the detention of the imported goods. Remaining issues: Binding/non-binding obligation, the scope of information regarding the detention to be communicated. Need also to cater for the fact that some information giving rise to detention may be confidential. 3. Test Procedures Objectives: If requested by importers, a second confirmatory test should be available. A clear procedure should available, and a list of accredited laboratories should be published. Members of a customs union shall recognise each others confirmatory tests. Remaining issues: It is still discussed whether this provision belongs in a TF agreement at all (given the overlaps with SPS) and if so, how prescriptive it has to be.


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F. FEES AND CHARGES CONNECTED WITH IMPORTATION AND EXPORTATION 1. Disciplines on Fees and Charges Imposed on or in Connection with Importation and Exportation Objectives: Rules regarding application of fees and by customs for their activities, on for tasks undertaken on their behalf. Fees and charges shall only be asked for direct services, not exceed the cost of the service rendered, not to be calculated on an ad valorem basis, be publicly available, and not imposed before a reasonable period lapsed since they were published. Members are also required to periodically reviewing their application in order to reduce their number of diversity. Remaining issues: coverage of private entities acting on behalf of government authorities, possibility of ad valorem fees as long as the amount is limited to the approximate cost of the service, exceptional circumstance when simultaneous publication and imposition of fees and charges may be allowed, for example pursuant to a budget. 1. Penalties Disciplines Objectives: Principles governing penalties for breaches of customs law, regulations and procedural requirements. Remaining issues: type of penalties covered (should criminal penalties also be included); is the record of the person in its dealings with customs a circumstance to be considered for the penalty, procedures to avoid conflict of interest, may customs officials be allowed to receive part of fines or duties collected or would a conflict of interest be assumed in this case, should prior disclosure be a mitigating factor in establishing the duty amount. G. RELEASE AND CLEARANCE OF GOODS 1. Pre-arrival Processing Objectives: All Members are required to have measures for pre-arrival processing of consignments, and in cases where no further requirements are needed, goods are to be release immediately upon arrival (provided duties have been paid or a sufficient guarantee posted). A provision on documentation requirements for pre-arrival processing is also added. Remaining issues: Drafting, disciplines on documentation requirements. 2. Separation of Release from Final Determination and Payment of Customs Duties, Taxes and Fees


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Objectives: Importer to be allowed to remove goods from customs control prior to paying duties, taxes and fees. This possibility may require the provision of a guarantee. Remaining issues: Whether provision can be used for all consignments (or only when delays occur in determining the duties); cap on the amount of guarantee that can be requested for release. 3. Risk Management Objectives: customs controls to be done on the basis of risk assessment so as to facilitate movement of lower risk goods. Remaining issues: possible exceptions to application of risk management, scope of the provision (does it apply to border controls other than customs), whether and in what detail the provision should prescribe criteria for risk assessment, definitions. 4. Post-clearance Audit Objectives: Members must carry out post-clearance audits upon risk analysis results, through regular or targeted audits, based on international standards. Most compliant traders must be granted easier clearance by customs. Remaining issues: possible exceptions to the mandatory use of post-clearance audit, what transparency required towards the audited persons. 5. Establishment and Publication of Average Release and Clearance Times Objectives: Average release time (e.g. using WCO Time Release Study) shall be published periodically, with the objective of reducing it. In case of significant delay, traders may receive information on reasons for such delay. Remaining issues: whether this provision should be binding or a best endeavour, experience sharing in the Committee. 6. Authorized Traders Objectives: Members are to have authorised trader arrangements in order to apply additional facilitation to operators which meet specified criteria of compliance with customs requirements. Remaining issues: different views on the need for prescriptive disciplines on criteria, certain facilitation, on what basis mutual recognition of authorised traders scheme could be negotiated. 7. Expedited Shipments


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Objectives: Members must allow expedited release (normally within 3 hours) of at least those goods entered through air cargo facilities, but they may require the applicant to meet certain conditions, such as adequate infrastructure to process the expedited shipment and high degree of control over the shipment. Remaining issues: binding/non binding provision, whether this provisions requires a separate customs procedure, certain specific requirements that may be asked from traders, whether there should be a closed list of these requirements or Members retain flexibility, what facilitations precisely the expedited treatment would cover (maximum time for release, weight or value restrictions, release before final determination of customs duties etc., de minimis threshold). H. CONSULARIZATION 1. Prohibition of Consular Transaction Requirement Objectives: Elimination of consular transactions and any related fees or charges. Remaining issues: No agreement on elimination. I. BORDER AGENCY COOPERATION 1. Coordination of Activities and Requirements of all Border Agencies Objectives: Members shall ensure coordination among its agencies responsible for border controls and procedures dealing with importation, exportation and transit of goods. Moreover, Members who share a physical land border must put in place arrangements for cooperation, to coordinate procedures at border crossings, which may include aligning opening hours, common facilities, joint controls etc. Remaining issues: Range of activities covered under the cooperative arrangements, particularly concerning exchange of information and expedited process for goods in transit, how binding should this provision be. J. DECLARATION OF TRANSSHIPPED GOODS Objectives: Members should allow that goods whose destination in the territory of the Member is different from their point of entry are declared for the relevant customs procedure at any customs office where these formalities can be fulfilled. Remaining issues: Drafting. K. FORMALITIES CONNECTED WITH IMPORTATION AND EXPORTATION


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1. Review of Formalities and Requirements Objectives: Regular review of import and export formalities with the view to their simplification. Remaining issues: More precise definition of when to review. 2. Reduction/Limitation of Formalities and Documentation Requirements Objectives: Simplification of import and export formalities and documentation. The provision consists of an abstract obligation as well as a list of specific standards that should be followed when setting out formalities and documentation requirements. Remaining issues: Drafting of the abstract discipline as at least one Member is opposed to the current approach which uses a necessity test for formalities and documentation requirements. Whether the use of relevant international standards should be mandatory. 3. Use of International Standards (IS) Objectives: Members should base themselves on international standards when legislating on import and export procedures. The Committee will provide a forum for discussion on relevant international standards and their implementation. Remaining issues: How binding the use of international standards should be. 4. Single Window/One-time Submission Objectives: Establishment of a one stop shop for import and export covering all border agencies. Remaining issues: Very trade facilitating but even most developed WTO Members think that it should remain a best endeavour. 5. Elimination of Pre-shipment/Post-shipment Inspection Objectives: Elimination of PSI. Remaining issues: Whether PSI activities beyond tariff classification and valuation issues (such as testing and certification to technical regulations) should also be covered by the elimination requirement, how to treat post-shipment or destination inspections. 6. Use of Customs Brokers Objectives: Elimination of the mandatory use of customs brokers. Moreover, rules for licensing customs brokers should be transparent, non-discriminatory and reasonable.


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Remaining issues: In Latin America (except Argentina, Brazil and the Dominican Republic) there is very strong resistance to the idea of elimination. 7. Common Border Procedures/ 8. Uniform Forms and Documentation Requirements Relating to Clearance Objectives: Ensuring uniformity of procedures and related documentation requirements. Remaining issues: scope (should only customs or all border procedures be covered, precision on what elements of procedures should be covered). 9. Option to Return Rejected Goods to the Importer Objectives: Members to allow return of a rejected food consignment to be returned to the exporter before destroying it. Remaining issues: In which cases the option to return goods has to be given. 10. Temporary Admission of Goods/Inward and Outward Processing Objectives: Members should allow traders to bring in without (full) payment of duties and taxes goods that will be re-exported within a specific period of time and that will not undergo any change in the territory of the Member. Remaining issues: What requirement Members may impose on traders as a condition for relieving their goods of payment of import duties and taxes. L. FREEDOM OF TRANSIT Objectives: Enhanced non-discriminatory treatment for goods in transit regardless of the mode of transportation. Facilitating provisions of the TF agreement should also apply mutatis mutandis to goods in transit. Remaining issues: the definition of goods in transit under Article V of GATT (clarification that transit of e.g. energy products through fixed infrastructure is included), disciplines concerning limitations to the freedom of transit, national treatment for transiting goods, fees and charges, enforcement of quality standards for goods in transit, en route customs inspections, guarantees, use of customs convoys. M. CUSTOMS COOPERATION


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Objectives: Data exchange between exporting country and importing country customs administrations to combat fraud. Remaining issues: whether this can be a binding obligation, role of bilateral agreements, what information/documents would be exchanged, for what purposes could the recipient country use the information, confidentiality of the data, level of data protection that has to be ensured in the recipient country, whether exporting administrations should have total discretion in refusing to exchange data if they do not want to, or if their current laws prohibit it.

II. INSTITUTIONAL ARRANGEMENTS Reference: TN/TF/W/165/Rev.10, Section I: Articles 13-14 Objectives: Establish an institution framework within the WTO, as well as at national level. Remaining issues: Role of a future WTO Trade Facilitation Committee and of a National Committee on Trade Facilitation.

III. CROSS-CUTTING MATTERS Reference: TN/TF/W/165/Rev.10, Section I: Articles 15 Objectives: Clarify issues that impact all substantive provisions in the agreement. Remaining issues: Relationship to other WTO Agreements, Dispute Settlement, Final Provisions, Implementation Schedules, Exceptions.

IV. SPECIAL AND DIFFERENTIAL TREATMENT Reference: TN/TF/W/165/Rev.10, Section II Objectives: Modalities allowing developing countries to implement the provisions of the agreement in a gradual manner, and, where required, receive technical assistance and capacity building (TACB). Each developing country Member will itself determine and notify for each individual provision or subpart of a provision when it will implement it and whether it will require TACB to do so. Technically speaking, each developing country Member will in their schedules classify each provision or subpart of a provision of the future TF Agreement into one of three categories:


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− Category A: provisions (or subparts of provisions) which the Member commits to implement from entry into force of the agreement.

− Category B: provisions (or subparts of provisions) which the Member commits to implement within a certain period of time after entry into force of the agreement.

− Category C: provisions (or subparts of provisions) for which the Member

requires both time and technical assistance/capacity building. Remaining issues: Category A provisions: when they would have to be notified, whether there should be a requirement to include in this category all those provisions the Member is already implementing. Category B/C provisions: process and timeframe for notification of these provisions and their implementation dates, additional information to be notified for Category C provisions (e.g. required, implementing agency, donors), whether a Member will be entitled to a first automatic extension of implementation date, when and how a Member may shift provisions from category B to C, whether there would be a grace period also for category B/C provisions (a 2-year grace period applies for provisions categorised as A), whether acquisition of capacity and implementation are assumed at the end of the implementation period or subject to an additional notification by the Member, whether there should be language on mandatory provision of TACB by developed countries. Overall: special provisions for LDCs, the role of the future WTO TF Committee including its possible link with aid channels/mechanisms.

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