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

2. 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.

6. Existing WTO rules on trade facilitation GATT 1994: • Article VFreedom of Transit • Article VIIIFees and Formalities connected with Importation and Exportation • Article X Publication and Administration of Trade Procedures

7. 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.

9. Article X: Publication & Administration of Trade Regulations • Publication; • Administration of laws; • Appeals.

10. 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

11. Trade Facilitation Under WTO • Trade facilitation was added to the WTO’s 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, S&DT provisions and customs cooperation mechanism.

14. 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.

15. 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.

16. Modalities set out in Annex D • S & D treatment • Results of the negotiations shall take principle of S&D treatment fully into account. • Should extend beyond traditional transitionperiods for implementing commitments. • Extent+timing of entering into commitmentsshall be related totheimplementation capacities of developing and least developed countries. • Developing + least developed countries are not obliged to undertake investments in infrastructureprojects beyond their means.

17. 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.

18. 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.

19. Proposals ConcerningGATT Article V • Customs procedures & documentation requirements; • Non-discriminatory treatment; • Fees and charges and securities; • Cooperation; • Technical assistance, capacity building, S & D.

20. 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.

21. 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.

22. Example of possible Rules:The 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

23. Example of possible Rules:The 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.

24. WayAhead • 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.

25. 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

26. Some Possible Proposals • Should there be disciplines for SPS procedures under the cover of GATT Article VIII:4? • 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.

27. 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.

28. 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).

29. Thank You