Technical Aspects of GATT Articles V, VIII, and X and UNECE Trade Facilitation Instruments

1. Technical Aspects of GATT Articles V, VIII and X and the UNECE Trade Facilitation Instruments UNECE-UNESCAP Capacity Building Workshop on Trade Facilitation Implementation for Asia and the Pacific Region17 – 18 March 2005, Kuala LumpurMs Maria Misovicova, UNECE, Trade Division

2. Content • Technical and Legal Aspects of Articles V, VIII and X of the GATT 1994 • UNECE/ UN/CEFACT Instruments available for implementation • Capacity Building and Technical Assistance

3. Current Environment • Business needs (global supply chains): demanding speedy, secure and simplified procedures • Trade Facilitation as a Policy issue, currently determined by: • Increased role in Trade/Economic Development • TF in WTO (GATT Articles V, VIII & X) • Regional Initiatives (APEC Strategy, ASEAN Single Window Initiative) • TF and Security

4. WTO Trade Facilitation Negotiations • OBJECTIVES: • “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” (July Package, Annex D) • Recognizing Special and Differential Treatment (SDT) for developing countries and LDCs: • Entering into commitments related to their implementation capacities (CB and TA, investment in infrastructures...) • Beyond traditional SDT (pure exemptions, transition periods, differentiated non-reciprocity)

5. WTO: Core Principles • Most-favoured Nation (MFN) Treatment (non-discrimination, Art. I of the GATT1994) • National Treatment (Art. III) • Transparency (Art. X)

6. WTO vs. UNECE: different but complementary approaches WTO doing the „WHAT“ of the international trade: Legally binding rules to be observed by the countries, while respecting SDT UNECE/ UN/CEFACT doing the" HOW“ of trade facilitation: delivering the solutions for supply chain to facilitate international trade and business processes (Trade and transport facilitation conventions, standards, recommendations, best practices and other tools...)

7. Article V obligations • Article V of the GATT imposes obligationsregarding “traffic in transit”: • The basic objective is to allow for freedom of transit through a country (paragraphs 2, 3, 4) • Article V also imposes a non-discrimination requirement (MFN) (paragraphs 2,5,6)

8. Freedom of Transit • There is freedom of transit (through the most convenient route) for goods from one WTO member to another WTO member (para.2) • There is a broad duty to prevent “unnecessary delays or restrictions”(para.3) • Charges and regulations imposed must be “reasonable” (para.4) • Traffic in transit is exempt from customs duties, a member can only impose charges commensurate with the expenses incurred (para. 3)

9. Non-discriminatory Treatment (MFN) • In respect of all “charges, regulations and formalities in connection with transit” there is an MFN requirement (para.3) • No distinction can be made based on between traffic in transit on grounds of the ownership of the means of transport/goods, the origin/destination of the traffic etc. (para.2) • Directly transported goods and goods which are transported via a third country should be treated equally by the receiving country (para. 6)

10. Some issues raised on Article V (2002) • Reduction, simplification and harmonization of documentary and data requirements, and procedures for transit, including risk assessment and limitation of physical inspection (CAN, EC KOR) • Use of existing multilateral, regional and bilateral transit instruments or arrangements (CAN, EC) • Note: • Great Importance for land-locked countries

11. Article V: UNECE Instruments available TIR Convention(Transport Internationaux Routiers): • Multimodal • Goods carried under the TIR procedure in approved and sealed road vehicles, combination of vehicles or containers is not subject to Customs examination, unless irregularities are suspected • Reduces: regular requirements of national transit procedures and physical inspections in transit countries • Using a single standardized document: Carnet

12. Article VIII obligations • Imposes an obligation on a WTO Member to limit the fees and charges being charged in connection with importation/exportation to the level of the approximate cost of the services rendered by it (paras. 1(a),4) AND recognizes the need to reduce them as to the number and diversity • Requires WTO members not to impose substantial penalties for minor breaches of customs regulations or procedural requirements (para. 3) • Recognizes the need to reduce the incidence and complexity of import and export related formalities and documentary requirements (paras. 1(b), 1(c))

13. Fees and Charges • Requirement to limit the fees and charges to the approximate cost of the service rendered • Applies to fees and charges connected with importation and exportation, with the exception of: (i) import and export duties (ii) internal taxes applied at the border • Therefore Article VIII applies to a residual category of fees and charges connected with importation or exportation, such as: inspection fees (SPS), licensing fees etc. • The charge does not represent indirect protection to domestic products or taxation for fiscal purposes

14. Complexity of import and export formalities • The best-endeavour statements (paras. 1(b) and 1(c)): • These provisions recognise the need to: • minimise the incidence and complexity of import and export formalities • decrease and simplify documentation requirements • reduce the number and diversity of fees and charges imposed in connection with importation • However, there is no legally binding commitmentunder these provisions, accordingly WTO Members retain their policy autonomy in this regard, but at the end of negotiations there might be some obligations

15. Some issues raised on Article VIII (2002) • Simplifying border-related documentation and increasing compatibility/ standardizing data required for release of merchandise by using existing international standards where appropriate and developing common data sets to be requested in the process of clearance (CAN, HKG, EC) • Reducing excessive documentation and data requirements (COL, EC) • Establishing a Single Agency for trade documents and data (COL, EC, JAP) • Automation and use of ICT (COL, JAP, EC) • Advance information (CAN, EC, JAP, KOR)

16. Article VIII: UNECE Instruments available • United Nations Layout Key for Trade Documents (UNLK/ ISO 6422), Codes: UN/LOCODE, Currency, Modes of Transport, ISO Country Code... • Recommendation and Guidelines on establishing a Single Window (UN/CEFACT Recommendation 33) • UN/CEFACT Recommendations 4 (TF Pro Committees) and 18 (Facilitation Measures related to Int´l Trade Procedures) • UN/EDIFACT, UN Trade Data Element Directory (UNTDED), UNeDocs • New: Benchmarking Guide, Single Window Repository, to be available in 2005

17. Article X obligations Imposes obligations regarding: • Transparency/ publication requirement (para 1, 2) • Impartiality in administration of laws, regulations and administrative rulings of general application (para 3)

18. Transparency obligations • There is a duty to promptly publish: • “laws, regulations, judicial decisions andadministrative rulings of general application” • Regarding: • “the classification or the valuation of products for customs purposes” • “rates of duty, taxes or other charges” • “requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing

19. Some issues raised on Article X (2005) • WHEN to publish: • Currently: to publish before starting applying certain measures and regulations • Proposal: a prior publication of the proposed measures and regulations to allow other WTO Members to comment on proposed the measures • HOW to publish: • Currently: no obligation to publish by particular means • Proposal: to make information available through Internet and to establish Single Entry Points for information • Appeal Procedure: • Currently: having guaranteed an appeal for any customs determination • Proposal: asking for interim measures during the appeal so that you do not collect any duties during that time • Note: Implications of the proposed measures (developing countries)

20. Article X: UNECE Instruments available • UN/CEFACT Recommendations 4 (TF Pro Committees) • Recommendation and Guidelines on establishing a Single Window (UN/CEFACT Recommendation 33)

21. SUMMARY OF UNECE and UN/CEFACT TRADE FACILITATION TOOLS • Article V: • Transport and Transit Facilitation Instruments (TIR Convention, Harmonization Convention...) • Article VIII: • Standards and tools for trade documents (UNLK, UNTDED, UNeDocs) • Simplification and harmonization of trade procedures (Recommendation 33 - Single Window, Recommendation 4 - TF Pro Organizations, Recommendation 18 -Trade Facilitation Processes) • Codes for International Trade (UN/LOCODE, Country Codes, Currency Code...) • Automation and e-businessinstruments (UN/EDIFACT, UNeDocs, UNTDED...) • Article X: • Single Entry Information Point:Single Window Recommendation

22. Implementation • Capacity Building and Cooperation: • African Group (March 2005) • Asia and the Pacific Region (March 2005) • Other 13 regional workshops organized jointly with other 4 UN Regional Commissions under the TF Inter-regional Project (2005-2006) • Global Facilitation Partnership (GFP) – World Bank, UNCTAD, WCO... • WTO

23. Total int´l organizations focus WTO WCO ICC UN/CEFACT UNCTAD ITC AFACT ISO

24. Follow-up All UNECE Recommendations, codes, standards and publications are available for free on our website at: • www.unece.org/trade • www.unece.org/cefact/ • www.unece.org/etrades/unedocs/

25. THANK YOU !!! maria.misovicova@unece.org