MARKET ACCESS Issues

1. MARKET ACCESS Issues Samer Seif El-Yazal Counsellor Institute for Training and Technical Cooperation World Trade Organization

2. Structure of this presentation • Market Access in the GATT/WTO context: basic elements and definitions • Introduction to NAMA negotiations • Overview of Customs and Trade Administration Agreements • Market Access – Russian Federation • Notification obligations

3. MARKET ACCESS IN THE GATT/WTO CONTEXT: BASIC ELEMENTS AND DEFINITIONS

4. 1. What is Market Access? • In the WTO framework, the term stands for the totality of government-imposed conditions (regulations/measures) under which a product may enter a country under non-discriminatory conditions.

5. 1. What is Market Access? • Market access in the WTO sense is regulated most of the time through border measures including, inter alia, tariffs, tariff rate quotas, quantitative restrictions and other non-tariff measures.

6. 2. GATT/WTO: ensuring MA • Predictable and growing access to markets for goods and services is one of the goals of the WTO • Basic Principles: Non discrimination (NT/MFN) and transparency • Predictable: binding commitments • Growing access: periodic “rounds” of negotiations

7. 3. Types of MA barriers in trade in goods • In the GATT/WTO framework there are 2 basic types of barriers to trade in goods: • Tariffs • Non Tariff Barriers

8. 4. Basic GATT/WTO framework • Tariffs should normally be the only instrument used to protect domestic industries • Quantitative restrictions (bans/restrictions) are generally prohibited (GATT Art. XI)... but they could be allowed under certain circumstances • Tariffs should be transparent, predictable and stable • Tariffs are included in “Schedules of concessions”

9. NAV 5. Tariffs: duty types

10. 6. Tariffs and the GATT • Security and predictability in trade in goods are achieved through the commitments embodied in the "binding” of tariffs.

11. 6. Tariffs and the GATT • A "bound" tariff is a tariff in respect of which there is a legal commitment not to raise it beyond a certain level • A binding is a “ceiling”, not a “floor”

12. 7. GATT Article II • “a. Each contracting party shall accord to the commerce of the other contracting parties treatment no less favourable than that provided for in the appropriate Part of the appropriate Schedule annexed to this agreement.”

13. 7. GATT Article II • Treatment can be more favourable: bound tariffs vs. applied tariffs • Other tariff treatments are also possible due to, inter alia, RTAs, CUs and non-reciprocal arrangements ( “enabling clause”)

14. 8. Other duties and charges (ODCs) • Include all taxes levied on imports in addition to the customs duties which are not in conformity with Article VIII (Fees and Formalities) of GATT 1994. • GATT Article II:1 (b) stipulates that the products described in the schedules "shall be exempt from other duties or charges of any kind imposed in excess of those imposed at the time a concession was granted".

15. 8. Other duties and charges (ODCs) • Understanding on the Interpretation of Article II:1 (b): Members must include in Schedules any other duty or charge existing on by 15 April 1994. • If not notified by then, then eliminated.

16. 9. “Schedules” of concessions • Tariff bindings and other concessions are contained in the “Schedules of concessions” (GATT Article II) • Each Member of the WTO has its own Schedule, identified by a roman number

17. 9. “Schedules” of concessions • Except customs unions where two or more Members have one single schedule for a (i.e. European Communities)

18. MFN Rates I.A Part I Part II Part III Part IV Section I Section II I.B Memberx Agricultural Products Duties (Tariffs and ODCs) Schedule of Concessions Tariff Rate Quotas (TRQs) GATT 1994 Preferential rates Other Products Non-tariff Concessions Agricultural Subsidies 10. Structure of a Member's Schedule

19. Agricultural products are defined in Annex 1 of the Agreement on Agriculture Non Agricultural products are all the “other products” Why “non-agricultural” products?

20. Schedule M – Member XThis Schedule is authentic only in the English languagePART I – MOST-FAVOURED NATION TARIFFSECTION II – Other Products

21. 11. Changing a concession • Tariff negotiations (GATT Article XXVIII bis)*1957 • Rectifications and modifications • Renegotiations (GATT Article XXVIII) • Customs Union (GATT Article XXIV) • Other • Implementation of the HS • Transposition to HS92, HS96, HS2002, HS2007 … All of them have special procedures! Need to be “certified” in order to be legally binding

22. Binding coverage of Non AG prod. • 50 Members have 100% binding coverage(EC-25 counted as one) • 29 Members between 90% and <100% • 10 Members between 50% and < 90% • 10 Members between 25% and < 50% • 23 Members between 0.1% and < 25% • NOTE: Agriculture already 100% binding

23. Part II. NAMA Negotiations:Paragraph 16 of the Doha Ministerial Declaration “16. We agree to negotiations which shall aim, by modalities to be agreed, to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries.” “Product coverage shall be comprehensive and without a priori exclusions.”

24. “The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments, in accordance with the relevant provisions of Article XXVIII bis of GATT 1994 and the provisions cited in paragraph 50 below.” Paragraph 16 of DMD (cont.)

25. Modalities Post-modalities Basic framework for negotiating tariff concessions • Defining the rules of the gameGATT Article XXVIII bis • Tariff reduction: which option? • Request/Offer? • Sectoral? • Formula? If so, which one? • New bindings: how many? at what level? • Implementation period • S&D / Flexibility provisions • Members prepare and submit offers • Multilateral verification • Final Schedules of concessions

26. DDA (NAMA): Sequence of main events 2001 ->Doha Ministerial Declaration (Paragraph 16) July 2002 ->Work program is adopted(deadline for modalities = 31 May 2003) May 2003 -> Chairman’s Draft Elements for Modalities (TN/MA/W/35 i.e. “Girard Text”) September 2003 ->Cancun Ministerial fails to adopt a “framework” on NAMA (JOB(03)152/Rev.2) July 2004 ->“July Package” adopts the NAMA Framework with initial elements (Annex B of WT/L/579) December 2005 ->Hong Kong Ministerial clarified add. elements 2007 Chairman's Introd. to the Draft NAMA Modalities(JOB(07)/126) 2008 Third revision of draft modalities (TN/MA/W/103/Rev.2)July Mini-ministerial Fourth revision of draft modalities (TN/MA/W/103/Rev.3)

27. Part III. Customs and trade administration • VAL: Customs valuation • PSI: Pre-shipment inspection • RO: Rules of origin • LIC: Import licensing procedures

28. VAL: Background • Specific and ad-valorem customs duties • Short historical overview • Article VII GATT • Brussels definition of value • Tokyo Round Valuation Code

29. VAL: The WTO Agreement • The new Agreement • Basic principle: Transaction value • The 6 Methods • Other provisions

30. VAL: Method 1 - Transaction value • Definition of transaction value • Conditions to be fulfilled • Evidence of sale • No restriction on the disposition or use • Not subject to additional conditions • Full prices, unless... • Sufficient information for adjustments • Buyer and seller not related, otherwise ... • Related parties • Cases where Customs Administrations have reasons to doubt the truth or accuracy of the declared value

31. VAL: Methods 2 and 3 • Method 2: Transaction value of identical goods (Article 2) • Exceptions • Method 3: Transaction value of similar goods (Article 3) • Other methods

32. PSI: Background and overview • Functions of PSI • conformity of goods with the terms of the sales contract • verification of invoice price • Definitions • Objectives

33. PSI: Obligations of user Members • Non-discrimination (Article 2.1) • Governmental requirements (Article 2.2) • Site of inspection (Article 2.3) • Standards (Article 2.4) • Transparency (Articles 2.5 to 2.8) • Protection of confidential business information (Articles 2.9 to 2.13) • Conflicts of interest (Article 2.14) • Delays (Articles 2.15 to 2.19) • Price verification (Article 2.20) • Appeals procedure (Article 2.21) • Derogation (Article 2.22)

34. PSI: Obligations of exporter Members • Non-discrimination (Article 3.1) • Transparency (Article 3.2) • Technical Assistance (Article 3.3)

35. PSI: Independent review procedures • Purpose of the Independent Review Procedures • Independent Entity

36. RO: Background • Definition • Where are rules of origin used? • No specific provision in GATT • Interest in the harmonization of rules of origin • Increased number of preferential trading arrangements • Increase in the number of origin disputes • Increased use of anti-dumping laws

37. RO: The UR Agreement • Introduction • Aims of the Agreement • harmonization • general principles • Coverage: all non-preferential rules of origin • Institutions • WTO Committee on Rules of Origin • WCO Technical Committee

38. RO: Harmonization • The Harmonization Work Programme (HWP) • Definitions of goods being wholly obtained • Last substantial transformation • Change of tariff heading • Supplementary criteria • Overall architectural design • Results of the Harmonization Work Programme

39. RO: Other provisions • Disciplines during the transition period • Disciplines after the transition period • Consultation and dispute settlement • Preferential rules of origin

40. LIC: Background and definition • Definition • Basic obligations • GATT Article VIII • GATT Article X • From the Tokyo Round Code to the Uruguay Round Agreement

41. LIC: General principles • Main objectives • General provisions • Neutral application, fair and equitable administration • Publication of rules and procedures • Simple forms and procedures • Other principles

42. LIC: Automatic import licensing • Definition • Conditions • Main provision for automatic import licensing • Approval of application within 10 working days • Use

43. LIC: Non-automatic import licensing • Definition • Main provisions applicable to non-automatic import licensing • No additional restrictive or distortive effects • All relevant information to be published • No discrimination among applicants • Time limits for processing applications • Validity of a licence • Other provisions

44. Part IV. Market Access: Russian Federation • On average the final legally binding tariff ceiling for the RF will be 7.8% • Average tariff ceiling for Agriculture, 10.8% • Average tariff ceiling for NAMA, 7.3% • Final tariffs will be bound at zero for cotton and information technology products (ITA) • Implementation: 1/3 of tariff lines upon accession, another 1/4 cuts in 3 years. Longest tariff cuts on pork 8 years and cars 7 years.

45. Notification ObligationsNOTIF: Customsvaluation • Art. 22.1 - “one-time”Notification of laws and regulationsAllMembers once theyapply the Agreement, includingChecklist of Issues • DecisionsonInterestcharges and media-carrierAllMembersiftheyapplytheDecisions

46. NOTIF: PreshipmentInspection • Art. 5 - “one-time”Notification of laws and regulationsAllMembers

47. NOTIF: Rules of Origin • Art. 5.1 - “one-time”Notification of non-preferential rules of originAllMembers • Annex II para. 4 - “one-time”Notification of preferential rules of originAllMembers

48. NOTIF: ImportLicensing • Notifications • Copies of publications and full text of laws and regulations • Notification of changes • Reverse notification • Annual questionnaire (by 30 September each year)

49. NOTIF: QuantitativeRestrictions • Decision G/L/59 of the Council for Trade in Goods (1 December 1995) • Basic document: G/MA/NTM/QR/2 • Notification of allquantitativerestrictions(by 31 January 1996 and at two-yearlyintervalsthereafter)AllMembers

50. NOTIF: Integrated Data Base (IDB) • Decision WT/L/225 of the General CouncilAllMembers • Basic document: G/MA/IDB/W/6 • Tariff data at the tariff line levelEveryyear (by 30 March) • Trade data at the tariff line levelEveryyear (by 30 September)