Trade Facilitation: WTO Negotiations and Beyond

1. Trade Facilitation: WTO Negotiations and Beyond Donald J Lewis Faculty of Law The University of Hong Kong Trade Facilitation and Development: What Will and Won’t the DDA Accomplish World Bank and WBI ICTSD Trade and Development Symposium 16 December 2005 Hong Kong, China

2. WTO Negotiations • TF Negotiations Launched by WTO General Council Decision 1/8/04 (“July Package”) • Annex D Modalities • Role of Negotiating Group on Trade Facilitation (NGTF) • Core Aims/Objectives: • First Aim: Clarification/improvement of Articles V, VIII and X, GATT 1994 • Second Aim: Technical assistance (TA) and Capacity building (CB) for developing countries and LDCs • Third Aim: Cooperation on customs compliance issues

3. WTO Negotiations • Recent Developments • Revised Draft Ministerial Text: Annex E (02/12/05) • NGTF Analytical Compilations of TF Proposals • TN/TF/W/43/Rev.4 (31/10/05): Rev.4 Document • Focus primarily on first aim: reform of Articles V, VIII and X, GATT 1994 • “Built-in Flexibilities” • TA/CB Developments • Special and Differential Treatment (S&DT) Issues

4. WTO Negotiations • Recent Developments • TN/TF/W/43/Rev.4: Rev.4 Document • Classification Scheme: • Article X (Transparency): • Publication and Availability of Information • Time Period between Publication and Implementation • Consultation and Comment on New/Amended Rules • Advance Rulings • Appeal Procedures • Measures to Enhance Impartiality and Non-Discrimination

5. WTO Negotiations • TN/TF/W/43/Rev.4: Rev.4 Document • Classification Scheme: • Article VIII (Fee and Formalities): • Fees and Charges Connected w/ Import/ Export • Formalities Connected w/ Import/Export • Consularization • Border Agency Coordination • Release and Clearance of Goods • Tariff Classification

6. WTO Negotiations • Article V (Freedom of Transit): • Matters Relating to Goods Transit • WTO Progress To Date • Significant work accomplished on first aim of TF negotiations: clarification/improvement of GATT Articles V, VIII and X • Additional work still needs to be done on second and third aims • Second aim: although TA/CB and S&DT issues are addressed in the Rev.4 Document, they are not yet clearly linked-up to specific TF measures/commitments for developing countries and LDCs • Third aim:Only two proposals submitted to date on customs cooperation issues (India and United States; India)

7. WTO Negotiations • WTO Progress To Date • Noprioritization and/or sequencing of potential WTO TF commitments for developing countries and LDCs • Attention to needs and priorities of developing countries considered in Rev. 4 document and in other NGTF work and documents (See TN/TF/W/59 which sets forth NGTF Self-Assessment Questionnaire and Inventory) • No Consensus w/in NGTF on the actual “package” of TF measures/commitments to be adopted at Hong Kong Ministerial

8. Hong Kong and Beyond • Trade Facilitation Strategies for Asia Pacific • Asia Pacific governments, business stakeholders and civil society need to determine what specific TF measures in the NGTF Rev.4 Document they are willing to support • National TF Assessment Process • Key to TF assessment process: TF should be situated w/in the larger context of a national trade and development strategy

9. Hong Kong and Beyond • National TF Assessment Process Steps: • Benchmarking of current state of TF implementation • TF Needs and Priorities (a consultative process) • Implementation costs for identified TF measures • Roles and sources ofTA/CB • Prioritization and sequencing of TF measures (on basis of NGTF Rev.4 Document) • S&DT Conditionality Issues

10. Hong Kong and Beyond • Consensus at the Hong Kong Ministerial • Consensus sought on at least a “basic package” of TF measures based on Rev.4 Document proposals • NGTF deliberations suggest that a “basic package” may emerge w/ predominant emphasis on Article X Transparency commitments • Beyond Hong Kong: More ambitious “phased packages”:Additional packages containing more demanding TF measures culminating in an “advanced package” which would include ICT-enabled “paperless trading” systems

11. Hong Kong and Beyond • UNESCAP/ARTNeT TF Studies • East and South Asia: China, India, Bangladesh, Nepal and Indonesia • TF Implementation to Date • Most countries in the ARTNeT studies are or will be implementing many of the NGTF Rev. 4 TF measures • Article X Implementation: • Increased dissemination of trade information, including national enquiry points and internet publication • Adoption of advanced ruling systems • Revision of trade/customs appealsprocedures

12. Hong Kong and Beyond • UNESCAP/ARTNeT TF Studies • TF Implementation to Date • Article VIII Implementation: • Reduction/simplification in trade/customs documentation • Automated, ICT-enabled “paperless trading” systems (i.e. UNCTAD ASYCUDA or national software systems (e.g., India’s ICEGATE) • Partial implementation of risk management systems and reduced customs inspection based on goods classification • Pre-arrival clearance systems • Stronger multi-agency co-ordination

13. Hong Kong and Beyond • UNESCAP/ARTNeT TF Studies • TF Implementation to Date • Article V Implementation: • Bilateral treaties generally consistent w/ Article V provisions • However, in practice,national treatmentnot always applied to goods in transit, particularly as regards choice of modes of transport

14. Hong Kong and Beyond • UNESCAP/ARTNeT TF Studies • Private Sector Surveys • Key Problem Areas: • Customs Valuation • Tariff Classification • Import Licensing Procedures • Inspection and Release • Technical Barriers (including SPS barriers) • Submission of Documentation

15. Hong Kong and Beyond • UNESCAP/ARTNeT TF Studies • Private Sector Surveys • TF Priorities: (1) Dissemination/publication of trade regulations and procedures (2) Elimination of corruption (3) Improvement in agency co-ordination (4) Computerization/automation of cross-border procedures (5) Pre-arrival clearance systems

16. Hong Kong and Beyond • UNESCAP/ARTNeT TF Studies • TF Implementation Costs (and Benefits) • TF cost measurement challenge: • Difficulty of “unbundling” TF implementation costs from regular customs/trade budgetary expenditures • ARTNeT Country Studies: TF Costs Hierarchy (1) Infrastructure costs (2) ICT-enabled “single window” systems (3) Risk management systems (4) Training/staff re-deployment costs

17. Hong Kong and Beyond • UNESCAP/ARTNeT TF Studies • TF Experts Survey • An independent qualitative assessment of costs, benefits, and implementation time-frames for selected NGTF Rev. 4 TF measures • Figure 1(infra) indicates: • Long-term savings achieved for all selected TF measures • Relatively low set-up/operating costs for several TF measures • Relatively high costs for implementing advanced customs methods (e.g., “single window” and risk management systems)

19. Hong Kong and Beyond • UNESCAP/ARTNeT TF Studies • TF Experts Survey • Table 1(infra) indicates: • Possible Sequencing of WTO TF commitments for developing country/LDC Members • However, Sequencing is ultimately a matter for each developing and LDC Member to determine on the basis of its own implementation capacities, needs and priorities, and by reference to its national trade and economic development strategy • The Table 1 Sequencing is useful in generally identifying TF measures in terms of progressive difficulty (and costs) of implementation

21. WTO Negotiations: Future Implications • World Bank and OECD studies point to the benefits of TF implementation for developing countries • Eventual WTO Agreement on Trade Facilitation will give rise to binding legal obligations on developing countries • Approaches toWTO TF implementation: • APEC TF Action Plan Approach: “Options Menu” • NGTF “Basic Package” + “Phased Packages”: • Implementation according to scheduled commitments • Linked to implementation capacities, needs, costs and the provision of specifically targeted, sustained TA/CB