Bridges Weekly Trade News Digest • Volume 8 • Number 40 • 24th November 2004
Progress Underway On Trade Facilitation
The second meeting of the Negotiating Group on Trade Facilitation took place on 22-23 November. The meeting consisted of a "stock-taking" process to establish the base for negotiations, with the WTO Secretariat, the World Customs Organisation (WCO), the UN Conference for Trade and Development (UNCTAD), the World Bank and the Organisation for Economic Co-operation and Development (OECD) making presentations on their work and their findings on trade facilitation.
The mandate and modalities for the negotiations on trade facilitation are set out in Annex D of the July Package (WT/L/579). "The negotiations," it specifies, "shall aim to clarify and improve relevant aspects of three Articles of the GATT 1994 with a view to further expediting the movement, release and clearance of goods, including goods in transit". The three Articles referred to are Article V, which deals with freedom of transit for goods from another member state and states that all charges imposed on goods in transit must be "reasonable"; Article VIII, which says that fees and formalities connected with importation and exportation must be about equal to the cost of the services rendered so that they do not constitute a form of indirect protection, and calls for reducing the number and diversity of such fees; and Article X, which requires all trade regulations to be clearly published and fairly administered.
Clarification and improvement of Articles V, VIII and X
The clarification and improvement of these articles will be the first item tackled in the negotiations. The Secretariat said that Members might feel the need for greater clarity with regard to some parts of the three articles. For example, Article V stipulates that all charges imposed be "reasonable". But what exactly does "reasonable" entail? How can the number of fees associated with the import and export of goods be reduced, as called for by Article VIII?
Members raise questions regarding illegal trade, security
In its presentation, the WCO focused on the importance of trade facilitation at the customs level in order to minimise unnecessary restrictions while the qualities of controls simultaneously are improved in an internationally harmonised manner. The presentation outlined the various trade facilitation and customs procedures tools developed by the WCO. It also underlined the importance of customs duties for poor developing countries, noting that customs duties ranged between 30 and 50 per cent of total treasury revenues — and in one case up to 70 percent.
In response to a question from Kenya and the EC on whether trade facilitation would lessen border controls aiming to control illegal trade and enhance security, the WCO responded that there was no evidence that trade facilitation impeded control. On the contrary, it enhanced customs controls by enabling customs authorities to focus on the areas that truly need control.
UNCTAD calls for coherent approach to trade facilitation
UNCTAD drew attention to the fact that a coherent approach to trade facilitation would require that Members move beyond customs procedures and address issues such as sanitary and phytosanitary measures, quarantine, technical barriers to trade, transport measures. The overall aim would be to simplify, harmonise, and standardise of all the measures involved. UNCTAD observed that in most countries, trade facilitation involved the ministries of trade, transport and finance as well as the private sector.
The World Bank, pointing to the "trade-barrier" effect of customs and regulatory formalities — increasingly regarded as more significant than tariffs — concluded that productive investment in trade facilitation, based on customs and border processing reform and modernisation, could deliver value for money and sound development results. The OECD highlighted examples of benefits in countries like Chile, Latvia, Morocco and Uganda, which had implemented improved customs facilities.
Members highlight their priorities
Many WTO Members, both developed and developing, recognised the benefits flowing from the trade facilitation negotiations in terms of transparency, certainty, legal security and efficiency in customs procedures. The EC noted that all countries would benefit from trade facilitation and that there was no North-South divide in this regard — the aim was a reduction of bureaucracy. Developing countries also noted concerns, however, especially regarding capacity issues.
Zambia, on behalf of the least developed countries (LDCs), called for technical assistance to be addressed as a priority, and said Members needed to put special and differential (S&D) treatment for developing countries into practice. The July Package deals states that "where required support and assistance for such infrastructure is not forthcoming, and where a developing or least-developed Member continues to lack the necessary capacity, implementation will not be required". Trade sources noted that such language is unprecedented in WTO negotiating; together provisions on technical assistance, S&D and LDCs, it had been critical to Members’ agreement to initiate trade facilitation talks. During the meeting, the EC noted to need to separate technical assistance available in the WTO context, and assistance other organisations could provide.
On the future process, a trade delegate described negotiations over the next year as set to be "flexible," "evolutionary" and "Member-driven". Relevant international organisations would be invited to attend on an ad-hoc basis.
The next meeting of the Negotiating Group is due to take place next year from 7-9 February.
ICTSD reporting.