Bridges Weekly Trade News Digest • Volume 9 • Number 16 • 11th May 2005
Trade Facilitation Talks See Flurry Of New Proposals
The 2-3 May meeting of the Negotiating Group on Trade Facilitation saw several new proposals, as its previous session had in March (see BRIDGES Weekly, 6 April 2005). Eleven new papers were tabled, by both developing and developed country Members.
As before, the simplification and standardisation of rules governing the movement of goods was an underlying theme in most of the submissions. According to one Geneva source, several capital-based officials familiar with the issues were present at the meeting, facilitating constructive discussions and ‘on the spot’ responses to proposals.
The July Package (WT/L/579) sets out modalities for the trade facilitation negotiations, mandating Members to "clarify and improve relevant aspects" of General Agreement on Tariffs and Trade (GATT) 1994 Articles dealing with freedom of transit for goods from other Member states (Article V), trade-related fees and formalities (Article VIII), and transparency in the regulation and administration of trade regulations (Article X).
The discussions were structured in three parts — cross-cutting issues, substantive aspects related to the three articles, and presentations by relevant international organizations.
Peru calls for inventory of trade facilitation measures
In its submission (TN/TF/W/30) aimed at all three of the GATT Articles that come under the remit of the trade facilitation talks, Peru proposed establishing an inventory of applied trade facilitation measures. The inventory would link each measure to its beneficiaries, the sectors involved in its implementation, related regulations, and in particular, its economic and trade impacts. This information would then provide the basis for determining "which measures currently applied need to be endorsed and encouraged by technical and financial cooperation activities and reflected in WTO provisions"; and which new measures need to be developed and adopted by WTO Members, accompanied by appropriate assistance. China and Pakistan (TN/TF/W/29) supported by Sri Lanka proposed that Members use a common tool based on work already done by international organisations to identify trade facilitation needs and priorities.
One trade diplomat stated that Members need to assess the ‘implementation gap’ on the basis of countries’ abilities to meet the demands of actual proposals. On the basis of this ‘gap,’ they could then decide whether to adjust a particular country’s commitments downwards, or to accord it special and differential treatment (S&D) and technical assistance to help it make up the shortfall.
Transit Issues receive Greater Attention
Many of the new submissions focused on the transit of goods (Article V). This was welcomed by several land-locked countries. Bolivia, Mongolia and Paraguay (TN/TF/W/28) put forward a joint submission, as did Paraguay, Rwanda and Switzerland (TN/TF/W/39). Other papers came from Korea (TN/TF/W/34) and the EU (TN/TF/W/37). Most of these proposals highlighted various obstacles to the quick and predictable transit of goods. These obstacles, which render goods from landlocked countries particularly uncompetitive in world markets, included additional and sometimes illegal controls, excessive security measures, excessive and non-standardised documentation requirements, and a lack of coordination among different customs-related agencies. The EU submission (TN/TF/W/35) listed similar transit-related problems.
The submissions also highlighted unpublished and unreasonably high transit charges faced by land-locked Members in neighbouring countries. Paraguay, Rwanda and Switzerland’s proposal noted that for land-locked least developed countries (LDCs), freight and insurance costs in accounted for an average of 12.9 percent of total exports (compared to 8.1 and 5.8 percent in developing and developed countries, respectively), and that for some African LDCs, the figure was over 50 percent.
The submissions suggested solutions such as extending the non-discrimination principle to modes of transport, origin and destination, carriers, routes and goods, as well as promoting coordination among relevant authorities in neighbouring countries and the use of international standards for transit formalities. One delegate remarked that certain countries frequently discriminate in terms of treatment between ships and trucks from different countries, e.g., by requiring them to follow routes that are not cost-effective.
Proposals on transparency emphasize advance notice
The Peruvian submission also addressed transparency (Article X), as did a paper from Hong Kong (TN/TF/W/32). They underscored the importance of giving traders sufficient time to prepare themselves for new trade-related regulations. The Peruvian submission called for the publication of all relevant legislation on customs procedures as well as the establishment of minimum time periods before new regulations can enter into force. The Hong Kong submission reinforced this by demanding that new measures be published as early as possible.
Fees and formalities: use of international standards deemed essential
New Zealand, Norway and Switzerland (TN/TF/W/36) said that simplifying, reducing, and standardising documentation for trade-related fees and formalities (Article VIII) would help small and medium enterprises. Singapore’s submission (TN/TF/W/38) stressed the importance of advance rulings (i.e. advance information on tariff classification, customs valuation, etc.) in improving certainty and predictability with regard to customs procedures. Peru’s paper recommended that Members accede to the World Customs Organization (WCO) conventions that seek to harmonise and simplify customs procedures.
Africa Group Emphasizes Right to select policy options and policy flexibility
The group of African WTO Members (TN/TF/W/33) stated that the right to select policy options and exercise flexibilities granted to developing and least-developed countries must remain sacrosanct. The proposal emphasised the importance of S&D, technical assistance, capacity building and support for implementation assistance. Priorities identified by the African Group included reducing transport and communication costs, enhancing the capacities of customs agencies, and the integration of African enterprises and economies into international payment and insurance systems.
South African trade analyst Nkululeko Khumalo wrote in the Johannesburg daily Business Day that the WTO needs to go beyond the scope of its current discussions and put greater emphasis on capacity building and technical assistance, particularly as it pertains to infrastructure needs such as transportation networks. A Geneva-based delegate countered this by indicating that Members must decide on actual commitments before they can make concrete decisions about necessary assistance.
Sources report that one of the notable aspects of the meeting was a World Bank presentation on a project in Jamaica which apparently not only enhanced trade facilitation but also enabled government agencies to participate in WTO negotiations.
The EU (TN/TF/W/37) described its current technical assistance initiatives, including a 60 million euro project to overhaul the Egyptian customs system. It also stated that trade-facilitation related technical assistance was an important component of its regional trade negotiations with developing countries.
‘Hong-Kong is not the horizon’ for trade facilitation
A negotiator said that there is no urgency to develop ‘modalities’ for trade facilitation as there is for other areas of the negotiations, since the GATT Articles themselves give Members a basis to work from. Delegates simply needed to assess progress in the discussions and determine what should go into a package for adoption at the WTO’s December Ministerial Conference in Hong Kong. As far as the negotiations are concerned, however, "Hong Kong is not the horizon for trade facilitation."
Another trade diplomat remarked that Members differed on what should come first — needs assessment, technical assistance, or WTO commitments.
The next meeting of the Negotiating Group is scheduled for 13-14 June. According to one trade source, there was some expectation that Members would table proposals regarding the future direction of negotiations.
ICTSD reporting; "Break down Africa’s Barriers," BUSINESS DAY, 10 May 2005.