Bridges Weekly Trade News Digest • Volume 11 • Number 27 • 25th July 2007
Steady Progress On Trade Facilitation, Though Developing Countries Ruffle Feathers
WTO Members are making "steady progress" on reducing red tape and other obstacles to the movement and transit of goods, the chair of the WTO negotiations on trade facilitation said at the end of a week of talks on 20 July.
Chair Ambassador Eduardo Ernesto Sperisen-Yurt (Guatemala) said that particularly valuable work had been done with regard to identifying countries’ trade facilitation needs and priorities, development aspects, cost implications, and inter-agency cooperation. Technical assistance is at the heart of the trade facilitation negotiations: the mandate is unique in that Members will not be required to implement new commitments unless they receive the technical assistance necessary to do so.
Specifically, Members are charged with clarifying GATT articles on the 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).
Trade facilitation is one of few areas in the troubled Doha Round talks on which negotiators have reported consistent progress, but this too has been slowed by the persistent impasse on the core issues of agriculture and industrial goods trade.
The recent session of the negotiating group ran for five days - three longer than normal. The chair suggested that this would let delegations discuss each others’ proposals in greater depth, and facilitate the participation of capital-based experts. He also added that it would give the Negotiating Group a new dynamic and inject additional momentum into the debate. One delegate said that the presence of capital-based officials allowed for a more detailed examination of customs-related issues with which many Geneva-based trade negotiators are unfamiliar.
As in recent sessions of the committee, negotiators discussed the contents of a potential WTO agreement on trade facilitation, including revised proposals for the legal phrasing of specific articles. Issues discussed included a Turkish proposal (TN/TF/W/120/Rev.1) on ‘advance rulings’, which would allow traders to seek binding decisions by customs authorities in advance of the export or import of goods, as long as they fulfil certain conditions. Also considered was a US proposal (TN/TF/W/144/Rev.1) on accelerated customs clearance proposals for ‘expedited shipments’, which, based on Members’ queries, it defined as those from exporters that use security, logistics, and tracking technology to track and control shipments at every point during their conveyance (see BRIDGES Weekly, 13 June 2007).
China (TN/TF/W/148) called for Members to use risk management techniques "to reduce, to the extent possible, physical inspections on goods." Specifically, they called for low-risk goods to be given accelerated clearance. Import inspection procedures have in recent weeks been in the spotlight in the US, after a series of revelations of tainted food and toy imports, most prominently from China.
With regard to the freedom of transit, delegates looked at a joint proposal by Turkey and Georgia (TN/TF/W/146), which argued that transit traffic quotas and permits along with discriminatory road and transit charges constituted a barrier to fair and competitive trade. Arguing that bilateral arrangements were insufficient to address the issue, they called for all WTO Members to establish quota-free road transit regimes, with charges applied equally to national and foreign transporters irrespective of origin. Delegations sought additional clarifications, to which Turkey promised to respond.
Developing country proposal criticised for exemptions
The most significant discussion, according to one developing country trade delegate, centred on a proposal for technical assistance and capacity building (TN/TF/W/147) jointly tabled by several developing country alliances, including the ‘core group’ (comprising Bangladesh, Botswana, Cuba, Egypt, India, Indonesia, Jamaica, Kenya, Malaysia, Mauritius, Namibia, Nepal, Nigeria, the Philippines, Rwanda, Tanzania, Trinidad & Tobago, Uganda, Venezuela, Zambia, and Zimbabwe), the Africa Group, the group of African, Caribbean, and Pacific (ACP) states, and the least-developed country (LDC) group.
The proposal classifies developing countries’ trade facilitation commitments into two categories: a minimal set, determined by each government, to be implemented upon the entry into force of the agreement, and a broader set to be implemented after the conclusion of a transition period of a to-be-determined number of years. This transition period, the proposal stipulates, should be long enough for countries to plan and carry out the steps necessary to become able to implement the commitments. Neither set of commitments would become mandatory implementation if governments continued to lack implementation capacity.
Furthermore, as a form of special and differential treatment, the proposal called for allowing developing countries to identify specific derogations from binding trade facilitation commitments, similar to the GATS-style limitations and restrictions Members are allowed to place on services liberalisation obligations.
In addition, the proposal delineated two types of technical assistance and capacity building (TACB), calling for donor governments’ commitments to be clear and operational. The first referred to TACB prior to signing on commitments, including assistance aimed at helping developing countries fully participate in the negotiations and to assess their own implementation capacity. The second comprised TACB post-entry into force of commitments.
As to the issue of how to determine whether developing countries have acquired the capacity to implement trade facilitation commitments, the proposal would leave it to the developing country alone, or for it to work out bilaterally with donors. It broached the concept of an ‘early warning’ mechanism under which developing countries would be able to inform the WTO about delays in implementing commitments.
In the case of LDCs, the proposal reiterated the need for TACB efforts to be tailored to individual countries. It also left the determination of capacity acquisition solely to each LDC Member.
The proposal, whose sponsors account for a majority of WTO Members, also called for the creation of a ‘Trade Facilitation Technical Assistance and Capacity Building Support Unit’ within the WTO Secretariat that match TACB resources provided by donors with the needs identified by developing country Members.
Trade sources report that the paper faced strong criticism from developed country Members such as the EU and Switzerland, as well as some developing countries like Costa Rica, for seeking too many exemptions for developing countries on the implementation of key parts of a multilateral agreement.
Switzerland expressed opposition to the notion of optional commitments within an agreement, while Costa Rica reportedly considered it a ’step backwards’, noting that the three GATT articles under discussion were already part of multilateral rules. Generally, developed countries were unhappy with letting developing countries ’self-assess’ implementation capacity, instead preferring a multilateral mechanism, sources said.
The Philippines countered that the objective was not to create opt-outs, but to ensure that countries get the technical assistance they need to implement the agreement.
According to one delegate, despite the overall optimism that trade facilitation remained a an area in which progress had been substantial enough to allow negotiators to proceed soon to talks on a draft agreement text, the developing country submission represented a certain hardening of attitudes. The official added that it would be difficult for the sponsors of the paper to agree to rapid movement in the talks without meaningful concessions from the predominantly developed countries that wanted negotiations on trade facilitation in the first place.
The next session of the trade facilitation negotiating group is tentatively scheduled for 1-3 October.
ICTSD reporting; "Bush Forms Cabinet Committee to Study Safety of U.S. Imports," NEW YORK TIMES, 19 July 2007.