Technical Aspects of GATT Articles V, VIII and X and the

UNECE Trade Facilitation Instruments

UNECE-UNESCAP Capacity Building Workshop on Trade Facilitation Implementation

for Asia and the Pacific Region

17 – 18 March 2005, Kuala Lumpur

Ms Maria Misovicova, UNECE, Trade Division

ContentContent

Technical and Legal Aspects of Articles Technical and Legal Aspects of Articles V, VIII and X of the GATT 1994V, VIII and X of the GATT 1994

UNECE/ UN/CEFACT Instruments UNECE/ UN/CEFACT Instruments available for implementation available for implementation

Capacity Building and Technical Capacity Building and Technical AssistanceAssistance

Current EnvironmentCurrent Environment

Business needs Business needs (global supply chains): (global supply chains): demanding speedy, secure and simplified demanding speedy, secure and simplified proceduresprocedures

Trade Facilitation as a Policy issue, currently Trade Facilitation as a Policy issue, currently determined by: determined by:

Increased role in Trade/Economic Increased role in Trade/Economic DevelopmentDevelopment

TF in WTO (TF in WTO (GATT GATT Articles V, VIII & X)Articles V, VIII & X)

Regional Initiatives Regional Initiatives ((APEC Strategy, ASEAN APEC Strategy, ASEAN Single Window InitiativeSingle Window Initiative))

TF and Security TF and Security

WTO Trade Facilitation WTO Trade Facilitation NegotiationsNegotiations

OBJECTIVES:OBJECTIVES:• ““shall aim to clarify and improve relevant aspects shall aim to clarify and improve relevant aspects

of of Articles V, VIII and X of the GATT 1994Articles V, VIII and X of the GATT 1994 with with a view to further expediting the movement, a view to further expediting the movement, release and clearance of goods, including goods release and clearance of goods, including goods in transit” (July Package, Annex D)in transit” (July Package, Annex D)

• Recognizing Special and Differential Treatment Recognizing Special and Differential Treatment (SDT) (SDT) for developing countries and LDCs: for developing countries and LDCs:

Entering into commitments related to their Entering into commitments related to their implementation capacities (CB and TA, investment in implementation capacities (CB and TA, investment in infrastructures...)infrastructures...)

Beyond traditional SDT (pure exemptions, transition Beyond traditional SDT (pure exemptions, transition periods, differentiated non-reciprocity)periods, differentiated non-reciprocity)

WTO: Core PrinciplesWTO: Core Principles

Most-Most-favouredfavoured Nation (MFN) Nation (MFN) Treatment (non-discrimination, Art. I Treatment (non-discrimination, Art. I of the GATT1994)of the GATT1994)

National TreatmentNational Treatment (Art. III) (Art. III)

TransparencyTransparency (Art. X) (Art. X)

UNECE/ UN/CEFACT doing the" HOW“

of trade facilitation:

delivering the solutions for supply chain to facilitate international trade and business

processes(Trade and transport facilitation conventions, standards,

recommendations, best practices and other tools...)

WTO doing the „WHAT“ of the international trade:

Legally binding rules to be observed by the countries, while respecting SDT

WTO vs. UNECE: different but WTO vs. UNECE: different but complementary approachescomplementary approaches

Article V obligationsArticle V obligations

Article V of the GATT imposes obligationsArticle V of the GATT imposes obligations regarding “traffic in transit”regarding “traffic in transit”::

The basic objective is to allow for The basic objective is to allow for freedom of transit through a country freedom of transit through a country (paragraphs 2, 3, 4)(paragraphs 2, 3, 4)

Article V also imposes a non-Article V also imposes a non-discrimination requirement (MFN) discrimination requirement (MFN) (paragraphs 2,5,6)(paragraphs 2,5,6)

Freedom of TransitFreedom of Transit

There is freedom of transit (through the There is freedom of transit (through the most convenient route) for goods from most convenient route) for goods from one WTO member to another WTO one WTO member to another WTO member (para.2) member (para.2)

There is a broad duty to prevent There is a broad duty to prevent “unnecessary delays or “unnecessary delays or restrictions”(para.3) restrictions”(para.3)

Charges and regulations imposed must Charges and regulations imposed must be “reasonable” (para.4)be “reasonable” (para.4)

Traffic in transit is exempt from customs Traffic in transit is exempt from customs duties, a member can only impose duties, a member can only impose charges commensurate with the expenses charges commensurate with the expenses incurred (para. 3) incurred (para. 3)

Non-discriminatory Non-discriminatory TreatmentTreatment (MFN) (MFN)

In respect of all “charges, regulations and In respect of all “charges, regulations and formalities in connection with transit” there formalities in connection with transit” there is an MFN requirement (para.3) is an MFN requirement (para.3)

No distinction can be made based on No distinction can be made based on between traffic in transit on grounds of the between traffic in transit on grounds of the ownership of the means of ownership of the means of transport/goods, the origin/destination of transport/goods, the origin/destination of the traffic etc. (para.2) the traffic etc. (para.2)

Directly transported goods and goods Directly transported goods and goods which are transported via a third country which are transported via a third country should be treated equally by the receiving should be treated equally by the receiving country (para. 6)country (para. 6)

Some issues raised on Some issues raised on Article Article V (2002)V (2002)

• Reduction, simplification and harmonization of documentary and data requirements, and procedures for transit, including risk assessment and limitation of physical inspection (CAN, EC KOR)

• Use of existing multilateral, regional and bilateral transit instruments or arrangements (CAN, EC)

Note:• Great Importance for land-locked countries

ArticleArticle V: UNECE V: UNECE Instruments availableInstruments available

TIR ConventionTIR Convention (Transport Internationaux Routiers)(Transport Internationaux Routiers):: MultimodalMultimodal Goods carried under the TIR procedure in Goods carried under the TIR procedure in

approved and sealed road vehicles, approved and sealed road vehicles, combination of vehicles or containers combination of vehicles or containers is not is not subject to Customs examinationsubject to Customs examination, unless , unless irregularities are suspected irregularities are suspected

Reduces:Reduces: regular requirements of national regular requirements of national transit procedures and physical inspections transit procedures and physical inspections in transit countriesin transit countries

Using a single standardized document: Using a single standardized document: CarnetCarnet

Article VIII obligationsArticle VIII obligations

Imposes an obligation on a WTO Member to limit Imposes an obligation on a WTO Member to limit the the fees and chargesfees and charges being charged in being charged in connection with importation/exportation to the connection with importation/exportation to the level of the approximate cost of the services level of the approximate cost of the services rendered by it (paras. 1(a),4) rendered by it (paras. 1(a),4) ANDAND recognizes recognizes the the need to reduceneed to reduce them as to the number and them as to the number and diversity diversity

Requires WTO members Requires WTO members not to impose not to impose substantial penalties for minor breachessubstantial penalties for minor breaches of of customs regulations or procedural requirements customs regulations or procedural requirements (para. 3)(para. 3)

Recognizes the need to Recognizes the need to reducereduce the incidence the incidence and complexity of import and export related and complexity of import and export related formalities formalities and and documentary requirementsdocumentary requirements (paras. 1(b), 1(c))(paras. 1(b), 1(c))

Fees and ChargesFees and Charges

Requirement to limit the fees and charges to the Requirement to limit the fees and charges to the approximate cost of the service renderedapproximate cost of the service rendered

Applies to fees and charges connected with Applies to fees and charges connected with importation and exportation, with the exception importation and exportation, with the exception of:of:

(i) import and export duties (i) import and export duties (ii) internal taxes applied at the border (ii) internal taxes applied at the border

Therefore Article VIII applies to a residual Therefore Article VIII applies to a residual category of fees and charges connected with category of fees and charges connected with importation or exportation, such as: inspection importation or exportation, such as: inspection fees (SPS), licensing fees etc. fees (SPS), licensing fees etc.

The charge does not represent indirect protection The charge does not represent indirect protection to domestic products or taxation for fiscal to domestic products or taxation for fiscal purposespurposes

Complexity of import and Complexity of import and export formalitiesexport formalities

The The best-endeavourbest-endeavour statements statements ( (paras. 1(b) paras. 1(b) and 1(c)and 1(c)):):

These provisions These provisions recogniserecognise the need to the need to:: (1)(1) minimise the incidence and complexity of import and minimise the incidence and complexity of import and

export formalitiesexport formalities(2)(2) decrease and simplify documentation requirementsdecrease and simplify documentation requirements(3)(3) reduce the number and diversity of fees and charges reduce the number and diversity of fees and charges

imposed in connection with importation imposed in connection with importation

However, there is However, there is no legally binding no legally binding commitmentcommitment under these provisions, under these provisions, accordingly WTO Members retain their policy accordingly WTO Members retain their policy autonomy in this regardautonomy in this regard, , but at the end of but at the end of negotiations there might be some obligationsnegotiations there might be some obligations

Some issues raised on Some issues raised on Article Article VIII (2002)VIII (2002)

• Simplifying border-related documentation and Simplifying border-related documentation and increasing compatibility/ increasing compatibility/ standardizing datastandardizing data required for release of merchandise by using required for release of merchandise by using existing existing international standardsinternational standards where where appropriate and developing common data sets to appropriate and developing common data sets to be requested in the process of clearance (CAN, be requested in the process of clearance (CAN, HKG, EC)HKG, EC)

• Reducing Reducing excessive documentation excessive documentation andand data data requirementsrequirements (COL, EC) (COL, EC)

• Establishing a Establishing a Single AgencySingle Agency for trade for trade documentdocumentss and data (COL, EC, JAP) and data (COL, EC, JAP)

• AutomationAutomation and use of ICT (COL, JAP, EC) and use of ICT (COL, JAP, EC)• Advance informationAdvance information ( (CAN, EC, JAP, KOR)CAN, EC, JAP, KOR)

ArticleArticle VIII: UNECE VIII: UNECE Instruments availableInstruments available

• United Nations Layout KeyUnited Nations Layout Key for Trade for Trade Documents (UNLK/ ISO 6422), Codes: Documents (UNLK/ ISO 6422), Codes: UN/LOCODE, Currency, Modes of Transport, UN/LOCODE, Currency, Modes of Transport, ISO Country Code...ISO Country Code...

• Recommendation and Guidelines on establishing Recommendation and Guidelines on establishing a a Single WindowSingle Window (UN/CEFACT (UN/CEFACT Recommendation 33)Recommendation 33)

• UN/CEFACT Recommendations 4UN/CEFACT Recommendations 4 (TF Pro (TF Pro Committees) and Committees) and 1818 (Facilitation Measures (Facilitation Measures related to Int´l Trade Procedures)related to Int´l Trade Procedures)

• UN/EDIFACT, UN Trade Data Element Trade Data Element Directory (UNTDED), UNeDocsDirectory (UNTDED), UNeDocs

• New: Benchmarking Guide, Single Window Repository, to be available in 2005

Article X obligationsArticle X obligations

Imposes obligations regarding:Imposes obligations regarding:

TransparencyTransparency/ publication requirement / publication requirement (para 1, 2)(para 1, 2)

Impartiality in administrationImpartiality in administration of laws, of laws, regulations and administrative rulings of regulations and administrative rulings of general application (para 3)general application (para 3)

Transparency obligationsTransparency obligations

There is a duty to There is a duty to promptly publishpromptly publish::““laws, regulations, judicial decisions andlaws, regulations, judicial decisions and administrative rulings of general administrative rulings of general application”application”

Regarding: Regarding: ““the classification or the valuation of products the classification or the valuation of products

for customs purposes” for customs purposes” ““rates of duty, taxes or other charges”rates of duty, taxes or other charges” ““requirements, restrictions or prohibitions on requirements, restrictions or prohibitions on

imports or exports or on the transfer of imports or exports or on the transfer of payments therefor, or affecting their sale, payments therefor, or affecting their sale, distribution, transportation, insurance, distribution, transportation, insurance, warehousingwarehousing

Some issues raised on Some issues raised on Article XArticle X (2005) (2005)

WHEN to publish:Currently: to publish before starting applying certain measures and regulationsProposal: a prior publication of the proposed measures and regulations to allow other WTO Members to comment on proposed the measures

HOW to publish:Currently: no obligation to publish by particular means Proposal: to make information available through Internet and to establish Single Entry Points for information

Appeal Procedure:Currently: having guaranteed an appeal for any customs determinationProposal: asking for interim measures during the appeal so that you do not collect any duties during that time

Note: Implications of the proposed measures (developing countries)

ArticleArticle X: UNECE X: UNECE Instruments Instruments availableavailable

• UN/CEFACT Recommendations 4UN/CEFACT Recommendations 4 (TF (TF Pro Committees)Pro Committees)

• Recommendation and Guidelines on Recommendation and Guidelines on establishing a establishing a Single WindowSingle Window (UN/CEFACT Recommendation 33)(UN/CEFACT Recommendation 33)

SUMMARY SUMMARY OF UNECE and OF UNECE and UN/CEFACT UN/CEFACT TRADE TRADE

FACILITATION TOOLSFACILITATION TOOLS

Article V:Article V:• Transport and Transit Facilitation Instruments (TIR

Convention, Harmonization Convention...)

Article VIII:• Standards and tools for trade documents (UNLK,

UNTDED, UNeDocs)• Simplification and harmonization of trade procedures

(Recommendation 33 - Single Window, Recommendation 4 - TF Pro Organizations, Recommendation 18 -Trade Facilitation Processes)

• Codes for International Trade (UN/LOCODE, Country Codes, Currency Code...)

• Automation and e-business instruments (UN/EDIFACT, UNeDocs, UNTDED...)

Article X:• Single Entry Information Point: Single Window

Recommendation

ImplementationImplementation

Capacity Building and Cooperation:Capacity Building and Cooperation:- African Group (March 2005)African Group (March 2005)- Asia and the Pacific Region (March 2005)Asia and the Pacific Region (March 2005)- Other 13 regional workshops organized Other 13 regional workshops organized

jointly with other 4 UN Regional jointly with other 4 UN Regional Commissions under the TF Inter-regional Commissions under the TF Inter-regional Project (2005-2006)Project (2005-2006)

- Global Facilitation Partnership (GFP) – Global Facilitation Partnership (GFP) – World Bank, UNCTAD, WCO...World Bank, UNCTAD, WCO...

- WTOWTO

WCO

WTO

ICC

ITC

ISO

UNCTAD

UN/CEFACT

AFACT

Total Total int´l int´l organizationorganizationss focus focus

Follow-upFollow-up

All UNECE Recommendations, codes, All UNECE Recommendations, codes, standards and publications are available standards and publications are available for free on our website at:for free on our website at:

www.unece.org/tradewww.unece.org/trade

www.unece.org/cefact/www.unece.org/cefact/

www.unece.org/etrades/unedocs/www.unece.org/etrades/unedocs/

THANK YOUTHANK YOU !!! !!!

maria.misovicova@unece.orgmaria.misovicova@unece.org