Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany 1 Market Access: Tariffs and other Charges WTO Law V.1

Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany 1

Market Access: Tariffs and other Charges

WTO Law V.1

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TRADE BARRIERS

1.

•Tariff Barriers

•Tariffs and Charges

2.

•Non-Tariff-Barriers



Tariff Reduction and its impact

Customs Unions

and Free Trade zones

Development preferences

Non Tariff Barriers

Agriculture?

NAMA negotiati

ons ?Tariffs go down since 1947 from average 47 % to

3.9 %



Function of Tariffs

State income

Protectionist tool/Currency measure

Balancing against unfairness



Tariff Schedule of a Country - 1Part I : Most-favoured-nation or MFN concessions, maximum tariffs to goods from other WTO members. Part I is further divided into:- Section 1A — tariffs on agricultural products- Section 1B — tariff quotas on agricultural products- Section II — Other products Part II: Preferential concessions (tariffs relating to trade arrangements listed in GATT Article I) Part III: Concessions on non-tariff measures (NTMs) Part IV: Specific commitments on domestic support and export subsidies on agricultural products



Tariff Schedule of a country - 2

Tariff item numberDescription of the productRate of dutyPresent concession establishedInitial Negotiation Rights (or INR, such as main suppliers of product)Concession first incorporated in a GATT ScheduleINR on earlier occasionsOther duties and chargesFor agricultural products special safeguards may also be defined



Harmonized System Classification

Section I (Chapters 1-5, live animals and animal products);Section II (Chapters 6-14, vegetable products);Section III (Chapter 15, animal or vegetable fats and oils);Section IV (Chapters 16-24, prepared foodstuffs, beverages and spirits, tobacco);Section V (Chapters 25-27, mineral products);Section VI (Chapters 28-38, chemical products);Section VII (Chapters 39-40, plastics and rubber);Section VIII (Chapters 41-43, leather and travel goods);Section IX (Chapters 44-46, wood, charcoal, cork);Section X (Chapters 47-49, wood pulp, paper and paperboard articles);Section XI (Chapters 50-63, textiles and textile products);

Section XII (Chapters 64-67, footwear, umbrellas, artificial flowers);Section XIII (Chapters 68-70, stone, cement, ceramic, glass);Section XIV (Chapter 71, pearls, precious metals);Section XV (Chapters 72-83, base metals);Section XVI (Chapters 84-85, electrical machinery);Section XVII (Chapters 86-89, vehicles, aircraft, vessels);Section XVIII (Chapters 90-92, optical instruments, clocks and watches, musical instruments);Section XIX (Chapter 93, arms and ammunition);Section XX (Chapters 94-96, furniture, toys, miscellaneous manufactured articles);Section XXI (Chapter 97, works of art, antiques).



Aspects of Calculating Tariffs

Classification• Tariff Rate

Customs Valuation• Origin of the Goods



Classification of Goods

Most States: Harmonized System of the WCO

H.S. CodesRegularly RevisedGeneral Rules for InterpretationExplanatory notes (authentic interpretation)



Tariff Rates

Specific

•Quantity

Ad Valorem

•Value of goods

Mixed

•Partly Quantity

•Partly Volume



Customs Valuation

1.Transaction Value of the actual good2.Transaction Value of identical goods3.Transaction Value of similar goods4.Deductive Value Method5.Computed Value Method6.Fall – Back Method

See Art. VII GATT and the „AGREEMENT ON IMPLEMENTATION OF ARTICLE VII OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994”

Different Methods of Calculation:



Origin of the Goods

Last Substantial TransformationChange of Tariff Classification

Value Added

Manufacturing or processing operation

Relevance• Preferential Treatment or Trade Measures• Different steps of production in different

countries

• Possible Criteria



Tariff Regime in GATTTariffication -> Elimination of NTBs (XI GATT)Reduction of Tariffs through negotiation Rounds

Geneva, Annecy, Torquay, Geneva, Dillon, Kennedy, Tokyo, Uruguay, Doha (47 to 3,9 %)

Changing ApproachesProduct-By-Product -> MFNLinear Reduction Approach -> Different Levels of reductionHarmonization Formula -> differentiated reductionsSector Approach: different formula in different sectors

ResultCountry Schedules

Part of the GATT



Bound TariffsUpper Ceiling of tariff duties on specific goods (II.1 GATT)Flexible by Renegotiation Rights (XXVIII GATT)

After 3 YearsWith INR countries or member countries having a „principal supplying Interest“ and other „substantial interests“Goal: to "endeavor to maintain a general level of reciprocal and mutually advantageous concessions not less favorable to trade than that provided for in this agreement prior to such negotiations." If no agreement – unilateral action and countermeasure



Other Border Charges

Other duties and charges (II.2 and VII GATT)No ordinary dutiesAdministrative Services, Fees for Statistics, Security Deposits

Generally a Standstill: notified in the scheduleExceptions

Border Tax adjustmentAD and CV DutiesCommensurate Service Fees (VII.4 GATT)



Freedom of Transit

Art. V GATTTraffic in TransitNo discriminationMFN treatmentNo unreasonable charges, regulations and delays



Transparency and legal protection

Art. X GATTPublication (1)

In advance (2)Uniform, impartial and reasonable administration (3 a)Judicial Review (3 b, c)



Non-tariff Barriers (NTBs)

„Prohibitions and restrictions other than duties, taxes and other charges“

Legal or factualPotential for restrictions is sufficient

Quantitative RestrictionsImport LicensesOther NTBs

Tariff quotas ?Import bans ?

Border measuresBorder adjustment? Asbestos Case!



NTBs

B o rd er M e asu res

Q uo ta Im po rt/ E xpo rt B a ns

Q R s

M a x im u m /M in im um P rices

Im p ort L ice n ses

P re sh ip m e n t I

C u s to m s Fo rm a lit ies

O th e r N T B s

N o n -T a riff B a rrie rs



Applicable Norms: General (GATT)

General RulesXI.1, XIII GATT

VIII GATT for fees and chargesIX. marks of origin (see also 22-24 TRIPS)

ExceptionsXI.2 are specific exceptionsXIX, XX, XXI GATT, XXIV, XXV are general exceptions



Principles

Prohibition of all NTBsExcept for art. XI.2

If not justified under XX, XI, XXIV, XXVAnd not in violation of art XIII (no discriminatory application)If not covered by special rules

TBT, SPS, Government Procurement Agreement, Import Licenses AgreementAgriculture: XI:2 and the Agreement on Agriculture



Applicable Rules: Specific

Specific rulesTBTSPS (see XX (b) GATT)GPA11 Safeguards Agreement (OMAs, VERs etc.)4.2 Agriculture AgreementImport Licensing Agreement



Technical Standards

SPSAnnex A SPS

TBT (art. 1 and Annex 1)Technical Regulation Technical StandardNot covered by the SPS (art. 1.5 TBT)

General FeaturesPromoting international harmonisation (3.1 SPS, 2.4 TBT)Rebuttable Presumption in favor (2.5 TBT, 3.2 SPSAdditional obligations (3.3 SPS, 2.4 TBTNotification (2.11 TBT, 7 SPS)Explanation (2.5 TBT, 5.8 SPS)

Recognition of foreign standardsLimite duty (4 SPS, 2.7 TBT)



Hierarchy of Norms

The MTAs prevail over GATT 1994 (Annex I a to the WTOA) to the extent of possible conflictsSPS prevail over TBT (1.5 TBT)

Important because of the difference between 3.3 SPS and 2.4 TBT



Divergence from international standards - SPS

SPSBasis 3.1Conformity 3.2Divergence 3.3

Risk Assessment 5Science and Economic factors (5.2 and 3)

Actual risks Actual potential in the real world Particular type of risk Quantitative or qualitative assessment Own or foreign assessment

Necessity (5.4 and 5.6)No arbitrary or unjustifiable distinctions (5.5.)

Preliminary risk determination (5.7)



Divergence from international standards - TBT

Scope of application 1.3MFN (2.1)Necessity (2.2 and 2.3)

Legitimate objective

Harmonization (2.4)Divergence if international standards are ineffective or inappropriateConformity – Rebuttable Presumption (2.5), but only duty to consider as principal constituent or fundamental principle



GPA

Plurilateral Agreement (37 and the EU)Procurement of central and sub-central government entitiesExceeding certain threshold limit values

Annex 5: 5 mio SDRSupply and service: 400.000 or 200.000 SDR

Exceptions: Security and other legitimate public concerns, see art. XXIII.2 GPAAllowed Procedures

Open, non-open, limited

TransparencyLimited AcceptanceDispute settlement



GATS

Market Access Rules (XVI) and other barriersFreedom to exclude

Quantitative restricitions (XVI.2 a-d)Company Law (XVI.2 e)Investment Restrictions (XVI.2 f)

ConcessionsLiberalization in the Commitments (Schedules) (XX)Application of MFN (XVI.1)Application of NT (XVII)



Service Schedule

Four columsSector (12 classes with 150 sub-sectors) and service mode (art. 1)Terms, limitation and conditions on market accessConditions and qualifications on national treatmentUndertakings concerning additional commitments

Bound, Conditionally Bound, UnboundIncluding intl. Transfers and Payments for services



Changes of Commitments

Rounds of Negotiation (XIX)So far sucessful: telecommunications, financial services and only partly movement of personsDoha Round ?

Modification or withdrawal (XXI GATS)CompensationArbitration Countermeasures



Other trade barriers for services

Lacking transparency – see art. III Unreasonable, subjective or partisan administration – see art. VI.1 Licensing, qualification requirements and technical standards as nullification or impairment of market access commitments – see art. VI.5 (a)Non – recognition of foreign diplomas and certificates – see art. VII.1Service monopolies – see art. VIII.1Restrictive business practices – see art. IXRestraints of international transfers and payments for services – see art. XIGovernment procurement – see art. XIII.1 and the GPA as a PTA


Documents

Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany 1 Market Access: Tariffs and other Charges WTO Law V.1