TRADE FACILITATION TALKS RESUME WITH FLURRY OF NEW PROPOSALS

The 15-16 February meeting of the WTO Negotiating Group on Trade Facilitation, its first since the December Ministerial Conference in Hong Kong, saw a flurry of new proposals. The eight new submissions addressed all three of the General Agreement on Tariffs and Trade (GATT) 1994 articles that the trade facilitation negotiations are supposed to clarify: 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).

Which way towards transit?

Chile's submission (TN/TF/W/70), which dealt with all three articles, called on Members to establish "precise routes and periods of transit between an entry and an exit point," to levy no fees that are not strictly related to transport costs, and to make all transport-related charges public. Similar issues were raised in a joint eight-country paper from Armenia, Canada, the EU, the Kyrgyz Republic, Mongolia, New Zealand, Paraguay and Moldova (TN/TF/W/79), which said that transit-related charges should be transparent, roughly equivalent to the cost of the service rendered, and subject to periodic review.

Transit routes were the subject of many interventions at the meeting. Most countries felt that the choice of transit route should be based on commercial considerations, and be left to the operator. Others, notably Pakistan, deemed this approach 'risky'; Argentina mentioned the need for balancing commercial interests with national ones. The EU reportedly supported allowing traders to choose the route, with governments retaining the right to apply restrictions if needed. One developing country delegate when contacted mentioned that intensive use of one specific route could lead to congestion particularly when road quality and infrastructure were poor. It was necessary to improve a number of alternative routes between the entry and exit points and until then the government should be able to regulate traffic using a particular route.

Cost, S&D, TACB concerns underlie most proposals

With regard to trade-related fees and formalities, Chile's proposal included a 'single-window' for export/import clearance, as well as a register of all services connected with export and import operations in order to increase transparency and predictability. Some Members were sceptical of the proposal for a 'register,' considering it to be too costly.

Concerns about technical assistance, capacity building, and the cost of implementing future rules on trade facilitation were expressed in a number of proposals.

Mauritius' proposal on the behalf of the Group of African, Caribbean, and Pacific (ACP) countries (TN/TF/W/73) called for the establishment of an inter-agency coordinating mechanism for the provision of trade facilitation-related technical assistance and capacity building (TACB) involving international, regional and sub-regional organisations such as the UN Conference on Trade and Development (UNCTAD), the UN Economic Commission for Africa, the WTO, the World Customs Organisation, and the World Bank. This agency would help them identify their TACB related needs and priorities during the negotiations, and implement them afterwards.

Flexibility and the need for special and differential treatment (S&D) was a key aspect of the ACP submission. Moldova and the Kyrgyz Republic focused on these issues in a joint paper (TN/TF/W/74), as well as the proposal that they cosponsored with Armenia, Canada, the EU, Mongolia, New Zealand, and Paraguay. While the submission by Moldova and the Kyrgyz Republic requested special flexibilities for small low-income transition economies, the eight-country submission put forth concrete suggestions on S&D, including longer implementation periods for resource-intensive commitments, and even specific exemptions until capacity existed for least-developed countries (LDCs) and other countries in need, notably small low-income transition economies. The latter paper also noted the importance of S&D with regard to transit for land-locked countries, although it did not spell out what this might entail.

General, security exceptions emphasised

The eight-Member paper (W/79) set out a principle of 'non-discrimination' with regard to trade-related procedures and fees that echoed GATT prohibitions on discriminating between goods based on their national origin: "With respect to all laws, regulations, requirements, procedures and fees and charges, including transportation charges, affecting the internal passage of traffic in transit across the territory of a Member, without prejudice to the legitimate customs control and supervision of goods in transit, Members shall accord to traffic in transit to or from the territory of any Member, treatment no less favourable than that accorded to domestic goods, exports and imports, and their movement."

Stressing the importance of public policy objectives, the proposal refers to GATT general and security exceptions, specifying that "national security, health, safety and the environment, shall not be compromised in any way" by new disciplines on trade facilitation. It specifies that the treatment of traffic in transit must simply not be arbitrary, or constitute a disguised restriction on international trade. According to one trade source, these may be significant in terms of trade facilitation transit rules given increasing environmental, health and terrorism-related concerns among Members.

India: customs unions should harmonise border procedures

India made two submissions about harmonisation across customs unions. In a proposal on trade-related fees and formalities (TN/TF/W/ 77), it stressed the importance of uniform border clearance procedures for agriculture and food products among parties to a customs union, including specifications, definitions, inspection, sampling and test methods. India argued that the alternative was 'differential treatment' for the same good by different member states of a customs union.

In a complementary proposal on transparency (TN/TF/W/78), India argued that the 'rapid-alert' system used in some customs unions (and countries) to monitor and ensure the quality of imported food had trade-restricting effects. Under such systems, as soon as imports that are contaminated or that fail to meet the required standards are detected, every member of the customs union is notified, as is the exporting country, after which consignments from the exporter are subject to 100 percent inspection at points of entry, thus delaying clearance.

India contended that the alerts may be triggered by a parameter for which different member states of a customs union apply different requirements. It argued, therefore, that customs unions should only use rapid alert systems if they apply uniform standards across all of their constituent states. India also proposed procedures for rapid alerts to follow to minimise the chance that they would become an unfair barrier to trade.

One trade observer suggested that these proposals may have been made with the EU in mind, as it is both a major export market and a customs union in which some member states have different policies vis-à-vis food imports.

While the Indian proposals received praise for their substantive content and concrete focus, the EU and some other Members questioned whether the issues they raised fell within the mandate of the trade facilitation talks. India responded that while standard-setting did indeed lie outside the Negotiating Group's mandate, the problem in question was not about the standard, but about transparency and uniformity in administrative procedures at borders. According to one trade delegate, India asked why imports were rejected in one port but not another in the same customs union. Another developing country negotiator said that some exports often faced rejection during the months of the year in which the product in question was being harvested locally in the importing country, adding that specific causality in this case would be hard to prove.

The meeting also saw Egypt presenting its national experience on trade facilitation and their ideas on future needs and priorities (TN/TF/W/75), as well as a short paper from Australia, Canada and the US (TN/TF/W/80) on advance rulings. 'Advance rulings' allow traders to ask for and receive written certification about tariff levels from authorities in a destination country -- before the merchandise is prepared for export. The paper summarises common elements from eight prior proposals on the subject and suggests that Members consider scope, transparency, S&D, and technical assistance related to such rulings at the next meeting.

According to the informal timeline for the negotiations put forward by a late-January meeting of ministers from some 25-odd Member governments in Davos, countries are supposed to submit and discuss proposals on trade facilitation in February. The target for the first full draft text is July.

ICTSD reporting.