MEMBERS TABLE DRAFT ARTICLES FOR FUTURE AGREEMENT ON TRADE FACILITATION

The outlines of a future WTO draft agreement on trade facilitation are starting to take shape, as Members proposed text for several potential articles during the 6-7 June meeting of the negotiating group.

The trade facilitation negotiations aim to simplify customs procedures and cut commerce-related red tape, as well as to enhance developing countries' ability to participate in international goods trade. The July 2004 Framework (WT/L/579) specified that developing and least-developed countries would not have to implement future trade facilitation obligations unless they received the technical assistance necessary to do so. During the recent meeting, a loose group of developed and developing countries responded to this unprecedented link by outlining a possible mechanism through which developing countries could seek and receive technical assistance before having to comply with new commitments.

Members are specifically mandated to clarify three articles of the General Agreement on Tariffs and Trade (GATT) 1994: 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).

Proposals suggest text for future agreement

Many of the papers tabled during the meeting built upon already-revised submissions to propose specific wording for different sections of a future agreement on trade facilitation. Several of them emphasised that general exceptions to WTO rules would also apply to the disciplines proposed.

For instance, the EU, Korea, and Switzerland (TN/TF/W/107) tabled a series of prospective rules governing the type and amount of trade-related fees and charges governments could levy, specifying that they must not exceed the approximate cost of the import- or export-related service they ostensibly pay for.

In an attempt to get countries to speed up customs clearance times, EU, Japan, Korea, Mongolia, and Taiwan proposed rules that would require them to periodically calculate and publish the length of their average periods for releasing goods, and commit to trying to reduce them. This provoked a response particularly from Australia and India, which said that they did not want any such commitment to be mandatory.

Japan, Mongolia, and Switzerland (TN/TF/W/114) tabled a series of potential disciplines that would require Members to clearly publish all trade-related laws and regulations. Their proposal lists the precise kinds of information that governments would be required to provide, and calls for the establishment of enquiry points where traders from any country would be able to find out about documentation and other requirements. Along with Korea, they also put forward draft articles (TN/TF/W/115) that would require Members to allow traders and other governments to comment on new or amended trade-related procedures, and publish adopted rules well in advance of their entry into force. The four countries jointly submitted another textual proposal (TN/TF/W/115) on 'pre-arrival processing,' which provides for customs and other border agencies to accept and examine import-related documentation submitted by traders before the goods arrive, in order to expedite their eventual clearance.

With regard to the transit of goods from other WTO Members -- a key problem for landlocked countries -- Armenia, the EU, the Kyrgyz Republic, Macedonia, and Moldova (TN/TF/W/113) put forward comprehensive disciplines to regulate how governments treat such goods. Specifically, they wanted countries to treat goods from all Members equally for transit purposes. Many Members were uncomfortable with the notion of according traders who would likely be from other countries the freedom to choose transit routes. They also criticised the proposal's call for goods in transit to be treated identically to domestic merchandise. One delegate told Bridges that locally-manufactured products might not require the sort of mandatory inspections which could be necessary for foreign goods.

Other potential rules proposed included disciplines from the EU, Switzerland, and Taiwan (TN/TF/W/109) that would oblige countries to provide expedited inspection clearance to "authorised traders" that meet certain criteria for past compliance. The EU and Taiwan (TN/TF/W/108) outlined a procedure for the progressive elimination of 'pre-shipment inspections,' which refers to requirements that the quality, quantity, or price of goods be verified before they can be exported.

New Zealand (TN/TF/W/111) tabled a provision that Members would have to apply objective criteria for the tariff classification of goods to ensure that they are not "arbitrary or unjustifiable," and "do not constitute a disguised restriction" to trade. It suggested that classifying all tariffs on the basis of the World Customs Organisations' HS Convention would achieve this.

Mechanism proposed for implementation

An informal group of developed and developing countries co-sponsored an informal 'non-paper' that spelled out a multi-stage process for the implementation of a future agreement on trade facilitation, specifically with regard to commitments that some Members might be unable to put into place on their own.

Canada, Chile, China, the EU, Guatemala, Honduras, Japan, Mexico, Pakistan, Paraguay, Sri Lanka, and Uruguay proposed that developing countries should, as soon as the agreement enters into force, formally commit to obligations conforming to measures that they already had in place and implement any minimal set of 'core' disciplines that might arise from the new rules.

The paper provides for developing countries to notify the WTO of any obligations that would require additional time or technical assistance to implement, after identifying them through a 'capacity self-assessment.'

Developing countries would not have to implement obligations requiring additional time until the end of the period specified in their notification.

For measures that would be impossible to implement without technical assistance, the paper would have developing countries formulate a 'capacity-building plan' in cooperation with donors and international organisations, and notify it along with specific implementation periods. At the end of the implementation period for such a plan, a developing country would have to verify whether it had indeed acquired the capacity to implement a particular obligation, and, if so, notify its newly-acquired ability to the WTO. Following this, it would become subject to legal challenge on the basis of the commitments in question.

In cases where Members disagree with another's assessment of its capacity to implement an obligation, the paper specifies that "a mechanism is to be developed" to resolve their differences. It also provides for 'multilateral dialogue' on countries' initial notifications of specific needs.

Sources report that interventions on the proposed mechanism were largely positive, with Barbados, Bolivia, India, New Zealand, and the US welcoming the proposal.

Comprehensive text likely in July

One trade diplomat described prospects for a comprehensive text on trade facilitation by July as good, since text-based proposals have now been made on roughly half the issues in the negotiations. The delegate suggested that Members are aware that they need to bring all of the text-based proposals together in a single document; some have wondered aloud whether the WTO Secretariat could do so, as it did for an earlier compilation of Members' less-evolved submissions (now TN/TF/W/43/Rev.7).

One delegate expressed doubt that all delegations were in a position to submit proposals in the form of draft legal text, but suggested that the simple fact that Members had already started text-based discussions was notable. The negotiator acknowledged the concern among some developing and least-developed countries that trade facilitation negotiations were almost proceeding 'too speedily,' and said that an agreement would have to wait for a deal on agriculture and industrial tariffs. Another trade diplomat said that if ministers and senior trade officials scheduled to meet at the end of June made a breakthrough in these two areas, Members would probably call upon the Secretariat to draft a comprehensive trade facilitation text based on their submissions.

Sources report that Chair Tony Miller (Hong Kong) suggested that he was not planning to come forward with a comprehensive text of his own, as some of his counterparts in other negotiating areas have been asked to do. He urged Members to keep producing text-based proposals until the end of June, ahead of an informal meeting of the negotiating group scheduled for 10-11 July.

ICTSD reporting.