| In trade facilitation negotiations, developing countries question the nature of commitments in trade while developed countries propose new obligations
TWN Info Service on WTO and Trade Issues (Feb05/4)
17 February 2005
Third World Network
www.twnside.org.sg In the July 2004 Package, it was decided that negotiations would be launched on trade facilitation (one of the “Singapore issues”). This would involve clarifying and reviewing three existing articles in GATT 1994: Articles V [transit of goods], VIII [fees and charges] and X [transparency in the publication and administration of trade regulations], “with a view to further expediting the movement, release and clearance of goods, including goods in transit,” On 7 and 9 February 2005, the third meeting following the July Package was held of the Negotiating Group on Trade Facilitation held at the WTO. At the meeting, there was a clear contrast in the basic approaches of developing and developed countries. Many developing countries and their groupings raised the issue whether any agreement arising from the negotiations should be legally binding or instead be based on a system of incentives, and stressed that developing countries could only implement commitments if they have the resources to do so, as agreed to in the text on trade facilitation (Annex B of the July package). On the other hand, many developed countries submitted papers that gave specific proposals on new obligations that WTO members should undertake on various aspects of trade facilitation. These proposals were met with great caution by several developing countries. Below is a report by Goh Chien Yen on the meeting. ---------------------------------------------------- DEVELOPING COUNTRIES QUESTION THE NATURE OF COMMITMENTS IN TRADE FACILITATION, WHILE DEVELOPED COUNTRIES PROPOSE NEW OBLIGATIONS.
TWN Report by Goh Chien Yen
Geneva, 14 February 2005 There was a clear contrast in basic approach taken by developing and developed countries at a meeting of the Negotiating Group on Trade Facilitation held at the WTO on 7 and 9 February. It was the Group’s third meeting since the “July Package” of 2004 which decided to launch negotiations on the topic. Many developing countries and their groupings raised the issue whether any agreement arising from the negotiations should be legally binding or instead be based on a system of incentives, and stressed that developing countries could only implement commitments if they have the resources to do so, as agreed to in the text on trade facilitation (Annex B of the July package). On the other hand, many developed countries submitted papers that gave specific proposals on new obligations that WTO members should undertake on various aspects of trade facilitation. These proposals were met with great caution by several developing countries. The Philippines speaking on behalf of the Core Group{[1]}, a prominent grouping of 19 developing countries in the trade facilitation negotiations, pointed out that “an important question that will have to be addressed during the negotiations is the question of what legal commitments if any will a new agreement entail.” The Negotiating Group on Trade Facilitation met on the 7th and 9th Feb 2005 for the third time since the adoption of the July Package last year in August. The Core Group in their statement highlighted a recent World Bank publication on trade facilitation which concluded that “trying to compel countries’ reforms to adopt particular institutions or forms under threat of trade sanctions is unlikely to succeed—and may even be counterproductive.” This is because “improving [trade facilitation] institutions is a continued process and there is no single recipe for design and organization of good institutions,” the World Bank said. It proposed that “one alternative is to ask countries to develop a trade facilitation program that would subsume an action plan for institutional requirements and report on progress as part of the [WTO] Trade Policy Review Mechanism...” Hence, according to the Core Group, “it will have to be discussed, whether the components of an agreement on trade facilitation will lead to dispute resolution or rules based commitments of compelled reforms or a more general incentives based reform commitment process that recognizes the large resources and lengthy timeframe involved…” The Core Group sees that “the specific task and challenge of this Negotiating Group is to make a concrete list of the specific components and criteria for promoting trade facilitation..., while keeping in mind that these negotiations are in the context of the Doha Development Round and are limited in scope to reviewing and clarifying GATT Articles V, VIII and X.” The Africa Group also made a statement. It stressed the importance of reaffirming the understanding that the scope of negotiations is only limited to Articles V, VIII and X of GATT 1994. It said that special and differential treatment for developing countries is a key principle in Annex D on trade facilitation and the Group wanted this principle to be early identified in the negotiations and added this should not be limited to longer transition periods for implementing any new possible obligations. The Africa Group cited paragraph 3 of Annex D that LDCs will not be asked to make commitments inconsistent with their development policy and asked that this be made operational in that it will “provide LDCs the basis for not undertaking commitments that are not compatible with their development, financial or trade needs or their administrative and institutional capabilities.” On para 4 requiring members to identify their trade facilitation needs and priorities, the Africa Group said many African countries face resource constraints that may limit their ability toi undertake a comprehensive review of their existing trade facilitation infrastructure to serve as the basis for their individual national identification of trade facilitation needs and priorities. “In this regard, we believe the provision of externally-sourced resources to support such review and identification of TF needs and priorities is essential. Further, a study on the needs and priorities of African countries, including flexibilities and costs of adjustment, must be conducted.” Many of the developing countries stressed the importance of technical assistance and capacity building. The Core Group pointed out that the proposals submitted so far do not contain any definitive or concrete S and D or financial or technical assistance components as mandated by the July package. “It is important to the Core Group that such components be integrated into each and every trade facilitation proposal.” [According to Annex D of the July Package on Trade Facilitation, “…the provision of technical assistance and support for capacity building is vital for developing and least-developed countries (LDCs) to enable them to fully participate in and benefit from the negotiations. Members, in particular developed countries, therefore commit themselves to adequately ensure such support and assistance during the negotiations.”] Zambia, on behalf of the LDCs reiterated the need for financial assistance and technical assistance, development and costs implications. This was supported by the other developing countries which also highlighted the human and technical costs involved. [According to Annex D, “least-developed country Members will only be required to undertake commitments to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capabilities.”] The Africa Group said provision of technical assistance and capacity building is a sine-qua-non condition for African countries to implement the results of the negotiations. In contrast to the cautious approach taken by the developing countries, many developed country members have interpreted Annex D of the July Package on Trade Facilitation liberally and made several proposals to introduce new obligations on WTO members. The developed countries’ proposals were submitted as formal papers (TN/TF/W/6-15), which were discussed during the meeting. To be sure, members did agree to “clarify and improve relevant aspects of Articles V [transit of goods], VIII [fees and charges] and X [transparency in the publication and administration of trade regulations] of the GATT 1994 with a view to further expediting the movement, release and clearance of goods, including goods in transit,” as stipulated in the Annex D of the July package. However, the Annex is silent on how these Articles are to be clarified and improved upon. On Article X regarding the publication of trade regulations, the EC proposed to have established an obligation whereby members are required to “publish and make easily available” all laws, procedures and rules affecting imports, exports and goods in transit. This includes, for the EC, administrative guidelines, decisions and rulings, and “customs’ and other government agencies’ management plans relating to implementation of WTO commitments.” The EC also wants this information to be made available in a “simple and accessible manner” and preferably on line as well. In addition, the EC proposed that it should be required for all members to establish a national trade desk where all this information will be provided. The idea of having a one-stop information center was also proposed by Taiwan, Korea and Japan in their papers. Furthermore, the EC in its submission proposed that when members introduce new rules and procedures that they are to notify the WTO Secretariat. Korea added in their submission that WTO members should also be provided with opportunities to make comments on these rules. On the issue of how trade regulations are administered, the EC wants Article X expanded to include imposing on members the requirement to hold prior consultations with the private sector on new and amended rules and procedures before they are implemented. Moreover, according to the EC, “the consultation should take place at a stage where comments can be discussed and taken into account.” The EC also proposed that members be obliged to provide a legal right of appeal against customs and other agency rulings and decisions. Several developing countries expressed concerns about the proposals of the developed countries. Some developing country members such as Jamaica and Brazil pointed out that the EC proposals would entail sweeping and far reaching requirements which may not be appropriate. For instance the publication of all information fails to consider the need for business confidentiality under some circumstances, Brazil explained. Other developing countries also pointed out the requirement for publication of all rules should not be too stringent and onerous and imposed in such a way inconsistent with their circumstances. Furthermore, Brazil also highlighted the fact that proposals for prior consultation on new rules and procedures, goes well beyond the need for transparency. India sought for clarification on a number of concepts and terms used by the EU in its proposals, since they were not defined and were used with imprecision. For instance, India wanted to know what acts would constitute “make easily available” information on customs; what are the “different ways of publishing” the EC had in mind; what is a “minor appeal” in the EC proposal for a right to appeal; and what would advance rulings entail. In relation to Article X, the US and Canada proposed that members commit themselves to provide binding advance rulings on tariff classification when requested by traders to do so. According to the Canadian proposal “advance rulings refers to the possibility of for a customs administration to provide, upon application by a trader in connection to the planned importation of goods, a written ruling with respect to…applicable rate of duty, any tax applicable upon importation, whether goods qualify as originating goods [in order to benefit from preferential tariff treatment].” However, these proposals up the ante by making the advance rulings legally binding on the authorities making them. Apart from its submission on binding advance rulings, the US submitted 3 other proposals under its own interpretation of Articles X and VIII of GATT 1994. The three US proposals were on: (1) internet publication of customs rules and procedures; (2) to “establish specific parameters for fees charged by Members under Article VIII GATT 1994 and publish such fees on the internet and notify the WTO with a specified number of days in advance of implementation”; and (3)the need to “provide specific expedited procedures for express shipments.” The next meeting of the Negotiating Group on Trade Facilitation will be held on 22-24 March 2005.
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