RESTRICTED
WORLD TRADE G/C/W/85
20August 1997
ORGANIZATION(97-3423)
Original: English Council forTrade inGoods
TRADE FACILITATION
Communication from theEuropean Communities
Thefollowing communication, dated 5August 1997, hasbeenreceived from thePermanent
Delegation oftheEuropean Communities.
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1. Trade facilitation isastrategy thatcanbedefined initsbroadest sense asthe"simplification
oftrade procedures forinternational traders andagencies inorder tofacilitate thetrade transaction
process". Anobjective oftrade facilitation could betoensure thattheinternational trade transaction
process becomes assimple asthatrequired foradomestic sale. Inparticular, exporters should be
abletoexpect solidbutsimple andtransparent procedures fortrading, containing nosurprises orhidden
requirements. Thiswould benefit governments aswellastraders through increased efficiency and
economic well-being.
Bywayofexample, thiscould include audit-based control ofimports andexports (i.e.
consignments arenotchecked individually buttargeted checks might becarried outbased onarisk
assessment andprofiling ofthetrader involved using atrader 'sowncommercial records); simplification
andstandardization ofdocuments usedinimport/export procedures; simplified international payment
mechanisms; useofasingle setofinformation forbothexport andimport ofaconsignment; and
theincreased useofinformation systems tofacilitate dataexchange using international standards.
2. Importandexportprocedurescanbeanimportantremainingnon-tariffbarriertotrade.Onerous
formalities areafrequent cause forcomplaints bythetrading community aswellasbeing amajor
deterrent forgreater economic activity beyond national boundaries, particularly forSMEs. Such
formalities haveinmany casesgradually evolved andexpanded overdecades, andveryoften, noserious
attempt hasbeenmade atsimplification orrationalization. Veryoftentheseformalities donotcontribute
anything totheeffective implementation ofcontrol measures andother requirements andaddnovalue
tothegoods inquestion. Nomatter theleveloftariff protection importers andexporters should be
abletoexpect simple andtransparent procedures fortrading.
Inrespect ofcustoms procedures itisclearthatabalance hastobestruck between theobjective
ofenforcing government regulations while atthesametimeposing theminimum obstacles tolegitimate
trade. Thisisanongoing process asthese procedures should bereviewed andadapted overtimeto
reflect changes intrade patterns, introduction ofinformation technologies andnewadministrative
requirements.
Inparticular thesuccessive rounds oftariffcuts,thevastincrease inthevolume ofgoods being
traded, newtransport systems andtheuseofcomputers requires andmakes itpossible thatsimplified,
harmonized andstandardized procedures areapplied.G/C/W/85
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Many international instruments havealready beendeveloped (e.g.theKyoto Convention on
thesimplification andharmonization ofcustoms procedures). Within theUN/ECE Trade Facilitation
Recommendations havebeendeveloped formany years. Additional initiatives arebeing taken within
regional frameworks suchasAPEC, ASEM andbyindividual countries. Thequestion ishowever
whether amore comprehensive approach should betaken inorder topromote amodernization process
which corresponds totheneed ofinternational trade today, theobjectives being nottoreduce
responsibilities oftraders buttofacilitate trade, generate growth andrevenue andmeet theneedof
especially small- andmedium-sized enterprises.
3. Within theWTO anumber ofprovisions related totradefacilitation exist. They include origin
rules, customs valuation, import licensing procedures, standards, preshipment inspection etc.Those
areas havehowever oftenbeensubject tocomplaints frombusiness because ofdifferences inapproach,
interpretation, lackoftransparency andsoon.
Inrespect ofcustoms valuation derogations provided forintheAgreement expire foranumber
ofcountries intwoyears'time. Thatwillbring about necessary improvements which havelongbeen
needed. Itishowever important thatMembers concerned prepare themselves andtakethenecessary
steps inadvance ofthissituation. Inthisrespect itshould beconsidered howthatprocess could be
further stimulated andwhether thepresent technical assistance offered issufficient orneeds tobe
increased inorder toensure themaximum benefit forworld trade from theverybeginning. Asthe
deadline agreed upon istoberespected itisimportant thatthetechnical assistance offered through
theWCO isorganized andallocated inawaytoallow forasmooth transition.
4. Formany years work ontrade facilitation hasalsobeencarried outinother international
organizations, themostimportant being theWorld Customs Organization (WCO), UNandotherbodies
likeIMO(maritime transport), ICAO (civil aviation). Alsothebusiness society hasbeenveryactive
inpromoting rules.
Theresult ofthiswork hasbeenalarge number ofrecommendations, standards, etc.but
agreement ontheimplementation hasoften beenlimited.
5. IntheUN,26recommendations drawn upbytheUN/ECE, which cover thewhole ofthe
international trade transaction, havebeenaccepted. These include work ondocumentary standards
(e.g.theUN/Layout Keyfordocuments). UN/ECE hasjustcompleted reorganizations, meaning that
theformer WP.4 hasbeentransformed intoaglobal centre fortrade facilitation named CEFACT.
Impetus hasbeengiven tothework bythesymposium inColumbus, Ohio 1994 ontrade efficiency
(ECE/UNCTAD). Inthecustoms areathemain instruments aretheKyoto Convention onthe
simplificationandharmonizationofcustomsproceduresandalargenumberofotherspecificinstruments.
TheKyoto Convention isunder review intheWCO (deadline July1999).
Particular attention hasbeengiven totheimplementation andpractical assistance byUNCTAD
which have offered tailor-made systems todealwith agreed customs procedures andpractices
(ASYCUDA) including otherimportant sectors (banks, transport, insurance, telecommunications, etc.)
aswellasassistancebytheITCmainlyaimedathelpingsmall-andmedium-sizedenterprises.UNCTAD
repeatedly underlines theneedforgovernments andother actors topromote trade facilitation within
theirpolicy aswellingeneral, e.g.bycreation oftradepoints offering avariety ofsources ofbusiness
information, inparticular inrespect ofthesectors concerned, asinrespect ofcertain administrative
procedures established bytheauthorities.
6. InSingapore Ministers agreed to"direct theWTO Council forTrade inGoods toundertake
exploratory andanalytic work, drawing onwork ofother relevant international organizations on
simplifications oftrade procedures inorder toassess thescope forWTO rules inthisarea".G/C/W/85
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Thereason forthiswasthatthecomplex andnumerous regulations andprocedures relating
toimports andexports canconstitute asignificant andtime-consuming burden toworld trade.
TheWTO Secretariat hasinaccordance withthemandate produced afactual background note
(G/C/W/80). Itcovers allmainactivity areas including related WTO provisions aswellasinitiatives
undertaken inregional frameworks. Thefocus isonthetraditional trade facilitation work carried out
intheWCO, UN/ECE andUNCTAD. WTO Members havebeeninvited toidentify priority sectors
where theyfeeltheWTO could giveanadded value.
7. Activities inthisareaarewidespread andbased onvarious instruments ranging frompresent
WTO agreements, conventions, recommendations, bestpractice andcooperation asapplied inanumber
ofinternational frameworks. What ismissing? Firstanoverall approach based onthetradetransaction
process. Onekeyelement inallthework seems tobecustoms procedures anddocumentary standards
which facilitate theinformation flowbetween operators. Second, broad country coverage backed up
bypolitical commitment toapply simplified procedures. Thisfallstoanumber ofbodies. Inorder
toanswer thequestion ofaWTO involvement thefollowing questions should beaddressed.
Isthere aneedforimprovement inexisting WTO provisions inthisarea?
Asreferred toinparagraph 3anumber ofWTO provisions related totradefacilitation already
exist. However, thereappears tobealackoffullimplementation aswellascomplex andnon-transparent
procedures. Ongoing work onorigin andvaluation determinations andpreshipment inspection should
beconsidered inthelightoftrade facilitation, inorder tocreate systems withtheleastburdensome
procedures forbusiness. TheWTO Origin Agreement willfacilitate trade butitisimportant thatthe
provisions, e.g.theprovision related toadvance ruling, arefullyimplemented byallparties. Itis
likewise important thattheoutcome ofthethree-year WCO/WTO work programme isconsidered in
theoverall perspective oftrade facilitation withrespect totheoperation oftherules.
Inrespect ofimport licensing improved management procedures could beconsidered interms
oftraders predictability which mayallow foramore effective quota allocation.
Asanother example theprovisions inrespect ofpreshipment inspection canbeofmuch value
toexportersandimportersandarefacilitatingtradebetweendevelopedanddevelopingcountriesprovided
thatarbitrary valuation practices areruled out. Theexpertise andexperience provided canbeused
tofurther streamline procedures andbythatalsoincrease trade andrevenues within amodernization
process which eventually enhances theefficiency andeffectiveness oftheCustoms services within their
responsibilities.
Thestandards rulesintheWTO areveryimportant inremoving barriers totrade. Thetriennial
review oftheTechnical Barriers toTrade Agreement offers animportant opportunity tofacilitate trade
byimproving theoperation oftheAgreement andaddressing wider issues suchasthedevelopment
andapplication ofinternational standards.
What arethespecific newareas ofwork which should beconsidered?
- Alignment ofcustoms procedures.
Although avastnumber ofprovisions existinrespect oftrade facilitation issues, theyarefar
from being accepted, applied orimplemented byanumber ofcountries. TheKyoto Convention has
onlybeenaccepted byfewandthere areaconsiderable number ofreservations. Itistherefore clear
thatthere isaneedforfurther harmonization ofprocedures. Thiscould beachieved byhaving WTO
binding rules e.g.inrespect ofcertain basic principles drawn upintheWCO.G/C/W/85
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- Transparent customs procedures.
Customs administrations being thefocalpoint inimport/export procedures should berequired
toexamine working relations andintroduce programmes aimed atimproving thegeneral transparencies
oftheseprocedures. Regulations should bemade publicly available andstepsshould betaken toincrease
professional standards within acooperative approach vis-à-vis commercial operators.
Thecompilation ofrelevant procedures canalsobeasignificant element oftrade facilitation
policy.
- Modern customs procedures.
Within theCommunity theCustoms 2000 programme hasbeenintroduced. Theaimisto
simplify andcomputerize procedures. Thetrade facilitation aspects aretobespecifically pursued on
thebasis oftheCouncil Resolution of25October 1996 onthesimplification andtherationalization
oftheCommunity 'scustoms regulations andprocedures, where itisi.a.recognized thatregulations
andprocedures needtobemore lucid andtransparent, adapted totheneeds offoreign trade etc.in
viewofthecompetitive environment inwhich trade andcommerce operate today.
Modern customs procedures imply i.a.thatgoods should notbesubject tosuccessive controls
bydifferent agencies, allow fordataprocessing inadvance ofthearrival ofthegoods, release ofgoods
prior tocompletion ofadministrative requirements andpayment ofduties, riskmanagement, etc.
Suchprocedures facilitate trade aswellasenhance customs control. Theaimisnottoreduce
responsibilities oftraders buttointroduce modern procedures supported bycomputers.
Theneedforsuchprocedures tobeintroduced byCustoms worldwide hasoftenbeenunderlined
bytrade andindustry.
- Standardized information andelectronic transmissions.
Standards related todocumentation mayinclude internationally agreed codes, abbreviations,
layout-keys andstandards forelectronic interchange ininternational trade.
Within G7customs administrations aredeveloping aprototype project thepurpose ofwhich
istodefine adataset(andtheelectronic format) which willalways beaccepted byCustoms inorder
toallow fora"non-stop go"from exporter todestination. General acceptance andimplementations
ofsuchstandardized information requirements oninternational levelwillhighly facilitate world trade.
FormanyyearstheCommunityhasbaseditsrequirementsonaSingleAdministrativeDocument
(SAD) which makes itclear totraders whatinformation should beprovided. Wewould bewilling
toshare ourexperience andthecontent ofthisadministrative document withpartners.
Arethere particular needs tobeconsidered bye.g.thedeveloping countries?
Customs procedures often reflect adifferent stage ofdevelopment andsome newprocedures
mayseem controversial tocertain countries. However inbothdeveloped anddeveloping countries
there isaneedtoreview procedures andmodernize administrations. Theefforts made byUNCTAD
arehighly recognized anddemonstrate thatdeveloping countries prepared tomove forward havemost
togain. Again itshould beunderlined thattheaimisnottoabandon control buttoestablish more
efficient andcost-effective procedures inasituation where Customs around theworld perform different
tasks against different backgrounds.G/C/W/85
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8. What added value isthere inWTO involvement?
TheWTO could addconsiderable value bytaking acomplete overview ofthetradetransaction
process andintegrate work ofother relevant organizations. Thiswould complement current WTO
work inthisarea. Existing WTO provisions (valuation, origin, licensing procedures, preshipment
inspection etc.)could inthisrespect bescrutinised withaviewtopossible improvements.
Inaddition,MembershipoftheWTOisglobal,withmorecountriestojoin,thepoliticalimpetus,
backed byabinding Dispute Settlement understanding, arethings noother organization canofferunder
their existing terms ofreference. AnewWTO agreement covering thenewareas highlighted in
paragraph 7would havetheobjective offacilitating themovement ofgoods between Members. This
would ensure theacceptance byallMembers ofacentral coreofthemore widely accepted rulesand
recommendations which haveresulted fromwork ofother organizations, butwhich maynotbewidely
applied orenforced, without duplication ofthatwork.
TheAnnex contains thepossible elements ofanewagreement butother aspects ofthetrade
transaction process could beconsidered.G/C/W/85
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ANNEX
What recommendations etc.could constitute thecentral coreofaWTO agreement
- Standards ondocumentation andinformation drawn upbyUN/ECE; standards agreed upon
within theframework oftheKyoto Convention which affect anormal import/export transaction
(thehorizontal orgeneral rulesapplied uptotheclearance ofgoods) andtheIstanbul Convention
ontemporary admission.
- Other general requirements astothesimplification ofdocumentation/information whose
implementation havewidesupport from Members.
- Provisions toincrease thetransparency ofrights andobligations byauthorities andtraders.
- Definition ofacommon datasettoconstitute thenecessary information requirements forboth
import andexport.
- Provisions topromote theacceptance oftheuseofinformation technology asanequivalent
topaper-based procedures andinternational standards tofacilitate theuseofelectronic data
interchange.