RESTRICTED
WORLD TRADE G/C/W/92
30September 1997
ORGANIZATION(97-4101)
Original: English Council forTrade inGoods
TRADE FACILITATION
Draft PlanofAction bySwitzerland
Thefollowing communication, dated 24September 1997, hasbeenreceived fromthePermanent
Mission ofSwitzerland.
_______________
Executive Summary
1. Trade Facilitation haslongbeenasubject ofaction inmany foraandorganisations, both
intergovernmental andnon-governmental, butitisnewtoWTO, especially those aspects which may
evolve toprovide direct rights tooperators. Itisimmediately beneficial tothetrading community
and,assuch, itclearly warrants theattention ofallWTO Members.
2. Thepurpose ofthiscommunication istosuggest fiveareas where Switzerland believes action
inthefieldofTrade Facilitation should betaken byWTO: pre-arrival processing, customs irregularities,
transit operations, harmonisation andriskassessment, aswellasstandardised information andelectronic
transmissions. Itisproposed toholdaninitial meeting ofexperts tobeconvened bytheSecretariat,
inorder toelicit reactions from interested sides andtodiscuss further WTO work inthisfield
(paras 25/26).
3. Wedonotsuggesttosubstituterulesandstandardsestablishedincompetentinternationalbodies
byWTOrules. Ourpreferred approach would be(a)toincorporate byreference suchrulesandstandards
inWTO inasimilar waytheTBTandSPSAgreements refertointernational standards, thusdefining
forWTO Members anumber ofnew, implicit disciplines (aswellasahigher degree ofclarity and
carewhen elaborating suchrulesinother fora); and(b)toenvisage strengthening existing WTO rules
where theypertain tothe"best endeavour" category ofrules (para 7).
Areas forwork inWTO
General Remarks
4. Trade Ministers atSingapore havedecided to"assess thescope forWTO rules" inthefield
oftrade facilitation. TheSecretariat hasprepared twoBackground Notes1,andproposals foraction
1G/C/W/70 dated 28February 1997 andG/C/W/80 dated 23May 1997.G/C/W/92
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inWTO have been made bytheEuropean Communities2and inthedebate inthe
Council forTrade inGoods.3
5. Inouropinion Trade Facilitation supports development. Itcontributes, especially indeveloping
andtransition countries, toreducing administrative costs, redtape, timeandnecessary civilservice
expertiseinhandlingtrade.Ontheexportside,tradefacilitationincreasestransparencyandpre-visibility
especially inremote markets. Anumber oftradefacilitation instruments (e.g.ASYCUDA /UNCTAD)
arealready attheirdisposal, andmore efforts interms oftechnical co-operation willbewarranted
toenable them tofullybenefit from suchfacilities.
6. There isnocommonly accepted definition oftradefacilitation. TheEChavedefined itbroadly
asbeing the"simplification oftradeprocedures forinternational traders andagencies inorder tofacilitate
thetrade transaction process".4Weconcur withsuchadefinition andtherefore strongly believe that
"trade facilitation" requires aseries ofgovernmental andnon-governmental actions inanumber of
areas ofinternational trade regulations andprocedures -regardless ofwhether theyareapplied atthe
border ornot.
7. Thelegalstatus, interms ofinternational lawandenforceability, oftheinstruments adopted
byinter-governmental andnon-governmental organisations, bothatglobal andregional levels, isnot
always clear. However, thefollowing classification might beattempted forpractical purposes:
(i) "Law": Binding instruments ofinternational law,subject to
ratification and reserves, such astheKyoto
Convention (without itsAnnexes), theHarmonised
System andsome oftheWTO obligations outlined in
theSecretariat ’spaper.
(ii) "Best endeavour": Standards andrecommendations constituting strongly
recommended practices, notsubject toratifications or
reserves:
. ofintergovernmental bodies (e.g.UN/ECE,
Kyoto Annexes);
. ofnon-governmental organisations (e.g.ISO
standards).
2G/C/W/85 dated 20August 1997.
3Itshould alsobenoted that, asrecently asattheir Eighth Summit inDenver (USA), G7Members
have urged customs experts tocomplete their work onthestandardisation andsimplification ofcustoms
procedures asinitiated atlastyear’sSummit inLyon aswell astoidentify opportunities tofacilitate global
electronic commerce. Also, APEC ,theSummit oftheAmericas andtheso-called Transatlantic Business
Dialogue (TABD), abusiness-driven initiative which aims atfacilitating closer economic relations between
theEUandtheUSA, toname butafewothers, have taken further initiatives inthisfield whose importance
inaglobalising economy isthus nolonger tobeestablished.
4cf.G/C/W/85 dated 20August 1997, para 1.G/C/W/92
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(iii) "Technical Documentation", i.e.clearly documented andprocedural options
identified invarious bodies, bothintergovernmental
andnon-governmental ones.
8. Some oftheWTO provisions quoted bytheSecretariat5could alsobeclassified inthesecond
category (although, ofcourse, theyhavebeenratified byWTO Members). Forinstance, under the
Agreement onImport Licensing Procedures, WTO Members commit themselves tosimplify andbring
transparency totheir import licensing procedures andtoadministering them inaneutral and
non-discriminatory manner. There areindicative timelimits, publication andnotification obligations
aswellasprovisions allowing forjudicial procedures innational courts aswellasthrough theWTO
dispute settlement mechanism. But,especially when itcomes torules meant tocreate afavourable
business environment, those provisions often have nothing more thanaprogrammatic character.
Moreover, theyhavebeenestablished primarily intherule-and-control interest ofgovernments whereas
thescope ofthepresent exercise istoactually facilitate trade.
9. Theproposals forwork inWTO, asoutlined below, arenotpresented inaparticular order
ofpriority; thelistisnon-exclusive andcould easily beenlarged. Forinstance, non-customs subjects
arecertainly equally openforscrutiny under "trade facilitation". Incidentally, several procedures at
thenational level, bothgovernmental andnon-governmental ones, areseenashaving acertain influence
oninternationaltradeandshouldthereforebetakenintoaccountwhentradefacilitationisbeingaddressed
inacomprehensive manner. Also, international co-operation procedures inmatters suchasfraud
prevention, drugs, corruption, public health andproliferation ofstrategic goods oftencontain potential
forfacilitating trade without impairing theobjectives ofsuchco-operation.
10. Forthetimebeing, however, ourproposals arelimited tosubjects (a)which havebeendealt
withinoneormore foraother thanWTO (b)which could berelevant toWTO, and(c)where
governmental adherence torules bothatthenational andintergovernmental levels (including WTO)
could beimproved soastoallow forthespeedy andeasycarrying outoftrading activities.
11. Theprincipalinternationalandregionalorganisations,intergovernmentalandnon-governmental,
dealing withtrade facilitation outside WTO havebeendescribed intheSecretariat ’snote. They will
notbere-quoted hereinextenso .However, inviewofincreased co-operation itwillbeimportant
fortheWTO Secretariat toparticipate asanobserver inimportant meetings ofthose organisations and
tokeepWTO Members appraised ofdevelopments.
A. Pre-Arrival Processing
12. Pre-Arrival Processing isbestdescribed asthepossibility formerchandise tocross aborder
without having tostop. Electronic customs processing or"onestop" facilities (i.e.forbothcountries
atthesametimeandplace) arebuttwoexamples worth mentioning here. Commercial practice, today,
isfollowing aclear trend inthisrespect, forinstance through theconcept of"authorised traders",
i.e.companies allowed tocertify origins, clearcustoms, etc.forbothimports andexports -inother
words, a"nostop"-procedure.
13. InWTO, Article VIIIofGATT 1994 relating toFeesandFormalities connected withImportation
andExportation doesnot,ofcourse, prescribe one-stop orno-stop procedures, butonecould argue
that,where suchtechnology iscommonly available, WTO Members areunder anobligation tointroduce
themsince, intheabsence ofsuchameasure, theirborder feesandformalities will"represent anindirect
protection todomestic products" prohibited byArticle VIII. Onecould follow asimilar lineofargument
5G/C/W/80 dated 23May 1997.G/C/W/92
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withregard totheobligations enshrined intheAgreement onImport Licensing Procedures ,inthesense
thatsuchlicenses must notinthemselves restrict ordistort trade.
14. Thefollowing questions arise: How farhasprogress inthisfieldbeenachieved? Arethe
mentioned WTO rules sufficient, anddotheyhaveanoverall positive impact ontrade facilitation?
B. Customs Irregularities
15. Anumber ofinitiatives andrules havebeensetuptocombat corruption andmalpractice by
customs authorities, notonlyinthe(fiscal) interest ofgovernments butalsoinorder toallow trade
tobecarried outunimpeded bysuchproblems. Forinstance, theArusha Declaration oftheWCO
assigns toppriority tothecombat ofcorruption inside customs administrations.
16. InWTO, among thevarious agreements coming tomind inthisrespect areArticle VII-
Valuation forCustoms Purposes, theAgreement onPre-Shipment Inspection ,theAgreement onImport
Licensing Procedures andtheplurilateral Agreement onGovernment Procurement .Inaddition, Article X
prescribes thePublication andAdministration ofTrade Regulations andthuscontributes toprevent
arbitrary andharassment measures. TheSecretariat ’snotecontains many more provisions suchas
Articles V,VIIIandIXGATT 1994,theAgreements onRules ofOrigin ,onPreshipment Inspection ,
onTBTandSPS,aswellasGATS andTRIPS .
17. Thefollowingquestionarises:wouldfurtherstrengtheningofsuchprovisionshelp,inconnection
withtheprescriptions andstandards established outside WTO, notonlytofacilitate trade butalsoto
further reduce customs irregularities world-wide?
C. Transit Operations
18. Transit operations areoften prone toirregularities andfraud. They arethussubject tospecial
borderformalities.Whileantifraudmeasuresarecertainlylegitimateandnecessary,itmaybeworthwhile
todiscusswhethersuchformalitiesmaybefacilitatedbyimprovementsinpre-arrivalprocessing-without
impairing national efforts andinternational antifraud co-operation. A.T.A. Carnets established by
national chambers ofcommerce facilitate suchoperations. UN-ECE (TIR) hasextensively dealtwith
thissubject. Progress hasalsobeenachieved inother areas (e.g.theTransit Convention EU-EFTA
-4Visegrad countries, NAFTA).
19. InWTO, Article VonFreedom ofTransit notonlyconsecrates thefreedom oftransit fortraffic
from every WTO Member across theterritory ofevery other Member. Italsostates that"except in
cases offailure tocomply withapplicable customs lawsandregulations, suchtraffic coming fromor
going totheterritory ofother Members shallnotbesubject toanyunnecessary delays orrestrictions".
20. Thefollowing question arises: could recommendations suchastheonesestablished byUN-ECE
bemade mandatory forWTO Members (except where special circumstances justify deviations)?
D. Harmonisation andRiskAssessment
21. Perhaps theultimate challenge intrade facilitation (andprobably evenmore important than
customs simplification) isthequestion ofharmonisation ofcustoms procedures aimed at,inparticular
butnotexclusively, bytheWCO International Convention ontheSimplification andHarmonisation
ofCustoms Procedures (Kyoto Convention ),including through itspresently ongoing Revision, due
tobecompleted in1999. Aparticular feature oftheDraft Revised Kyoto Convention isitsrisk
assessment andmanagement procedure which establishes guidelines forcustoms operations inorder
tospeed upprocedures andclearance while optimising, whenever possible, bothfraud prevention andG/C/W/92
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government revenue objectives. Itistooearly topredict theoutcome ofthisambitious andcomplex
revision; butitisinteresting tonotethattheintention istocreate a"Code ofBestCustoms Practice"
whose rules would evolve overtimeandwhose implementation would besubject tosupervision by
themanagement committee ofthisnewconvention, including through mandatory application ofall
theKyoto Convention Annexes toallits142Members.
22. InWTO, nosimilar provisions existdirectly inthefieldofcustoms procedures, andthereshould
benoattempt toduplicate thework undertaken inWCO andelsewhere. Butalotofefforts havebeen
invested inasimilar way,i.e.technical prescriptions andnorms. BoththeTBTandtheSPSAgreements
(aswellas,toalesser extent, theAgreement onRules ofOrigin )contain anumber ofprovisions on
harmonisation andmutual recognition. They alsoaddress theproblem ofriskassessment and
management: while acknowledging thelegitimacy ofdiffering national standards, these agreements
trytoprevent abuse ofsuchdifferences.
23. Thequestion arises whether, based onthese rules andexperience, either ofthefollowing
approaches could further theobjective ofcustoms harmonisation:
- Adopting theKyoto Convention anditsannexes aswellasother standards and
recommendations asmandatory forWTO purposes similarly tothefunction of,say,
theCodex alimentarius intheSPSAgreement.
- Examination oftheriskassessment provisions established bytheTBT andSPS
Agreementsandtheirpotentialutilisationinthefieldofriskassessmentandmanagement
incustoms procedures.
E. Standardised Information andElectronic Transmissions
24. Trade facilitation toolsdeveloped byUNCTAD, UN-ECE, ISOandothers haveconsiderably
improved trading operations world-wide. Thesubject ofstandardised information andelectronic
transmission -inaprocess ofconstant evolution -definitely deserves tobeincluded inthework on
linking WTO withexisting standards, along thelinesoftheEC’sproposals (G/C/W/85, para7).
Concluding Remarks
Meeting ofExperts
25. Asoutlined above (para 3)itisproposed toholdaninformal, "brainstorm"-type meeting of
experts, organised bytheWTO Secretariat, where representatives fromintergovernmental organisations
suchasWCO, UNCTAD, UN-ECE andIBRD andfromnon-governmental organisations suchasICC,
FIATA, IATA andIECC would meetwithrepresentatives from WTO Members (i.e.trade aswell
ascustoms experts fromcapitals). Trade Facilitation isatechnically highly complex subject. Itinvolves
mostdirectly business operators inagreat number offields. Therefore itwillbenecessary toinvolve
technical experts ofinternational organisations, bothgovernmental andnon-governmental. Also, the
question ofhowtoensure adequate communication between theKyoto Revision process andWTO
work should beaddressed atthatmeeting.
26. Thepurpose ofthemeeting would betomake anassessment ofthesituation andcollect
suggestions forpossible WTO action onTrade Facilitation, onthebasisinparticular oftheSecretariat ’s
analysis andtheEC’sandourproposals. Further background contributions bydelegations would be
welcome. Theresult ofthemeeting would besubmitted totheCouncil forTrade inGoods.G/C/W/92
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Trade Facilitation: TheChallenge ofEnsuring Speed andControl
27. While tradefacilitation isintheinterest ofbothtraders andgovernments itshould alsobeclearly
understood thatnothing inthisfieldmustbeseenaseasing thewayforabuse andcircumvention of
national andinternational legislation andefforts tocombat fraud. "Nocontrol" isperhaps equivalent
to"facile trade", butitisnotthepurpose of"trade facilitation". Theon-going revision oftheKyoto
Conventionisaddressingthischallengeoffacilitatingtradewithoutimpairingtheattainmentoflegitimate
governmentalobjectivesandpolicies,inparticularthroughitsenvisagedriskassessmentandmanagement
procedure (seealsoabove under "Harmonisation andRiskAssessment"). Itisobvious thatalltrade
facilitation work undertaken inWTO mustfollow thesame, carefully designed approach ofcombining
security andspeed ininternational trade transactions.