RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/133
3 December 1998
(98-4853)
Council for Trade in Goods Original:  English
TRADE FACILITATION
Issues Relating to the Physical Movement of Consignments (Transport and Transit)
& Payment, Insurance and Other Financial Questions Affecting Cross-border Trade in Goods.
Communication by the European Community
A. PHYSICAL MOVEMENT OF CONSIGNMENTS (TRANSPORT AND TRANSIT )
As the March 1998 Symposium showed, this is a potentially vast area, covering everything
from transport documentation or visa requirements for drivers to international transport conventions
and upgrading of physical infrastructure, all of which have a direct or indirect impact on the ease with
which goods cross borders. It seems necessary therefore to focus on areas where the WTO has a
relevant role, either in terms of possible rule making or in terms of coordinating and guiding activity.
Based on proposals made at the March 1998 Symposium, consultations held with business
groups and intergovernmental organisations, and the European Community’s own reflections, the
Community offers below some preliminary views on areas for consideration by the WTO.
1. Import, Export and Customs Procedures, and the GATS
Consultations with interested bodies such as representatives of shippers, carriers, freight
forwarders, surface container consortia etc suggest that some of the major constraints to their
operations relate to : excessive and unharmonised documentation and data requirements at import andexport, continued reliance on paper based procedures, without adequate use of electronic techniques,
including EDI, multiplicity of separate official interventions at import, with their associated
information/data requirements, and delays in obtaining customs release of goods, particularly where
documents or data have to travel with or precede the goods.
Our consultations indicate that some of the proposals made at the Symposium and taken up in
the EC’s previous
1 paper would, if turned into WTO commitments, meet many of the concerns not
only of importers and exporters, but of the transpor t and freight sector too. Those proposals included :
• reduction and harmonisation of data.
• one-stop minimal data requirements.
• introduction of modern customs methods through the revised WCO Kyoto Convention
• advance clearance of consignments, post-clearance controls and audit, hours of opening of
customs offices.
• Transparency and avoidance of sudden changes in documentation and other requirements,
• and progressive convergence of official controls on the international movement of goods.
                                                     
1 Document G/C/W/122 dated 22 September 1998G/C/W/133
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Concerns have been expressed however that the full benefits of further liberalisation of the
transport sector per se  may not be reaped without these improvements to trade procedures that the
sector has to deal with on a day to day basis.
The Community suggests therefore that as we prepare for the next phase of GATS
liberalisation, we need to recognise that un-simplified trade procedures can have a negative impact on
the performance of service providers, notably in the areas of transport and distribution. Further
liberalisation resulting from GATS 2000 should, to maximise its potential, be accompanied by
parallel facilitation of the import and export procedures  that affect the services sectors effectiveness
and competitiveness. This suggests that in the next phase of GATS work we ensure that procedures
applicable to trade in goods buttress the market access commitments negotiated in the field of trade in
services and that, where necessary, the WTO introduces rules to simplify procedures relating to tradein goods impacting on services sectors.
A second area relevant to the next stage of GATS liberalisation relates to the temporary
movement of personnel . Evidence has been provided at the Symposium and since of arguably
excessive and duplicative visa and related requirements for transport service personnel eg driversoperating international road haulage.  These issues should also be taken up in the next phase of GATS
work.
2. Documentation and Data Issues Relevant to Physical Movement of Consignments
Current Problems :  One concern of traders and some transport service providers continues to
be the excessive reliance in international transport and trade of multiple, negotiable and paper based
documentation and data requirements . The historical rationale for negotiable documents such as bills
of lading (where rights to the cargo pass with physical transfer of the documents) is understood, and
these documents are still necessary eg where ownership of goods changes during transportation, a
frequent occurrence in commodities trade, but probably not for manufactured goods.
However, as UNCTAD and other organisations have recognised, the growth of multimodal
transport (eg container based), and the pressure for rapid delivery times – just-in-time servicing of
global supply, production and distribution operations, the need for airfreight and road express
companies to maximise efficiency by relating origin-destination delivery times to their speed
advantages -  necessitates more than ever the speedy receipt of goods separately from paperwork, via
non-negotiable documents, the acceptance by different transport modes of the same data in the sameform, and the use of electronic data interchange rather than physical documents.
Options for Improvement :  The EC in its previous submission proposed measures to reduce
the quantity, harmonise, and promote electronic s ubmission of, documentation and data requirements
for import and export of goods. To the extent that similar requirements are imposed on partiesinvolved in transportation of goods (freight forwar ders, carriers etc) the same simplified data and
documentation should apply, to enable the same minimum dataset to be used, or relevant elements of
it extracted, through each stage of the transport chain irrespective of mode. This will in turn help to
reduce the difference between the relatively streamlined information systems used between carriers
and other private operators for their commercial purposes and those used for thecommercial/administrative interface. It will also support the concept of the integrated transaction
(sharing and control of the same data by exporting and importing administrations) described in the
Community’s previous submission.
The EC also suggested developing WTO provisions that would ensure use, as benchmark
standards, of relevant UN-ECE Recommendations on  trade facilitation, subject in some cases to
revision and ongoing review.  UN-ECE Recommenda tion 11 concerns facilitation of the documentary
aspects of the transport of dangerous goods, while Recommendation 12 encourages the use ofG/C/W/133
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non-negotiable waybills in electronic form. Adoption of such recommendations as default standards
i.e. the norm in a WTO framework, would go in th e direction of reducing and harmonising transport
documentation requirements.
Beyond this it seems necessary however to look at other possible measures to promote,
particularly in a multimodal transport framework, negotiable transport documents in electronic form,
as well as other simplification measures. This is considered further in Section 3 below.
3. Intermodal/Multimodal Cooperation
A substantial concern of many sectors in international trade – both goods traders and carriers -
is the lack of a uniform, harmonised régime for intermodal transportation of goods. Current
international rules and practices are reflected in a multitude of international conventions and codeswhich are:
• largely single-modal in character;
• whose rate of adoption or implementation by national governments varies greatly;
• which vary significantly between each other in liability arrangements ; and
• which, even within a single mode (notably carriage by sea) have not been harmonised into a
single set of rules.
• which often fail to reflect modern operational environments and use of information technologies,
and which lack inbuilt time-windows for review and modernisation.
Problems are compounded where national legislation provides differing interpretations or
only partial application of the international rules : at the Symposium in March concern was voiced
over the apparently extraterritorial application of one WTO Member’s liability rules. Moreover, those
multimodal instruments that do exist, rather than offering a uniform régime, tend instead to
incorporate provisions of the unimodal régimes into a « network » régime.
The consequence of current arrangements is therefore a patchwork of régimes for goods
traders which fails to capitalise on modern IT-based communications systems and practices, which
impedes the introduction and use of a single multimodal waybill/transport document, and which does
not reflect fully the increased use of containerised transportation operating across different modes,making mode-specific liability arrangements inappropriate. In cases of loss or damage of goods, this
creates uncertainty as to the time of loss/damage, uncertainty as to mode and identity of the carrier;
and uncertainty as to the applicable legal regime for liability and its effects. Furthermore separate
arrangements exist for transport of dangerous goods.
Possible Ways Forward
The EU is currently discussing bilaterally with major partners the prospects of greater
harmonisation of regulations for different transport modes, including the feasibility of developing a
single intermodal framework covering, inter alia , liability rules, the use of modern techniques for data
provision, payments and invoicing methods, together with flanking measures for cargo tracking and
tracing across the different modes.
This is however an area where one can consider possible action driven by the WTO. We
believe it worth considering a WTO-led programme to centrally review the current regulatory
framework, with the aim to coordinate and oversee the development of a single set of international
regulations for goods moving intermodally. This exercise could  encompass uniform liability rules,use of information technology, harmonised documentation and data requirements (including use ofG/C/W/133
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non-negotiable documents); and means of frequent re view and adjustment to take account of changing
business practices.
Such a review would among other things, be a us eful means to draw attention to problems of
duplication, redundancy, omissions and rigidities in the current international regulatory framework.And it could promote the rationalisation and integration, where appropriate, of the corpus of rules
represented by existing conventions and equivalent international instruments.
Any such review should thus involve all the relevant intergovernmental organisations as well
as interested trade and business organisations, and focus in particular on the effect of different
regulatory options on the effective movement of goods. The WTO is in our view uniquely
well-positioned to carry out this task as it is not captive to any particular interest group and canachieve the optimum balance between public and comme rcial interests. But to do this would need the
active participation of the key intergovernmental and business organisations operating in the sector.
The mandate of the Goods Council is to « assess the scope for WTO rules » in the field of
trade facilitation. The proposal made above is not one of rule making in the conventional sense, butrather for a WTO initiative that could ultimately lead to rule making. It might require a longer
timeframe than would the elaboration of some basic WTO provisions to simplify import, export and
customs procedures, which we have proposed be done in the next phase of WTO negotiations.
The Community believes that the proposed review is best carried out within the framework of
WTO trade facilitation, so as to ensure the right focus on movement of goods. It could however also
be done as a sui generis  activity or as a supporting element in the forthcoming negotiations on trade in
services. Indeed, such a review could usefully input into the GATS 2000 process, as part of the
examination of the classification of transport services for possible scheduling purposes.
Separately, the WTO could also consider specific instruments that could be made more
enforceable by integration into a WTO framework of rules on trade facilitation (for example the
IMO’s FAL convention, Annex 9 of the ICAO 1944 C onvention on International Civil Aviation, or
Montreal Protocol IV of that Convention, which has just entered into force).
4.  Other Issues
The EC recognises that the above proposals cover only a part of what potentially falls within
transport-related aspects of trade facilitation. We have not addressed at all questions relating to
physical infrastructure, which can give rise to serious constraints and must be tackled. At the March
meeting of the CTG, where development and technical assistance issues are to be discussed, we intend
to return in particular to consideration of infrastr uctural initiatives such as the ACIS (Advanced Cargo
Information Systems) project being introduced in some developing regions.
B. P
AYMENT , INSURANCE AND OTHER FINANCIAL QUESTIONS AFFECTING CROSS -BORDER
TRADE IN GOODS .
Again this is a potentially broad area, rais ing some issues which probably go beyond the
capacity of WTO in terms of possible rule making, or which are best resolved through competitive
pressure at the private sector level. The Community has only carried out  a preliminary assessment of
issues which repay further study by WTO, and may wish to return to this subject at a later date.
At this stage, the Community suggests that the following issues receive attention.G/C/W/133
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1. Electronic Payment Systems
Widespread requirements to use and present physical documentation for bank payment and
issuance of letters of credit, often tied to the use of negotiable documents, as well as insufficient use
of electronic means for payments, continue to cause unnecessary delays to goods transactions. Several
speakers at the March Symposium suggested that WTO promote greater use of secure electronicdocumentation for transfer of goods, and electronic payments procedures. As we develop global
electronic commerce, we must ensure that electronic alternatives do not simply replicate in electronic
form existing rigidities or duplicative requirements. At the next trade facilitation meeting of the CTG
in March 1999, which will be studying electronic means to facilitate trade, the European Community
hopes to consider these issues in more detail.
2. Banking Settlement Delays
As noted in the March 1998 Symposium, lengthy « float » times, i.e. the time taken between a
customer paying monies into their bank and funds being received and usable in the exporter’s bank
account, can result in high interest charges and overdraft difficulties, particularly for small and
medium sized enterprises. Inter-bank competition for customers has not by itself resolved this
problem.  Within the EU action has been taken. Directive 97/5/EC concerning cross border credittransfers aims to introduce minimum standards for such EU transactions, including time limits for
bank processing.  It would be of interest to examine the legislations of WTO member countries
regulating this area with a view to consider whether possible future work on regulatory issues under
the GATS could help ensure that such domestic regulations are not more burdensome than necessary
to ensure the quality of the service.
3. Non-Payment & Credit Worthiness
A classic problem for international open accoun t trading is the insecurity for exporters of
selling to an unknown buyer : a potential risk unless the customer has been thoroughly checked for
credit worthiness. Typically, the exporter has to rely on his own monitoring of procedures until receiptof payment ; However, the cost of obtaining up-to-date credit information can represent a significant
proportion of profit margin. Within a future WTO framework of rules to simplify trade procedures the
Community suggests that measures to improve access to credit information, particularly for SMEs and
for companies in developing countries, be developed, possibly using the UNCTAD’s Trade Points
Programme as a vehicle for such access. Further development of ISO quality management standards
setting norms of satisfactory performance regarding payment delays would also be worth considering.
Last, improved access to ordinary and commercial insurance is also needed, especially for
small and medium sized enterprises, since a major insecurity for exporters selling on open account to
unknown buyers is ensuring that consignments are not stolen or diverted en route. The Community
would welcome views on whether WTO Members consider there is scope within WTO to address this
problem
4. Late Payment in Commercial Transactions
Recent surveys carried out in the EU suggest that late payment of commercial debts continues
to be a major hindrance to cross border trade, affecting companies’ cashflow, profitability and
competitiveness, and discouraging potential exporters. Within the EU, proposals are being elaborated
2
to penalise companies that habitually settle bill s late, through the introduction of a legal right to
interest on late payments.
                                                     
2  European Commission Doc 98/0126/final. Proposal for a European Parliament and Council Directive
Combatting Late Payment in Commercial Transactions.G/C/W/133
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It would be of interest to know what similar provisions exist in other WTO members and
whether Members believe this form of domestic regulation, one effect of which would be to provide
greater security to international trade, could through WTO be promoted further.
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