   
  
JOB/AG/185  
 
14 April 2020  
(20-2896) Page: 1/3 
Committee on Agriculture  
Special Session  Original: English  
 
TRANSPARENCY IN TARI FF RATE CHANGES, AND   
THE TREATMENT OF SHIPMEN TS EN ROUTE  
MEMBERS PRACTICES AN D PERSPECTIVES  
SUBMISSION FROM  AUSTRALIA  AND CANADA  
The following submission, dated 14  April 2020, is being circulated at the request of the delegations 
of Australia  and Canad a.   
 
_______________  
 
 
Background:  
1. Unexpected increases in applied tariffs by Members can create uncertainty for exporters, as 
well as additional costs for importers, and can be a significant disincentive to trade. In 
discussions in the Committee on Agriculture in Special Session, Members e xpressed interest in 
exploring this topic further. In November 2019, Australia and Canada circulated a paper 
(JOB/AG/168) asking Members a series of questions on their current practices regarding the 
treatment of shipments en route  when a tariff changes. T he objective of these questions was 
to gather information in order to deepen Members ' collective understanding of current practices.  
 
2. Since the paper was circulated in November 2019, Canada and Australia have engaged in 
consultations with interested Member s on the basis of the questions in JOB/AG/168 in order to 
better understand the scope of potential problems resulting from changes to applied tariffs.  
 
3. A wide cross -section of the Membership, including large exporters, large importers, small 
developing country exporters/importers/net food importers, and representative of all 
negotiating groups provided responses. A summary of the information grouped by themes is 
set out below.  
 
4.  The objective of this follow -up paper is to:  
 
a. compile an inventor y of current practices when an applied tariff changes;  
 
b. share with Members the potential issues that arise when an applied tariff changes , and  
 
c. propose an option to enhance predictability in applied tariffs.  
 
Summary of General Comments from Members:  
5. All acknowledge that a Member is free to adjust its MFN applied tariffs within its tariff bindings. 
Members identified a number of reasons that may lead to adjustments in applied tariffs. The 
reasons to lower applied tariffs include: to reduce costs of manufac turing inputs, address 
domestic product shortages, or to control prices on the domestic market. Applied tariff increases 
may be implemented to protect a domestic industry, or to reflect seasonal changes in applied 
tariffs or changes in international prices  for a product.   
 JOB/AG/185  
 
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  6. There is a desire to enhance predictability when applied tariffs are increased, in particular for 
shipments in -transit or en route . Members noted that it was only in limited circumstances that 
they would increase an applied MFN tariff.  
 
7. Members should be encouraged to continue to liberalise and lower tariffs on all products, 
including agricultural products.  
 
8. There is a general interest to enhance predictability in the application of applied tariffs.  
 
9. If a Member increases applied tariffs within MFN bindings, there should be greater predictability 
for exporters and importers.  
 
10. Discussions should focus on applied MFN tariffs and not on other measures such as anti -
dumping/countervailing duties, excise taxes, safeguard measures, issues regardi ng tariff 
classification or preventing fraudulent actions, etc.  
What are the Current Practices of Members:  
11. Very few Members provide advance notice before an applied tariff increase. One Member notifies 
its applied tariff changes 30 days in advance, and ano ther Member changes its applied tariffs 
only once a year, providing advance notice of the date. These Members do not usually include 
an en route  provision . 
 
12. Those Members that do not provide advance notice of an applied tariff change do so for various 
reasons, including domestic restrictions, or variable tariff rates based on international prices for 
a product. Some of these Members usually implement an en route  provision with certain 
conditions or on a case -by-case basis when making applied tariff changes,  but usually without 
advance notice of the change. In some cases, a Member may consult on proposed tariff changes.  
  
13. A small number of Members noted that they provide neither an advance public notice nor an en 
route  provision.  
 
14. Depending on a Member 's dom estic process, an applied tariff can be changed at any time during 
the year and this appears to be the case for most Members.  
 
Summary : 
15. Based on the responses received and discussions with Members, there does not appear to be a 
uniform manner in which app lied tariff changes are publicly  notified. This is not surprising given 
the differences between Members with respect to their domestic processes. Members are open 
to discussing options with the objective of facilitating agricultural trade.  
 
16. Based on domes tic restrictions raised by several Members, it is clear that a one size fits all 
approach will not work. There are, however, at least two best practices that could achieve the 
goal of improved predictability for traders: (i) advance public notice of a chan ge in applied MFN 
tariff rates or how an automatic applied tariff change is calculated, where practical/feasible, and 
(ii) use of an en route provision when advance public notice is not provided. Members may wish 
to consider adopting one or both approaches , as appropriate.  
 
Potential Options to Enhance Transparency and Manage Shipments  en route :1 
Option 1:  
Recognizing that Members have different domestic frameworks, and therefore differing abilities to 
adopt either prior public notice or en route  provisions when an applied MFN tariff changes, Members 
are free to choose the best practice that works in their d omestic framework, noting that the use of 
one or more of the methods below provides greater certainty for traders. Members have the option 
 
1 The Merriam Webster Dictionary defines en route  as "on or along the way ". It can be inferred that the 
product will soon be exported or has been exported to a destination market, and the exporter may thus not 
account for the impact of the applied tariff changes on the shipment in question. A Member may have a more 
precise definition or may provide guidance on its application.  JOB/AG/185  
 
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  to choose one or more of the appropriate mechanism or mechanisms, which may differ depending 
on the circumstances:  
 
1. Provide a public notice [x] days prior to a change in an applied tariff.  
- The notice should be public and readily accessible by importers and exporters.  
2. Provide clear prior  guidance on how a tariff will change in response to defined 
factors, such as chang es in market prices, indexation against inflation.  
 
3. Provide an en route provision for shipments.  
Option 2:  
Agree in -principle that Members having provisions in place for shipments  where applied tariff 
changes are made  would provide greater certainty for  traders.  
 
Develop best practices  for customs authorities to facilitate the development of en route  provisions 
which could be implemented domestically by Members.  
 
As a first step, Members shall provide responses to the questions in JOB/AG/168 to the Secr etariat. 
By [MC12/MC13, a date to be determined], Members shall establish a series of best practice for 
customs authorities to implement in cases where applied tariff changes are made, with a view to 
improving predictability for traders.  
 
Next steps:  
Discuss options in more detail with interested Members to develop a workable/realistic approach to 
a cross -cutting issue.  
 
__________  