Trade Facilitation (TF)
Issues at Stake
«Implementing Aid for Trade Road Maps»
Organized by UNECE
July 10th 2013
Background: the trade facilitaiton negotiations
• TF negotiations one of multiple issues on the WTO negotiations
agenda; need for a balanced outcome by Bali (implementation issues
and S&D, agriculture and food security, LDC issues…)
• Modalities of negotiations are set out in Annex D of the July 2004
Framework Agreement
• TF negotiations have three pillars:
– 1st Pillar: Clarifying and improving GATT Articles V, VIII and
X, with a view to further expediting the movement, release and
clearance of goods, including goods in transit.
– 2nd Pillar: Enhancing Technical Assistance and support for
Capacity Building (TACB) in the area of TF.
– 3rd Pillar: Enhancing cooperation on TF and customs compliance
issues.
TF articles under the GATT
• The objective of Articles V, VIII, and X GATT is to
reduce trading costs and facilitate trade.
– Article V GATT (Freedom of Transit) provides for
hassle-free movement of transit goods through the territory
of other WTO Members.
– Article VIII GATT (Fees and Formalities connected
with Importation and Exportation) seeks to rationalize
and simplify border procedures, formalities and charges.
– Article X GATT (Publication and Administration of
Trade Regulations) requires prompt publication of trade
laws and regulations and their uniform, impartial and
reasonable administration.
Centrality of special and differential (S&D) treatment
Annex D of July 2004 framework and Annex E of Hong Kong
Ministerial Declaration stress that:
– Negotiations “shall take fully into account the principle of special and
differential treatment for developing and least-developed countries”
(WT/L/579)
– Implementation is conditioned on acquisition of financial, technical,
and capacity building by developing countries and related to delivery of
technical, financial, and capacity building assistance by developed
countries Members of WTO
– S and D to extend beyond transitional periods for implementation
– In cases where required support and assistance for such infrastructure
(infrastructure development) is not forthcoming, and where a
developing or least-developed Member continues to lack the necessary
capacity, implementation will not be required
– Developed country Members provide support and assistance to
developing and least developed country Members in a comprehensive
manner and on a long term and sustainable basis, backed by secure
funding, in order to allow implementation.
Status of the negotiations
• Section I of the negotiating text dealing with new rules on trade facilitation
aims at ‘clarifying and improving’ the GATT
– An extended text of 30 plus pages, 16th revised version, and including
more than 500 brackets just four months before the Ministerial
– Overall, rules are designed based on mandatory language in most
provisions, which includes limited and uncertain flexibilities in some parts.
• Section II on special and differential treatment, including technical and
financial assistance and capacity building
– The discussion remains stalled at the conceptaul level up until a few
months before the Ministerial
– The current design does not include strong basis for defining
obligations of developed countries Members of the WTO towards
operationalization of the S & D, and include burdensome obligations
for developing countries and LDCs
Overall, there is still a significant imbalance within the text
Article 1: Publication and Availability of Information
Article 2: Prior Publication and Consultation
Article 3: Advanced Rulings
Article 4: Appeal or Review Procedures
Article 5: Other Measures to Enhance Impartiality, Non-discrimination, and
Transparency
Article 6: Disciplines on Fees and Charges Imposed on or in Connection with
Importation and Exportation
Article 7: Release and Clearance of Goods
Article 8: Consularization
Article 9: Border Agency Cooperation
Article 10: Formalities Connected with Importation and Exportation and Transit
Article 11: Freedom of Transit
Article 12: Customs Cooperation
Article 13: Institutional Arrangements
Article 14: National Committee on Trade Facilitation
Article 15: Preamble/ Cross-Cutting Matters
Issues for consideration
• Needs of developing and least-developed countries members in
facilitation of trade differ from what the negotiations cover
– Aid for trade should ensure prioritizing broader objectives of
supporting productive and trade capacities, needed
infrastructure,…
– Financial assistance should not be diverted away from
development objectives of developing Member and LDCs;
additional resources should be available for purposes of
implementing the potential TF agreement
• Many provisions under the negotiating text have no relationship
with the provision of technical and financial assistance and support
for capacity building, but are purely a policy and regulatory matters.
Implementation issues associated
with potential TF agreement
• Regulatory implications
• Legislative and institutional needs
• Short-term and long-term cost implications
On the regulatory front
The rules under negotiations are currently designed in a manner that
could undermine the regulatory capacities and space of WTO Member
States and could introduce multiple grounds based on which laws and
regulations of Member States could be challenged under the WTO
DSU.
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Lessons from the GATT and WTO jurisprudence: Dozens of dispute
settlement cases have been raised based on legal grounds under Articles V,
VIII and X GATT WTO often finding WTO Members in violation of their
obligations under these articles.
Design of the rules under negotiations is over-prescriptive; propose detailed
lists of criteria for designing and applying certain custom practices, or the use
of international standards as basis for such practice  would limit the space
and options for Members to design and apply several of the requirements
under a potential trade facilitation agreement.
Proposed rules open the influence on national legislative processes to an
undefined open-ended category of ‘interested parties may lead to
speculation, lobbying pressures, and profiteering by interest groups and tilt
the balance in national regulatory and legislative processes away from the
national constituencies and development priorities
On legislative and institutional fronts
Hold significant administrative and institutional burdens on Member
States, especially developing countries and LDCs, whose customs and
customs-related institutional mechanisms are not as advanced
compared to developed countries.
Examples:
– Setting in place and continuously updating systems for managing
information, and assigning staff or specific units to follow that
– In some cases, the national legislative process would need to be changed in
order to accommodate requirements stipulated by the agreement (such as
commenting on national laws)
– Need a legal act or formal policy to identify the government agency (or
agencies) or other entities that would be responsible for implementing the
obligation and legislative or administrative acts to designate responsibilities
and define the mandate and authority of the responsible institution.
– Burdens of implementing across the board at the national level; while some
Members may already have the practice implemented in some regions or
custom agencies, it remains significantly difficult to ensure a homogenous
alignment with the requirements across the national level.
In relation to costs
• Would include human resource expenses, equipment and
information-technology systems, as well as other significant
infrastructure expenditures.
• Most costs of a recurring nature; would not be limited to a one-time
investment  necessitate a carve-out of the national budgets on a
yearly basis.
• Could essentially lead to a disproportionate diversion of limited
resources from other vital institutions and public services to customs
administration.
• Assessment of the needs to meet these costs should be of a longterm nature, cannot be addressed by assessing the available funds at
the period of negotiations.
• Important to unpack the nature of the international funds available to
support the implementation of a trade facilitation agreement 
should not be a diversion from meeting development needs and
goals, nor should it be of a debt-creating nature.
• Calculate the potential costs associated with irreplaceable loss of
tariff revenues.
Needed Way Forward
• Need a balanced agreement the allows for the respect of developing
Members’ development context, policy space, and flexibility to adopt
and implement commitments commensurate with their capacity to do
so, and subject to the provision of technical assistance and capacity
building where needed.
• Pre-requisites include:
– New TF rules that do not extend beyond the mandate of negotiations, are
based on a best-endevour basis that respects the ability of WTO
Members to implement according to their capacities, and does not
intrude on national regulatory capacities.
– A strong and operational section on special and differential treatment
that preserves the intent reflected in the mandate of the negotiations
(Annex D, 2004), which conditions implementation on acquisition of
capacity, and technical and financial assistance.
• Overall, need a balanced outcome of the WTO Doha negotiations, that
addresses the implementation issues and S&D at the heart of the
multilateral trading system
• Aid for trade should focus on building the productive and export
capacities of developing countries