Trade Facilitation: Trade Facilitation: WTO Negotiations and BeyondWTO Negotiations and Beyond

Donald J LewisDonald J LewisFaculty of LawFaculty of Law

The University of Hong KongThe University of Hong Kong

Trade Facilitation and Development: What Trade Facilitation and Development: What Will and Won’t the DDA AccomplishWill and Won’t the DDA Accomplish

World Bank and WBI World Bank and WBI ICTSD Trade and Development Symposium ICTSD Trade and Development Symposium

16 December 200516 December 2005Hong Kong, China Hong Kong, China

WTO NegotiationsWTO Negotiations

TF Negotiations Launched by WTO General Council TF Negotiations Launched by WTO General Council Decision 1/8/04 (“Decision 1/8/04 (“July Package”July Package”))

Annex D ModalitiesAnnex D Modalities

Role of Negotiating Group on Trade Facilitation Role of Negotiating Group on Trade Facilitation (NGTF) (NGTF)

Core Aims/Objectives:Core Aims/Objectives: First AimFirst Aim: Clarification/improvement of Articles V, VIII and : Clarification/improvement of Articles V, VIII and

X, GATT 1994X, GATT 1994 Second AimSecond Aim: Technical assistance (TA) and Capacity building : Technical assistance (TA) and Capacity building

(CB) for developing countries and LDCs(CB) for developing countries and LDCs

Third AimThird Aim: Cooperation on customs compliance issues: Cooperation on customs compliance issues

WTO NegotiationsWTO Negotiations

Recent DevelopmentsRecent Developments

Revised Draft Ministerial Text: Annex E Revised Draft Ministerial Text: Annex E (02/12/05)(02/12/05)

NGTF Analytical Compilations of TF ProposalsNGTF Analytical Compilations of TF Proposals

TN/TF/W/43/Rev.4 TN/TF/W/43/Rev.4 (31/10/05): (31/10/05): Rev.4 DocumentRev.4 Document Focus primarily on Focus primarily on first aimfirst aim:: reform of Articles V, VIII and reform of Articles V, VIII and

X, GATT 1994X, GATT 1994

““Built-in Flexibilities”Built-in Flexibilities”

TA/CB Developments TA/CB Developments

Special and Differential Treatment (S&DT) Issues Special and Differential Treatment (S&DT) Issues

WTO NegotiationsWTO Negotiations

Recent DevelopmentsRecent Developments

TN/TF/W/43/Rev.4: Rev.4 Document TN/TF/W/43/Rev.4: Rev.4 Document

Classification Scheme: Classification Scheme:

Article X (Transparency):Article X (Transparency): Publication and Availability of Information Publication and Availability of Information Time Period between Publication and ImplementationTime Period between Publication and Implementation Consultation and Comment on New/Amended Rules Consultation and Comment on New/Amended Rules Advance Rulings Advance Rulings Appeal Procedures Appeal Procedures Measures to Enhance Impartiality and Non-DiscriminationMeasures to Enhance Impartiality and Non-Discrimination

WTO NegotiationsWTO Negotiations

TN/TF/W/43/Rev.4: Rev.4 DocumentTN/TF/W/43/Rev.4: Rev.4 Document

Classification Scheme: Classification Scheme:

Article VIII (Fee and Formalities): Article VIII (Fee and Formalities): Fees and Charges Connected w/ Import/ ExportFees and Charges Connected w/ Import/ Export Formalities Connected w/ Import/ExportFormalities Connected w/ Import/Export Consularization Consularization Border Agency Coordination Border Agency Coordination Release and Clearance of Goods Release and Clearance of Goods Tariff ClassificationTariff Classification

WTO NegotiationsWTO Negotiations

Article V (Freedom of Transit): Article V (Freedom of Transit): Matters Relating to Goods TransitMatters Relating to Goods Transit

WTO Progress To DateWTO Progress To Date Significant work accomplished on Significant work accomplished on first aimfirst aim of TF negotiations: of TF negotiations:

clarification/improvement of GATT Articles V, VIII and X clarification/improvement of GATT Articles V, VIII and X Additional work still needs to be done on Additional work still needs to be done on secondsecond and and third aimsthird aims Second aimSecond aim: : although TA/CB and S&DT issues although TA/CB and S&DT issues areare addressed in addressed in

the Rev.4 Document, they are the Rev.4 Document, they are notnot yet clearly linked-up to yet clearly linked-up to specific TF measures/commitments for developing countries and specific TF measures/commitments for developing countries and LDCsLDCs

Third aimThird aim:: OnlyOnly two proposals submitted to date on customs two proposals submitted to date on customs cooperation issues (India and United States; India)cooperation issues (India and United States; India)

WTO NegotiationsWTO Negotiations

WTO Progress To DateWTO Progress To Date NoNo prioritization and/or sequencing of potential WTO TF prioritization and/or sequencing of potential WTO TF

commitments for developing countries and LDCscommitments for developing countries and LDCs

Attention to Attention to needs and prioritiesneeds and priorities of developing countries of developing countries considered in Rev. 4 document and in other NGTF work and considered in Rev. 4 document and in other NGTF work and documents (documents (See See TN/TF/W/59 which sets forth TN/TF/W/59 which sets forth NGTF Self-NGTF Self-Assessment Questionnaire and InventoryAssessment Questionnaire and Inventory))

NoNo Consensus w/in NGTF on the Consensus w/in NGTF on the actual “package” of TF actual “package” of TF measures/commitmentsmeasures/commitments to be adopted at Hong Kong to be adopted at Hong Kong Ministerial Ministerial

Hong Kong and BeyondHong Kong and Beyond

Trade Facilitation Strategies for Asia PacificTrade Facilitation Strategies for Asia Pacific

Asia Pacific governments, business stakeholders Asia Pacific governments, business stakeholders andand civil civil society need to determine what society need to determine what specific TF measuresspecific TF measures in the in the NGTF Rev.4 Document they are willing to supportNGTF Rev.4 Document they are willing to support

National TF Assessment ProcessNational TF Assessment Process

Key Key to TF assessment process: TF should be situated w/in the to TF assessment process: TF should be situated w/in the larger context of a larger context of a national trade and development strategynational trade and development strategy

Hong Kong and BeyondHong Kong and Beyond

National TF Assessment Process Steps:National TF Assessment Process Steps:

1)1) BenchmarkingBenchmarking of current state of TF implementation of current state of TF implementation

2)2) TF TF Needs and PrioritiesNeeds and Priorities (a (a consultativeconsultative process) process)

3)3) Implementation costsImplementation costs for identified TF measures for identified TF measures

4)4) Roles and sources ofRoles and sources of TA/CB TA/CB

5)5) Prioritization and sequencingPrioritization and sequencing of TF measures (on basis of of TF measures (on basis of NGTF Rev.4 Document) NGTF Rev.4 Document)

6)6) S&DT ConditionalityS&DT Conditionality Issues Issues

Hong Kong and BeyondHong Kong and Beyond

Consensus Consensus at the Hong Kong Ministerialat the Hong Kong Ministerial ConsensusConsensus sought on at least a “basic package” of TF sought on at least a “basic package” of TF

measures based on Rev.4 Document proposals measures based on Rev.4 Document proposals

NGTF deliberations suggest that a “basic package” may NGTF deliberations suggest that a “basic package” may emerge w/ predominant emphasis on emerge w/ predominant emphasis on Article X TransparencyArticle X Transparency commitmentscommitments

• Beyond Hong Kong: Beyond Hong Kong: More ambitious More ambitious “phased packages”:“phased packages”: Additional packagesdditional packages containing more demanding TF containing more demanding TF measures culminating in an measures culminating in an “advanced package”“advanced package” which which would include would include ICT-enabled “paperless trading” systemsICT-enabled “paperless trading” systems

Hong Kong and BeyondHong Kong and Beyond

UNESCAP/ARTNeT TF StudiesUNESCAP/ARTNeT TF Studies East and South Asia: China, India, Bangladesh, East and South Asia: China, India, Bangladesh,

Nepal and IndonesiaNepal and Indonesia TF Implementation to DateTF Implementation to Date Most countries in the ARTNeT studies are or will be Most countries in the ARTNeT studies are or will be

implementing many of the NGTF Rev. 4 TF measuresimplementing many of the NGTF Rev. 4 TF measures

Article X Implementation: Article X Implementation: • Increased dissemination of trade information, Increased dissemination of trade information, including including

national enquiry pointsnational enquiry points and and internet publication internet publication • Adoption of advanced ruling systemsAdoption of advanced ruling systems• Revision of trade/customs appealsRevision of trade/customs appeals proceduresprocedures

Hong Kong and BeyondHong Kong and Beyond

UNESCAP/ARTNeT TF StudiesUNESCAP/ARTNeT TF Studies TF Implementation to DateTF Implementation to Date Article VIII Implementation: Article VIII Implementation: • Reduction/simplification in trade/customs documentationReduction/simplification in trade/customs documentation• Automated, ICT-enabled “paperless trading” systems (i.e. Automated, ICT-enabled “paperless trading” systems (i.e.

UNCTAD ASYCUDA UNCTAD ASYCUDA oror national software systems (e.g., national software systems (e.g., India’s ICEGATE)India’s ICEGATE)

• Partial implementation of risk management systems and Partial implementation of risk management systems and reduced customs inspection based on goods classificationreduced customs inspection based on goods classification

• Pre-arrival clearance systemsPre-arrival clearance systems• Stronger multi-agency co-ordinationStronger multi-agency co-ordination

Hong Kong and BeyondHong Kong and Beyond

UNESCAP/ARTNeT TF StudiesUNESCAP/ARTNeT TF Studies TF Implementation to DateTF Implementation to Date Article V Implementation:Article V Implementation:• Bilateral treaties generally consistent w/ Article V provisionsBilateral treaties generally consistent w/ Article V provisions

• However, However, in practice,in practice, national treatmentnational treatment notnot always applied always applied to goods in transit, particularly as regards to goods in transit, particularly as regards choice of modes of choice of modes of

transporttransport

Hong Kong and BeyondHong Kong and Beyond

UNESCAP/ARTNeT TF StudiesUNESCAP/ARTNeT TF Studies Private Sector SurveysPrivate Sector Surveys Key Problem Areas: Key Problem Areas: • Customs ValuationCustoms Valuation• Tariff ClassificationTariff Classification• Import Licensing ProceduresImport Licensing Procedures• Inspection and Release Inspection and Release • Technical Barriers (Technical Barriers (including including SPS barriers)SPS barriers)• Submission of Documentation Submission of Documentation

Hong Kong and BeyondHong Kong and Beyond

UNESCAP/ARTNeT TF StudiesUNESCAP/ARTNeT TF Studies Private Sector SurveysPrivate Sector Surveys TF Priorities:TF Priorities:

(1) (1) Dissemination/publication of trade regulations and Dissemination/publication of trade regulations and proceduresprocedures

(2) (2) Elimination of corruption Elimination of corruption

(3) (3) Improvement in agency co-ordinationImprovement in agency co-ordination

(4)(4) Computerization/automation of cross-border procedures Computerization/automation of cross-border procedures

(5) (5) Pre-arrival clearance systemsPre-arrival clearance systems

Hong Kong and BeyondHong Kong and Beyond

UNESCAP/ARTNeT TF StudiesUNESCAP/ARTNeT TF Studies TF Implementation Costs TF Implementation Costs ((and and Benefits)Benefits) TF cost measurement challenge:TF cost measurement challenge: Difficulty of “unbundling” TF implementation costs from Difficulty of “unbundling” TF implementation costs from

regular customs/trade budgetary expenditures regular customs/trade budgetary expenditures ARTNeT Country Studies: TF Costs HierarchyARTNeT Country Studies: TF Costs Hierarchy (1) (1) Infrastructure costsInfrastructure costs

(2) (2) ICT-enabled “single window” systemsICT-enabled “single window” systems (3)(3) Risk management systems Risk management systems

(4) (4) Training/staff re-deployment costsTraining/staff re-deployment costs

Hong Kong and BeyondHong Kong and Beyond

UNESCAP/ARTNeT TF StudiesUNESCAP/ARTNeT TF Studies TF Experts SurveyTF Experts Survey• An independent qualitative assessment of costs, benefits, and An independent qualitative assessment of costs, benefits, and

implementation time-frames for selected NGTF Rev. 4 TF implementation time-frames for selected NGTF Rev. 4 TF measuresmeasures

• Figure 1Figure 1 ((infrainfra) indicates: ) indicates: Long-term savingsLong-term savings achieved for achieved for allall selected TF measures selected TF measures Relatively lowRelatively low set-up/operating costs for several TF measures set-up/operating costs for several TF measures Relatively highRelatively high costs for implementing costs for implementing advanced advanced customs customs

methods (e.g., “single window” and risk management systems) methods (e.g., “single window” and risk management systems)

Hong Kong and BeyondHong Kong and Beyond

UNESCAP/ARTNeT TF StudiesUNESCAP/ARTNeT TF Studies TF Experts SurveyTF Experts Survey• Table 1Table 1 ((infrainfra) indicates: ) indicates:

Possible Possible Sequencing of WTO TF commitmentsSequencing of WTO TF commitments for for developing country/LDC Membersdeveloping country/LDC Members

HoweverHowever, , SequencingSequencing is ultimately a matter for is ultimately a matter for each each developing and LDC Member to determine on the basis of its developing and LDC Member to determine on the basis of its own own implementation capacitiesimplementation capacities, , needs and prioritiesneeds and priorities, , andand by reference to its by reference to its national trade and economic national trade and economic development strategydevelopment strategy

The The Table 1 SequencingTable 1 Sequencing is useful in generally identifying TF is useful in generally identifying TF measures in terms of progressive difficulty (measures in terms of progressive difficulty (and and costs) of costs) of implementation implementation

WTO Negotiations: WTO Negotiations: Future ImplicationsFuture Implications

World Bank and OECD studies point to the World Bank and OECD studies point to the benefitsbenefits of TF implementation for developing countriesof TF implementation for developing countries

Eventual Eventual WTO Agreement on Trade FacilitationWTO Agreement on Trade Facilitation will will give rise to give rise to binding legal obligationsbinding legal obligations on developing on developing countriescountries

Approaches toApproaches to WTO TF implementationWTO TF implementation:: APEC TF Action Plan APEC TF Action Plan Approach: “Options Menu” Approach: “Options Menu” NGTF “Basic Package” NGTF “Basic Package” ++ “Phased Packages”: “Phased Packages”: • Implementation according to Implementation according to scheduledscheduled commitments commitments • Linked to implementation capacities, needs, costs and the Linked to implementation capacities, needs, costs and the

provision of specifically targeted, provision of specifically targeted, sustainedsustained TA/CB TA/CB