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CBP logoU.S. Customs and Border Protection (CBP) published a Federal Register Notice inviting U.S. exporters to request CBP’s assistance in resolving disputes with foreign customs agencies over the tariff classification or customs valuation of U.S. exports. CBP explains that it is willing to assist U.S. exporters with these disputes under the auspices of the World Customs Organization (WCO). CBP is very active at the WCO and regularly participates in meetings concerning the application of the Harmonized Commodity Description and Coding System (HS System) and the World Trade Organization’s (WTO) Customs Valuation Agreement (CVA). According to CBP, this process was helpful in providing a successful outcome for clients who disputed a foreign customs agency’s classification of imported goods.

Tariff Classification
CBP represents the United States at meetings under the auspices of the International Convention on the Harmonized Commodity Description and Coding System (“HS Convention”). The HS Convention is the international agreement that provides that WCO Members will implement the HS System and comply with decisions of the various committees organized under the convention. CBP attends semiannual meetings of the WCO’s Harmonized System Committee (HSC), where contracting parties to the HS Convention examine policy matters, make decisions on classification questions, settle disputes, and prepare amendments to the HS System and its Explanatory Notes.

Article 10 of the HS Convention governs disputes between contracting parties concerning the interpretation or application of the HS Convention. The article provides that parties with potential disputes should first try to settle the dispute through bilateral negotiations. If such negotiation cannot resolve the dispute, the parties may refer the dispute to the HSC for its consideration and recommendations. The HSC, in turn, refers irreconcilable disputes to the WCO Council for its recommendations.

Customs Valuation
CBP represents the United States at the WCO with respect to issues arising under the CVA. Pursuant to Annex II to the CVA, the WCO’s Technical Committee on Customs Valuation (TCCV) is authorized to examine specific problems arising from the customs valuation systems of WTO Members. The TCCV is responsible for examining the administration of the CVA, providing WTO Members with advisory opinions regarding particular customs valuation issues, and issuing commentaries or explanatory notes regarding the CVA. Like the HSC, the TCCV may get involved in disputes amongst foreign customs agencies. CBP stands willing to help U.S. exporters with these disputes. This process may provide U.S. exporters with a faster procedure to resolve disputes than a typical WTO dispute.

CBP’s Role at the WCO May Resolve Export Issues for U.S. Exporters
CBP states in the notice that its communication with other customs administrations through the meetings of the HSC and TCCV at the WCO can “often serve to eliminate or resolve export issues for U.S. traders.” As an example, in 2014, a U.S. exporter notified CBP of a foreign customs administration’s misclassification of its textile exports. The U.S. exporter requested that pursuant to Article 10 of the HS Convention, CBP (1) contact the foreign customs administration to resolve the tariff classification dispute; and (2) refer the matter to the HSC at the WCO, if it could not be resolved bilaterally. After confirming it agreed with the U.S. exporter’s position, CBP engaged the foreign customs administration directly. Within seven months of the exporter’s request, CBP secured a favorable decision by the foreign customs administration to classify the merchandise in a manner consistent with the U.S. position. Consequently, the U.S. exporter obtained correct tariff treatment of its imported merchandise in the foreign country as a result of CBP’s engagement.

Source: http://www.internationaltradecomplianceupdate.com/

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flags2African countries are coming under strong pressure from the United States and the European Union to reverse the decision adopted by their trade ministers to implement the World Trade Organization’s trade facilitation agreement on a “provisional” basis.

At last week’s summit of African Union leaders in Malabo, Equatorial Guinea, “there was unprecedented [U.S. and European Union] pressure and bulldozing to change the decision reached by the African trade ministers on April 27 in Addis Ababa, Ethiopia, to implement the trade facilitation (TF) agreement on a provisional basis under paragraph 47 of the Doha Declaration,” Ambassador Nelson Ndirangu, director for economics and external trade in the Kenyan Foreign Ministry, told IPS.

“This pressure comes only when the issues and interests of rich countries are involved but not when the concerns of the poorest countries are to be addressed,” Ambassador Ndirangu said.

“Clearly, there are double-standards,” the senior Kenyan trade official added, lamenting the pressure and arm-twisting that was applied on African countries for definitive implementation of the agreement.

The TF agreement was concluded at the WTO’s ninth ministerial conference in Bali, Indonesia, last year. It was taken out of the Doha Development Agenda as a low-hanging fruit ready for consummation. More importantly, the agreement was a payment to the United States and the European Union to return to the Doha negotiating table.

The ambitious TF agreement is aimed at harmonising customs rules and regulations as followed in the industrialised countries. It ensures unimpeded market access for companies such as Apple, General Electric, Caterpillar, Pfizer, Samsung, Sony, Ericsson, Nokia, Hyundai, Toyota and Lenovo in developing and poor countries.

Former WTO Director-General Pascal Lamy has suggested that the TF agreement would reduce tariffs by 10 percent in the poorest countries.

In return for the agreement, developing and least-developed countries were promised several best endeavour outcomes in the Bali package on agriculture and development.

They include general services (such as land rehabilitation, soil conservation and resource management, drought management and flood control), public stockholding for food security, an understanding on tariff rate quota administration, export subsidies, and phasing out of trade-distorting cotton subsidies (provided largely by the United States) in agriculture.

The non-binding developmental outcomes include preferential rules of origin for the export of industrial goods by the poorest countries, a special waiver to help services suppliers in the poorest countries, duty-free and quota-free market access for least developed countries (LDCs), and a monitoring mechanism for special and differential treatment flexibilities.

African countries were unhappy with the Bali package because they said it lacked balance and was tilted heavily in favour of the TF agreement forced by the industrialised countries on the poor nations.

The Bali outcomes, said African Union Trade Commissioner Fatima Acyl, “were not the most optimal decisions in terms of African interests … We have to reflect and learn from the lessons of Bali on how we can ensure that our interests and priorities are adequately addressed in the post-Bali negotiations.”

The African ministers in Malabo directed their negotiators to propose language on the Protocol of Amendment – the legal instrument that will bring the TF agreement into force at the WTO – that the TF agreement will be provisionally implemented and in completion of the entire Doha Round of negotiation.

African countries justify their proposal on the basis of paragraph 47 of the Doha Declaration which enables WTO members to implement agreement either on a provisional or definitive basis.

The African position on the TF agreement was not acceptable to the rich countries. In a furious response, the industrialised countries adopted a belligerent approach involving threats to terminate preferential access.

The United States, for example, threatened African countries that it would terminate the preferential access provided under the Africa Growth Opportunities Act (AGOA) programme if they did not reverse their decision on the TF, said a senior African trade official from Southern Africa.

The WTO has also joined the wave of protests launched by the industrialised countries against the African decision for deciding to implement the TF on a provisional basis. “I am aware that there are concerns about actions on the part of some delegations [African countries] which could compromise what was negotiated in Bali last December,” WTO Director-General Roberto Azevedo said, at a meeting of the informal trade negotiations committee on June 25.

The African decision, according to Azevedo, “would not only compromise the Trade Facilitation Agreement – including the technical assistance element. All of the Bali decisions – every single one of them – would be compromised,” he said.

The United States agreed with Azevedo’s assessment of the potential danger of unravelling the TF agreement, and the European Union’s trade envoy to the WTO, Ambassador Angelos Pangratis, said that “the credibility of the negotiating function of this organisation is once again at stake” because of the African decision.

The United States and the European Union stepped up their pressure by sending security officials to Malabo to oversee the debate, said another African official. He called it an “unprecedented power game rarely witnessed at an African heads of nations meeting.”

In the face of the strong-arm tactics, several African countries such as Nigeria and Mauritius refused to join the ministerial consensus to implement the TF agreement on a provisional basis. Several other African countries subsequently retracted their support for the declaration agreed to in April.

In a nutshell, African Union leaders were forced to change their course by adopting a new decision which “reaffirms commitment to the Doha Development Agenda and to its rapid completion in accordance with its development objectives.”

The African Union “also reaffirms its commitment to all the decisions the Ministers took in Bali which are an important stepping stone towards the conclusion of the Doha Round … To this end, leaders acknowledge that the Trade Facilitation Agreement is an integral part of the process.”

Regarding capacity-building assistance to developing countries to help them implement the binding TF commitments, African Union countries still want to see up-front delivery of assistance. The new decision states that African Union leaders “reiterate in this regard that assistance and support for capacity-building should be provided as envisaged in the Trade Facilitation Agreement in a predictable manner so as to enable African economies to acquire the necessary capacity for the implementation of the agreement.”

The decision taken by the African leaders is clearly aimed at implementing the TF decision, but there is no clarity yet on how to implement the decision, said Ndirangu. “We never said we will not implement the TF agreement but we don’t know how to implement this agreement,” he added.

In an attempt to ensure that the rich countries do not walk away with their prized jewel in the Doha crown by not addressing the remaining developmental issues, several countries – South Africa, India, Uganda, Tanzania, Solomon Islands and Zimbabwe – demanded Wednesday that there has to be a clear linkage between the implementation of the TF agreement and the rest of the Doha Development Agenda on the basis of the Single Undertaking, which stipulates that nothing is agreed until everything is agreed!

More than 180 days after the Bali meeting, there is no measurable progress on the issues raised by the poor countries. But the TF agreement is on course for final implementation by the end of 2015. Source: Inter Press Service

AmatiThirty-one countries belong currently to the Group of Landlocked Developing Countries: 15 are located in Africa, 12 in Asia, 2 in Latin America and 2 in Central and Eastern Europe. The lack of territorial access to the sea poses persistent challenges to growth and development of these countries and has been the main factor hindering their ability to better integrate in the global trading system. The transit of export and import goods through the territory of at least one neighboring State and the frequent change of mode of transport result in high transaction costs and reduced international competitiveness.

For more details on LLDCs visit – Landlocked Developing Countries (LLDCs)

The 2003 Almaty Programme of Action highlighted the link between the ability of LLDCs to harness their trade potential and the state of the transport infrastructure and the efficiency of trade facilitation measures in neighboring transit countries and called for international support in favor of LLDCs. The United Nations General Assembly in its resolution 66/214 of 22 December 2011 and resolution 67/222 of 3 April 2013 decided to hold a Comprehensive Ten-Year Review Conference of the Almaty Programme of Action in 2014 with a view to formulating and adopting a renewed development partnership framework for LLDCs for the next decade.

It is expected that the ten-year review will provide an opportunity for: (i) assessing progress made in establishing efficient transit transport systems in landlocked developing countries since the adoption of APoA in August 2003, and particularly after the midterm review of 2008; and (ii) agreeing on actions needed to sustain achievements and address challenges in overcoming the special problems of landlocked developing countries around the world.

It would appear that this programme very much supports the creation of inland ports connected to the seaports by means of secure and bonded facilities – within the ambit international law, i.e. WTO (Trade Facilitation Agreement) and the WCO (Revised Kyoto Convention). The question arises as to whether an inland port located in Botswana, Zimbabwe or any adjoining country be able to demand such rights where a ‘corridor’ country or country providing international seaport access to LLDCs does not observe or accept international transit principles?

Related articles

Picture2The International Trade Centre has prepared a guide to help businesses take advantage of the WTO Trade Facilitation Agreement. The agreement simplifies customs procedures, allowing businesses to become more competitive. This jargon-free guide explains the provisions with a focus on what businesses need to know to take advantage of the agreement. It will also help policy makers identify their needs for technical assistance to implement and monitor it. To download the guide – click the following link: http://www.intracen.org/wto-trade-facilitation-agreement-business-guide-for-developing-countries/.

For instance, the guide explains how the article on ‘Advance rulings’ aims to address problems with inconsistent classification of goods by customs officials and the uncertainty it creates for traders. ‘Advance rulings are binding decisions by customs…on the classification and origin of the goods in preparation for importation or exportation. Advance rulings facilitate the declaration and consequently the release and clearance process, as the classification has already been determined in the advance ruling and is binding to all customs officers for a period of time,’ the guide explains. It goes on to list in jargon-free language the obligations and the procedure imposed on customs authorities related to advance rulings.

Reducing the on-the-spot decision making authority of individual customs agents thanks to advance rulings will also reduce bribery, the guide says. Corruption continues to be a key problem for developing-country exporters, who identified it as a major constraint on exports in a recent survey conducted by ITC.

The last chapter of the guide describes how the agreement will be implemented, including the special and differential treatment provisions that developing countries may invoke. Developing countries will be able to link the implementation of the commitments to technical assistance and support from donors. WTO member states will have to explicitly apply for delays for each commitment, which will need to be approved by the WTO and the implementation schedule published.

Source: International Trade Centre

The Dublin Resolution, which was issued at the conclusion of the Policy Commission meeting in Dublin, Ireland on 11 December 2013, welcomes the WTO Agreement On Trade Facilitation (the “Trade Facilitation Agreement”), as embodied in the Bali Package’s Ministerial Decision, adopted at the WTO’s Ninth Ministerial Conference in Bali, Indonesia from 3 to 7 December 2013, under the framework of the Doha Development Agenda.

The Dublin Resolution emphasises the commitment of the WCO to the efficient implementation of the Trade Facilitation Agreement.

The WCO Secretary General, Kunio Mikuriya, said that he was very pleased with the timely and affirmative action of Policy Commission, which reflects the determination to drive forward the global Customs trade facilitation agenda.

Posted by Simon Lester for http://worldtradelaw.typepad.com

 

What Does the WCO think of the WTO Trade Facilitation Agreement?

Cahir Castle Portcullis by Kevin King

Cahir Castle Portcullis by Kevin King

The traditional symbol of customs and borders services is the portcullis – the fortification through which a ship used to enter a port. But as developing countries are increasingly asked to recognise the benefits of liberalised trade to the detriment of their import duty revenue, how can they be helped to raise the portcullis? And is it really in their interests to do so?

With world trade growth expanding more than twice as rapidly as gross domestic product (GDP) over the past decade, says Steve Brady, director, Customs and Trade Facilitation for development consultancy Crown Agents, the potential rewards from participating in world trade are significant. “According to figures from WTO, in 2011 world merchandise exports and imports in real terms grew by over 5%. As a result, each reached over $1.8tn, the highest level in history.”

The major players working with developing country governments to help them benefit from this increase in trade include the World Bank, ICC, World Customs Organisation (WCO), IMF, UN Conference on Trade and Development (Unctad), development banks and specialist intermediaries such as Crown Agents.

A number of countries have improved their capacity as a result of international and domestic efforts, yet some are still hesitant to do so. The Centre for Customs and Excise Studies (CCES) at the University of Canberra finds that many developing country governments are heavily dependent on the revenue from import duties – in some cases this can be as high as 70% of a country’s total revenue base. The desire to protect this is understandably strong. Yet this same desire can be used to drive forward modernisation efforts, explains Professor David Widdowson, CEO of CCES. “Revenue leakage resulting from commercial fraud, poor customs and border procedures and corruption represents a major impediment to poverty reduction.”

Similarly time-consuming manual processing systems, over-regulation, or outright corruption, will discourage trade and investment and further undermine a country’s development. “In the worst cases up to 20 signatures are required to obtain customs clearance of goods, all of which require ‘informal payments’,” says Widdowson. “I have also seen examples of 15 different government agencies playing some role at the border, all acting independently.”

Guidelines or blueprints to modernise such customs and borders processes are available, for example, via the revised Kyoto convention (extolling the basic principles of automation, simplification, responsiveness to the regulation, consistency and co-ordination); the “Framework of standards to secure and facilitate global trade” developed by the WCO; and its “Columbus programme.”

Turkey is cited by Sandeep Raj Jain, economic affairs officer at the United Nations Economic and Social Commission for Asia and the Pacific (Escap), as a case study for the successful modernisation of customs systems, having consolidated 18 previously autonomous border gates and introduced a single IT clearance system, leading to an increase in tax revenues and a decrease in clearance time to the benefit of incoming and outgoing trade. Angola increased receipts sixteen-fold from $215.45m in 2000 (£148m) to $3,352m in 2011 through an improved National Customs Service and the introduction of an automated entry processing system and customs clearance Single Administrative Document.

The African Development Bank also supported post-conflict Liberia with the extension of an automated system for customs data, helping to reduce the time to clear goods at the port from 60 days to less than 10 days and increase revenue collection at three ports from about $4m a month to $10m-$12m. This, Ellen Johnson Sirleaf, president of Liberia has said, given the government additional scarce revenues to invest in the projects to improve the livelihoods of people.

Horror stories also abound of revenue loss, acting as a cautionary tale for leaving outdated customs processes untouched. A World Bank report, for example, finds that in Algeria smuggling caused a loss to the public exchequer rising from DA18bn in 2006 ($237m) to over DA61bn in 2011.

The message from the international community is that improved, automated and transparent customs services not only help eradicate theft and corruption, but also increase revenue through increased trade. Any fall in revenue from import tariffs due to signing up to bilateral free trade agreements can also be offset, says Bijal Tanna of Ernst & Young LLP: “One only has to look at the take-up of VAT by countries since the 1980s to understand that there is a consumer tax outlet to offset any loss of revenue from customs duty reductions. Back in the late 1980s, approximately 50 countries had VAT, now it is in place in over 150 countries.”

However, these arguments don’t always reach an appreciative audience. “In my experience”, says Widdowson, “economies may give lip service to the trade facilitation agenda, including entering into free trade agreements, but still expect their customs administration to collect traditional levels of duty. For example, with the introduction of free trade arrangements – hence falling duty rates – and a downturn in international trade, the Philippines continues to increase the ‘revenue targets’ of its bureau of customs, the derivation of which appears to be devoid of any analytical rigour.” (emphasis – mine)

Tanna also points to the collapse of the Doha round of the WTO negotiations heralding a breakdown in efforts to find a single global platform to drive a uniform approach to trade liberalisation. Perhaps it is the obligation of the international community to renew such efforts, alongside projects to improve customs systems in-country. Source: Original article by Tim Smedley of The Guardian

Africa Trade Network, comments that: “Whatever the expectations with which African countries came to Bali, they are leaving virtually empty-handed. There is hardly anything of substance in the just adopted Bali package that addresses Africa’s developmental imperatives….We will expect our States to wake up, go back to the drawing board, take the negotiations seriously as having grievous implications for their people…”

Read Africa Trade Network’s conclusions in full.

 

WTO-globalvoices_org__au_The draft text relating to the outcome on a Trade Facilitation Agreement at 9th Ministerial Conference of the WTO can be located here!   It reveals some significant impact and far-reaching implications for the Customs administrations, but to a great extent it will probably be welcomed by the world’s trading community. In the South African context, readers may find Article 11 on “Freedom of Transit” extremely interesting, if not controversial by some members of the establishment. In essence it’s all about being transparent! Source: World Trade Organisation.

Bali 2013A rather lengthy article published by Third World Network, but entirely relevant to trade practitioners and international supply chain operators who may desire a layman’s understanding of the issues and challenges presented by the WTO’s proposed agreement on ‘Trade Facilitation’. I have omitted a fair amount of the legal and technical references, so if you wish to read the full unabridged version please click here! If you are even more interested in the subject, take a look through the publications available via Google Scholar.

A group of eminent trade experts from developing countries has advised developing countries to be very cautious and not be rushed into an agreement on trade facilitation (TF) by the Bali WTO Ministerial Conference, given the current internal imbalance in the proposed agreement as well as the serious implementation challenges it poses.

“While it may be beneficial for a country to improve its trade facilitation, this should be done in a manner that suits each country, rather than through international rules which require binding obligations subject to the dispute settlement mechanism and possible sanctions when the financial and technical assistance as well as capacity-building requirements for implementing new obligations are not adequately addressed.”

This recommendation is in a report by the Geneva-based South Centre. The report, “WTO Negotiations on Trade Facilitation: Development Perspectives”, has been drawn up from discussions at two expert group meetings organised by the Centre.

Noting that an agreement on trade facilitation has been proposed as an outcome from the Bali WTO Ministerial Conference, the South Centre report said that the trade facilitation negotiations have been focused on measures and policies intended for the simplification, harmonization and standardization of border procedures.

“They do not address the priorities for increasing and facilitating trade, particularly exports by developing countries, which would include enhancing infrastructure, building productive and trade capacity, marketing networks, and enhancing inter-regional trade. Nor do they include commitments to strengthen or effectively implement the special and differential treatment (SDT) provisions in the WTO system”.

The negotiations process and content thus far indicate that such a trade facilitation agreement would lead mainly to facilitation of imports by the countries that upgrade their facilities under the proposed agreement. Expansion of exports from countries require a different type of facilitation, one involving improved supply capacity and access to developed countries’ markets.

Some developing countries, especially those with weaker export capability, have thus expressed concerns that the new obligations, especially if they are legally binding, would result in higher imports without corresponding higher exports, which could have an adverse effect on their trade balance, and which would therefore require other measures or decisions (to be taken in the Bali Ministerial) outside of the trade facilitation issue to improve export opportunities in order to be a counter-balance to this effect.

According to the report, another major concern voiced by the developing countries is that the proposed agreement is to be legally binding and subject to the WTO’s dispute settlement system. This makes it even more important that the special and differential treatment provisions for developing countries should be clear, strong and adequate enough. The negotiations have been on two components of the TF: Section I on the obligations and Section II on special and differentiated treatment (SDT), technical and financial assistance and capacity building for developing countries.

Most developing countries, and more so the poorer ones, have priorities in public spending, especially health care, education and poverty eradication. Improving trade facilitation has to compete with these other priorities and may not rank as high on the national agenda. If funds have to be diverted to meet the new trade facilitation obligations, it should not be at the expense of the other development priorities.

“Therefore, it is important that, if an agreement on trade facilitation were adopted, sufficient financing is provided to developing countries to meet their obligations, so as not to be at the expense of social development,” the report stressed.

The report goes on to highlight the main issues of concern for a large number of developing countries on the trade facilitation issue. It said that many developing countries have legitimate concerns that they would have increased net imports, adversely affecting their trade balance. While the trade facilitation agreement is presented as an initiative that reduces trade costs and boosts trade, benefits have been mainly calculated at the aggregate level.

Improvements in clearance of goods at the border will increase the inflow of goods. This increase in imports may benefit users of the imported goods, and increase the export opportunities of those countries that have the export capacity.

However, the report noted, poorer countries that do not have adequate production and export capability may not be able to take advantage of the opportunities afforded by trade facilitation (in their export markets).

“There is concern that countries that are net importers may experience an increase in their imports, without a corresponding increase in their exports, thus resulting in a worsening of their trade balance.”

Many of the articles under negotiations (such as the articles on ‘authorized operators’ and ‘expedited shipments’) are biased towards bigger traders that can present a financial guarantee or proof of control over the security of their supply chains. There is also the possibility that lower import costs could adversely affect those producing for the local markets.

“The draft rules being negotiated, mainly drawn up by major developed countries, do not allow for a balanced outcome of a potential trade facilitation agreement,” the report asserted.

New rules under Section I are mandatory with very limited flexibilities that could allow for Members’ discretion in implementation. The special and differential treatment under section II has been progressively diluted during the course of the negotiations. Furthermore, while the obligations in Section I are legally binding, including for developing countries, developed countries are not accepting binding rules on their obligation to provide technical and financial assistance and capacity building to developing countries.

The trade facilitation agreement would be a binding agreement and subject to WTO dispute settlement. The negotiating text is based on mandatory language in most provisions, which includes limited and uncertain flexibilities in some parts.

Therefore, if a Member fails to fully implement the agreement it might be subject to a dispute case under the WTO DSU (Dispute Settlement Understanding) and to trade sanctions for non-compliance.

“Many of the proposed rules under negotiations are over-prescriptive and could intrude on national policy and undermine the regulatory capacities and space of WTO Member States. The negotiating text in several areas contains undefined and vague legal terminology as well as ‘necessity tests’, beyond what the present GATT articles require.”

Continue Reading…

TFPrinciples tfig.unece.org

India has proposed changes in the trade facilitation agreement to address the concerns of developing countries in the proposal that tops the agenda of the WTO‘s Bali ministerial scheduled for early December.

The trade facilitation agreement aims to smoothen cross-border trade by removing red tape, improving infrastructure and harmonising Customs procedures. Seen as the developed countries’ agenda, the emerging economies have sought relaxations in the legally binding clauses like clearing shipments within three hours.

“We have informed WTO that there needs to be some restriction on the scope of expediting shipment, and should be only limited to air cargo and that too very urgent ones,” a commerce department official told ET.

The country should also be allowed to restrict it to courier services, as the ones very urgent. WTO has subsequently agreed to relax the clause to make expediting shipments within six hours or as rapidly as possible instead of three hours.

Negotiators from 159 countries have held several rounds of talks since September in Geneva to forge a consensus on the multilateral agreement.

Although talks started in 2001 in Doha, lack of consensus between the developed and developing countries has lead to an impasse.

The ninth ministerial round in Bali is being seen as the last attempt to renew the global trade agreement agenda by focusing on the low hanging fruit such as trade facilitation.

India’s commerce & industry minister Anand Sharma told WTO director-general Roberto Axevedo during his Delhi visit in October that India was in support of the trade facilitation agreement, “but needs a balance in the pact”.

India along with other developing countries had raised objection to the clause, which calls for a sufficient time gap between the announcement of change in tariff to its coming into effect. This would be against India’s constitution, since most of the budget announcements related to tariffs come into effect within 24 hours. “We cannot change our constitution for WTO,” said the official, adding that India has submitted an alternative proposal to this effect, wherein, budget-related announcement should be kept out of this clause since they need to become applicable immediately. “Deliberations are still on, we need to be given flexibility,” he added.

Besides, India has sought a binding agreement on Customs cooperation under trade facilitation, which will ensure mandatory exchange of information between Customs administrations (on request) so as to prevent under-invoicing, overvaluation, tax evasion and illicit capital flows.

However, the developed countries want to agree to it only on ‘best endeavour basis’. “It is important for us, and has been on the table for over 20 year. It is only for cross checking, as information is available at both ends. However, developed countries are putting in so many conditions, confidentiality laws, secrecy. So, we are not sure in what form it will finally look like,” said the official.

India has also been pushing for a binding technical and financial assistance by the developed countries to the developing countries to accept TF agreement. Source: Economic Times (India)

Port of Lagos, Nigeria

Port of Lagos, Nigeria

The following article, allbeit long, provides a good overview of trade facilitation developments in Nigeria. I doubt that there is a single country on the African continent that cannot draw some parallel experience contained in this article.

Trade across borders is not a new phenomenon. But the World Trade Organization is now championing the concept of trade facilitation among nations, which has been defined as simplication , harmonization, standardization and modernization of trade procedures.

Trade facilitation seeks to reduce trade transaction between businesses and government. This concept is receiving unprecedented attention globally and it is at the heart of numerous initiatives within the customs world.

The United Nations Centre for Trade facilitation and Electronic business (UN/CEFACT) in its recommendation No 4 of 1974, said trade facilitation programme ought to be guided by simplication, harmonization and standardization (of trade procedures) so that transaction becomes easier, quicker and more economical than before.

According to the body, there was need to eliminate duplication in formalities, process and procedures; align all national formalities, procedures operation and documentation with international conventions, standard and practices to develop international agreed format for practices, procedures, documentation and information in international trade.

Proponent of trade facilitation believed that if transaction cost in international trade is reduced, there could be creation of wealth, especially in developing countries where red-tapism and other procedural barriers to trade tend to be pronounced.

The organization for Economic Cooperation and Development (OECD) estimated recently that even one per cent reduction in such “hidden cost” would boost the global economy by $40 billion with most of these benefits going to the developing world. Trade facilitation therefore encourages, or perhaps requires countries to adopt means such as publishing their imports and export procedures, reducing the number of forms that importers and exporters are required to complete, allowing forms to be submitted on-line, and checking corruption at border post.

Nigeria, though a signatory to Kyoto 1974 and other convention on trade facilitation, is far from embracing the ideals of the global concept.

The president of the council of Managing Directors of Customs licensed Agents, Mr. Lucky Amiwero, said that although Nigeria was yet to comply with all the provisions of trade facilitation, it has the tools to facilitate international trade, such as the scanning machines and the e-platform.

“In Nigeria, the real cost of doing business is an impediment to trade facilitation. We have no good procedure for goods on transit to Niger and Chad. That has been taken over now by our neighboring countries. One of the key component of trade facilitation is charges which must be tied to services. We have shortcoming in that area. We are still working at cross purposes when other countries are busy harmonizing their import and export procedures”, he said.

In Nigeria, there is no one stop shop process for goods clearance as we have over 10 agencies superintending goods clearing procedure at the nation’s gateways.

“This is very bad and constitute hindrance to trade. The regulatory process is supposed to have been harmonized with other agencies to have a one stop procedures. Procedures are not published and not in line with WTO article which has to do with publication, regulation and administration of procedures. Our trading regime are expensive, our procedures are cumbersome. When others are simplifying and synchronizing their process of import and exports, our import and export procedures are lengthy. We have not been able to harmonise process and procedures and that is where we have a problem. If you still have to go through 100 per cent examination when we have the scanners, that is an impediment to trade,” Amiwero said; adding that the time spent to conclude business in Nigerian ports and border post is much higher than anywhere in the West African sub-region.

The level of corruption at the port border post is high and making them the most expensive business environment in Africa; as un-receipted charges far outweigh the official charges in the process of good clearing. Importers are still submitting hard documents instead of making use of e-devices, and going through the cumbersome process of clearing and receiving of consignments. Continue Reading…

WTO-SPS-Measures-Presentation-Transcript-23698Cabinet approved South Africa’s ratification of the Sanitary and Phytosanitary (SPS) Annex to the Southern African Development Community‘s (SADC) Protocol on Trade and for this to be submitted to Parliament.

Agriculture is one of the key sectors in the SADC region due to the sector having the highest potential for growth in terms of export. SADC realises, however, that the sector can only grow significantly if producers are able to access markets for agricultural products. To facilitate market access and promote intra Africa trade it is critical that border trade policies, including SPS measures be harmonised in line with international standards and guidelines in the interest of improving the movement of goods and services in the region. (Read in more red tape)

The SADC Protocol on Trade to which SA has acceded, serves to promote regional cooperation and integration amongst member states for trade in goods and services within the region, including agricultural products.

Article 16 of the Protocol encourages member states to base their Sanitary and Phytosanitary (SPS) measures on international standards, guidelines and recommendations so as to harmonise SPS measures for plant health, animal health and food safety.

To give effect to the provisions of Article 16 of the Protocol, an SPS annex to the SADC Protocol on Trade was drafted and consequently adopted by the SADC Committee of Ministers of Trade (CMT), in July 2008.  Annex VIII to the SADC Protocol on Trade concerning SPS measures represents an enabling regional strategy to promote cooperation in SADC with regards to issues of food safety, plant health and animal health.

In addition, most SADC member states are also signatory members to the World Trade Organisation‘s Agreement on Sanitary and Phytosanitary measures (WTO-SPS) which places obligations on member states to ensure that the SPS measures they implement are least restrictive to trade, while being scientifically justifiable for the protection of human, animal or plant life and health.

The ratification and implementation of the SPS Annex will therefore facilitate improved mechanisms and institutional arrangements in conformity with obligations under the WTO-SPS agreement so as to minimise SPS related issues that impact the trade of agricultural and services trade within the region. Source: SA Government

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English: Pascal Lamy.THE outgoing World Trade Organisation director general Pascal Lamy has rated the East African Community trading block as the most important in the African continent ahead of similar blocks in West and South Africa. He said EAC is three times more integrated than the West and South Africa.

“This region is a clear case that I think deserves a lot of attention…I have no doubt that this (EAC) will be the future,” Lamy said adding that the political goodwill from EAC leaders is the key distinguishing factor between EAC and other African trading blocks.

Lamy also described the African continent as the next growth frontier but added that some key bottlenecks such as not tarriff barriers, poor infrastructure and energy and corruption need to be addressed. The WTO boss cast doubt on the conclusion of crucial trade talks that can open international markets for African goods.

ZimbabweThe Interim Economic Partnership Agreement (IEPA) Zimbabwe signed with the European Union (EU) is set to suffocate the country’s trade and industrial development policies due to the removal of taxes, a regional non-governmental organisation has warned. Zimbabwe alongside Mauritius, Seychelles and Madagascar concluded the IEPA with the EU that would result in the removal of taxes between the African countries and the EU.

But in an analysis of the trade pact, the Southern and Eastern Africa Trade, Information and Negotiations Institute (Seatini) said the elimination of the export taxes is a blow to both the National Trade Policy (NTP) and Industrial Development Policy (IDP) meant to promote the trade and industrial revival respectively.

Last year, the Zimbabwean government launched the Industrial Development Policy 2012-2016 that advocates value-addition or beneficiation and the NTP to guide the country’s trade with the rest of the world.

“There is no doubt that for Zimbabwe to successfully implement the NTP and IDP it will need to use tools such as export taxes. However, Article 15 of the interim EPA agreement that Zimbabwe signed and ratified provides for elimination of export taxes, thereby suffocating the policy space Zimbabwe is referring to in its National Trade policy on the need for value-adding natural resources,” Seatini said in a discussion paper, Zimbabwe’s control over its natural resources in the WTO context.

Article 15 of the IEPA provides that for the duration of the agreement, the parties shall not institute any new duties or taxes on, or in connection with, the exportation of goods to any other party in excess of those imposed on products destined for sale. The organisation recommended that Zimbabwe “must exercise its right to develop its economy and protect the environment through the use of export taxes, until such a time when the economy can competitively trade with the rest of the world enabling it to then gradually eliminate the taxes on a product by-product basis”.

It also recommended that government should consult widely all relevant ministries and the private sector on its existing and proposed laws relating to any prohibitions and restrictions on the export of natural resources especially metals and minerals. Seatini warned that the use of export restrictions would be in violation of World Trade Organisation (WTO) rules.

Article XI:2(a) of the General Agreement on Tariffs and Trade does not allow WTO members to impose prohibitions and restrictions on the importation of any product, unless they (restrictions and prohibitions) are temporary, addresses critical shortages, relates to foodstuffs or other products and are essential to the exporting WTO member. It said it would be difficult for Zimbabwe to prove the critical shortage requirement. Source: The Standard – Zimbabwe

Nuctech Fast Scan Vehicle and Container inspection system

Nuctech Fast Scan Vehicle and Container inspection system

Part of the problem here is that the Chinese have a significant market share in this type of equipment. In a short period of 10 years they have outstripped some of the more fancied American and European players in this business. While the dispute in question raises ‘ethical’ questions of the Chinese, it does seem to be a matter of sour grapes.

China’s anti-dumping duties on imports of x-ray security scanners from the EU violated global trade rules, according to a WTO panel ruling that was issued yesterday. [WTO Dispute Settlement, DS425]

Brussels brought the dispute in July 2011 after Beijing imposed duties ranging from 33.5 to 71.8 percent on the x-ray scanners. (See Bridges Weekly, 25 January 2012) The EU exports approximately €70 million of these scanners to China annually.

China imposed the duties after the EU had applied anti-dumping duties on Chinese cargo scanners one year earlier, which some viewed at the time as a “tit-for-tat” move.

The panel report primarily focused on procedural issues in Beijing’s investigation, specifically regarding how China calculated the anti-dumping margin, loosely defined as the difference between the price – or cost – in the foreign market and the price in the importing domestic market.

Beijing included more expensive “high-energy” scanners – which do not “look remotely like” the cheaper scanners, according to the panel report – in calculating the average domestic price, even though only cheaper “low-energy” scanners were exported. The panel found that this price comparison was “not consistent with an objective examination of positive evidence” required under WTO rules.

The panel also found that Beijing did not comply with certain due process and transparency requirements before imposing the duties.

The panel did not rule with the EU on all points, however, noting that Brussels had not established that Beijing had acted inconsistently in certain other procedural matters.

“I expect China to remove the measures immediately,” EU Trade Commissioner Karel De Gucht said on Tuesday in response to the panel ruling. “I will not accept tit-for-tat retaliation against European companies through the misuse of trade defence instruments.”

Under WTO rules, both sides have 60 days to appeal the ruling. In a statement, China’s Ministry of Commerce indicated that they would make a serious assessment of the case and reserved the right to appeal.