WORLD TRADE
ORGANIZATIONG/C/W/394
12 July 2002
(02-3900)
Council for Trade in Goods Original:  English
WTO TRADE FACILITATION - IMPROVEMENTS TO GATT ARTICLE VIII ON FEES
AND FORMALITIES CONNECTED WITH IMPORTATION AND EXPORTATION
Submission from the European Communities
The following communication, dated 11 July 2002, has been received from the Permanent
Mission of the European Communities.
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Introduction
The WTO's work on Trade Facilitation in the last three years has led to agreement on the
benefits of measures to simplify import and export procedures. Members have stressed the importanceof trade facilitation in enhancing developing countrie s’ capacity to trade and better integrate into the
international economy, and agreed on the complementary nature of facilitation measures and the
improvement of border controls and revenue collection. The business community – both large
companies and SMEs, and traders in both developed and developing regions -  has emphasised the
need to simplify trade procedures so as to reduce costs and delays for legitimate business, as well as to
improve the climate for investment, and urged WTO Members to seize the opportunity before them to
establish trade facilitation measures in the WTO.
While the natural focus of simplification is on customs procedures, some WTO members
have also argued that measures should extend beyond customs to include the procedures and
formalities imposed by other public agencies, and to transit requirements. A number of Members,
while open to WTO commitments to simplify trade pr ocedures, have said that any such commitments
should operate hand in hand with meaningful technical assistance,  since it would be inadvisable to
assume commitments in WTO in cases where Members simply do not have the capacity to implement
measures, however necessary and beneficial those measures might be.  The EC agrees that measures
to deliver technical assistance should be an integral part of any WTO exercise.
At Doha, Members agreed to future negotiations on trade facilitation, subject to agreement on
modalities for such negotiations at the fifth minist erial conference, and identified the three key GATT
articles on which preparatory work should concentrate: Articles V, VIII and X. The EC has already
made a submission on ways to make Article X more operational, and is also preparing a paper on
improvements to GATT Article V, freedom of transit, although it would point out that several of theproposals in this paper, if implemented, will also have a positive effect on freedom of transit. The
present submission suggests how GATT Article VIII – the core GATT Article on trade facilitation –
could be improved and made fully operational in order to simplify international trade procedures in a
way that will benefit all WTO Members.G/C/W/394
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Article VIII of the GATT
Article VIII is quite broad in scope, extending "to fees, charges, formalities and requirements
imposed by governments in relation to importation and exportation". Of note is that it is not limitedsimply to procedures but also to requirements applied by governments to trade transactions, and it
deals equally with exports and imports. However, not all parts of GATT Article VIII are fully
operational. In particular, Article VIII merely "recognises the need for  reducing the incidence and
complexity of import and export formalities to the minimum" but neither requires  any such reduction
nor indicates how to achieve it. Similarly, it also "recognises the need  for reducing the number and
diversity of fees and charges" but again does not create any commitment actually to do so. The
absence of any operational WTO requirements to simplify or reduce fees and formalities - notably
unduly cumbersome border formalities - remains a significant weakness in the WTO rule book which,
as tariffs are progressively reduced, has become more and more in need of attention.
The EC believes there is scope to make Article VIII fully operational in the same way that, in
recent years, Members have made more specific and operational GATT Articles and provisionsrelating to eg anti dumping, subsidies, safeguards, customs valuation, import licensing and technical
barriers to trade. The trading community and many Members are keen to see the establishment of a set
of WTO commitments, perhaps in the form of an agreement or understanding on the Application of
GATT Articles V, VIII and X, that would set all WTO members on an agreed path of modern and
simplified procedures, based on international standards, and taking in account work done in otherinternational organisations. In respect of GATT Article VIII, we seek to clarify and improve its
provisions in a way that would, indeed, reduce th e incidence and complexity of import and export
procedures and formalities, and fees and charges.
The proposals below take in account the views of Members expressed in the course of the
WTO's  work programme and other international fora, and the views of the business community. The
“model” for the EC's overall approach to trade facilitation is the WTO TBT Agreement  which, for its
own particular subject area, has struck a pragmatic balance between general and specific
commitments tied to core GATT principles, ensures th e right to take measures to achieve legitimate
objectives, while ensuring that those measures are as little trade restrictive as possible, incorporates
into its commitments the work carried out by other international organisations, without duplication,
and includes measures of special and differential treatment and technical assistance. All of theseelements – core GATT principles, the avoidance of unnecessary obstacles when applying legitimate
measures, the use of international standards, and special and differential treatment -  are equally
relevant to efforts in WTO to simplify international trade procedures.
In addition, many of the specific proposals set out below implement the recommendations
made in the UNCTAD Columbus declaration of 1994. They also reflect concepts and ideas that
several Members have since begun to develop in bilateral or regional agreements. Embedding these
initiatives in a set of WTO commitments would ensure that all Members work to the same agreed
benchmarks, therefore reducing the risk of differing standards and practices.
Proposals to Clarify and Improve GATT Article VIII to Make it More Operational
The EC suggests that it would be useful to cl arify and improve Article VIII through a number
of general commitments reflecting WTO principles, as well as more specific provisions relating to
fees and charges, document and data formalities, customs and other import/export procedures, andspecial and differential treatment measures. The rest of this submission is structured accordingly.G/C/W/394
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A. General Commitments
1. Scope and Coverage. Pursuant to GATT Article VIII, the provisions would apply to all
procedures, formalities and requirements, and fees and charges applied to products by customsauthorities or by any other government body in connnection with importation and exportation, to the
extent not already covered by other WTO articles and agreements (including procedures and
formalities applied by customs on behalf of other agencies).
Comments: it is essential that the scope of any commitments in WTO apply beyond customs to other
agency interventions, as otherwise any efficiency gained via simple customs procedures could be
diminished by unnecessary procedures applied by other agencies.Our understanding of Article VIII is
that its scope does extend to any government agency imposing formalities and requirements in
connection with importation or exportation (VIII.4).
2. Geographical coverage. Any provisions agreed should also obviously apply to sub Federal
authorities where appropriate, as well as to procedures and requirements applied by customs unions.
Comments: it is assumed that Members would, as  in the case of existing WTO agreements, assume
responsibility for measures applied at the sub-national level. Inclusion of customs unions in the scope
of any future disciplines needs little explanation. It is essential that customs and other procedures are
applied in a uniform and simple way by customs unions as much as by individual countries,
particularly given the increasing number of customs unions being developed.
3. Non discrimination in the design, application and effect of export and import procedures and
formalities imposed on the goods of all Members.
Comments: GATT Article I  applies to some  import and export formalities but its applicability needs
to be made explicit,  as is the case in for example the TBT Agreement, the Agreement on Import
Licensing Procedures and other similar sets of WTO rules. Non-discrimination in the treatment of
exporters should also be covered by this commitmen t.  The principle of non-discrimination should not
of course interfere with Members' rights to treat consignments differently according to objective risk
assessment criterias.
4. Transparency and predictability  in the design, application and effect of procedures and
formalities.
Comments:  the EC recently submitted a proposed set of measures to implement GATT Article X,
notably to ensure transparency and predictability in the promulgation and application of traderegulation, as well as consultation with affect ed traders  (doc GC/W/363 of 12 April 2002). .
5. A  commitment to avoid unnecessary procedural barriers  to trade in the design, application
and effect of import and export procedures, and in particular to ensure that such procedures do not
unduly slow down the movement or release of goods. This should also  include a commitment not todesign or apply procedures and formalities with a view to or with the effect of giving additional
protection to domestic products.  This would be done by ensuring that import and export procedures
shall not be more trade restrictive than n ecessary to fulfil legitimate objectives ( which we
suggest should be specified or given in an illustrative list).
Comments: a basic discipline to ensure that regulatory authorities - customs etc - consciously make
efforts to design and implement procedures that take  account of the needs of traders, that facilitate
trade as far as possible, and that prohibit the use of import and export procedures for protectionist or
harassment purposes.G/C/W/394
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6. A provision whereby Members should no longer maintain a procedure or requirement if the
circumstances giving rise to its introduction no longer exist  or if the changed circumstances or
objectives can be addressed in a less trade restrictive  manner.
Comments: a commitment modelled on already existing provisions of Articles  2.2 and 2.3 of the TBT
Agreement, that requires public authorities regularly to review their regulations and working
procedures with a view to introducing better and less burdensome practice.
7. International Standards and Instruments . Members should base their import and export
procedures on agreed international standards and instruments, except where such international
standards would be an ineffective or inappropriate means to fulfil the legitimate objectives sought.
Comments: again, a provision inspired by several existing WTO Agreements, giving priority to the
use of international standards. Use of international standards ensures a common basis for the
measures applied by different WTO members, which in turn improves transparency and predictability,
and lowers costs for traders for example in preparation of trade documents and data. The standardsand instruments developed by  the WCO should be promoted, as well as those of UNCTAD, the UN
regional economic commissions, the IMO, and ICAO re levant to trade facilitation.Local variations of
such standards should be avoided as far as possible. It will be desirable to identify and agree which
international standards and instruments should be referred to, and to decide how to take account of
subsequent amendment or updating of such standards and instruments .
8. A commitment to the principle and application of Special and Differential Treatment  for
developing countries, in particular the least developed countries.
Comments: Special and Differential Treatment is referred to in the Doha declaration, para 27.
Specific measures are suggested in Section E below. The  possible options,  for least developed
countries and possibly other poorer developing count ries, would include waiving those commitments
that imply significant financial commitments or infr astructural assistance, until such time as these
Members  are in a position to apply them, or an approach whereby the Member in question assumes
commitments according to an agreed timetable, coupled with measures to provide assistance
necessary to aid implementation of trade facilitation measures.  The EC also suggests in section E
below a specific mechanism for future coordination of such assistance.
B. Specific Provisions on Fees and Charges
Article VIII paragraph 1 a) establishes certain obligations regarding fees and charges.
Notably, it authorises only those fees and charges that are limited to the approximate cost of servicesrendered, and prohibits fees and charges aimed indirectly at protecting domestic products or having an
effect equivalent to an import or export tax for fiscal purposes.
Past dispute settlement cases have partially clarified the scope of  this provision, notably the
definition of a fee or charge limited to the approximate cost of the service rendered, and the kinds ofservices permitted. There is still however a lot of uncertainty over what may or may not be allowed
under this provision, leading to introduction of widely varying practices around the world, and
resulting in uncertainty and unwarranted costs to traders.
Predictability for traders could therefore be increased if Members, based on past panel
conclusions,  were to agree on an interpretation of VIII 1 a) on the following lines:
• the  service provided must be related to the products in questionG/C/W/394
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• fees levied must refer to the approximate cost of the service rendered.
• the fees or charges in question may not therefore be calculated on an ad valorem basis.
• administrative or operational costs not associated with treatment of imports or exports
respectively may not be imposed on such imports or exports.
The second weakness in Article VIII regarding fees and charges concerns the provisions of
Article VIII 1b). This  "recognises the need for reducing the number and diversity of fees and
charges", but does not require their reduction. Given this, it would be useful to establish a
commitment by Members to review, and if necessary, consolidate or reduce the number and diversity
of their fees and charges, and to notify remaining fees and charges together with the justification for
them in terms of the provisions of Article II a nd Article VIII of the GATT. Consideration could be
given to establishing a list of types of permissible fee eg an illustrative list, or an exclusive list etc.
Comments: the above proposals confirm the findings of several  panels on the definition of
permissible fees, and create a new discipline to make VIII 1 b) operational. The proposals if
implemented will give important guidance to adminis trations when introducing fees or setting fee
levels, and ensure greater transparency and predictability of such fees. Provisions on the lines
proposed would enable us to avoid situations where unwarranted or disproportionate fees, unrelated
to the specific services rendered,  are imposed on either importers or exporters, and would ensure
transparency..
C. Specific Provisions on Data and Documentary Requirements and Procedures
Excessive and non-standardised documentation and data requirements for border crossing
trade are, according to representatives of the trade community, a significant obstacle to trade. Smallertraders, typically in developing countries and Small and Medium Sized Enterprises (SMEs) may be
particularly affected by unduly burdensome pr ocedures, since they both drain manpower and
resources which SMEs can ill afford, and they also act as a fixed cost regardless of the size of the
consignment. Evidence suggests that excessive export procedures are as troublesome and costly as
excessive import bureaucracy. Many such requirements – which have accreted over time - areunnecessary and can be simplified and reduced. One could therefore consider a number of ways to
make these requirements more focussed and simple and in so doing create a more hospitable climate
for international trade. One could for example consider improving GATT Article VIII by
commitments such as the following:
• Commitment by Members to simplify and  reduce documentation and data requirements  to
the absolute minimum,  consistent with the need to enforce legitimate policies, including the use
of agreed international standards as a basis for documentation and data requirements (both for
format and content of documents and data). The WCO’s simplified data set could be developed
further as the basic reference point/standard, while the UN layout key is also relevant here.
Members could agree to abolish excessive documentation requirements such as demands forconsular invoices and the like and, in cases where physical documentation is required, routinely
accept copies and not originals of documents, except in narrowly defined and clearly identified
circumstances.
• Introduction by each WTO Member, or customs union between two or more Members, of a
uniform domestic customs code  or similar legislation, as well as single import and export
declarations, administrative message or data set.
• Acceptance of relevant commercially available information  and documents as the norm, as well
as regular review of documentation and data requirements in liaison with representatives of thetrading community with a view  to continued simplification.G/C/W/394
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• Introduction of the principle of a single, one -time  presentation to one agency, normally the
customs,  of all documentation and data requirements for export or import, subject to any
exceptions to be identified.  For developing countries, the commitment should be to implement
this provision in a progressive manner.
Comments on the above proposals:  it is essential for transparency,  and for efficient administration
of customs to have a coherent body of legislation, regulations etc, and traders are keen to have
simple, standardised documents or data sets, as this reduces errors and processing times. Regarding
the proposals to reduce data and documents to a minimum, the approach should not be too
prescriptive but rather set the basic directi on for introducing improvements and continuously
reviewing the changes made. Reference to “presentat ion” of data or documents is taken to include
procedures whereby customs obtain data or documentation via traders’ systems.
D. Customs and Related Import and Export Procedures
There is overwhelming evidence that cumbersome border crossing procedures act as a brake
on trade and investment, and hamper exports as much as imports, in particular for small and mediumsized companies. Simplification of trade formalit ies and requirements is an important and low-cost
way to improve trade and investment flows. It  has also been shown to result in higher revenue
collection rates, better enforcement of justifiable border controls, and greater efficiency and morale of
customs administrations. The EC proposes therefore the establishment of a number of commitments
to simplify import and export procedures, which would be applicable to all Members. Thesecommitments would make GATT Article VIII 1 c) – which calls for the simplification of procedures –
more operational. The provisions proposed below would steer WTO members in a common direction
through the progressive adoption of simpler and more internationally standardised procedures drawing
on good administrative practices gaining currency worldwide.
• Progressive introduction of simplified and standardised import and export procedures,
based on  on international standards and instrument s (eg the WCO’s Kyoto Convention). This
could include a commitment to the progressive modernisation  of customs administrations (e.g.
through implementing the WCO's Customs Modernisation Programme and the Arusha
Declaration), and agreement by each Member to establish, notify and, within realisable targets,
progressively reduce, its domestic standard processing times  for goods release.
• Non-discrimination  in terms of requirements and procedures applicable to like products
irrespective of their mode of transportation (procedures are unlikely to be identical – but they
should not give rise to discriminatory treatment). Non –discriminatory criteria should also apply
in respect of licensing of customs brokers , together with an undertaking to phase out, over time,
any requirements for their mandatory use.
• Introduction of simplified release and clearance procedures ( eg. Presentation of simplified data
sufficient for rapid release, followed by submission of more detailed data later; or/and periodical
submission of data and company auditing). Members could consider drawing up a list of agreed
types of simplified procedures for adoption.
• Use of risk assessment  methods based on international standards and practices, and the
introduction by each Member of a system of authorised traders , using transparent, objective and
non-discriminatory criteria. Such systems would gr ant to compliant traders willing to support the
customs’ regulatory work with simplified or other premium procedures for their import and
export activities. Such systems should not exclude the participation of small and medium sizedG/C/W/394
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enterprises.  Members could consider developing in WTO or under WCO auspices a coherent
international standard or model for authorised trader status.
• Convergence of official controls. Where documentary or physical verification of consignments
by more than one agency is necessary this should be carried out at a single place and time, to the
extent possible, and at hours that meet traders’ needs.
• Automation of customs  and other agency procedures for import and export, including the
possibility to present electronically the customs’ and other declarations, and for the payment of
duties or other fees and charges.
Comments: through the above proposals Members would make a commitment to begin to simplify
procedures, basing their domestic efforts on international instruments.  The EC does not think thatMembers should be required formally  to adhere to instruments (such as the revised Kyoto
Convention) negotiated elsewhere but suggests that they be applied in substance or be given a
privileged status,  just as,  for example, FAO or  ISO standards are the benchmark standard in the SPS
and TBT Agreements respectively. Publication of standard processing times would ensure that such
times are in the first place  established, and then efforts made to reduce them. Regarding licensing of
customs brokers, this should be  carried out transparently and fairly, so as to enable competition, and
companies should have the choice of managing the transaction themselves.
Regarding simplified release and clearance procedures, many WTO members are now starting to
operate different forms of simplified procedure. Given the economic importance of such procedures, itseems essential that they be reflected in terms of WTO commitments so as to reduce costs and delays
and bring greater predictability to traders. The same is true of risk assessment. In practice no WTO
Member can inspect 100% of all consignments and should not. Risk assessment procedures allow
customs etc to concentrate their limited resources on  targeting the most suspect shipments while
facilitating trade for compliant traders. As trade flows expand but customs’ resources shrink orremain static, such  selectivity becomes even more essential. Exchange of experience on risk
assessment practices and tools and their further development in the WCO could complement this
proposed WTO provision. The proposal on authorised traders would encourage all Members to
implement procedures that identify and reward efficient and  compliant traders with additional
facilitation measures, and through which the traders themselves support the regulatory goals of thecustoms.  Such systems are a major benefit for hard pressed customs administrations, allowing them
then to target their limited resources on areas of risk.
A concern of traders relates to excessive delays in getting goods released due to the absence of
coordinated border controls between different  agencies. Developing countries have drawn attention
to the incidence of multiple  inspections for diff erent control purposes in their major export markets.
The EC believes that Members should make a commitment, towards greater coordination of controls,recognising that developed countries must lead the way here, and that for developing countries this
may take some time to accomplish.
Finally, customs automation is a key  facilitation tool, aiding in particular higher rates of tariff
collection and enforcement,  the im plementation of simplified release procedures delinked from the
payment of duties,  the speed of clearance and the movement of goods,  and the coordination of
official controls.. Many developing countries have in the past few years introduced automation (eg via
Unctad programmes), increasing efficiency and trade flows, and rapidly recouping investments. Since
however automation implies start up costs and maintenance, flexibility will be needed for developing
countries. This is taken up in Section E below.G/C/W/394
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E. Special and Differential Treatment
The biggest long term beneficiaries of simplified procedures should be developing countries,
whose future trading performance and attractiveness to foreign investment will improve if they can
provide and maintain a simple, transparent trading environment. Currently it is their typically small
and medium sized enterprises which may suffer most  from burdensome export and import procedures,
non-transparent and excessive charges, and costs and delays.  Simplified trade procedures should also
enable these Members to increase their rate of duty collection, which remains an important part of
government revenue, and improve controls on illicit goods, fraudulent activities etc. Many of the
proposals to improve customs procedures will also lead to savings in terms of human and otherresources in the medium term.
However, simplification cannot be achieved ov ernight and any agreement or understanding
on GATT Articles V, VIII and X should recognise the needs and difficulties faced by developing
countries, especially the least developed, and provide practical means to assist their development.
Taking in account the views expressed on this issue over the last three years, the EC suggests
that any future WTO provisions should therefore include a range of special and differential treatment
provisions, including less onerous initial commitments for poorer developing countries, transitional
periods for the assumption of commitments, and more stable provisions regarding the supply oftechnical assistance.
1. Differentiation in Commitments
As noted throughout this proposal, a number of commitments may require resources or
capacity building measures to implement, and may thus at the moment be beyond the means of, in
particular, least developed countries. This may be the case of the proposals on a single one time
presentation to one agency of data and documentation, automation of customs processes, and
introduction of certain kinds of simplified release procedure, but there may be other specific
procedures which pose difficulties in the short term for particular Members.
In these cases, two options could be considered and merit further discussion. The first option
is that the commitment in question should not apply until such time as the Member in question is in a
position to implement them, and in the meantime  developed country Members and intergovernmental
organisations should continue as far as possible to provide technical assistance to help
implementation. The drawback however with this option is that it risks creating a semi permanent
“two tier” Membership and may contain insufficient incentives for the Member in question toimplement what are at the end of the day valuable improvements to its trading potential. The EU is
therefore not convinced that this would be the best  option, but would like to  know the views of LDC
members.
The other option would be that all LDC Members do enter into commitments to implement all
the provisions established in the WTO but that, in doing so, individual transitional periods would be
established for each Member seeking time, in conjunction with a specific technical assistance
programme that would be worked out and agreed with the country in question. The advantage of this
approach is that it would increase the prospect of LDCs actually to join and implement the
commitments while maintaining cons iderable flexibility and giving specific consideration to their
individual development constraints. Further details of how such technical assistance programmes
could be carried out is found in paragraph 3 below.G/C/W/394
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2. Transitional periods
Transitional periods should also be considered to enable developing countries other than the
least developed to implement commitments in a prog ressive or staged manner, in particular where
commitments have appreciable resource imp lications. However, commitments relating to
transparency and non-discrimination could be implemented immediately.
3. Technical Assistance and Capacity Building Measures
The EC already dedicates considerable development assistance to trade facilitation and
intends to continue to do so, particularly if a set of WTO provisions, setting common standards to
which assistance can in future be mobilised, can be  established. The definition of trade facilitation, in
technical assistance programmes,  is of course traditionally wider than customs and border crossing
measures, and broader than the subject matter of GATT Articles V, VIII and X. Assistance for trade
facilitation often covers also measures relating to, for example, the improvement of portinfrastructure, cargo logistics, or services to exporters.
Recognising the importance given to technical assistance in para 27 of the Doha Declaration,
the EC proposes the following arrangements fo r the improved provision and coordination of
assistance in the field of trade facilitation:
a) Members should signal readiness to increase the level and quality of technical assistance for
trade facilitation. Where competing requests for assistance are made, priority should be given to those
countries whose needs are clearly identifiable and which have demonstrated clear political
commitment to carrying out simplification measures.
b) where a Member, as part of its development aid, is providing trade related technical assistance
to another Member it should, if requested by that other Member, include in such assistance trade
facilitation measures and support. This would help ensure that where a recipient Member does seek
support on trade facilitation, it can be provided as part of any TRTA programme – the concept of
“demand-driven” aid.
c) consideration should be given to setting up an international mechanism for the future
organisation of technical assistance in the field of trade facilitation, bringing together donor Members
and recipient Members and regional groupings, along with the WTO, UNCTAD, WCO, World Bank,
IMF,  UN regional economic commissions, and as necessary other intergovernmental bodies such as
the ICAO, IMO and UPU. This international mechanism would be charged with ensuring thatrecipient needs are matched with donors, that potential gaps are filled, that transparency, coherence
and where necessary coordination takes place between donors and recipients, and that assistance is
directed, among other things, to implementing WTO commitments in this field. This kind of
coordinated approach simply does not exist today and is needed.
d) In the case of a Least Developed Country Member seeking to implement specific
commitments only after a transitional period (see paragraph 1 above), the Member in question could
develop and agree with other donor Members and institutions a specific action plan,  whose
implementation could be reviewed and monitored through the joint mechanism described above. Such
action plans should define the activities, fundin g and timing for implementation, the commitments to
be made by the donors and the recipient, and where appropriate the regional dimension of
implementation.G/C/W/394
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e) The EC has received indications of interest from a number of trade federations in contributing
to assistance to implement trade facilitation measures, notably if some basic rules have been agreed in
the WTO to which that assistance could be targeted. The EC believes this interest should be
encouraged. The business community will be a major beneficiary of simplified procedures and at the
same time many of the improvements proposed need the active collaboration of traders. The ECsuggests therefore that national and international trad e federations or interested companies be invited
to participate in capacity building/technical assi stance programmes – either in respect of specific
country programmes, or specific areas of expertise - via the proposed international framework.
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