WORLD TRADE
ORGANIZATIONG/C/W/466
12 June 2003
(03-3063)
Council for Trade in Goods Original:  English
TRADE FACILITATION IN THE WTO:  BENEFITS OF A RULES-BASED SYSTEM
Communication from Australia
The following communication, dated 11 June 2003, has been received from the Mission of
Australia.
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Introduction
This paper forms part of Australia’s contribution to the WTO Council for Trade in Goods
(CTG) discussions on the Doha work programme on trade facilitation in the lead up to the Fifth
Ministerial Conference in Cancun. Previous CTG discussions highlight broad agreement about the
benefits that can be achieved through implementing trade facilitation measures.  However, there aresome differing views on whether strengthened WTO rules are necessary to achieve these benefits.
Some members question the need to revise Articles V, VIII and X of GATT 1994, or to negotiate
additional commitments, as these outcomes could be achieved on a voluntary basis.  Themes
underlying these concerns included that:
• additional rules may exceed the implementation capacities of some members and cause concerns
over dispute settlement;
• if problems with trade facilitation measures are related to lack of capacity to implement rather
than a lack of commitment,  non-complying countries should not be penalised; and
• commitments to meet capacity-building needs may prove to be insufficient.
The advantages of rules
Australia’s submission in December 2002 (cir culated in document G/C/W/443) noted that
although there are substantial benefits available from trade facilitation measures, these are unlikely tobe fully realised while their implementation remain for the most part voluntary.  Australia’s paper
identified several advantages from strengthened rules through:
• providing a universal and harmonised approach to ensure consistent implementation  (such as in
provisions in free trade agreements);
• encouraging support and compliance from the trade community for efficient and effective border
agency operation;
• providing for the necessary political impetus to guide national efforts to simplify and modernise
trade procedures and carry out domestic reforms that otherwise might not take place, even thoughtheir desirability is recognized; and
• offering strengthened rules and monitoring mech anisms, and thereby improving transparency and
predictability for traders and helping them compete on a non-discriminatory basis.G/C/W/466
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Strengthened rules can deliver significant advantages for members prepared to make firm
commitments, in particular by accelerating national efforts to simplify and modernise trade
procedures and to carry out related administrative reform. For example, and in relation to some of the
concerns raised, WTO trade facilitation rules could:
• ensure that both trade liberalisation and trade facilitation are placed on political and economic
agendas;
• enable impediments to trade to be addressed transparently and by targeted assistance.
• provide political momentum to advance the reform and modernisation of border agencies;
• elevate funding priority for capacity building directed at trade facilitation measures; and
• raise the profile of customs administrations and border agencies in some member administrations.
In addition to these points, and in respect of concerns about implementation capabilities, it is
useful to acknowledge that the development of rules can explicitly take account of developing country
and implementation issues.  For example the US stressed in its submission that the needs of membersat lower levels of development will be given proper consideration for special and differential
treatment and to ensure adequate technical as sistance and support for capacity building. Japan
suggested a three pillars approach, tying together an action program (setting non-binding and long-
term objectives for trade facilitation), capacity building activities and rule setting.  The European
Community has recognised the need for capacity-building measures and has noted the systemic
importance of binding rules in the WTO, but at the same time underlined the non-prescriptive nature
of rules and the need for members to view such rules as essentially a commitment to a process of
modernisation of trade facilitation procedures.
In developing strengthened trade facilitation arrangements Australia would welcome and
support debate aimed at ensuring appropriate technical assistance and capacity-building measures, as
well as addressing the issue of special and differential treatment for developing countries.  We wouldalso suggest that access to binding, enforceable rules through an established, impartial dispute
settlement mechanism could provide security for developing as well as developed countries.
Existing binding rules
There are examples of members at varying levels of economic development accepting binding
obligations such as through accession to the revised International Convention on the Simplification
and Harmonisation of Customs Procedures (the re vised Kyoto Convention).  By adopting the Kyoto
Convention governments commit themselves to the im plementation of international standards for the
border management of trade and to the modernisation of customs procedures.
It is encouraging that several governments, including those in less developed countries, have
either acceded to the Kyoto Convention or are cons idering how to progress accession through national
legislative and political processes1.  The composition of accession countries thus far reveals that the
level of development need not be an impediment to the implementation of trade facilitation activities.The WCO advises that several of its members looking to apply the Convention attribute their
accession difficulties not to physical infrastructure problems but to legislative processes and the lack
of technical and linguistic expertise.  Its broad acceptance by both developed and developing
countries is a positive example of trade facilitating measures that can be achieved through a
negotiated process supported by appropriate capacity building activity.
                                                     
1 14 contracting parties have acceded: Algeria, Au stralia, Canada, China, Czech Republic, Korea
Japan, Latvia, Lesotho, Morocco, New Zealand, Slovakia , Uganda and Zimbabwe. Four contracting parties have
signed subject to ratification: Democratic Republic of Congo, Sri Lanka, Switzerland and Zambia. The WCO
reports that many other members have indicated that their internal ratification processes are well underway.G/C/W/466
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Advantages of the WTO
Progress with accession to the Kyoto Conventi on has however been slower than expected.
Although the provisions of the Convention are binding, accession is voluntary.  This has delayed therealisation of the benefits of the Convention and perhaps illustrates that relying on voluntary
commitments is less effective as compared with the strong political impetus and direction for
countries to address border administration and procedures that can be realised from WTO
commitments.
Moreover, trade facilitation covers several aspects of border management and involves many
agencies associated with border controls, such as those responsible for customs, transport, health,quarantine, veterinary, agriculture, finance, defence and justice.  To be fully beneficial, trade
facilitation measures should apply to the maximum extent possible across the entire border
management process.  The WTO, as an organization establishing rules for international trade, is the
only international organisation with a sufficiently broad mandate to cover all aspects of border
management bearing on international trade.
National, bilateral and regional initiatives cannot deliver the comprehensive reform necessary
to ensure all members benefit from trade facilitation.  In the absence of a coherent multilateral
framework, bilateral and regional initiatives risk delivering, over the longer term, a fragmented or
piecemeal approach to trade facilitation, and militate against the wider sharing of trade facilitationbenefits.
Conclusion
The discussions so far have highlighted broad agreement about the general importance and
the overall benefits of trade facilitation measures to expedite the movement, release and clearance of
goods. Concerns over the development of WTO rules centre on the implementation capacities of some
Members.  Such concerns point to the need for appropriate attention to be given to capacity building
and special and differential treatment.
While there are examples of good progress being achieved with the implementation of trade
facilitation measures, greater benefits would be realised through the development of a framework ofWTO rules that would:
• secure the political commitment of WTO members;
• set the international policy framework needed to give direction and consistency to trade
facilitation initiatives across all aspects of border management;
• give the private sector more confidence to trade and invest;
• support the implementation of the trade facilitation instruments of other organisations, notably the
WCO; and
• ensure a coherent and targeted approach to the delivery of technical assistance and capacity
building, consistent with Members’ obligations.
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