G/MA/W/160  
27 October  2020 
(20-7471) Page: 1/3 
Committee on Market Access  Original:  English  
 
  
TRANSPARENCY IN TARIFF RATE CHANGES, AND  
THE TREATMENT OF SHIPMENTS  EN ROUTE  
MEMBERS PRACTICES AND PERSPECTIVES  
SUBMISSION FROM  AUSTRALIA, BRAZIL AND CANADA  
The following submission1, dated 22 Octob er 2020, is being circulated at the request of the 
delegations of  Australia , Brazil,  and Canad a.   
 
_______________  
 
 
Background:  
1. Unexpected increases in applied tariffs by Members can create uncertainty for exporters, as 
well as additional costs for importers, and can be a significant disincentive to trade. In 
discussions in the Committee on Agriculture in Special Session, Members e xpressed interest 
in exploring this topic further. In November 2019, Australia and Canada circulated a paper 
(JOB/AG/168) asking Members a series of questions on their current practices regarding the 
treatment of shipments en route  when a tariff changes. T he objective of these questions was 
to gather information in order to deepen Members ' collective understanding of current 
practices.  
 
2. Since the paper was circulated in November 2019, Canada and Australia have engaged in 
consultations with interested Members on the basis of the questions in JOB/AG/168 in order 
to better understand the scope of potential problems resulting from changes to applied tariffs.  
 
3. A wide cross -section of the Membership, including large exporters, large importers, small 
developing country exporters/importers/net food importers, and representative of all 
negotiating groups provided responses. A summary of the informa tion grouped by themes is 
set out below.  
 
4. The objective of this follow -up paper is to:  
 
a. compile an inventory of current practices when an applied tariff changes;  
 
b. share with Members the potential issues that arise when an applied tariff changes , and  
 
c. propose an option to enhance predictability in applied tariffs.  
Summary of General Comments from Members:  
5. All acknowledge that a Member is free to adjust its MFN applied tariffs within its tariff bindings. 
Members identified a number of reasons that may lead t o adjustments in applied tariffs. The 
reasons to lower applied tariffs include: to reduce costs of manufacturing inputs, address 
domestic product shortages, or to control prices on the domestic market. Applied tariff 
increases may be implemented to protect  a domestic industry, or to reflect seasonal changes 
in applied tariffs or changes in international prices for a product.   
 
1 This document replicates  JOB/AG/185/Rev.1 in the Committee on Agriculture in Special Session.  G/MA/W/160  
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  6. There is a desire to enhance predictability when applied tariffs are increased, in particular for 
shipments in -transit or en route . Members noted that it was only in limited circumstances that 
they would increase an applied MFN tariff.  
 
7. Members should be encouraged to continue to liberalise and lower tariffs on all products, 
including agricultural products.  
 
8. There is a general interest to enhance predictability in the application of applied tariffs.  
 
9. If a Member increases applied tariffs within MFN bindings, there should be greater 
predictability for exporters and importers.  
 
10. Discussions should focus on applied MFN tariffs and n ot on other measures such as anti -
dumping/countervailing duties, excise taxes, safeguard measures, issues regarding tariff 
classification or preventing fraudulent actions, etc.  
What are the Current Practices of Members:  
11. Very few Members provide advance not ice before an applied tariff increase. One Member 
notifies its applied tariff changes 30 days in advance, and another Member changes its applied 
tariffs only once a year, providing advance notice of the date. These Members do not usually 
include an en rout e provision . 
 
12. Those Members that do not provide advance notice of an applied tariff change do so for various 
reasons, including domestic restrictions, or variable tariff rates based on international prices 
for a product. Some of these Members usually imple ment an en route  provision with certain 
conditions or on a case -by-case basis when making applied tariff changes, but usually without 
advance notice of the change. One Member provides the ability to pre -clear customs at the 
time of shipping, in order to pr ovide certainty on the applied tariff in force.  In some cases, a 
Member may consult on proposed tariff changes.  
  
13. A small number of Members noted that they provide neither an advance public notice nor an 
en route  provision.  
 
14. Depending on a Member 's domestic process, an applied tariff can be changed at any time 
during the year and this appears to be the case for most Members.  
Summary : 
15. Based on the responses received and discussions with Members, there does not appear to be 
a uniform manner in which  applied tariff changes are publicly  notified. This is not surprising 
given the differences between Members with respect to their domestic processes. Members 
are open to discussing options with the objective of facilitating agricultural trade.  
 
16. Based on d omestic restrictions raised by several Members, it is clear that a one size fits all 
approach will not work. There are, however, at least three best practices that could achieve 
the goal of improved predictability for traders: (i) advance public notice of a change in applied 
MFN tariff rates or how an automatic applied tariff change is calculated, where 
practical/feasible, (ii) use of an en route provision when advance public notice is not provided , 
or (iii) provide certainty by providing the ability to pre -clear customs prior to shipping . 
Members may wish to consider adopting one or more approaches, as appropriate.  
 
Potential Options to Enhance Transparency and Manage Shipments  en route :2 
Option 1:  
Recognizing that Members have different domestic frameworks, and therefore differing abilities to 
adopt either prior public notice or en route  provisions when an applied MFN tariff changes, Members 
 
2 The Merriam Webster Dictionary defines en route  as "on or along the way ". It can be inferred that the 
product will soon be exported or has been exported to a destination market, and the  exporter may thus not 
 G/MA/W/160  
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  are free to choose the best practice that works in their domestic framework, noting that the use of 
one or more of the methods below provides greater certainty for traders. Members have the option 
to choose one or more of the appropriate mechanism or mechanisms, which may differ depending 
on the circumstan ces: 
 
1. Provide a public notice [x] days prior to a change in an applied tariff.  
- The notice should be public and readily accessible by importers and exporters.  
2. Provide clear prior  guidance on how a tariff will change in response to defined 
factors, such a s changes in market prices, indexation against inflation.  
 
3. Provide an en route provision for shipments.  
 
4. Provide the ability for shipments to pre -pay customs  duties , according to 
domestic laws of the importing Member, so that  so that the importer pays th e 
tariff in effect at the time of the goods begin their final journey to the country 
of importation . 
Option 2:  
Agree in -principle that Members having provisions in place for shipments  where applied tariff 
changes are made  would provide greater certainty f or traders.  
 
Recognize that Members may have provisions in place currently that provide this greater certainty 
through various mechanisms . 
 
Develop best practices  for customs authorities to facilitate the development of mechanisms, such 
as en route  provisions or the ability to pre -pay customs duties , which  could be implemented 
domestically by Members.  
 
As a first step, Members shall provide responses to the questi ons in JOB/AG/168 to the Secretariat. 
By [MC12/MC13, a date to be determined], Members shall establish a series of best practice for 
customs authorities to implement in cases where applied tariff changes are made, with a view to 
improving predictability fo r traders.  
 
Next steps:  
Discuss options in more detail with interested Members to develop a workable/realistic approach to 
a cross -cutting issue.  
 
__________  
 
account for the impact of the applied tariff changes on the shipment in question. A Member may have a more 
precise definition or may provide guidance on its application.