JOB/AG/185/Rev.2  
 
21 December 2020 
(20-9217) Page: 1/3 
Committee on Agriculture  
Special Session  Original: English  
 
TRANSPARENCY IN TARIFF RATE CHANGES, AND  
THE TREATMENT OF SHIPMENTS  EN ROUTE  
MEMBERS PRACTICES AND PERSPECTIVES  
SUBMISSION FROM  AUSTRALIA, BRAZIL , CANADA AND UKRAINE  
Revision* 
The following submission, dated 18 Decem ber 2020, is being circulated at the request of the 
delegations of  Australia , Brazil , Canada  and Ukraine . 
 
_______________  
 
 
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 Member s 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 cou ntry exporters/importers/net food importers, and representative of all 
negotiating groups provided responses. A summary of the information grouped by themes is 
set out below.  
 
4.  The objective of this follow -up paper is to:  
 
a. compile an inventory of current p ractices 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 tha t a Member is free to adjust its MFN applied tariffs within its tariff bindings. 
Members identified a number of reasons that may lead to 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 
 
* This revision is to add Ukraine as a co-sponsor to the submission . JOB/AG/185/Rev.2  
 
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  may be implemented to protect a domestic industry, or to reflect seasonal changes in applied 
tariffs or changes in international prices for a product.    
 
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 M FN bindings, there should be greater predictability 
for exporters and importers.  
 
10. Discussions should focus on applied MFN tariffs and not on other measures such as anti -
dumping/countervailing duties, excise taxes, safeguard measures, issues regarding tarif f 
classification or preventing fraudulent actions, etc.  
What are the Current Practices of Members:  
11. Very few Members provide advance notice before an applied tariff increase. One Member notifies 
its applied tariff changes 30 days in advance, and another Mem ber changes its applied tariffs 
only once a year, providing advance notice of the date. These Members do not usually include 
an en route  provision . 
 
12. Those Members that do not provide advance notice of an applied tariff change do so for various 
reasons, inc luding domestic restrictions, or variable tariff rates based on international prices for 
a product. Some of these Members usually implement an en route  provision with certain 
conditions or on a case -by-case basis when making applied tariff changes, but usu ally without 
advance notice of the change. One Member provides the ability to pre -clear customs at the time 
of shipping, in order to provide certainty on the applied tariff in force.  In some cases, a Member 
may consult on proposed tariff changes.  
  
13. A smal l 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 domestic 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 abil ity to pre -clear customs prior to shipping . Members may wish to 
consider adopting one or more approaches, as appropriate.  
 JOB/AG/185/Rev.2  
 
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  Potential Options to Enhance Transparency and Manage Shipments  en route :1 
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 
are free to choose the best practice that works in their d omestic 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 circumstances:  
 
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 as chang es 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 the tarif f 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 for 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.  
 
__________  
 
1 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 
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.