WORLD TRADE  
ORGANIZATION  TN/TF/W/8 
28 January 2005 
 
 (05-0360) 
Negotiating Group on Trade Facilitation Original:   English 
  
 
COMMUNICATION FROM JAPAN, MONGOLIA, AND THE SEPARATE CUSTOMS 
TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU 
  
 The following communication, dated 26 Ja nuary 2005, from the Delegations of Japan, 
Mongolia, and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, is being 
circulated in advance of the Negotia ting Group meeting of 7 and 9 February. 
 
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TRADE FACILITATION: PROPOSALS TO CLARIFY AND  
IMPROVE GATT ARTICLE X 
  
I. INTRODUCTION 
1. To further expedite the movement, release a nd clearance of goods based on Annex D of the 
July Package, it is essential to en sure transparency and predictab ility of trade regul ations, and to 
establish a regime for their impartial administration.  
2. Enhanced transparency, predictability and impa rtiality for trade regulations (including laws, 
regulations, judicial decisions and administrative rulings) would allow traders to obtain accurate and 
timely information on trade procedures, which would avoid unnecessary documentation and 
unnecessary procedures, thus reducing their logistical costs and time. This would lead to increased 
business opportunities, especially for small and medi um sized enterprises (SMEs) which have so far 
missed the opportunity to engage in internati onal trade. Also, for trade-related governmental 
authorities in Members, facilitated trade procedures would enable the more efficient allocation of 
human and financial resources, and bring them an increase in both trade volume and customs duties. 
In addition, an overall trust in the trade system is  a fundamental incentive fo r fostering further trade 
transactions and this would bring economic deve lopment through expansion of trade and foreign 
direct investment. Accordingly, ensuring transp arency, predictability and impartiality under the 
GATT principle of non-discrimination would bring bene fits to all the parties involved in trade, both 
developing and develope d Members, importing and exporting Members, private and public sectors, 
and large enterprises and SMEs alike. 
3. In order to contribute to the negotiations on tr ade facilitation, this proposal aims at further 
clarification and an improvement of GATT Article X, which stipulates the publication and administration of trade regulations. In making this  proposal, we first categorized the principles for 
trade facilitation included in Article X into three principles, i.e. transparency, predictability, and 
impartiality. Then, under each of these three principles, a specific example of problems pointed out by 
the private sector is presented together with possible elements of solutions and examples of implementing these elements, without prejudice to thei r nature in the final result of the negotiations. 
Proposals on special and differential treatment (such as the granting of transition periods, etc.), 
technical assistance and support for capacity building, and cost implications of proposed measures, TN/TF/W/8 
Page 2  
 
 which are also important elements for the negotiatio ns as agreed by Members in Annex D of the July 
Package, will be appropriately addressed dur ing the course of the negotiation process.  
4. The following proposals are not exhaustive and are organized to facilitate Members’ 
understanding of the basic obligations, problems an d solutions related to GATT Article X.  Each 
Member of this proposal reserves the right to make  further proposals on this subject in the future.  
II. TRANSPARENCY 
A. E
XAMPLE  
 
Unpublished trade regulations  
Company A in Member X is planning to export their products to Member Y. However, they found out 
that detailed information on trade procedures is not stipulated in Member Y’s published trade 
regulations. Administrative guidelines stipulating de tailed regulations for trade procedures are not 
published as they were treated as internal inform ation within the government of Member Y.   
 
 5. In this case, SMEs, especially in developing and least developed Members trying to engage in 
international trade for the first time, would lo se the opportunity to enter new markets and their 
business opportunities would be unduly restricted if th e relevant regulations on trade procedures were 
not published in the exporting Members and prospective markets. 
B. P
OSSIBLE ELEMENTS OF SOLUTIONS  
6. If trade-related regulations were  not published, it would be difficult for traders to anticipate 
the necessary procedures for engaging in trade. While GATT Article X.1 obliges Members to publish 
trade-related regulations promptly, it does not provid e a detailed scope of info rmation to be publicized 
or the means to publicize it. Improvement and clar ification of the above-mentioned points is necessary 
to make GATT Article X more effective in its implementation.  
7. It is worth mentioning that, other than th e 1994 GATT, Article III of the GATS, other WTO 
agreements also stipulate provisions related to tr ansparency. Furthermore, for example, “Disciplines 
on Domestic regulation in the accountancy sector (S/L /64)” provides details to achieve transparency 
on the basis of articles of the GATS. These provisions could serve as a reference for discussion on trade facilitation. 
8. The following are possible elements to  solve the above-mentioned problems: 
1. Clarification and improvement of the scope  of trade regulations to be publicized 
9. The examples of trade regulations to be publicized are: 
- All trade-related laws and regulations  (including trade-related treaties and 
agreements) 
- Procedures and administrative rules of border agencies (including 
documentation formats) 
- Applied tariff rates 
- Decisions and examples of customs classification  TN/TF/W/8 
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 - Fees and charges imposed on or in connection with importation or 
exportation (To ban the collection of the unpublicized fees and charges is one possible idea)   
- Details of service contracts between PSI entities and governments  
- Details of export inspection for safety standards, etc. 
- Standard processing period for major trade procedures 
10. Relevant governments and traders could obtai n the following information from the competent 
border agencies:  
- Legitimate purpose or objective in imposing trade-related restrictions 
- Reasons for any delay in cases where trade-related pro cedures take longer 
than the standard processing period 
2. Clarification and improvement of methods of publication 
11. The following are possible methods of publication:  
- Notices in government gazettes 
- Publication on the official website of any competent government or 
governmental agency 
- Publication of a summary (complete translation if possible) of trade 
regulations in more than one of the official WTO languages on the website (a transition period would be permitted fo r Members whose mother tongue is 
not one of the WTO official languages)  
3. Notification to the WTO of trade-related regulations 
12. To ensure transparency, notification to the WTO of each Member’s trade regulations in one of 
the WTO official languages may be an option. 
- Establishment of a committee in the WTO to process the notification (c.f. 
Agreement of Import Licensing Procedures, Article 4) 
- Publication of notification on the WTO we bsite (the WTO secretariat or other 
international organizations (UNCTAD, ITC etc.) could provide translation 
services, especially for LDCs that have  difficulties in publicizing their trade 
regulations on their websites.)  
4. Establishment of inquiry points 
13. Establishment of inquiry points would be a usef ul tool to improve the accessibility of trade-
related information to traders. The establishment of an advance ruling system that would enable 
traders to obtain and confirm necessary informa tion beforehand is vital for promoting trade 
facilitation. TN/TF/W/8 
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 - Establishment of inquiry points r esponsible for providing relevant 
information or documents related to trad e procedures to the traders (including 
co-ordination among existing inquiry points of each border authority) (c.f. TBT Agreement Articles 10.1 and 10.2) 
- Establishment of an advance ruling system (c.f. Agreement on Rules of 
Origin Article 2 (h)) 
III. PREDICTABILITY 
A. E
XAMPLE  
 
Sudden change in laws and regulations  
Trading company A in Member X mainly exports goods  to Member Y. In Member Y, trade-related 
laws and regulations are suddenly re vised and many trade restrictions are not included in the laws and 
regulations. Therefore company A has to spend unnecessary additional time confirming the required 
trade procedures, making it difficult to deliver its products by the deadline due to delayed cargo 
release 
 
 
14. As this case indicates, if laws and regulations were suddenly revised or if the revision were 
not published before its implementation, compan ies would not have enough preparation time to 
comply with the revised regulations appropriately. In particular, due to the lack of human or financial 
resources to adjust and manage these sudden changes, it would be particularly difficult for SMEs to 
maintain a stable business environment in these Memb er countries. In such a situation where it is 
difficult for traders to comply with revised trade regulations, it would also hinder the adequate and 
effective administration of these regulations for the government or a governmental agency concerned.  
B. POSSIBLE ELEMENTS OF SOLUTIONS  
15. In order to solve the above-mentioned probl ems, it is necessary to provide sufficient 
preparation or adjustment periods for traders who have to comply with the revised trade-related 
regulations. Possible elements, through clarifica tion and improvement of the definitions and 
understanding of GATT Article X, for ensuring the pr eparation and adjustment period for traders are 
as follows:  
1. Publication of trade-related laws and regulations before implementation 
- Providing opportunities for interested parties including the private sector to 
comment on prospective trade-re lated laws and regulations 
- Publication of laws and regulations (o r final draft regulations) before their 
implementation 
- Publication of the legislative purpose of  the prospective trade-related laws 
and regulations 
2. Confirmation of trade-related decisions before any trade transactions 
- Development of advance ruling system  TN/TF/W/8 
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 3. Explicitly stating trade procedures 
- Explicitly stating the required trade pr ocedures in the relevant laws and 
regulations 
IV. IMPARTIALITY 
A. EXAMPLES  
 
Partial administration of trade regulations  
In Member X, the criteria for customs classification are imprecise, allowing the discretion of each 
official. Tariff rates and the processing time for goods and trade-related procedures are operated 
differently by each local customs due  to the priority of local rules over national rules. In addition, 
since an appropriate appeal system has not been established in Member X, traders have no choice but 
to accept the decisions of each local customs.   
 
16. As this example indicates, different customs cl assification of the same product, especially in 
cases where the tariff rates are different, would genera te additional costs for traders, which would be 
of great concern, especially for SMEs. Furthermor e, in cases where customs classification and applied 
tariff rates differ among various importers who impo rt the same products, this would lead to unfair 
price competition in the market, leaving some im porters in an unfair position. By solving such 
problems pertaining to unfair administration of tr ade regulations, governments are able to avoid an 
unnecessary cost burden on traders and would contribute to improved duty collection by governments. 
In addition, if an appropriate appeal system is not established whereby impor ters can appeal to the 
government in the event of unfair administration, tr aders may lose their trust in the trade procedural 
system itself, thereby discouraging the expansion of  trade transactions in the Member countries and 
allowing for a loss of economic development opportuniti es. Therefore it is vital to develop appropriate 
legal appeal systems together with securing im partial administration of trade regulations. 
B. POSSIBLE ELEMENTS OF SOLUTIONS  
17. Ensuring the impartial administration of trad e regulations would e xpedite trade-related 
procedures through a more efficient allocation of r esources within the government or a governmental 
agency and would gain traders’ trust towards each  Member’s trade system, which would lead to a 
greater incentive for expanding trade and the economic development of all WTO members.  
18. With a view to realizing such merits, the aspects of GATT Article X that are of relevance to 
impartiality should be clarified a nd improved through the following examples of measures to enhance 
impartial administration of trade regulations:  
1. Uniform administration of trade regulatio ns throughout the Member’s territories 
19. Ensuring uniform administration of trade regulations throughout the Member’s territories is 
essential to enhance the impartiality of trade procedures. 
- Establishment of a central function within the government which has the 
primary responsibility to interpret trade regulations such as those relating to 
customs classification or customs valuation, etc.  
- Compilation and distribution of casebooks of cases and examples of customs 
classification and customs valuation TN/TF/W/8 
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 - Provision of staff training based on casebooks on customs classification and 
customs valuation 
2. Establishment of appeal system  
20. The establishment of an appeal system as a relief measure for traders against unfair 
administration of trade-related procedures is cruc ial for traders to appropriately recover damages 
caused by such actions.   
- Establishment of a complaints desk 
- Development of legal and administrative appeal systems for lodging 
objections 
- Publication of major judicial and administrative decisions against lodged 
appeals 
3. Maintenance of integrity among officials 
21. The awareness of officials in charge of administering trade regulations is of great importance 
for impartial administration and it is necessary to maintain a high level of integrity among officials.  
- Development of codes of conduct for staff of border agencies 
- Appointment of officials in charge of providing officials’ education and 
provisions of adequate training to relevant officials 
 
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