WORLD TRADE  
ORGANIZATION  TN/TF/W/49 
10 June 2005 
 (05-2410) 
Negotiating Group on Trade Facilitation Original:   English 
  
 
COMMUNICATION FROM THE PEOPLE'S REPUBLIC OF CHINA AND KOREA 
  
 The following communication, dated 9 June 2005, from the Delegations of the People's 
Republic of China and Korea, is being circulated in advance of the Negotiating Group meeting of 13-
14 June. 
 
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CLARIFICATION AND IMPROVEMENT OF GATT ARTICLE VIII 
APPLYING RISK MANAGEMENT 
 
I. INTRODUCTION 
1. Risk management has long been recognized by  our Customs Authorities.  Nowadays, this 
concept is not only adopted in Customs, but also widely accepted by other border agencies involved in 
trade administration.   
2. Risk management may be applied to:   
• The process of Customs supervision and control; 
• Post-clearance audit; 
• Customs classification; 
• Valuation; 
• Analysis of Customs statistics, etc. 
 
3. Through this method, commodities and traders are classified into different categories 
according to a set of rules.  The most compliant  traders or low risk commodities can be granted 
simplest and fastest clearance treatment by Customs Authorities.  In our experience, by adopting risk management systems, border crossing movement of  goods, formalities of clearance and release of 
goods could be expedited.   
4. Therefore, China and Korea would like to propose this paper for clarification and 
improvement of GATT Article VIII on the aspect of "import and export formalities".   
II. PROPOSALS 
A. D
EFINITION OF RISK MANAGEMENT  
5. Risk management means  the systematic application of management procedures and practices 
which provide Customs with necessary information to address movements or consignments which 
may present a risk.  This definition is excerpt ed from WCO Guidelines of the Revised Kyoto 
Convention, which is widely accepted throughout  Customs administrations worldwide.   TN/TF/W/49 
Page 2  
 
 B. E
STABLISHMENT OF A RISK MANAGEMENT PLATFORM BY ADOPTING ADVANCED 
INFORMATION TECHNOLOGY  
6. Primary customs data including classification, va luation, origin of the goods, incorporated 
with selected data from other border agencies or trad e authorities, can be gathered into the platform 
system.  The information can be shared not only by  Customs officers involved in risk management but 
also by those in relevant border  agencies and trade authorities.  
C. RISK ANALYSIS  
7. The WCO Guidelines on the Revised Kyoto Conv ention defines the concept as "systematic 
use of available information to determine how of ten defined risks may occur and the magnitude of 
their likely consequences".  Based upon the coll ection of clearance data and other relevant 
information, Customs officers at the risk manage ment unit should analyze the available data and 
arrange for the appropriate customs operation accord ingly.  With the purpose of expediting Customs 
clearance, different treatments should be granted to commodities and traders classified at different risk levels.  
D. P
OST-CLEARANCE AUDIT  
8. Customs should carry out necessary post-clear ance audit on the acc ount books, vouchers, 
commercial documents, customs declaration forms and other trade-related info rmation of enterprises 
upon the risk analysis results.  The outcome of pos t-clearance audit should be fed back timely to 
relevant Customs officers involved in clearance proce dures to take further action in order to ensure 
effective customs control.   
E. ENTERPRISE CLASSIFICATION  
9. The enterprise classification mana gement allows Customs to conduct  risk assessment1 to 
enterprises with respect to their sel f-compliance and risk level.  En terprises can be categorized into 
different risk levels upon their compliance records with  customs and be treated differently in terms of 
providing customs facilitation.  The categorization may be adjusted according to their future compliance of customs laws and regulations.   
III. BENEFITS OF IMPLEMENTATION 
10. Risk management can help Customs author ities to work out the problem of limited 
administration resources and massive administrative duties.  Other benefits include:   
• Improving the administrative efficiency; 
• Reducing administrative expenses; 
• Allocating administrative resources economically; 
• Providing trade facilitation to legitimate traders; 
• Minimizing the time of clearance; 
• Lowering trade costs. 
 
                                                     
 
1 Risk assessment:  the systematic determination of risk management priorities by evaluating and 
comparing the level of risk against predetermined standards, target risk levels or other criteria.  (WCO Kyoto 
Convention Revised).  TN/TF/W/49 
 Page 3 
 
 
 IV. COSTS 
11. Generally speaking, the proposed clarification and improvement set out above should not 
cause huge costs to Members with existing technolo gical and management conditions.  However, the 
application of risk management needs certain input in the areas of infrastruct ure, staff training, and 
coordination and coopera tion among government agencies.  Spec ific implementation expenses may 
vary from one Member to another according to its current situation. 
V. SPECIAL AND DIFFERENTIAL TREATMENT 
12. Considering the difficulties that developing Me mbers may confront in implementing risk 
management, longer period and other necessary flex ibilities should be granted to these developing 
Members in the implementation of the relevant  rules that may result from the negotiations. 
VI. TECHNICAL ASSISTANCE AND CAPACITY BUILDING SUPPORT FOR 
NEGOTIATIONS 
13. Members, especially developing and least -developed Members, should identify their 
difficulties, requirements and priorities in implementing risk management through self-assessment. Developed Members and relevant in ternational organizations should wo rk out practical ways to assist 
these Members in this process and help develop their risk management projects. 
14. Members should share their useful experience accumulated in implementing risk management 
techniques.  Developed Members should make  special contribution in this regard. 
 
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