WORLD TRADE  
ORGANIZATION  TN/TF/W/47 
9 June 2005 
 
 (05-2376) 
Negotiating Group on Trade Facilitation Original:   English 
  
 
COMMUNICATION FROM SINGAPORE 
  
 The following communication, dated 8 June 2005,  from the Delegation of Singapore, is being 
circulated in advance of the Negotiating Group meeting of 13-14 June. 
 
 
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GATT ARTICLE V  
(FREEDOM OF TRANSIT) 
 
 1. This paper sets out a number of proposals to clarify and improve Article V with a view to 
further facilitating the movement of goods in transit.   
2. The proposals are by no means exhaustive.  This  paper is intended to complement the recent 
papers submitted by Bolivia, Japan, Kyrgyz Republic, Mongolia and Paraguay [TN/TF/W28 and 
Add.1], Korea [TN/TF/W34], EC and Paraguay [T N/TF/W/35 and Add.1] a nd Paraguay, Rwanda, 
Switzerland [TN/TF/W/39] to clarify and improve Article  V.  In addition, proposals that have been 
submitted to date on Articles VIII and X, as they re late to transparency (of transit requirements, 
procedures and charges), and simplification and sta ndardization (of documentation, data requirements 
and procedures) may also be relevant to the cl arification and improvement of Article V.   
1. Risk Management 
3. Members should employ risk management tec hniques that enable their authorities to 
concentrate inspection and monitoring activities on  high-risk goods in transit, and facilitate the 
movement of low-risk goods in transit.  For exam ple, the risk of illegal diversion into domestic 
markets is generally higher for goods which are subject  to special controls or have higher duties, or 
both.  In discussing the issue of risk management as it relates to Article V, it may be useful to look at 
Japan's recent explanatory note on its experience in risk management [TN/TF/W/42].   
2. Custom House 
4. Under Article V:3, traffic in transit can be entere d at the proper custom house.  It is not to be 
subject to unnecessary delays or restrictions unless there has been a failure to comply with the 
applicable customs laws and regulations.   
5. "Unnecessary delays" is ambiguous and may possibly be  subject to arbitrary interpretation.  In 
this connection, Members may wish to discuss stipul ating [a] time period[s], after which any further 
retention at the custom house could be deemed to constitute unnecessary delay.   TN/TF/W/47 
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 3. Article V:3 
6. Article V:3 states that "traffic in transit … sh all be exempt from customs duties and from all 
transit duties or other charges imposed in respect of  transit, except charges for transportation or those 
commensurate with administrative expenses entailed by transit
 or with the cost of services rendered ".    
7. It is unclear what the permissible scope of "a dministrative expenses entailed by transit" and 
"the cost of services rendered" is and how these requirements are to be applied on an objective and 
reasonable basis.  It is suggested that Members disc uss what can legitimately be charged in respect of 
transit traffic on these bases.   
8. It is possible that "administrative expenses"  could serve as a backdoor for the imposition of 
arbitrary charges.  It would therefore be usef ul for Members to discuss whether and under what 
situations these expenses should be  imposed on transit traffic.  In this connection, Members could 
consider drawing up guidelines for the imposition of "administrative expenses".  For example, 
Members could clarify that "administrative expens es" should only relate to costs expended for risk 
assessment and random inspections.  This could be  a nominal fee which should be applied on a non-
discriminatory basis.  Members could discuss what other elements to include in these guidelines.  
9. With regard to "the cost of services rendered", it should be clarified that any charges imposed 
should only be in respect of the provision of ser vices necessary to ensure the effective transit of 
goods.  The charges levied must refer to the approxi mate cost of the service rendered and may not be 
calculated on an ad valorem  basis. 
4. Strengthening international cooperation with respect to transit 
10. Many issues raised in relation to Article V have  already been debated extensively in other 
fora such as the World Customs Organization (W CO).  Where relevant, in order to avoid the 
duplication of efforts and save time and effort, Members should build on the discussions and results 
achieved in the WCO and other fora.   
11. Further, it is recognized that transit traffic is, in many cases, best facilitated through regional 
cooperation.  Notably, in TN/TF/W/39, Paraguay, Rw anda and Switzerland have highlighted that "the 
promotion of regional transit arra ngements should be part of the cl arification and improvement of 
Article V".  Apart from encouraging Members to cooperate on a regional b asis, the Negotiating Group 
could also consider the possibility of drawing up a non-exhaustive list of elements that Members 
should endeavour to incorporate when negotiatin g regional transit agreements.  For example, 
Members could discuss having, to the extent possible,  harmonized road traffic regulations with regard 
to road signs, road transport permits, technical requirements of vehicles, inspection certificates and 
insurance, etc., which may help to reduce the costs required to comply with different regulations.  In 
this connection, we note that in TN/TF/W/39, Paraguay et. al. have enumerated a number of common features in certain transit agreements wh ich may be relevant for our discussions.     
5. Special and Differential Treatment (SDT) 
12. We recognize that least-developed countries and some developing countries may have 
difficulties implementing some of the proposals relati ng to Article V.  SDT should therefore be an 
integral part of any commitment in this area. In th is connection, we note that the papers submitted on 
Article V contain specific proposals on SDT.  Further to these proposals, Members may also wish to discuss:   
(a) longer implementation time-frames for deve loping and least-developed countries;  TN/TF/W/47 
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 (b) allowing developing and least-developed countries to implement, on a best- 
endeavour basis, the more onerous ob ligations resulting from the Article V 
negotiations, including in the c ontext of phased-in approaches. 
 
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