WORLD TRADE  
ORGANIZATION  TN/TF/W/19 
18 March 2005 
 
 (05-1142) 
Negotiating Group on Trade Facilitation Original:   English 
  
 
COMMUNICATION FROM AUSTRALIA AND CANADA 
  
 The following communication, dated 16 March 2005, from the Delegations of Australia and 
Canada, is being circulated in advance of the Negotiating Group meeting of 22-24 March. 
 
 
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POSSIBLE COMMITMENTS ON ENHANCED CLEARANCE PROCEDURES - 
PROVISION FOR COLLATERAL OR MONETARY SECURITY  
 
A Proposal by Australia and Canada
 
  
 
I. BACKGROUND 
1. The timely clearance of imported goods is ofte n impeded by the fact that Customs authorities 
do not allow for the release of goods until the cust oms obligations of traders (e.g., importers, 
exporters, warehouse operators or inte rnational transporters) are fully discharged.  One way to address 
this significant impediment to trade facilitation is to separate the process of fulfilment of customs 
obligations (including the payment of duties) from the actual release of goods.  Several Members have 
separated these two processes through the use of collateral or monetary securities (e.g., bonds or other 
financial guarantees).   
II. PROPOSAL 
2. We suggest that WTO Members consider commitments on the release of goods from Customs 
prior to payment of duties in cases where a trad er provides sufficient guarantees in the form of 
collateral security or some other appropriate instrume nt with respect to the ultimate payment of duties 
and taxes, under circumstances such as the following: 
(a) where delays are encountered in completion of final clearance procedures (as in cases 
awaiting a decision on the correct tariff classification); 
(b) where goods are imported to fulfil a specific purpose and subsequently duty-paid or 
exported after use (as in cases where there is authorization to import goods for "inward processing" without payment of duties and taxes, providing the finished goods are subsequently exported). TN/TF/W/19 
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 3. A similar relevant process is already reflected in Article 13 of the WTO Agreement on 
Customs Valuation (CVA).  While the existing GA TT provisions do not prevent the provision of 
collateral security, it is only within the context of the CVA that a requirement to do so exists.
1 
4. Collateral or monetary securities operate in the following manner:  
•  A trader who wishes to ask for the release of a given good prior to payment must post a 
security instrument with the Customs authorities.  A security can be in the following forms: 
cash, a certified cheque, a transferable bond issued by the Government or an approved financial institution, or a surety b ond issued by an approved issuer.
 
 
• Upon final determination of the amount of duty or charges payable, the Customs authorities 
seek payment from the trader.  If the trader cannot and will not fulfil its obligations, the 
Customs authorities can obtain payment from the security instrument.  
 
• Bonds could be limited to a single transaction  or cover several transactions , including 
importations across the customs territory (continuous bonds). 
 
• Bonds may also be employed for an expanded range of uses  to meet a variety of import 
circumstances.  As an example, surety  bonds may include such uses as immediate 
clearance/delivery in the case of express shipments. 
 
5. Special and differential treatment  provisions reflecting the specific circumstances and 
capacity to deliver collateral security services in i ndividual Members could be incorporated within 
commitments, for example through provisions for deferred implementation. 
III. BENEFITS 
6. The availability of collateral security for release of goods is of key importance to traders, 
especially small- and medium-sized ones.  It provides for quicker release of goods, costs savings from reduction in delivery delays and greater certainty and predictability as to cash flow management and 
shipping times.  
7. For governments, collateral security instrument s such as bonds provide a guarantee that the 
importer will faithfully, and in a timely manner, ab ide by all laws and regulations governing the 
importation of goods into the country.  In this manne r, a bond is not designed nor intended to protect 
the importer, nor does it relieve the importer of any obligations, rather it protects the government 
while clearing the way for faster release of goods.  Governments benefit from this system by securing revenue owed. 
8. The lower transaction costs and increased ce rtainty in shipping times provided by the 
provision of collateral security will also encourag e greater investment and much needed flows of 
                                                     
 
 
1 Article 13 of the CVA (also known as the Agreem ent on Implementation of Article VII of the GATT 
1994) reads as follows: 
 
If, in the course of determining the customs value of imported goods, it becomes necessary to delay the 
final determination of such customs value, the importer of the goods shall nevertheless be able to 
withdraw them from customs if, where so required, the importer provides sufficient guarantee in the 
form of a surety, a deposit or some other approp riate instrument, covering the ultimate payment of 
customs duties for which the goods may be liable.  The legislation of each Member shall make 
provisions for such circumstances.  TN/TF/W/19 
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 capital to developing countries.  Availability of collate ral security also helps to establish trust between 
Customs authorities and traders and, hence, to  reduce incentives to circumvent regulations. 
IV. IMPLEMENTATION COSTS 
9. Since provision of collateral security is a financ ial service offered by the private sector, there 
are no direct costs for governments to authorize thei r use in import transactions.  There may be some 
incremental costs in training officers in wider use of collateral security arrangements.  That being 
said, since the Agreement on Customs Valuation al ready requires Parties to provide for security 
instruments in cases of delays in the final determin ation of customs value, incremental costs could be 
limited.   
V. TECHNICAL ASSISTANCE 
10. Technical assistance efforts in training and ad ministration of Customs can include elements 
focusing on ways to improve revenue collection a nd enforcement of Customs laws, including through 
systems allowing for collateral or monetary secu rities.  These elements could allow developing 
economies to gain further access to a policy tool that provides the means to facilitate trade by 
enhancing certainty and pred ictability in transactions. 
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