WORLD TRADE  
ORGANIZATION  TN/TF/W/24 
21 March 2005 
 
 (05-1199) 
Negotiating Group on Trade Facilitation Original:   English 
  
 
COMMUNICATION FROM NEW ZEALAND 
  
 The following communication, dated 18 March 2005, from the Delegation of New Zealand, is 
being circulated in advance of the Ne gotiating Group meeting of 22-24 March. 
 
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PROPOSALS TO CLARIFY AND IMPROVE ARTICLES VIII AND X 
 
 
I. INTRODUCTION 
1. The submission outlines a group of "bite sized" proposals for specific clarifications or 
improvements to Articles VIII and X, with imp lications for Article V of GATT 1994.  For 
convenience the proposals are arranged under the we ll-established WTO principles of transparency, 
due-process and minimising unnecessary restrictions on trade.  The proposals seek to identify rules 
that would increase the predictability and certainty of international trade.  These include discussion of 
Special and Differential treatment and Technical A ssistance and Capacity Building considerations.  
New Zealand, however, considers that most of the fo llowing proposals are inherently likely to deliver 
greater benefits to developing country and sma ll economy exporters than to developed country 
exporters. 
II. TRANSPARENCY AND DUE-PROCESS 
Proposal:  That Members and traders be given the right to comment on proposed laws, regulations, 
judicial decisions and administrative rulings (as referred to in Article X) and have those comments 
taken into account.   
 
• Improvement and clarification:   Article X should be improved to establish clearly that 
traders and other WTO Members have the right  to comment on proposed customs rules, 
procedures, and policy with commercial effects.  Currently Article X requires official publication of measures affecting imports, particularly customs measures, before they are enforced, and provides for appeal against and review of administration actions relating to 
customs matters.  But the article makes no prov ision for those directly affected to comment 
on such proposed measures.  This right to comment should also oblige the responsible 
authorities to take these comments into account, and either amend the proposed rule or 
procedure, or as the case may be, provide an e xplanation to traders and other WTO members 
as to why their comments have not been taken into account. 
 
• Experience:   Customs rules and procedures affect traders most directly;  they also affect 
other WTO Members.  New Zealand’s domestic  experience with implementing supply chain 
security, for example, has illustrated the importanc e of adequate consultation with traders to 
ensure that proposed systems minimize costs, avoid unnecessary restrictions on trade and are 
workable in practice, while also fulfilling any relevant security objectives.  New Zealand has TN/TF/W/24 
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 also found it valuable to have such a dialogue with traders, including in providing 
explanations where their views or preferences have  not been able to be taken into account.   
 
• The Agreement on Technical Barriers to Trade (TBT Agreement) already provides a similar 
requirement that proposed regulations be publis hed in advance and in a way that enables 
economic actors to become acquainted with the proposal, and establishes the right of other 
WTO Members to comment on proposed domestic regulations of other Members.  It is 
anomalous that this right is already establis hed under the WTO with regard to Members' 
domestic regulations, but does not apply to Member s' border regulations that directly affect 
trade.   
 
• Experience with the TBT Agreement also shows th at even an obligation to "take into account" 
comments may in practice have little effect in ensuring that proposed measures are adjusted 
when they would have significant adverse effect s on other Members or traders.  At the same 
time, however, the right of Members to regulate must also be recognized and protected.  This 
balance could perhaps best be addressed by a strong requirement that where a measure is not 
amended in accordance with comments (as is permitted under the TBT agreement), the 
responsible authorities should be required to jus tify the decision.  This would go some way to 
addressing shortcomings that have been e xperienced in the application of the TBT 
Agreement, including insufficient protection given to exporting Members. 
 
• Special and Differential Treatment:   A requirement to allow for prior comment may 
lengthen the customs regulation process, and ma y increase administrative workloads for all 
Members which do not currently employ such procedures.  On the other hand, the opportunity 
for consultation with those directly affected by proposed measures is likely to improve the 
quality and practicability of the resulting measure s.  If the proposed requirement would be 
inherently more burdensome for developing c ountries than for other Members, special and 
differential treatment to mitigate or manage such burdens would need to be considered. 
 
• Technical Assistance and Capacity Building:   Consideration of issues raised by traders or 
other Members could increase administrative workloads.  A full consideration within government administrations of potential i ssues arising from proposed customs measures 
should be part of the normal process for sound de velopment of government  regulations in any 
event, but some Members may identify techni cal assistance and capacity building needs in 
this respect. 
 
Proposal:  That objective criteria be required to be used for tariff classification of goods.  
 
• Improvement and clarification:  GATT 1994 Articles VIII and X contain only limited 
disciplines about how
 products are classified at the border.1  This proposal would improve 
and clarify those articles, particularly by requiring the use of objective tests, and by requiring 
Members to adopt the World Customs Or ganization's Convention on the Harmonized 
Commodity Description and Coding System ("the HS Convention"), as detailed below.   
 
• Experience:   The aim of introducing a greater degree of objectivity into customs 
classifications procedures would be to ensure that tariff classification decisions are not themselves used as disguised protection of domestic industries additional to the explicit 
protection provided through the tariff level set out  in members' schedules and national tariffs.  
When customs officials decide how a good shoul d be classified, the classification procedures 
                                                     
 
1  The focus is on publication of decisions about the classification or valuation of products for customs 
purposes and appeal and review mech anisms with respect to customs d ecisions, and fees and formalities 
associated with border entry.  TN/TF/W/24 
 Page 3 
 
 
 should not impose protection over and above that which is objectively necessary to implement 
the relevant level of tariff or other scheduled border protection.   
 
• Our experience is that tariff classification deci sions can have a significant effect on real 
market access.  Based on this e xperience, we see real merit in introducing an explicit standard 
of objectivity into classification procedures.  Wh ere it is otherwise not possible to accurately 
determine the classification of a product, a test may be necessary.  In such cases, an objective 
test should be used.  These negotiations are an opportunity to establish criteria that classification decisions and any necessary tests sh ould satisfy, such as objectivity, scientific 
basis, wide acceptance and impartiality.   
 
• One element of ensuring that tariff classificati on decisions are made on an objective basis is 
to require Members to use the HS classification system when making tariff classification decisions.  Under current GATT rules, there is  no requirement to use any particular tariff 
classification system.  Use of different classification systems by Members leads to uncertainty, and inconsistency in classifica tion procedures and on occasion allows for the 
practice whereby importing countries sometimes manipulate tariff classification decisions to 
assign a higher tariff and/or different market acc ess requirements to imported products.  This 
could be readily redressed by requiring all Memb ers to adopt the HS Convention.  Although 
only two-thirds of WTO Members are Contracti ng Parties to the HS, this nomenclature is 
already applied to over 95 per cent of world tr ade.  New Zealand sees benefit in requiring all 
WTO Members to commit to using this system of tariff classification. 
 
• Special and differential treatment/Tec hnical assistance and capacity building:   Given the 
wide application of the HS Convention alr eady, there may be only minimal special and 
differential treatment and technical assistance and capacity building required here for most 
Members.  Prior to the introduction of the HS Convention, and ahead of each of the larger 
updates in 1996 and 2002 extensive TA was pr ovided to Members.  For those Members 
implementing for the first time, especially LDCs, some technical assistance may be needed.   
 
III. MINIMIZING UNNECESSARY RESTRICTIONS ON TRADE 
Proposal:  That Members agree to more precise, operationa lly effective provisions on minimizing 
excessive documentation.    
 
• Improvement and clarification :  GATT Article VIII recognizes the need to reduce fees and 
formalities connected with importation and exporta tion to the minimum but neither requires it 
nor indicates how it could be done.  Article VIII needs to be improved by providing clearer 
guidelines on how best to simplify and minimize  these fees and formalities.  A substantial 
part of any rules on trade facilitation should addr ess the improvement and clarification of this 
Article.   
 
• Experience :  It is widely accepted that excessive documentation and complex fees and 
formalities at the border act as a disincentive to  trade and also add costs and delays.  Our 
experience is that current rules in GATT Artic le VIII do not provide sufficient guidance and 
encouragement to reduce these documentation require ments.  In addition, there is often little 
understanding of the administrative framework ope rating within many members.  Therefore, 
and to establish a baseline for this part of the negotiations, it would be useful for all Members 
to notify the documentation and entry systems wh ich they currently implement or have in 
preparation.  Based on this information, Members could then look at practical ways to 
minimize fees and formalities.  We suggest that it might be appropriate to consider a menu of various steps to reduce excessive documentation requirements.   
 TN/TF/W/24 
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 • Special and differential treatment:  The idea of a menu of options is specifically designed 
to provide flexibility for members given the vari ation in their capacity to implement.  In 
addition, developing country Members could be  given additional time to implement such 
measures.   
 
• Technical assistance and capacity building:  This proposal is designed to allow a better 
assessment of Members' current ability to implement new requirements for minimizing documentation.  Depending on the detail of an y menu of steps, in some cases technical 
assistance and capacity building may be necessar y to help individua l developing country 
Members to introduce such measures.   
 
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