RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/122
22 September 1998
(98-3618)
Council for Trade in Goods Original:  English
TRADE FACILITATION
Assessment of the Scope for WTO Rules in the Field of Import, Export and Customs Procedures
Communication by the European Community
1. Introduction
The Singapore mandate requires WTO members to:
“Carry out exploratory and analytical work, taking into account the work of other
relevant organisations, on the simplification of trade procedures, in order to assess
the scope for WTO rules in this area.”
In line with this mandate, and the work prog ramme established by the Council for Trade in
Goods, the EU in this paper gives an analysis and assessment of the scope for WTO rules covering
import and export procedures and requirements, including customs and border crossing problems.
To simplify the presentation, the analysis is divided into two parts : documentation and
information requirements at import and export ; and customs procedures.
2. Documentation and Information Requirements at Import and Export
2.1 The issue – current problems
All international trade transactions generate extensive documentation and information
requirements at each stage of the process. Typically, a trader must submit detailed information on his
shipment to obtain export clearance, duty drawbacks, fulfil export statistics’ requirements etc, and
further information at import so that eligibility for clearance, verification of origin, calculation of value
for duty purposes, licensing requirements and import statistics can be determined. For goods subject tohealth or safety verification, restrictions, quota, preferential origin, licensing or other controls,
additional information is required by a multiple of agencies in the importing country, and further
verifications needed. Extensive information is  also required by transport operators, freight forwarders
and port and airport authorities in order to ensure proper transport, tracking and delivery of goods.
Evidence from business (including at the very instructive WTO Symposium in March 1998)
overwhelmingly shows that traders in all parts of the world are currently subject to a host of
burdensome and seemingly nugatory requirements, falling into the following 4 broad categories:
• unnecessary or excessive data or documentation requirements, that create additional costs and
delays for traders (eg irrelevant data requests, non-acceptance of commercially available
information, multiple forms, multiple authorisati ons and fees, consular invoices), all of which
create delays and additional costs for traders;G/C/W/122
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• the need to regenerate or resubmit different information and documentation at different steps in the
transaction process, again contributing to costs and delays and high levels of errors in datamanipulation and processing;
• repeated/multiple demands for the same information and documentation from different agencies in
both exporting and importing administrations, with little attempt to rationalise or coordinate those
requirements, again contributing to unneeded delay and cost. Studies carried out in the EU indicatethat it is at the export  end that the least effort to coordinate or rationalise tends to take place, with
obviously a negative impact on export efficiency;
• lack of harmonisation in terms of both form and content of data/messages supplied, both within
individual countries and internationally, forcing traders to continually modify information for
different markets.
Both business organisations and international organisations such as UNCTAD and the
UN-ECE have highlighted that the costs of excessive requirements (which represent between 2% and
10% of overall costs) often fall disproportionately on:
• companies in developing countries, for whom the fixed costs of compliance with import/export
procedures represents a higher percentage of total turnover;
• Small and Medium Sized Enterprises, for whom due to economy-of-scale reasons the cost of trade
procedures is a higher proportion of overall costs, who are more often forced to rely oncommercial third parties for management of the international transaction, and who are more likely
to be discouraged from engaging at all  in international trade due to bureaucratic obstacles.
The costs to governments of imposing excessive or inappropriate documentary and data
requirements are also evident, in terms of :
• Higher capital and running/administrative costs (borne by the taxpayer), which leads to poorer, or
less cost-effective control;
• Misallocation of human resources, with a demotivating effect on staff;
• Discouragement of two way trade (impacting on economic performance and tax  revenues) due to
eg blockages, delays, port congestion, and (as pointed out by UNCT AD) discouragement of
inward investment, which favours a climate of transparent and streamlined trade procedures to
facilitate smooth supply of raw materials and components and efficient distribution or export of
goods.
2.2 Problems identified and solutions to date
Any analysis of the problem needs to identify why certain procedural barriers have grown up,
the efforts made to date to reduce them, and why those efforts have not produced the solutions
demanded. The EU believes there are three basic reasons for the apparent growth in proceduralobstacles :
• First, the exponential growth in world trade – new ways of conducting business, more border
transactions, at higher velocity, and increasingly between integrated companies operatingcommon systems – has not been matched by commensurate reform and modernisation at
governmental level. Import and export procedures can thus create or represent non-tariff barriers;G/C/W/122
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• Global expansion of regulatory requirements relating to eg health, safety, transport of dangerous
goods, prohibitions, preferential tariffs and origin etc, all of which drag additional informationand data procedures in their wake;
• Lack of political will among governments to seek comprehensive solutions or to place
simplification of trade procedures sufficiently high on their domestic or international trade
agendas.
Accordingly, efforts to simplify procedures have been partial only. At the national  level, some
governments have taken steps to simplify, through eg periodical attempts to reduce requirements, to
increase the use of information technology, to base procedures and data requirements on existing
international standards, and to better coordina te data flows and requirements between different
agencies. But these efforts have not been pursued with equal determination by all WTO members, and
have not followed common approaches necessary if obstacles to international transactions are to beminimised. The result is that most WTO members have extensive, and extensively differing and often
incompatible information and documentation requirements.
At the regional  level, efforts at simplification of requirements and procedures are only at a
nascent stage. Regional initiatives such as AP EC, NAFTA, ASEAN, Mercosur, SADC and ECOWAS,
either in the framework of customs cooperation, gene ral trade facilitation work, or in support of free
trade arrangements have recognised the need to reduce, simplify and harmonise documentation and
data requirements. While valuable and trade enhancing, it is important in the EU’s view that such
regional initiatives develop in a way that is compatible with each other, so as to facilitate inter-regional
and global trade. This is only going to be possible if regional initiatives are based on a common orcompatible set of rules, guidelines  or international standards.  It is also essential that any regional
initiatives are compatible with WTO obligations present or future.
Within the Group of 7  (G7)  framework an initiative was recently launched to reduce, simplify
and harmonise international trade data and messaging among G7 members.
1 This exercise will result in
G7 partners establishing a reduced and harmonised maximum data set for import clearance purposes,
based on international codes and standards.  The next stage of the exercise is to further reduce and
harmonise data requirements for other aspects of the trade and transport chain eg export data sets,
cargo report and cargo release data, as well as information requirements of other governmental
agencies, in an effort to secure an agreed maximum data set for all these purposes, with as few nationalvariations as possible. Such simplification and harmonisation of data messages is a pre-requisite for
automated, EDI based exchange of information be tween exporting and importing agencies : a medium
term aim.
The results so far of the G7 initiative, which will cover about 50% of world trade, have been
instructive, having shown up
                                                     
1 The G7 is composed of Canada, Japan, USA, France, Germany, Italy and the UK. The European
Commission takes part in the meetings. The work on customs simplification is carried out by two workinggroups : the Senior Expert Group (SEG) at Director level, and the Technical Working Group (TWG) at expertlevel. The groups’ mandate is set out in the Lyon and Denver G7 summits (96 and 97), which called for an effortof standardisation and simplification of customs procedures, the use of uniform customs documentation andelectronic transmission standards. This was later expanded at the Birmingham summit (May 1998) to encompass
the data required by other government depart ments and agencies eg health, agriculture etc.
The basic work programme envisaged is : finalisation of import and export data-sets by end 1998, and
establishment of customs prototypes or other procedures involving all G7 countries, who will use an agreed G7data-set, by the summit in the year 2000, if possible.G/C/W/122
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• wide differences  in data requirements among partners (and even between departments at a
national level), often unjustified;
• excessive data requirements in different G7 countries, that could be dispensed with;
• the existence of unique national  definitions or requirements, even where adequate international
standards exist;
• differences in understanding, interpretation or application  of international codes and standards
used.
The G7 initiative has thus shown up the continuing absence of simplified and harmonised
procedures even amongst major industrialised trading partners, as well as the urgent need for, and
value of such rules.
At the international level, several intergovernmental organisations have established
international instruments, standards or benchmarks aimed at simplifying documentation and
information at export and import. Notable are the UN/UN-ECE  (trade data elements directory,
UN-layout key, CEFACT Trade facilitation recommendations), WCO  (elements of the Kyoto and
Istanbul Conventions and other instruments), and UNCTAD.  There are also some sector specific
instruments in this field, for example notably under ICAO, through the Montreal Protocol to theWarsaw Convention. These different initiatives are all mutually compatible with no significant
overlap. However, the solutions proposed by UN, WCO and UNCTAD, and indeed other
organisations, have not been universally adopted by all WTO members, either due to a lack of political
will or because in some cases they have not met specific needs or kept pace with changes in the ways
of doing trade or in technology.
The WTO  itself has imposed some limited disciplines on import and export requirements and
procedures, in particular via GATT Article VIII :1 (c), and the Agreements on Import Licensing, and
Customs Valuation. However, the extent of problems identified forces one to conclude that
Article VIII has remained too general to be very operational : it only recognises “the need  for
minimising the incidence and complexity of import and export formalities… “ and does not in fact
require  their reduction or harmonisation, nor suggest how this should be achieved.
Similarly, the Valuation Agreement concentrates almost solely on defining the way in which
goods should be valued, and does not otherwise set rules or standards on simplification of procedures.The Import Licensing Agreement does seek to minimise procedural obstacles but only those pursuant
to a specific type of control prior to import (i.e. licensing), which is not applied to the majority of
goods in international trade, and which is not relevant to export or other stages of the trade and
transport chain. Other agreements such as those on Technical Barriers to Trade, SPS or Origin do not
substantially cover the documentation or data requirements imposed on traders. In sum, nocomprehensive framework of WTO disciplines in this field exists.
2.3 The scope for WTO rules
In the light of this analysis of the current situation, and in accordance with the Group’s
mandate, the EU suggests consideration be  given to the following suggestions:
(i) A WTO provision on the avoidance of unnecessary procedural obstacles.
Consideration could be given to making Article VIII : 1(c) fully operational by a provision to
expand and elaborate on it : namely a requirement for WTO members to reduce import and
export procedures to the absolute minimum necessary to ensure the application of legitimate
controls, and to use the least trade restrictive procedures available. Provisions might beG/C/W/122
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necessary to define what would be such legitimate controls and what application of them
would constitute the “ minimum necessary “, taking account of risk based management
techniques, individual traders’ compliance etc.
Such a provision would be comparable to existing provisions in eg the TBT Agreement
concerning the avoidance of unnecessary technical obstacles. The recommendations set out in(ii) to (vii) below would constitute means to achieve this avoidance of unnecessary procedural
obstacles.
(ii) Adoption of International Standards : we could envisage agreement by all WTO
Members to use or accept extant UN/UN-ECE standards, codes and guidelines on trade
facilitation as the basis for their regulatory and administrative requirements for import and
export documentation and data. Such a rule would represent a major step towards establishingboth more harmonised systems for documentation and data submission, and common
assumptions as to the aims and role of simplified procedures in general. To achieve this
outcome, which would be comparable to the prio rity given to using harmonised international
standards in the TBT and SPS fields, it would be necessary
(a) to make a clear identification of the standards and codes in question;
(b) ensure that these standards and codes reflect current business needs and have
the in-built flexibility to change as trad e practises change: in this respect the
current revision and updating of the UN-ECE Trade Facilitation
Recommendations offers a key opportunity to ensure the continued relevance
of those standards;
(c) consider the need for and scope of any exceptions to the proposed rule, or
whether the rule should be absolute or normative.
(iii) Reduction and Harmonisation of Data Sets and Messages: there would be merit in
a multilateral programme to reduce and harmonise data sets/messaging in the manner beingpioneered by the G7, and as recommended eg by Australia in its paper to the WTO
Symposium on APEC procedures. Such a programme could be carried out under WTO
auspices in conjunction with other relevant organisations such as WCO and the UN-ECE who
have obvious technical expertise to contribute. Alternatively, since we recognise this exercise
would be technical and time-consuming, consideration could also be given to developing
WTO rules or guidelines dictating in general terms the objectives and parameters of such an
exercise, which could then be carried out either under the auspices of a specialist body, or atplurilateral level, or via autonomous national measures, within an agreed timeframe.
Whatever the methodology chosen, it is clear to the EU that such an exercise, in order
to deliver real value to international business (which is looking for globally simplified
procedures) must result in the adoption multilaterally of a harmonised and reduced maximum
data set, with any national exceptions or variations limited as far as possible, applicable to allrelevant stages of the trade transaction and tailored to meet the majority of trade transactions
and, ultimately, all governmental agency requirements.
The proposed harmonisation exercise should thus, in the light of both the immediate
and longer term aims, ensure that data-set requirements
• are reduced and restricted to the very minimum needed for appropriate administrative control,
enabling the trader to submit a single data set which would be retained throughout the different
stages of the trade transaction;G/C/W/122
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• are designed so that they can be manipulated for electronic messaging purposes;
• use to the maximum possible extent relevant internationally agreed standards and codes;
• are capable of supplying the needs of other actors in the trade and transport chain so that seamless
transfer of data is the norm, and re-keying or variation of data reduced to the minimum;
• be obtainable from commercially available information, to the extent possible for the purpose of
proper customs administration, so that traders do not need to develop separate data sets for officialpurposes;
• cover the majority of international trade transactions.
(iv) Adoption of Harmonised Documentation Format  : pending the global use of
electronic messaging formats there will still be a need for submission of import and export
data in paper form. Multilateral acceptance of the concept and design of the Single
Administrative Document (SAD) (based on the UN aligned document system, currently used
by over 60 countries and the standard tool used by UNCTAD in its Asycuda programme to
streamline customs procedures in developing countries) would be a significant international
harmonisation measure. Further discussion and possibly reduction of content of the SAD in
the light of progress made to reduce and harmonise data sets would need to accompany suchmultilateral acceptance. Integration into the SAD of elements of the WCO standard for a
Single Goods Document (SGD) would also be a useful measure to ensure a product with
global acceptability.
(v) Single Window Submission of Information  : establishment of the principle that
submission of data or other information requirements either at export or import be one timeonly and to a single agency (normally customs or a trade department), which will then ensure
onward transmission of data to other relevant agencies, and interagency coordination
thereafter. Such a provision naturally relies on the recognition of an agreed common data set
by different government agencies concerned with an export or import transaction, rather than
the imposition of unique, non-harmonised alternatives. EDI is also an important element inthe functioning of such arrangements. Discussion would be needed on acceptable exceptions
that may be necessary to the norm of providing information to one administrative window
alone.
(vi) The Seamless Integrated Transaction :  establishment of a reduced and harmonised
data-set is a pre-condition for the successful introduction of EDI-based communicationbetween traders and government agencies. Many business and government representatives
have rightly stressed that automation of import and export data is of limited value if it simply
computerises excessive or bureaucratic requirements. Equally, an internationally agreed data-
set permits the establishment, over time, of integrated transactions between exporting and
importing administrations, i.e. arrangements where data collected at export forms the basis ofthe data-set collected subsequently at import. The seamless integrated transaction (sometimes
called the seamless electronic transaction) enables a single submission by the trader of data at
export, thus bringing considerable cost and time benefits to his operation. It also permits far
more effective governmental control over illegal activities such as systematic
under-invoicing, which robs countries - especially developing countries whose tariffs tend to
be higher - of legitimate revenue, through enabling the comparison of export and import data.
The seamless integrated transaction depends not only on common data-sets but also
on compatible EDI-systems (trader-government and government-government), criteria forG/C/W/122
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traders’ participation, and a high level of mutual confidence between import and export
administrations, which is probably easier to establish bilaterally, at least initially. Customs
administrations in the Community and the USA are currently developing a bilateral prototype
operation of this nature, with significant business support.
It is likely that seamless integrated transactions will progressively be introduced at a
bilateral or regional level irrespective of a WTO-driven data harmonisation exercise. In
anticipation of this there may be merit in considering whether, within an overall trade
facilitation exercise, certain WTO principles (of non-discrimination, rights of access by all
companies able to meet certain objective conditions, conditions of participation by third
countries etc) could be designed to ensure that the development of such arrangements is both
encouraged and guided in the optimum manner.
(vii) Other Areas: the EU recognises that any effort to simplify the international trade
transaction should consider the process in its entirety. In addition to the suggestions set out
above, WTO members will need to consider how to ensure maximum simplification and
harmonisation of data and procedures relevant to cargo transportation and logistics, specific
requirements in respect of transport of dangerous goods, freight forwarding, and banking and
payments transactions attached to traded goods. Electronic commerce – the introduction ofautomated systems and EDI-based messaging – is also a key element in simplification of data
which has only been referred to briefly.
Since these areas are all earmarked for discussion in subsequent informal discussions
in the Council for Trade in Goods, the EU will c onsider them in more detail at those meetings,
and relate them to the proposals made in the present paper. Similarly, the EU will address atthese meetings developmental questions relating to trade facilitation – a horizontal theme
running throughout the exercise – as well as the scope for simplifying and harmonising further
the trade procedures in other WTO agreements.
3. Customs and Border Crossing Procedures
3.1 The issue and current problems
The business community, at the WTO Symposium and in submissions made elsewhere,
regards improvement to customs and border procedures as a sine qua non of trade facilitation, and has
high expectations of the WTO in this respect. The WCO for its part has supported proposals that the
WTO integrate and enforce within a broad trade facilitation framework the modern customs and
facilitation concepts now being developed in the revision of the Kyoto Convention on Simplificationand Harmonisation of Customs Procedures.
Before assessing the scope for WTO rules in the field of customs and border crossing
problems, it is useful to recap the main problems perceived by international business, and which were
described in some detail at the Symposium. These include:
• Lack of transparency concerning customs procedures and other import and export requirements
in general, and lack of rapid redress against erroneous decisions;
• over-reliance on transaction-based  customs clearance procedures, which creates unwarranted
costs and delays;
• Lack of coordination  between different control agencies at import and export, and hence multiple
submission of information, documentation, and multiple inspection;G/C/W/122
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• Lack of cooperation  on trade simplification between traders and customs/other governmental
agencies;
• Corruption and integrity  issues rooted in lack of training, resources etc for customs agencies;
• Non-automation  of customs procedures, notwithstanding the exponential growth in international
trade.
3.2 Solutions to date
The level of concern shown by the ICC and international business and industry federations
suggests that comprehensive solutions to the above problems still remain to be found. The WCO,
UNCTAD, WTO and other organisations have addressed specific aspects of these problems but, withthe exception of the WTO, in a less than fully enforceable manner. Within WCO however the current
revision of the Kyoto Convention proposes to introduce a number of innovations that will facilitate
trade, notably general requirements that WCO members.
• Provide some form of fast-track clearance facility for authorised traders (questions such as what
such a facility should comprise, what benefits it should at a minimum bring, nor who shouldqualify to use it, remain open);
• Introduce, in relation to the above, audit-based customs controls as an alternative to transaction
based controls (although again the question of the scope of such audit based controls or whoshould benefit from them remains open);
• Introduce techniques of risk assessment of traders and shipments, through the application by
customs of compliance measurement strategies. These techniques have not been defined in detail,
and may understandably vary among countries;
• Introduce to the extent possible, automated customs clearance procedures, including acceptance of
messages based on the UN-EDIFACT standards, as an alternative to paper based procedures;
• Seek to cooperate with traders and seek to conclude Memoranda of Understanding to that effect, to
the extent permissible under national law.
Clearly, adoption by all WTO members of the above provisions would be an important step to
encourage broader adoption of modern customs techniques. Beyond this however, WTO members
need to address two related issues. First, is there scope for WTO rules expanding the above areas, and
secondly, do these provisions address all the problems identified in relation to customs and border
crossing procedures, or are additional provisions or rules desirable? An assessment is made in thefollowing section.
3.3 The scope for WTO rules in the field of customs procedures
The EU shares business’s analysis that integration of a revised Kyoto Convention into a WTO
framework would be a good starting point. But over and above that, it would be desirable to consider
developing further WTO rules that build upon the key trade provisions in the Kyoto Convention, in
order to bring additional benefits to international trade. This conclusion is based on the following
grounds.
First, several of the provisions proposed in the revision of the Kyoto Convention aimed at
trade facilitation are, by definition, trade related, with a direct effect on imports and exports, and aimedG/C/W/122
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at reducing potential non-tariff barriers. As such they fall fair and square within the competence of
WTO.
Secondly,  the revision of the Kyoto Convention is not finished, and we cannot at this stage
make predictions about either its final form or its membership, which may or may not coincide withWTO membership : this will not be clear until 2000. Given this situation, it may be inappropriate to
rely simply on the Convention to provide the solutions needed, and thus to ignore a possible role for
WTO.  Given the separate status of the two organisations (WCO and WTO) and their different
membership, a WTO provision simply obliging memb ers to join a revised Kyoto Convention would
not necessarily be the most appropriate solution.
Third, in the EU’s assessment the proposed revision of the Kyoto convention, even if
confirmed, does not fully address every concern of international trade. This is understandable : the
Kyoto work introduces certain basic concepts of trade facilitation without seeking to fully develop
them at this stage, and otherwise seeks to strike a certain balance between facilitation and customs
control, arguably with emphasis still on the latter : a perfectly legitimate outcome for an organisation
one of whose main concerns is to further the objectives of customs administrations, not all of whichhave yet made trade facilitation a central aim.
In addition, other customs related reforms to facilitate trade are not currently addressed at all
by the Kyoto Convention. The revised Convention recognises this by encouraging individual
signatories to take trade facilitation measures beyond those in the Convention. There is merit inidentifying what further measures might be developed in WTO.
Fourth, the WCO instruments do not necessarily have the binding effect of WTO rules. WTO
could provide the necessary political impetus to ca rry out domestic reforms that otherwise might not
take place, even though their desirability is recognised.
Notwithstanding the above, it would be essential to ensure that any WTO rules that might in
future be agreed, and the revised Kyoto Convention, ar e consistent and mutually reinforcing. It would
also be of mutual benefit to examine ways in which the WTO and WCO and other relevant bodies
could operate in partnership to develop additional rules or guidelines to bring more precision to certain
trade facilitation concepts.
3.4 Proposals for consideration in a WTO trade facilitation framework
In the light of the above arguments, and in response to the needs of the business community,
we could consider developing WTO rules on the following core issues:
(i) Introduction of Automated Customs Clearance. The commercial and
administrative advantages of automated, IT-based interfaces between traders and
administrations is well understood and needs no further elaboration here. Although employed
by a growing number of countries (including many countries applying the Asycuda and ACIS
(cargo tracking) systems developed and supplie d by UNCTAD) IT-based customs clearance is
not yet universal. We could envisage provisions for Members progressively to introduce
electronic-based systems as an optional alternative to paper based systems, based on
benchmarks of choice, effectiveness and cost efficiency for traders, using the relevant
internationally accepted standards such as the UN-EDIFACT. Provisions could also be
designed to ensure that introduction of IT-based systems is carried out in consultation with allaffected parties, is used in a coordinated way by all agencies involved in export and import
verification or information collection, and for each stage in the trade and transport chain. A
comprehensive, « holistic » approach is needed to maximise the benefits of IT based systems.
We also note that automation should logically follow, rather than precede other initiatives to
simplify and harmonise requirements.G/C/W/122
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Noting that a subsequent informal meeting of the Council for trade in goods is
concerned with electronic facilities for trade facilitation, this being a key component of the
E-Commerce debate, the EU will set out  its thinking in more detail at that future meeting. We
would however draw attention to the us eful contribution made by Egypt (in
WT/COMTD/W/38) which sets out many of the key issues relating to the development andimplications of automated systems, their benefits in terms of reducing transaction costs for
business, and the priority that must be given to ensuring that developing countries are able to
benefit from these developments.
(ii) Pre-arrival Processing, Post Clearance Controls and Audit. WTO member
administrations are increasingly introducing different forms of « green channel » rapid
clearance procedure relying on pre-filed entries, i.e. the pre-arrival processing of information(increasingly by electronic message), and clearance of goods based on supply of limited
commercial information followed by post-clearance reconciliation; and alternatives to
transaction-based intervention based on the auditing of companies or/and acceptance of
periodic declarations for revenue or statistical purposes, including permission to retain
documents at company premises without systematic presentation to customs or other bodies.
Against a background of : reducing tariffs, increasing trade volumes, the need for
companies to effect more rapid transit and delivery, and the need for administrations to make
control more cost-and time efficient,  such systems are increasingly necessary. It is difficult for
example to justify systematic border checks of each consignment simply for the purpose of
compiling trade statistics. Air transport for example needs speedy clearance if the extra cost ofsuch transport is not to be negated by delayed clearance. There would be merit in elaborating
WTO provisions that could promote, progressiv ely, the universal introduction of these modern
concepts and guide their development in a trade enhancing and equitable manner.
Trade issues that should be addressed in such a set of provisions would include : the
definition and scope of such systems, the eligibil ity of traders to benefit from them ( to ensure
that not only major companies but all traders ab le to comply with objective competence and
compliance benchmarks would qualify); how to  ensure their application for all control
purposes (the benefits of audit based controls are negated if they apply only for eg duty
calculation purposes, while origin verification, licensing, or statistical returns remained subject
to transaction based clearance) ; and how to ensure the flexibilities needed for customs
administrations to operate according to local ci rcumstances. Elaboration of the scope of audit
procedures could also be considered : UN-ECE with WCO are currently developing
recommendations in this area that could be drawn upon.
(iii) Authorised Traders. The draft revision of the Kyoto Convention introduces the
notion of « authorised traders » without however  seeking to define or condition this term.
Some WTO member administrations are already developing this concept as a means to
provide privileged import and export clearance facilities for certain companies.
Globalisation, the growing number of dominant and well established multinational companies
operating sophisticated systems of communication, and the increase in intra-company
transactions, makes this a logical development. Fast track facilities of the type described in (ii)above bring obvious benefits for such companies, and establish an important link between
compliance, facilitation and simplification, rewarding compliant and efficient traders with
cheaper, simplified procedures. Benefits to government include better targeting and risk
assessment, better use of limited resources, and as a result higher levels of compliance.
As these concepts evolve however we should consider how to ensure that they develop
in a non-discriminatory and optimum way. The EU does not favour solutions that provide forG/C/W/122
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easier market access only for established multinationals. We would wish to see measures
introduced that would allow companies of all si zes, including SMEs, able to meet objective
criteria, to benefit from authorised trader status. We also would wish to see  the criteria for
granting such status to be broadly compatible amongst member governments, so as to
maximise the potential companies obtaining overseas authorised status on the basis of adomestic authorisation. Agreement between member governments on the criteria for
eligibility, and the nature and extent of benefits to be accorded to authorised traders, while
preserving the flexibility needed by customs administrations, would also be an important step
in facilitating the development between admini strations of seamless integrated transactions,
which depend on common standards and assumptions.
In the EU’s view, the WTO should be prepared to develop the necessary criteria to
ensure that systems of authorised traders are WTO-compatible,  do not discriminate among
traders on the basis of size or origin, and reduce trade barriers to the greatest possible extent.
(iv) One Stop Clearance. Lack of coordination of different agencies concerned with
import and export, and the resulting requirement to subject cargoes to multiple checks atdifferent times and places, has been cited by traders as a major concern. In view of the
multiplication of regulatory controls world-wide, some rationalisation of procedural aspects of
such controls is essential to streamline trad e flows, while IT-based means of information
exchange between traders and government and between government agencies makes it more
feasible.
In terms of coordinating the provision of information to different government
agencies, proposals have been made in section 2.4 (iv) above. These however could be
complemented with provisions to ensure, notabl y at import, that goods are subject only to a
single physical intervention, normally by customs on behalf of other agencies. In other words,
administrations would ensure, over time, a level of coordination and delegation of controls tocustoms to enable all verifications (eg health and safety data and certification, sanction
controls, IPR verification, import licence checks, export subsidy verification) to be done once
only. The overall aim should be to set a norm of such integration, subject to possible
exceptions (where customs may not be qualified to carry out specific expert functions), but
with the burden of proof clearly lying on the administration seeking to maintain separate or
unharmonised control functions.
The benefits of working towards such systems are manifold. Trade and transport
interests benefit in terms of reduced delay and cost from a one stop procedure that fits to their
commercial rhythms and needs, and allows them to organise their compliance and cooperation
much more efficiently, while the use of a single interface with the administration makes it
easier for traders to align their computer netw orks with the receiving agency. Administrations
benefit through the optimal use of their customs personnel and databases, and the reduction of
fraud or due to better coordinated information between agencies : a so called win situation.
(v) Remote Filing and Simplified Clearance Procedures.  International trade has called
for the introduction by individual administrations of systems permitting the filing of customsand other documents at a location different from the port of export or arrival of the goods.
This benefits companies who can operate as a result a centralised administration facility more
easily.
The possibility to benefit from simplified clearance procedures, whereby a trader can
have goods cleared (either for export or import purposes) at inland premises rather than at theport of export or entry, is another trade facilitation mechanism which business has called for.
Such systems, in place in certain WTO members, bring several benefits. There are obvious
cost and time savings for companies, especially for container and trailer transport cargo whereG/C/W/122
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clearance can be effected at the point of loading or unloading rather than separate
opening/unloading at port : the basic principle being that official controls be carried out where
goods are handled for commercial purposes. Among the benefits to administrations of such
systems is that pressure on port infrastructure is relieved.
We could therefore consider future WTO provisions whereby such facilities would be
established by Members as an option for traders, based on the relevant provisions in the
revised Kyoto Convention.
(vi) Clearance Times. A basic problem for international trade is delay in obtaining
customs clearance, particularly in the absence of computerised procedures and where
physical, transaction based clearance remains the norm. In other WTO Agreements we havetackled this type of problem by setting a normative time limit for administrative action : the
import licensing agreement is one example. Within the framework of the trade facilitation
work we could consider a similar solution : setting as a norm an absolute time limit for routine
customs clearance, with suitable flexibility provided both for exceptional circumstances and
goods that fall outside the scope of a routine clearance procedure, which would need to bedefined.
(vii) Cooperation between Trade and Customs/other Agencies. At the WTO
Symposium and elsewhere we have heard the complaint that some customs administrations
still adopt a confrontational stance towards the trading community. This attitude leads to the
failure to distinguish between compliant and non-compliant traders, perpetuates theapplication of excessive and unnecessary control procedures and prevents the development
between both parties of trade facilitation solutions of mutual benefit. UNCTAD has rightly
observed (in its recent Trade Point Review, Geneva September 1997) that administrations that
cooperate actively with traders benefit the most in terms of efficiency, achieving levels of
compliance, and morale.
The revision of the Kyoto Convention moves in the right direction by suggesting that
customs administrations seek to cooperate with representatives of trade. This concept could
however be developed further in terms of requiring such cooperation, or in ensuring the
involvement in any government-trade relationship of all interested parties such as other
government agencies, transport operators, freight forwarders, chambers of commerce, banks
etc. In the light of that it would be useful to consider the scope for WTO rules requiring each
Member to set up a systematic mechanism of cooperation on trade facilitation. This could be asui generis provision or based on adoption of  the UN-ECE Recommendation 4 concerning the
establishment of national trade facilitation bodies. A provision of this nature would lead over
time to the needed changes in attitude, and ensure the domestic agreement on and
implementation of trade facilitation measures, through making this a political priority. It would
also give important momentum to UNCTAD’ s further development of Trade Points.
(viii)  Judicial or Administrative Redress.  Some elements of the business community
have called on governments to introduce a right of judicial or administrative review of
customs determinations. Their emphasis is on obtaining redress swiftly enough to ensure
efficient movement of goods subject to the determination, as well as proportionality in theimposition of penalties for minor or technical breaches.
We note that GATT Article X :3 requires all WTO Members to install “judicial,
arbitral or administrative tribunals for the purpose, inter alia of the prompt review and
correction of administrative action relating to customs matters” and goes on to set other
conditions. Similarly GATT Article VIII :3 states that “no contracting party shall imposesubstantial penalties for minor breaches of customs regulations or procedural requirements. In
particular no penalty in respect of any omission or mistake in customs documentation which isG/C/W/122
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easily rectifiable and obviously made without fraudulent intent or gross negligence shall be
greater than necessary to serve merely as a warning.”
These provisions prima facie  seem to respond to business’s concerns, except that they
do not require that tribunals act rapidly enough to preserve commercial interests (eg deliverydeadlines, perishable goods). Consideration coul d be given in a trade facilitation framework to
defining additional rules to cater for this problem, drawing on what has been developed within
the Kyoto Convention work. We could, in addition, given the demand by business of
appropriate judicial or administrative procedures, study the way in which the provisions of
Articles VII :3 and X :3 have been implemented by WTO members.
(ix) Transparency.  As noted earlier, lack of transparency of import and export
procedures, especially at the level of regulations and customs’ administrative guidelines, is a
major concern for international trade, and one which disproportionately affects SMEs and
companies located in underdeveloped countries who have fewer resources to obtain needed
information.  Calls have been made accordingly for the creation of a single comprehensive
database, accessible by internet, assembling all relevant laws, rules and procedures for importand export. The germ of this already exists among the WTO’s data base for tariffs and in
databases being developed by and within the EU, by APEC and no doubt other groupings, and
of course within national trade databases. It will be necessary in the WTO discussions to
evaluate the most efficient means of ensuring maximum transparency and availability to
traders, especially SMEs, by exploiting existing national and international sources, avoidingduplication, and to the extent that more inform ation is needed, to ensure that sufficiently
detailed and comprehensive transparency requirements are established. Enhanced
transparency, among other things, would ensure a reduction in the discretionary treatment of
goods at the border.
(x) Corruption and Integrity Issues. This is recognised as a complex and sensitive
question where there are no easy solutions. The EU considers that over time, introduction
through a WTO framework of many of the trade facilitation proposals set out in this
submission would reduce both the scope and the incentive for failures at the level of customs
administrations. Provided greater political prio rity is given to reform and modernisation of
customs administrations, to the introduction of modern concepts, and above all to the training
and capacity building that are necessary for such concepts to operate in practice, then clearly
improvements will result. One major benefit of developing WTO rules in the area of tradefacilitation is precisely to ensure that the necessary political priority is given in all of these
areas, both at the level of individual administrations and to ensure appropriate levels of
development and technical assistance where needed.
Other than the above, the EU is chary of proposing the establishment in WTO of hard
rules concerning customs or border corruption, in view of the difficulty of eradicating suchproblems via simple or short term measures, or through the threat of dispute settlement. What
we could instead consider in a WTO trade facilitation framework is the benchmarking via soft
rules of certain generally agreed standards of performance, so as to give political guidance to
administrations as to the direction they should be taking in terms of medium to long term
administrative reform.  The WCO’s Arusha Declaration, and the WCO’s extremely welldeveloped customs reform guidelines, offer such benchmarks. Further consideration could also
be given to the valuable observation made by Chile, at the WTO Symposium in March, that
the setting of performance indicators, and the establishment of customs’ own missions and
management programmes, with unequivocal political support, was a key factor in ensuring
effective customs modernisation.G/C/W/122
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4. Conclusions
The EU is convinced that a determined multilateral effort to simplify trade procedures,
through a framework that integrates, but also builds upon, the best practices and standards of other
organisations, will bring important trade benefits  for WTO members, with  no downside. Experience
demonstrates that trade facilitation is not an issue involving the exchange of gains and concessions, butone in which all gain : governments in terms of better controls, higher revenue intakes and more
efficient administration ; and traders, both large and small, in terms of reduced costs and delays, and
thus more competitive import and export conditions. Such benefits can accrue in particular to
developing countries and provide new trading opportunities for small and medium sized enterprises.
But to realise these benefits requires cooperation at the multilateral level, in order to develop
harmonised solutions necessary for traders to most effectively carry out international transactions.
Accordingly the EU has in the present paper (s ections 2.3 and 3.4) made a series of proposals
covering import, export and customs procedures that it believes could be developed into a framework
of WTO rules. We have tried to do this in a comprehensive manner while following the selective
approach of the work programme of the Council for Trade in Goods.  In subsequent meetings on trade
facilitation, we intend to make further proposals covering other aspects of trade facilitation which willfit into this comprehensive framework.
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