TWN Info Service on WTO Issues (June03/14)

Third World Network

28 June 2003

Dear friends and colleagues


One of the Singapore Issues in WTO is trade facilitation.  On 12-13 June, there was a final meeting on trade facilitation held at the WTO’s Goods Council.

At the meeting many developing countries stated they are against new binding rules on trade facilitation.

Thus, for all the Singapore issues (investment, competition, transparecy in government procurement, trade facilitation), there has been no convergence of views on clarifying the issues, let alone on modalities for possible negotiations of new agreements.

Below is a TWN report on the trade facilitation meeting.

Please check our website for previous issues of TWN Info Service.

with best wishes

Martin Khor

Third World Network


Developing countries against binding trade facilitation rules

TWN Report by Martin Khor, Geneva

Several developing countries have stated that they are opposed to establishing new binding rules at the WTO on trade facilitation, during a meeting of the WTO’s Council for Trade in Goods held here on 12-13 June.

The developing countries said they were not convinced that binding rules in the WTO would be necessary or helpful in this area, but could instead cause problems when they had to implement the new obligations.

Several developed countries however reiterated their position that the Cancun Ministerial Conference in September should launch negotiations for new rules or a new agreement on trade facilitation.

The discussions were taking place under the mandate of the Doha Ministerial Declaration which in paragraph 27 states that recognizing the case for further expediting the movement, release and clearance of goods in transit and the need for enhanced technical assistance and capacity building, negotiations will take place after the Fifth Ministerial on the basis of a decision by explicit consensus on modalities of negotiations.

Until the Fifth Ministerial, the Council for Trade in Goods is mandated to review, clarify and improve relevant aspects of Articles V, VIII and X of GATT 1994 and identify the trade facilitation needs and priorities especially of developing countries and LDCs.

In several sessions on trade facilitation after the Doha conference, there has been a split between countries advocating that the Cancun Ministerial decide to start negotiations on new trade facilitation rules, and those who remain sceptical of the benefits of new and binding WTO rules in this area.

It is clear from this meeting that the WTO members are still far from agreement on whether Cancun should launch negotiations on binding trade facilitation rules.

Although there is a broad and shared understanding that measures leading to improved trade facilitation would have positive effects, there is disagreement on what is required to bring about the improvements, particularly whether binding multilateral rules are appropriate or whether international cooperation and domestic initiatives are better options.

At the meeting, Brazil stated that it was still unconvinced of the need to have binding rules on trade facilitation.  It said that binding rules are not an automatic solution to problems, as can be seen by the agriculture agreement which has perpetuated injustice in the trade in agriculture.

Brazil added that there should not be new regulations on trade facilitation if there are no new and adequate commitments for technical assistance and capacity building by the proponents.  There could instead be non-binding guidelines, which could be built upon.

According to India, improvements in trade facilitation is an area best left to members for autonomous implementation and should not be the subject of an agreement that is binding on all Members.  India expressed support for Brazil’s suggestion of having some guidelines which could be built on later. Members should decide on and implement their own measures.

India added that before considering on  undertaking new measures on trade facilitation, the WTO should first deal with issues that are related to trade facilitation that are already pending but not yet resolved, such as rules of origin and customs valuation.  India emphasized that it was wary of suggestions to begin negotiations.

Zimbabwe said it was not ready to go for binding commitments in this area.  Being a landlocked country, Zimbabwe also had more urgent problems to deal with. Zambia also stated that it was not ready to agree to having binding commitments in this area.

Jamaica said that it took a serious interest in trade facilitation, but binding rules and timetables are not the right road to take in this area.  It expressed support for Brazil’s suggestion for non-binding guidelines.

Malaysia stated that the existing WTO rules are already adequate to deal with the issues, for example, Article X in GATT is already comprehensive.  What we have, said Malaysia, is fear of the unknown, should negotiations start, indicating that developing countries could not anticipate what kinds of commitments an agreement would eventually result in.

China said it favoured multilateral disciplines in this area as this was in line with the WTO’s mandate and it was prepared to support negotiations.  However, it did not think that this agreement should be subjected to the WTO’s dispute settlement mechanism.

Egypt stated that although it could accept negotiations in principle, before a binding agreement can be adopted, several important issues had to be considered and resolved, such as timing in implementation and the need for financial commitments from the developed countries.

Several Members, most of them developed countries, expressed support for negotiating binding rules.

The European Communities said that on the issue of whether the agreement should be binding, it saw no reason to depart from the standard GATT practice.  It added that the approach to be taken in trade facilitation should be similar to the approach in the TBT Agreement and similar agreements.  It proposed that the agreement should have a broad framework of principles.

It mentioned that there would be flexibility for developing countries.

The US said it favoured negotiations, and a decision in Cancun to start the negotiations would be a win-win outcome.

Australia presented a new paper at the meeting, arguing the case that there would be many benefits from having strengthened rules on trade facilitation at the WTO. These include providing a universal and harmonized approach to ensure consistent implementation;  compliance for efficient and effective border agency operation; providing political impetus to guide national efforts to simplify and modernize trade procedures and carry out domestic reforms;  and improving transparency and predictability for traders to compete on a non-discriminatory basis.

Japan also presented a new paper on the international architecture on trade facilitation.  It said there are three pillars of approaching trade facilitation:  a non-binding action programme, capacity building and rule setting (to provide legal stability and predictability).  It argued that the role of the WTO was in rule setting and of a cross sectoral and multilateral nature, which could complement the action-programme and capacity-building work of other organizations such as UNCTAD, APEC and the World Bank.

New Zealand also said it was in favour of binding rules. Chile said it was convenient and appropriate to start negotiations; the rules should be binding but implementation gradual.  Costa Rica said new measures would be helpful and it favoured negotiations, but saw difficulties in implementing these measures, and therefore felt that technical assistance is important.

At the end of the meeting today, the Council chairman, Ambassador Milan Hovorka of the Czech Republic, said that he would prepare a report on the discussions on trade facilitation for the General Council, and the General Council would decide what further action to take.   There will not be any further meeting of the Council for Trade in Goods on trade facilitation before the Cancun conference.