1 Singapore Issues with special reference to Trade Facilitation Shashank Priya, Director, Trade Policy Division.

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Singapore Issues with special reference to Trade Facilitation

Shashank Priya, Director, Trade Policy Division

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Singapore Issues

Trade and Investment Trade and Competition Policy Transparency in Government

Procurement Trade Facilitation

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Singapore Issues – The Genesis

EC and Japan wanted new issues on the WTO Agenda– To coincide with mandated negotiations – To balance losses in Agriculture and ATC

Singapore Ministerial in 1996 – WTO considered an effective forum in view of

strengthened Dispute Settlement process

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Singapore Issues – The Genesis

Resistance by many members – incl. India Compromise – decided to study the issues in depth

– Especially w.r.t. interaction with trade

3 separate Working Groups formed– WG on Relationship between Trade & Investment– WG on the Interaction between Trade & Competition Policy– WG on Transparency in Government Procurement– Work Programme on Trade Facilitation in CTG

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Doha Mandate on Singapore Issues

Decision at Doha was –– Recognizing the case for frameworks– Begin a clarification process on many elements in

each of the issues– Negotiations to take place after the Fifth Ministerial – Based on a decision on modalities– Decision to be by explicit consensus

Chairman’s clarification– Members have the right to take a position to prevent this

consensus and block negotiations

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Trade & Investment – India’s position

Question the rationale for bringing investment into the WTO as it was overburdened and ill–equipped to handle investment

Question the need for a multilateral framework as it would not grant developing countries any certainty of additional FDI flows and the BITs were serving the requirements well with the needed flexibility

Trade and Investment has different effects and different treatment of these issues was required

Investment policies are closely linked to national development policies in which developing countries need policy space

Doha mandate is about a clarification process, not about negotiations and clarity has not been achieved

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Trade &Competition - India’s Position

Competition Policy covers besides, trade policy, investment, industrial etc policies, and WTO may not be the forum for Competition policy as such

Countries are at different stages of development: Multilateral Competition Policy assumes convergence of economic and even political interests

Naturally, bilateral agreements are few and confined to developed countries or to RTAs

Efforts by some Members are to address governmental measures, while India is interested in ‘enterprise practices’ having cross border effects being addressed

Effectiveness of WTO provisions doubtful in the absence of readiness of Members like the US, EC, Japan etc. for information sharing and DSU.

‘Peer Review’ would work against developing countries in view of ‘asymmetry’ of market power of WTO Members

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Transparency in GP - India’s Position

For India ‘transparency’ means gathering full information about a Members procurement regime - No new commitments for changing or modifying any aspect of its procurement system;

Regarding coverage, due to the federal structure of the government and the large number of entities involved it would be very difficult to provide detailed information on all levels of procurement;

Information on the Central Government procurements of goods (not services) above a particular threshold limit could be considered;

On other issues such as information on laws/ rules; procurement opportunities; information on procedures; time periods; etc. could be provided and was easily available already;

India has objected to any prescriptions on domestic review procedures; and

Questioned application of the DSU on this kind of an agreement.

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Trade Facilitation - India’s Position

India had expressed its reservations regarding the need for multilateral rules on TF in WTO.

No need for an agreement for what are essentially trade procedures.

Other expert bodies like WCO dealing with similar issues. Resource implications in terms of modernization,

commitment for timely clearance of goods would be difficult for developing countries to meet.

Not clear how DSU would apply to a ‘Procedural Agreement’

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Singapore Issues - Pre - Cancun

Initial draft text (Rev 1) reflected two diametrically opposite options

– Proponents’ - launching negotiations based on modalities– Opponents’ - continuing the clarification process (No annexes)

We had co-sponsored a paper highlighting the elements which still lacked clarity

Draft text (Rev 2) released at Cancun framed it differently– Investment - Intensify clarification process; finalise modalities at a

date linked to agriculture and NAMA– Competition – Continuation of the clarification process– Transparency in Government Procurement – commence

negotiations– Trade Facilitation – commence negotiations

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Singapore Issues - Pre- Cancun

Core Group on Singapore Issues– Just prior to Cancun, a Core Group of 16 countries (G-16,

Bangladesh representing LDCs) was formed G-16 extremely effective at Cancun

Formed the core of developing country opposition Articulated opposition to launch of negotiations when many elements

were not yet clear Highlighted lack of explicit consensus on modalities

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Singapore Issues – At Cancun

Green Room Process– In the Green Room discussions, at one point, EC

offered to drop Investment and Competition from the agenda.

– Owing to further opposition, there was even a suggestion at one time that Transparency in Government Procurement too could be dropped

– As no consensus could be reached, the Green Room process was called off and the Ministerial took no decision on Singapore Issues

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Singapore Issues – Geneva Framework Agreement by GC (1st August 04)

Trade and Investment; Trade and Competition Policy and TGP will not form part of the work programme set out in Doha Declaration (in paras 20-22, 23-25 and 26).

No work towards negotiations on any of these issues will take place within the WTO during the Doha Round.

On Trade Facilitation, explicit consensus to commence negotiations on the basis of modalities set out in Annex D.

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What is Trade Facilitation

Systematic rationalization of procedures and documentation for international trade (UN ECE definition).

In WTO context, it means issues covered under GATT Articles V, VIII and X.

Would essentially cover subjects relating to importation and exportation: fees and charges; formalities; documentation; publication of laws; judicial and administrative tribunal; transit.

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Why Trade Facilitation in WTO

Rule based Strong dispute resolution Open markets and smooth flow of international trade

possible only if trade facilitative customs procedures in place.

Reduce transaction costs Signify political commitment Uniformity of efforts.

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Background

Before Cancun Ministerial, a group of countries raised several issues on which clarification was needed.

Some important issues were: Estimated costs for undertaking commitments? What mechanism for compensating DCs for additional

expenditure? Nature of Special and Differential Treatment? How to enhance effective cooperation between Customs

authorities? How to preserve development policy space?

Discussions on above issues continued during post-Cancun phase

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Negotiation process

Intensive negotiation took place between 22nd to 31st July, 2004 in Geneva.

The Annex D modalities of GC Decision of 1st August, 2004 was a result of such negotiation and took on board most of the concerns of DCs.

A Core Group consisting of countries like India, Malaysia, Philippines, Jamaica, Egypt, Bangladesh, Indonesia, etc. highlighted the concerns of DCs regarding cost implication, technical assistance, S&DT provisions and customs cooperation mechanism.

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Elements of Annex D

Negotiations to clarify and improve Articles V, VIII and X.

Negotiations to aim at enhancing technical assistance and support for CB.

Negotiations to aim at provisions for effective cooperation between customs authorities on TF and customs compliance issues.

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Important S&DT provisions in AnnexD

S&DT should extend beyond granting of traditional transition periods for implementing commitments.

Extent and timing of entering into commitments shall be related to the implementation capacities of DCs.

DCs not obliged to undertake investments in infrastructure projects beyond their means.

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Important S&DT provisions in Annex D

Members to identify TF needs and priorities of DCs.

Members to address concerns of DCs related to cost implications of proposed measures.

Support and assistance to be provided to DCs to implement commitments resulting from negotiations.

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Important S&DT provisions in Annex D

Where implementation of commitments require support for infrastructure development, developed country members will make every effort to ensure such support

Where required support and assistance for infrastructure is not forthcoming and DCs continue to lack necessary capacity, implementation of commitment will not be required

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Other elements of Annex D

A review of effectiveness of support and assistance provided.

Collaborative effort with other relevant international organizations for TA and CB (IMF, OECD, UNCTAD, WCO, WB).

Due account shall be taken of the relevant work of the WCO and other relevant international organizations.

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GATT Article VIII

GATT Article VIII deals with fees and formalities connected with importation and exportation. Its important elements are:

All fees and charges (other than import and export duties) imposed in connection with importation and exportation shall be limited to the approximate cost of services rendered. It should not represent an indirect protection to domestic products or a taxation of imports or exports.

The number and diversity of fees for above purposes should be reduced.

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GATT Article VIII (contd.)

There is a need to minimize the incidence and complexity of import/export formalities and to decrease and simplify import/export documentation requirements.

Substantial penalties should not be imposed for minor breaches of customs regulations or procedural requirements.

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GATT Article VIII (contd.)

The provision of this Article shall extend to fees, charges, formalities and requirements imposed by government authorities in connection with importation and exportation.

Illustrative list of areas where this would be applicable: consular transactions, such as consular invoices and certificates; quantitative restrictions; licensing; exchange control; statistical services; documents, documentation and certification; analysis and inspection; quarantine, sanitation and fumigation.

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GATT Article X

GATT Article X deals with publication and administration of trade regulations. It lays down:

Various laws, regulations, judicial decisions and administrative rulings relating to various customs related issues for clearance of goods (classification or valuation; rates of duties; requirements, restrictions or prohibitions on imports/exports) shall be published promptly by the contracting parties to enable governments and traders to become acquainted with them.

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GATT Article X (contd.)

No increase in rate of duty or a more burdensome requirement, restriction or prohibition on imports shall be enforced before such measure has been officially published.

Each contracting party shall administer the laws of the above kind in a uniform, impartial and reasonable manner.

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GATT Article X (contd.)

The contracting parties shall maintain judicial, arbitral or administrative tribunals for prompt review and correction of administrative action relating to customs matters.

Such tribunals shall be independent of the agencies entrusted with administrative enforcement.

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GATT Article V

GATT Article V deals with freedom of transit of goods.

The term “traffic in transit” implies movement of goods and means of transport (other than aircraft) across the territory of the country, where both the starting and the terminating point of the journey lies beyond it.

This article envisages that there should be freedom of transit via the routes most convenient for international transit.

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GATT Article V (contd.)

No distinction shall be made on the basis of flag of vessels, the place of origin, departure, entry, exit or destination, ownership of goods or means of transport.

The charges imposed on traffic in transit shall be reasonable and will be on MFN basis.

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Important Proposals Made

About 50 proposals made so far by countries like EC, US, Canada, Japan, Switzerland, China, Korea, Uganda, Rwanda, Paraguay, Mongolia, Argentina, etc. Compiled in TN/TF/W/43

Transparency Publication of all border related laws, regulations, procedures

and practices (Gazettes, Websites) Time interval between publication of rules and entry into force Prior consultation and commenting on new and amended rules Information on policy objectives Enquiry point/SNFP Advance Ruling Right of appeal/Release of goods in event of appeal Maintenance of integrity amongst officials

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Important Proposals Made (Contd.)

Simplification of fees fees be relatable to service provided and not be ad

valorem Publication/Notification of fees/charges Prohibition on collection of unpublicized fees Periodic review of fees/charges Automated payment Reduction/minimization of the number and diversity

of fees and charges

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Important Proposals Made (Contd.)

Simplification of procedures and documentation Risk management Post clearance audit Single Window/one time submission Border agency coordination Authorized trader system Automation of customs Acceptance of commercially available information and

copies of documents Use of international standards Pre arrival clearance Expedited procedures for express shipments Separating Release from Clearance Procedures Periodic Review of Formalities and Requirements

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Important Proposals Made (Contd.)

Establishment and publication of average release and clearance times

Objective criteria for tariff classificationTransitFees and Charges Publication of fees and charges and

prohibition of unpublished ones Periodic review of fees and charges

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Important Proposals Made (Contd.)

Transit formalities and documentation requirements

Give choice of route to operators Reduction/Simplification of procedures Harmonization/Standardization Promotion of regional transit arrangement Simplified and preferential clearance for

certain goods

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Important Proposals Made (Contd.)

Whether transit of oil and gas through pipeline and electricity through grid could come under Article V (in addition to air, road, rail and boat)

Non-discrimination between individual carriers and types of consignments for transit procedures

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India’s Participation

An active developing country participant Participation is positive but also raising issues and

points of concern Presented a room document on TA/CB during June

meeting of NGTF Working on a paper on cooperation mechanism Working on proposals under Article VIII and Article V

on the basis of studies commissioned (MIDS, Ace Global through UNCTAD)

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Thank You