Guide on Trade Facilitation
1-) Definitions on Trade Facilitation
While there is no single definition for trade facilitation, it is generally defined as “the simplification, harmonization, standardization and modernization of international trade procedures” in the narrow sense of the word. However, it compromises simplification and harmonization of all procedures from manufacturing to clearance of goods and development and reinforcement of foreign trade and logistic infrastructure via the means of automation and communication technologies.
World Trade Organization (WTO) once prominently defined trade facilitation as ‘the simplification and harmonization of international trade procedures, whereas trade procedures are defined as the ‘activities, practices and formalities involved in collecting, processing, presenting and communicating data required for the movement of goods in international trade’.
2-) Recommendations And Instruments Regarding The International Trade Facilitation
International community has elaborated on a large number of standards and recommendations on trade facilitation issues reflecting the best practices to present governments new solutions which can be drawn upon when implementing the trade facilitation measures. In countries in which trade procedures and documentation are based on common standards and simplified and harmonized to the greatest possible extent, business can be greatly accelerated for the operators, trading in various countries.
2.1-) World Customs Organization (WCO)
The main mission of WCO is to determine international standards harmonizing customs systems by means of increasing the efficiency of Customs administrations and ensuring effective communication among them. To fulfil its mission of improving the effectiveness and efficiency of the customs administrations of the 174 member states across the globe, WCO develops and administers various international instruments, tools and standards for the harmonization and uniform application of simplified and effective customs systems and procedures governing the cross border movement of commodities and people.
Some of those instruments, tools and standards are listed below:
2.2-) United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT)
The United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) serves as the focal point for trade facilitation recommendations and electronic business standards, covering both commercial and government business processes that can foster growth in international trade and related services. Within the body of UN/CEFACT, many working groups composed of the representatives of the various countries, international organizations and business, are established to put forward new standards, recommendations and the best practices related to trade facilitation and e-commerce matters.
By this time, 35 recommendations have been formulated by UN/CEFACT to avoid complexity of trade procedures and to develop new methods on information exchange.
2.3-) United Nations Conference on Trade and Development (UNCTAD)
UNCTAD, established in 1964 (currently with 194 Member States) is the body of the United Nations responsible for dealing with poverty and development issues, particularly international trade – the main driver of development. Its activities may be categorized as analysis on economy, trade and financial issues and research for development, collecting data and providing training programs and technical support on these issues especially for Developing Countries (DCs) The main aim is to promote the macroeconomic policies best suited to ending global economic inequalities and to generating people-centered sustainable development. UNCTAD is also a forum where representatives of all countries may be freely engaged in dialogue and discuss ways to establish a better balance in the global economy.
Moreover, given the needs and priorities of DCs and Least Developed Countries (LDCs), UNCTAD assumes an effective role in determining international trade and development policies as well as providing technical support to improve human resources for international trade, development and other related areas.
In 1981, Automated System for Customs Data - ASYCUDA was established by UNCTAD for automation of customs procedures so as to simplify and accelerate customs procedures, providing effective implementation of customs legislation, resolving problems faced in international trade, reducing bureaucracy, increasing the capacity of customs administrations. Today, the system is used by around 80 countries and serves for collecting statistics on import, export and transit regimes.
2.4-) World Bank (WB)
WB has organized many seminars in the international arena to raise awareness on importance of trade facilitation, prepared many guidelines elaborating on the facilitation of trade and initiated around 120 projects amounting to 2.3 billion USD to modernize customs administrations and trade corridors, enhance the infrastructure of the border crossing points, and to develop logistics and multimodal transportation.
2.5-) The Organization for Economic Co-operation and Development (OECD)
OECD was established to develop policies in the direction of protection of fiscal stability, provision of sustainable economic growth and employment, raising living standards in member states and contributing to the growth of world economy and multilateral trade in an indiscriminate manner and in compliance with the international obligations. In this context, OECD conducts analysis on general and current subjects and provides advice to governments.
Recently, trade facilitation has become another subject discussed at OECD platform. In general, some papers are published by OECD on possible economic impacts of trade facilitation measures and WTO ATF on trade costs directly and world economy indirectly.
2.6-) International Chamber of Commerce (ICC)
ICC is a platform established with the aim of developing international trade relations and hosts many national committees. The main focal point of the organization is the facilitation of international trade through reforms in customs procedures and policies. For this purpose, “ICC Customs Guide” and "ICC Guidelines for Cross-border Traders" have been prepared. Additionally, the simplified customs procedures and related government policies are supported as well as the works conducted within the scope of WCO and WTO. ICC endeavours to bring the representatives of public and private sector together, with the purpose of promoting trade facilitation measures at the national level.
2.7. International Maritime Organization (IMO)
The IMO’s Convention of Facilitation of International Maritime Traffic (FAL) was adopted in 1965 to prevent unnecessary delays in maritime traffic, to aid cooperation between governments, and to secure the highest practicable degree of uniformity in formalities and other procedures.
Additionally, IMO’s Safety of Life at Sea Convention (SOLAS) addressing maritime safety and the International Ship and Port Facility Code aiming at development of security measures for ships and ports are adopted.
2.8-) The International Road Transport Union (IRU)
IRU is an organization pursuing the interests of road transport sector and promoting the improvement and adoption of the professional standards. In this respect, it provides the safety level of road transport and environmental protection as well as the facilitation of cross border movement of people and commodities.
It also makes great contribution in facilitation of trade as the guarantor of TIR System which is the only universal transit system that allows the goods to transit from a country of origin to a country of destination in sealed load compartments with customs control recognition along the supply chain. TIR System both facilitates the transportation of commodities under seal and guarantees payment of customs duties and charges in transit countries.
2.9. World Trade Organization (WTO)
After World War II, General Agreement on Tariffs and Trade (GATT) described as “temporary” was signed in Geneva on October 30th, 1947 for the liberalization of international trade. Between the years 1948 and 1994, GATT has served as a framework accepted worldwide regulating international trade of goods.
In negotiations conducted in England/Torquay, in 1951, Turkey was also considered for accession to GATT coupled with a lot of countries and Turkey signed the Agreement in 1953.
Since its establishment, 8 multilateral trade negotiation rounds characterized as “trade rounds” have been conducted on the purpose of dragging tariffs down and liberalization of international trade within the scope of GATT. As a result of the negotiations, additions in the form of “plurilateral agreements” have been made to the main GATT text.
WTO was founded with the Marrakesh Agreement signed on April 15th, 1994 and came into force in January 1, 1995 as the result of Uruguay Round- the last negotiation round which was conducted referring to GATT, starting in 1986 and ending in 1993-. This newly-founded organization (i.e. legal and institutional principal of plurilateral trade system) is a platform with a high sanction power, in which international commercial relations are developed via negotiations, determining the basic framework relating to the way the governments develop and apply their domestic trade legislation and principles.
As of December, 2014, WTO has 160 members. 24 states have observer status in the WTO.
The aim of WTO is to improve the relations between Member States in the field of trade and economy, to enhance the quality of life, to achieve full employment, to stably increase real income and real demand capacity, to advance manufacture and commerce for goods and services, as well as to provide the opportunity by utilizing from world resources in accordance with sustainable development goal, and both to protect environment and to develop current resources of countries at different economic levels in a way to responding to their needs and priorities.
Multilateral trade negotiations conducted within the scope of GATT at WTO have culminated in international trade facilitation. If we need to indicate this success more concretely, import taxes imposed on goods processed in the years of signing GATT were at the rate of 20-30%, while currently this rate has decreased below 4%. Apart from customs tariffs, as non-tariff obstacles, quotas preventing international goods and services flows from occurring in the context of free trade conditions, voluntary export restrictions, balancing tax and anti-damping tax have also been regulated within the scope of WTO to reduce the trade restrictive effects.
After overcoming traditional obstacles to trade, attention has been directed to the issues such as decreasing information and document requirements which make cross-border movement of goods difficult, leading to more proportional duties and fees received, and reducing the restrictive and unnecessary administrative procedures.
In this framework, the concept of trade facilitation came to the agenda of WTO at WTO Singapore Ministerial Conference held in Singapore, in 1996. By Singapore Ministerial Declaration the decision has been taken “to make an analytic work related to the simplification of trade procedures within the framework of WTO rules by benefiting from the researches of other international organizations”.
As DCs and LDCs did not have the necessary fund to cover financial and technical burden imposed by trade facilitation reforms, they perceived WTO as an organization defending the interests of developed countries and having difficulty in trusting the organization, and eventually hindered these efforts that were likely to result in the signing of an international agreement, for a long time.
With the Doha Ministerial Declaration adopted in Doha Ministerial Conference held in Doha, in 2001, it was agreed to launch multilateral trade negotiations under the title of ”WTO Doha Development Round”, and the Doha Development Agenda was thus accepted. Trade facilitation was also considered within the said round of trade negotiations. The decision was taken to launch negotiations after the 5th Ministerial Conference. However, the current attitudes of DCs and LDCs were reflected to the negotiation process and there were long-lasting barriers in negotiation process because of the increasing number of WTO members, different development levels of the countries and the difficulty in equalizing the interests of member states.
With July Package accepted by General Council in August 1, 2004, framework decisions have been taken on the negotiation subjects such as, agriculture, cotton, development, special and favorable treatment and trade facilitation for the aim of completing Doha Development Agenda. In paragraph (g) of July Package, it is decided to launch trade facilitation negotiations within the framework of the method regulated in Annex D of July Package.
The mandate for these negotiations is set out in Annex D ('Modalities for Negotiations on Trade Facilitation') of the 'July Package' of 2004, as:
to clarify and improve relevant aspects of GATT Article V on Freedom of Transit,
to clarify and improve relevant aspects of GATT Article VIII on Fees and Formalities Connected with Importation and Exportation,
to clarify and improve relevant aspects of GATT Article X on Publication and Administration of Trade Regulations,
to enhance technical assistance and capacity building support in order to ensure that DCs and LDCs may implement the commitments, and
to provide effective cooperation between customs or any other appropriate authorities on trade facilitation and customs compliance issues.
In consideration of the concerns of DCs and LDCs, the 2nd, 3rd, 5th and 6th paragraphs of Annex D lay down the principle of special and differential treatment to be accepted at the negotiations. The relevant paragraphs have also regulated the transition periods for implementation of the commitments to be granted, the extent and the timing of entering into commitments on the basis of the implementation capacities of countries as well as the countries not obliged to undertake investments in infrastructure projects beyond their means and to implement the commitments where no support is provided.
Negotiation Group on Trade Facilitation composed of the representatives of WTO members has adopted “bottom-up approach” in a manner to ensure that the draft negotiation text (TN/TF/W/43/Rev.1) would comprise of the proposals of member states. In due course, disagreements have arisen between the increasing numbers of member states and therefore, it became difficult to balance the interests of these countries. For that reason, the negotiation process planned to take a duration of 3 years has been prolonged to 9 years and has undergone very compelling stages.
As the result, WTO Trade Facilitation Agreement is the outcome of a long-lasting and remarkably challenging process carried out since August 1st, 2004 within the scope of the Doha Development Agenda. The negotiations on Trade Facilitation Agreement finally reached the outcome with the Bali Ministerial Declaration, on December 7th, 2013.
The Trade Facilitation Drafting Committee established by the Ministerial Decree has launched its efforts (as of January 2014) for reviewing the agreement text from a legal perspective, preparing the required modification protocol for the agreement to be added to the Marrakesh Agreement (founder Agreement of WTO), and creating the draft document of the relevant decision of the General Council.
The negotiation process examining the protocol and draft document of the decision was blocked because of the non-participating Indian representatives. In accordance with Decree of the Ministers at Bali, it was anticipated that the General Council would meet on Jul, 27th, 2014 (the latest) to adopt the modification protocol adding the category A declaratives to the Marrakesh Agreement Annex 1A. The protocol would be immediately put into effect by the member countries at a national level. Furthermore, this protocol would also be submitted to the vote of the member WTO countries; however the validity process of the Trade Facilitation Agreement came to a full stop due to the attitude of India.
Eventually, USA has convinced India at the G-20 Summit in Brisbane, Australia on November 15-16th, 2014 and the modification protocol adding the Trade Facilitation Agreement to the Marrakesh Agreement Annex 1A was adopted with the WTO General Council’s decision symbolized as WT/L940 at the meeting on November, 27th, 2014. The agreement was thus submitted for the approval of the member countries.
At that stage, it was necessary to ratify agreement in each member country. As from July, 9th 2015, Botswana, Hong Kong, China, Singapore, USA, Mauritius, Malaysia, Japan and Australia have ratified the Agreement. According to the Marrakesh Agreement, the Agreement comes into effect when the Protocol and its Annex the Agreement are approved by 2/3 of the member countries.
The Trade Facilitation Agreement symbolised as WT/L/940 (Rider 3) consists of 3 chapters, 24 articles, and 1 Annex and it was adopted by the Trade facilitation Drafting Committee on July, 7th 2014 after the judicial verification was completed. With the adoption of the Agreement by the WTO General Council, it was added to the Marrakesh Agreement Annex 1/A on November, 27th, 2014.
In the first Section including the first 12 Articles of the Agreement, Articles 1 to 5 have an explanatory quality for GATT Article X governing the transparency and predictability of commercial legislation,; while Articles 6 to 10 have an explanatory quality for GATT Article VIII, relating togoverning the charges and formalities, and the 11th Article has an explanatory quality for GATT Article V governing the freedom of transit. On the other hand, Article 12 lays down a mechanism enabling information exchange between the customs administrations of the WTO member countries.
The Second Section of the Agreement entitled as “Special and Differential Treatment to DCs and LDCs” includes Articles 13 to 22, prescribing capacity enhancement support and consolidation for the DCs and LDCs with a view to implementing the commitments.
As for the last Section of the Agreement, Article 23 applies to institutional arrangements, while Article 24 consists of the final provisions.
Article 1: Publication and Availability of Information
The Article regulates the Member States to promptly publish the procedures for importation, exportation, and transit (including port, airport, and other entry-point procedures), required forms and documents; applicable rates of duties and taxes of any kind imposed on or in connection with importation or exportation; fees and charges imposed on or in connection with importation, exportation or transit; rules for the classification or valuation of products for customs purposes; import, export or transit restrictions or prohibitions; penalty provisions; procedures for appeal or review etc. in a non-discriminatory and easily accessible manner.
Additionally, the Article requests the member states to make available description of their procedures for importation, exportation, and transit, the forms and documents required for importation into, exportation from, or transit through the territory of that Member and contact information on their enquiry point(s), on the internet and to the extent possible in one of the official languages of WTO (English, French or Spanish).
On the other hand, the member states are encouraged to establish enquiry points with the aim of answering the questions and providing the required forms and documents to traders of other member states.
Article 2: Opportunity to Comment, Information Before Entry into Force, and Consultations
The Article requests member states to provide opportunities and an appropriate time period to traders to comment on the proposed introduction or amendment of laws and regulations of general application related to the movement, release, and clearance of goods; and to enable regular consultations between its border agencies and traders or other stakeholders located within their territory.
Article 3: Advance Rulings
In this Article, advance ruling is defined as a written decision provided by a Member to the applicant prior to the importation of the goods covered by the application setting forth the treatment that the Member will provide to the goods at the time of importation with regard to the tariff classification and origin of the goods.
Members are also encouraged to provide advance rulings on the appropriate methods to be used for determining the customs value; on relief or exemption from customs duties; on tariff quotas and other quotas and any additional matters that a Member considers appropriate to issue an advance ruling.
In accordance with the Article, Members shall issue an advance ruling upon application, and for the well-functioning of the procedure, shall publish, the requirements for the application for an advance ruling, including the information to be provided and the format; the time period by which it will issue an advance ruling and the length of time for which the advance ruling is valid as well as the advance rulings themselves.
Article 4: Procedures for Appeal or Review
This Article regulates the right of trade operators (for whom an administrative decision is given) to apply for administrative or judicial review and to carry out appeal procedures in an equitable manner. The Article also lays down the requirement of an administrative appeal or review prior to a judicial appeal or review, the right of the petitioner to further appeal to or be reviewed by the administrative authority or the judicial authority in case of delay concerning the decision upon appeal and the requirement to provide the reasons for the administrative decision.
Article 5: Other Measures to Enhance Impartiality, Non-Discrimination and Transparency
In this Article, the Agreement emphasizes the enhancement of the level of controls or inspections at the border in respect of foods, beverages, or foodstuffs covered under the notification or guidance for protecting human, animal, or plant life or health; carrying out controls and examinations based on risk at the determined border crossing points and informing the carrier or importer in case of detention of goods, declared for importation, for inspection.
Article 6: Disciplines on Fees And Charges Imposed on or in Connection With Importation And Exportation and Penalties
This Article regulates the publication of information on import and export duties and all fees and charges (including the reasons, the responsible authority and when and how payment is to be made). The Article also stipulates the allocation of adequate time to operators between the publication of new or amended fees and charges and their entry into force. In this respect, such fees and charges are not provided until information on them is published, and those fees and charges may be periodically reviewed with a view to reducing their number and diversity, and may also be limited for customs processing in amount equivalent to the approximate cost of the services rendered.
Concerning the penalty disciplines, the Article regulates that penalties for a breach of a customs law, regulation, or procedural requirement will be imposed only on the person(s) responsible for the breach under its laws; the penalties shall depend on the facts and circumstances of the case and shall be commensurate with the degree and severity of the breach. Also, an explanation in writing should be provided to the person(s) upon whom the penalty is imposed, by specifying the nature of the breach. The provisions of this paragraph shall also be applied to the penalties on traffic in transit.
Article 7: Release and Clearance of Goods
Within the scope of this Article, the applications developed for facilitating clearance and release of goods are included. The Article is composed of 9 subtitles and aims at extending best practices as regards the customs transactions and other border transactions, and WCO recommendations in WTO Members.
7.1 Pre-arrival Processing
This subtitle regulates that WTO Members shall adopt or maintain procedure of pre-arrival and provide for advance lodging of documents in electronic format for pre-arrival processing of such documents before the arrival of goods.
7.2 Electronic Payment
WTO Members are expected to adopt or maintain procedures allowing electronic payment of duties, taxes, fees, and charges collected by customs authorities.
7.3 Release from Final Determination of Customs Duties, Taxes, Fees and Charges
According to this provision Members shall adopt or maintain procedures allowing the release of goods prior to the final determination of customs duties, taxes, fees, and charges, if such a determination is not done prior to, or upon arrival, or as rapidly as possible after arrival. As a condition for such release, a Member has the right to require payment of a guarantee for customs duties, taxes, fees, and charges not yet determined in the form of a surety, a deposit, or another appropriate instrument provided for in its laws and regulations.
According to this Article, such guarantee shall not be greater than the amount the Member requires to ensure the payment of customs duties, taxes, fees, and charges and it shall be discharged when it is no longer required.
7.4 Risk Management
In accordance with this provision, Members shall adopt a risk management system in a manner to avoid arbitrary or unjustifiable discrimination, or a disguised restriction on international trade. In this respect, in doing risk analysis, Members are expected to concentrate customs control on high-risk consignments and expedite the release of low-risk consignments and shall base the risk management system on selectivity criteria such as tariff code, nature and description of the goods, country of origin, country from which the goods were shipped, value of the goods, compliance record of traders, and type of means of transport.
7.5 Post-clearance Audit
Under this subtitle, Members are expected to adopt or maintain post clearance audit with a view to expediting the release of goods and ensure compliance with legislation. For this purpose, Members shall select a person or a consignment for post-clearance audit in a risk-based manner, conduct post clearance audits in a transparent manner and notify the person whose record is audited of the results. The information obtained in post-clearance audit may be used in further administrative or judicial proceedings as well as in risk management.
7.6 Establishment and Publication of Average Release Times
This provision encourages WTO Members to measure and publish their average release time of goods periodically and in a consistent manner by using tools such as the Time Release Study of the World Customs Organization.
7.7 Trade Facilitation Measures for Authorized Operators
Under this subtitle, it is foreseen that additional trade facilitation measures related to import, export, or transit formalities and procedures shall be provided to operators called authorized operators who meet specified criteria.
The mentioned criteria to qualify as an authorized operator shall be related to compliance, or the risk of non-compliance, with requirements indicated in a Member's laws, regulations or procedures. Such criteria may include an appropriate record of compliance with customs and other related laws and regulations, a system of managing records to allow for necessary internal controls, financial solvency, including provision of a sufficient security or guarantee and supply chain security.
The trade facilitation measures provided to an authorized operator shall include at least three of the following measures:
(a) low level of documentary and data requirements;
(b) low rate of physical inspections and examinations;
(c) rapid release time;
(d) deferred payment of duties, taxes, fees, and charges;
(e) use of comprehensive guarantees or reduced guarantees;
(f) a single customs declaration for all imports or exports in a given period; and
(g) clearance of goods at the premises of the authorized operator or another place authorized by customs.
In the Agreement, WTO Members are also encouraged to sign mutual recognition agreements on their authorized operator systems.
7.8 Expedited Shipments
Under this provision, the Agreement foresees that Members shall adopt or maintain procedures allowing for the expedited release of goods that entered through air cargo and to allow for the expedited release of goods entered through this way. In this regard, paragraph 7.8.1 lists the conditions for applying for this procedure and paragraph 7.8.2 explains the facilitation measures to be provided to operators in return.
The expedited shipment is subject to the Member countries who may set certain conditions for qualifying for the implementation of the treatment. Within this scope, Member countries may require the applicants to provide adequate infrastructure and payment of customs expenses related with the processing of expedited shipments; assume liability for payment of all customs duties, taxes, fees, and charges to the customs authority for the goods and submit, before arrival, an expedited shipment information which is necessary for the release. Moreover, the applicants might need to prove having a good record of compliance with customs and other related laws and regulations. In return, Member countries recognizing the possibility of expedited shipment shall provide expedited shipment from pick-up to delivery taking all logistical and security measures.
In accordance with this provision, Member countries shall minimize the documentation required for the release of expedited shipments arriving through air cargo and provide for expedited shipments to be released under normal circumstances as rapidly as possible after arrival, on condition that the information required for release has been submitted. A Member shall endeavor to extend this treatment to shipments of any weight or value, whereas, the Member is allowed to require additional entry procedures (declarations and supporting documentation and payment of duties and taxes) and to limit such treatment based on the type of good, provided that the treatment is not limited to goods of low value. Last of all, Member countries shall endeavor to provide, to the extent possible, for a de minimis shipment value or dutiable amount for which customs duties and taxes will not be collected.
7.9 Perishable Goods
In this provision, the Agreement regulates that Members shall take measures to prevent decay or deterioration of perishable goods, shall provide for the release of perishable goods within the shortest possible time (outside the business hours, if needed) and give priority to perishable goods when scheduling any examinations. Moreover, Member may require that any storage facilities arranged by the importer have been approved or designated by its relevant authorities. Furthermore, the Members shall, where practicable and consistent with domestic legislation, upon the request of the importer, provide for any procedures necessary for release to take place at those storage facilities. Finally, in cases of significant delay in the release of perishable goods, and upon written request, the importing Member shall, to the extent practicable, provide a communication on the reasons for the delay.
Article 8: Border Agency Cooperation
According to this Article, first of all, Members shall ensure that the authorities and agencies responsible for border controls and procedures dealing with the importation, exportation, and transit of goods cooperate with one another and coordinate their activities in order to facilitate trade. Secondly, Members shall cooperate on mutually agreed terms with other Members with whom it shares a common border with a view to coordinating procedures at border crossings to speed up and facilitate cross-border trade. Such cooperation may include, among others, alignment of working days and hours, alignment of procedures and formalities and implementation of joint controls.
Article 9: Movement of Goods Intended for Import under Customs Control
This Article introduces the responsibility for the Members to allow goods intended for import to be moved within its territory under customs control from a customs office of entry to another customs office in its territory from where the goods would be released or cleared.
Article 10: Formalities Connected with Importation, Exportation and Transit
Whereas the risk management and authorized economic operator applications, providing the possibility of electronic payment of customs duties, fees and charges, and the mechanism of pre-arrival declaration were aimed at accelerating border crossing procedures, provisions of Article 10 of the Agreement lays down the objectives for decreasing formalities for importation, exportation and transit in WTO Members as much as possible.
10.1 Formalities and Documentation Requirements
Under this provision, Members are expected to review formalities and documentation to decrease the number and complexity of import, export, and transit documentation requirements taking into account the factors as changing circumstances, availability of techniques and technology, and international best practices.
10.2 Admission of Copies
With regard to this provision, Members shall endeavor to accept paper or electronic copies of supporting documents required for import, export, or transit formalities; where a government agency already holds the original of such a document, any other agency of that Member shall accept a paper or electronic copy from the agency holding the original, and the Members shall not require an original or copy of export declarations submitted to the customs authorities of the exporting Member as a requirement for importation.
10.3 Use of International Standards
In this provision, Members are encouraged to use relevant international standards as a basis for their import, export, or transit formalities and procedures and to take part in the preparation and periodic review of relevant international standards set by appropriate international organizations.
10.4 Single Window
Under this provision, Members are encouraged to set up single window system by benefiting from information technologies.
10.5 Preshipment Inspection
This provision foresees that Members shall not require the use of preshipment inspections in relation to tariff classification and customs valuation. It also encourages Members not to introduce or apply new requirements for the use of preshipment inspections.
10.6 Use of Customs Brokers
In accordance with this provision, Members shall not introduce the mandatory use of customs brokers; and shall notify and publish its measures on the use of customs brokers and concerning the licensing of customs brokers. Members shall apply rules that are transparent and objective.
10.7 Common Border Procedures and Uniform Documentation Requirements
In this provision, Members are encouraged to implement common customs procedures and uniform documentation requirements for release and clearance of goods throughout their territory.
10.8 Rejected Goods
This provision regulates that where goods presented for import are rejected by the competent authority of a Member on account of their failure to meet prescribed sanitary or phytosanitary regulations or technical regulations, the Member shall allow the importer to re-consign or return the rejected goods to the exporter or another person designated by the exporter.
10.9 Temporary Admission of Goods and Inward and Outward Processing
This provision provides definitions of Temporary Admission, Inward and Outward Processing of Goods. According to this provision, goods allowed for outward processing may be reimported with total or partial exemption from import duties and taxes.
Article 11: Freedom of Transit (GATT Article V)
This Article regulates that:
Regulations or formalities in connection with traffic in transit shall be implemented in a reasonably less trade-restrictive manner or shall not be applied in a manner that would constitute a disguised restriction on traffic in transit,
Traffic in transit shall not be dependent upon the collection of any fees or charges imposed in respect of transit, and the goods subject to transit procedure shall be exempted from all kinds of customs payments until the goods arrive to the arrival point,
Once traffic in transit has reached the customs office where it exits the territory of a Member, that office shall promptly terminate the transit operation if there is no contradiction with legislation,
Separate infrastructure for traffic in transit shall physically be made available,
Where a Member requires a guarantee for traffic in transit, such guarantee shall be limited to ensuring that requirements arising from such traffic in transit are fulfilled,
The amount of guarantee shall not exceed the necessary amount for transit passage of the goods, and once the Member has determined that its transit requirements have been satisfied, the guarantee shall be discharged without delay,
Members may require the use of customs convoys or customs escorts for traffic in transit only in circumstances presenting high risks or when compliance cannot be ensured through the use of guarantees.
Article 12: Customs Cooperation
This Article introduces the possibility that customs administrations of WTO Members can request information from each other concerning customs transactions, the rules governing such information requests and circumstances where such requests might not be covered.
Articles 13-22: Special And Differential Treatment Provisions for Developing Country Members and Least-Developed Country Members
While multilateral trade system is carried out within the framework of rules defined by WTO, WTO Members do not have homogeneous economic development levels and some of the Members do not hold adequate technical and financial resources to put international standards into effect and practice. Therefore, these countries are not able to acquire benefits from the system at equal rate. In order to increase the benefits that DCs receives from multilateral trade system and decrease the criticism concerning the system, special and differential treatment provisions named as rights and privileges accorded by developed countries to DCs have been formulated within the scope of GATT Article XVIII.
Within the July Package adopted by the General Council on August 1st 2004, special and differential treatment provisions were included. Moreover, they also decided on including the provisions within the scope of Annex D which determines the method of trade facilitation negotiations on providing technical assistance and capacity building regarding the implementation of the commitments by DCs.
Second Section of the Agreement entitled as “Special and Differential Treatment Provisions for DCs and LDCs” comprises of the Articles between 13 and 22. This Section includes the provisions which render the implementation of the provisions in the first Section by DCs and LDCs conditional on capacity building support and assistance by donor countries and institutions. It also foresees that LDCs will implement them in accordance with development of their individual capabilities.
In accordance with the Agreement, with regard to the support and assistance to be provided within the scope of special and differential treatment provisions, Members are expected to make their self-assessment to classify their commitments concerning the implementation of the provisions in the first Section. Within this framework, in Article 14, 3 categories have been determined as category A, B and C. DCs shall include the provisions designated for implementation upon entry into force of this Agreement in Category A. However, in case of LDCs, provisions designated for implementation within one year after entry into force are included in Category A. Category B contains the provisions that both DCs and LDCs designate for implementation on a date after a transitional period of time following the entry into force of this Agreement. Category C contains the provisions that both DCs and LDCs designate for implementation on a date after a transitional period of time following the entry into force of this Agreement and requiring the acquisition of implementation capacity through the provision of assistance and support for capacity building.
Articles 23-24: Institutional Arrangements and Final Provisions
Third Section of the Agreement regulates the establishment of an international Committee on Trade Facilitation under the WTO to ensure the implementation of rules of the Agreement effectively by WTO Members.
The Committee shall be open for participation by all Members. The Committee shall meet as needed and envisaged by the relevant provisions of this Agreement, but no less than once a year, for the purpose of affording Members the opportunity to consult on any matters related to the operation of this Agreement or the furtherance of its objectives. The Committee shall carry out such responsibilities as assigned to it under this Agreement or by the Members. The Committee shall maintain close contact with other international organizations in the field of trade facilitation, such as the WCO. The Committee shall review the operation and implementation of this Agreement four years from its entry into force, and periodically thereafter.
Moreover, according to this Section, Members shall establish a National Committee on Trade Facilitation to facilitate both domestic coordination and implementation of the provisions of this Agreement.
According to final provisions, all provisions of this Agreement are binding on all Members; nothing in this Agreement shall be construed as diminishing the obligations of Members under the GATT 1994 as well as under the Agreement on Technical Barriers to Trade and the Agreement on the Application of Sanitary and Phytosanitary Measures. All exceptions and exemptions under the GATT 1994 shall apply to the provisions of this Agreement; the provisions of Articles XXII and XXIII of GATT 1994 as elaborated, while for Dispute Settlement Understanding, an application shall be submitted to consultations and the settlement of disputes under this Agreement and reservations may not be entered in respect of any of the provisions of this Agreement without the consent of the other Members.