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TEACHING NOTES  

Primary Issues  

Trade Facilitation is often defined as “the simplification and harmonization of international trade procedures” with trade procedures being the “activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade.”  This definition relates to a wide range of activities such as import and export procedures (e.g. customs or licensing procedures); transport formalities; payments, insurance, and other financial requirements.  Work in the WTO has focused to date mainly on customs and border-crossing procedures.

The WTO has identified some of the following problems in the trade facilitation area:[1]

  • Excessive documentation requirements;
  • Lack of automation and insignificant use of information-technology;
  • Lack of transparency; unclear and unspecified import and export requirements;
  • Inadequate procedures; especially a lack of audit-based controls and risk-assessment techniques;
  • Lack of modernization of, and cooperation among customs and other government agencies, which thwarts efforts to deal effectively with increased trade flows.

In the area of customs and border cross procedures, the WTO Agreements include a number of provisions that relate to trade facilitation.  Of primary importance: (A) GATT 1994 Articles V (Freedom of Transit), VII (Valuation), VIII (Fees & formalities) and X (transparency) and (B) the WTO Agreements on Licensing, Preshipment Inspection, Customs Valuation, Rules of Origin, Technical Barrier to Trade, and Sanitary and Sanitary Measures.  

Many of these agreements are quite technical and in order to successfully implement them countries must have the appropriate infrastructure and procedures.  In the customs administration area, customs authorities need both the authority and/or capacity to conduct such things audits procedures and risk assessments to subpoena information.  

Instructors may find it useful to have students read Chapter 3 “Valuations of Goods for Customs Purposes” in the International Trade Centre’s publication Business Guide to the World Trading System (1999).  In addition, instructors may want to ask students to read the following attached documents before doing the exercise: (a) Excerpts from the WTO working party reports on the accession of Jordan and China and (b) the decision of the Customs Valuation Committee extending the time Egypt has to comply with the Customs Valuation Agreement.  The exercise seeks to help students understand the problems in not basing valuation on transaction value.

 

[1] Source: Chairman’s summary of WTO symposium on trade facilitation [ 18 March 1998 (G/L/226)]

  

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