MARKET ACCESS Issues MARKET ACCESS Issues Samer Seif El-Yazal Counsellor Institute for Training and Technical Cooperation World Trade Organization

2 Structure of this presentation I.Market Access in the GATT/WTO context: basic elements and definitions II.Introduction to NAMA negotiations III.Overview of Customs and Trade Administration Agreements IV.Market Access – Russian Federation V.Notification obligations

I.MARKET ACCESS IN THE GATT/WTO CONTEXT: BASIC ELEMENTS AND DEFINITIONS

4 1. What is Market Access? In the WTO framework, the term stands for the totality of government-imposed conditions (regulations/measures) under which a product may enter a country under non-discriminatory conditions. In the WTO framework, the term stands for the totality of government-imposed conditions (regulations/measures) under which a product may enter a country under non-discriminatory conditions.

5 1. What is Market Access? Market access in the WTO sense is regulated most of the time through border measures including, inter alia, tariffs, tariff rate quotas, quantitative restrictions and other non-tariff measures. Market access in the WTO sense is regulated most of the time through border measures including, inter alia, tariffs, tariff rate quotas, quantitative restrictions and other non-tariff measures.

6 Predictable and growing access to markets for goods and services is one of the goals of the WTO Predictable and growing access to markets for goods and services is one of the goals of the WTO Basic Principles: Non discrimination (NT/MFN) and transparency Basic Principles: Non discrimination (NT/MFN) and transparency Predictable: binding commitments Predictable: binding commitments Growing access: periodic “rounds” of negotiations Growing access: periodic “rounds” of negotiations 2. GATT/WTO: ensuring MA

7 3. Types of MA barriers in trade in goods In the GATT/WTO framework there are 2 basic types of barriers to trade in goods: In the GATT/WTO framework there are 2 basic types of barriers to trade in goods: 1.Tariffs 2.Non Tariff Barriers

8 4. Basic GATT/WTO framework –Tariffs should normally be the only instrument used to protect domestic industries –Quantitative restrictions (bans/restrictions) are generally prohibited (GATT Art. XI)... but they could be allowed under certain circumstances –Tariffs should be transparent, predictable and stable –Tariffs are included in “Schedules of concessions”

9 5. Tariffs: duty types Duty type Example Ad valorem 5% 5% Specific $5 per Kg. Compound 10% + $2 per Kg Mixed 10% or $2 per Kg, NAV

10 6. Tariffs and the GATT Security and predictability in trade in goods are achieved through the commitments embodied in the "binding” of tariffs. Security and predictability in trade in goods are achieved through the commitments embodied in the "binding” of tariffs.

11 6. Tariffs and the GATT A "bound" tariff is a tariff in respect of which there is a legal commitment not to raise it beyond a certain level A "bound" tariff is a tariff in respect of which there is a legal commitment not to raise it beyond a certain level A binding is a “ceiling”, not a “floor” A binding is a “ceiling”, not a “floor”

12 7. GATT Article II “a. Each contracting party shall accord to the commerce of the other contracting parties treatment no less favourable than that provided for in the appropriate Part of the appropriate Schedule annexed to this agreement.” “a. Each contracting party shall accord to the commerce of the other contracting parties treatment no less favourable than that provided for in the appropriate Part of the appropriate Schedule annexed to this agreement.”

13 7. GATT Article II Treatment can be more favourable: Treatment can be more favourable: bound tariffs vs. applied tariffs Other tariff treatments are also possible due to, inter alia, RTAs, CUs and non- reciprocal arrangements ( “enabling clause”) Other tariff treatments are also possible due to, inter alia, RTAs, CUs and non- reciprocal arrangements ( “enabling clause”)

14 8. Other duties and charges (ODCs) Include all taxes levied on imports in addition to the customs duties which are not in conformity with Article VIII (Fees and Formalities) of GATT Include all taxes levied on imports in addition to the customs duties which are not in conformity with Article VIII (Fees and Formalities) of GATT GATT Article II:1 (b) stipulates that the products described in the schedules "shall be exempt from other duties or charges of any kind imposed in excess of those imposed at the time a concession was granted". GATT Article II:1 (b) stipulates that the products described in the schedules "shall be exempt from other duties or charges of any kind imposed in excess of those imposed at the time a concession was granted".

15 8. Other duties and charges (ODCs) Understanding on the Interpretation of Article II:1 (b): Members must include in Schedules any other duty or charge existing on by 15 April Understanding on the Interpretation of Article II:1 (b): Members must include in Schedules any other duty or charge existing on by 15 April If not notified by then, then eliminated. If not notified by then, then eliminated.

16 9. “Schedules” of concessions Tariff bindings and other concessions are contained in the “Schedules of concessions” (GATT Article II) Tariff bindings and other concessions are contained in the “Schedules of concessions” (GATT Article II) Each Member of the WTO has its own Schedule, identified by a roman number Each Member of the WTO has its own Schedule, identified by a roman number

17 9. “Schedules” of concessions Except customs unions where two or more Members have one single schedule for a (i.e. European Communities) Except customs unions where two or more Members have one single schedule for a (i.e. European Communities)

18 GATT Structure of a Member's Schedule Schedule of Concessions Member x Part I Part II Part III Part IV Section I I.A I.B Section II Preferential rates Non-tariff Concessions Agricultural Subsidies Agricultural Subsidies MFN Rates Duties (Tariffs and ODCs) Tariff Rate Quotas (TRQs) Agricultural Products Other Products

19 Why “non-agricultural” products? Agricultural products are defined in Annex 1 of the Agreement on Agriculture Agricultural products are defined in Annex 1 of the Agreement on Agriculture Non Agricultural products are all the “other products” Non Agricultural products are all the “other products”

20 Schedule M – Member X This Schedule is authentic only in the English language PART I – MOST-FAVOURED NATION TARIFF SECTION II – Other Products

Changing a concession 1. Tariff negotiations ( GATT Article XXVIII bis) * Rectifications and modifications 3. Renegotiations (GATT Article XXVIII) 4. Customs Union (GATT Article XXIV) 5. Other i.Implementation of the HS ii.Transposition to HS92, HS96, HS2002, HS2007 … All of them have special procedures! Need to be “certified” in order to be legally binding

22 Binding coverage of Non AG prod. 50 Members have 100% binding coverage (EC-25 counted as one) 50 Members have 100% binding coverage (EC-25 counted as one) 29 Members between 90% and <100% 29 Members between 90% and <100% 10 Members between 50% and < 90% 10 Members between 50% and < 90% 10 Members between 25% and < 50% 10 Members between 25% and < 50% 23 Members between 0.1% and < 25% 23 Members between 0.1% and < 25% NOTE: Agriculture already 100% binding NOTE: Agriculture already 100% binding

Part II. NAMA Negotiations: Paragraph 16 of the Doha Ministerial Declaration “ 16. We agree to negotiations which shall aim, by modalities to be agreed, to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. ” “ 16. We agree to negotiations which shall aim, by modalities to be agreed, to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. ” “ Product coverage shall be comprehensive and without a priori exclusions. ” “ Product coverage shall be comprehensive and without a priori exclusions. ”

“ The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments, in accordance with the relevant provisions of Article XXVIII bis of GATT 1994 and the provisions cited in paragraph 50 below. ” “ The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments, in accordance with the relevant provisions of Article XXVIII bis of GATT 1994 and the provisions cited in paragraph 50 below. ” Paragraph 16 of DMD (cont.)

25 Basic framework for negotiating tariff concessions Defining the rules of the game GATT Article XXVIII bis Tariff reduction: which option? Request/Offer? Sectoral? Formula? If so, which one? New bindings: how many? at what level? Implementation period S&D / Flexibility provisions Members prepare and submit offers Multilateral verification Final Schedules of concessions Modalities Post- modalitie s

26 DDA (NAMA): Sequence of main events > Doha Ministerial Declaration (Paragraph 16) July > Work program is adopted (deadline for modalities = 31 May 2003) May > Chairman’s Draft Elements for Modalities (TN/MA/W/35 i.e. “Girard Text”) September > Cancun Ministerial fails to adopt a “framework” on NAMA (JOB(03)152/Rev.2) July > “July Package” adopts the NAMA Framework with initial elements (Annex B of WT/L/579) December > Hong Kong Ministerial clarified add. elements 2007 Chairman's Introd. to the Draft NAMA Modalities (JOB(07)/126) 2008 Third revision of draft modalities (TN/MA/W/103/Rev.2) July Mini-ministerial Fourth revision of draft modalities (TN/MA/W/103/Rev.3)

Part III. Customs and trade administration VAL: Customs valuation VAL: Customs valuation PSI: Pre-shipment inspection PSI: Pre-shipment inspection RO: Rules of origin RO: Rules of origin LIC: Import licensing procedures LIC: Import licensing procedures

VAL: Background Specific and ad-valorem customs duties Specific and ad-valorem customs duties Short historical overview Short historical overview –Article VII GATT –Brussels definition of value –Tokyo Round Valuation Code

VAL: The WTO Agreement The new Agreement The new Agreement Basic principle: Transaction value Basic principle: Transaction value The 6 Methods The 6 Methods Other provisions Other provisions

VAL: Method 1 - Transaction value Definition of transaction value Definition of transaction value Conditions to be fulfilled Conditions to be fulfilled –Evidence of sale –No restriction on the disposition or use –Not subject to additional conditions –Full prices, unless... –Sufficient information for adjustments –Buyer and seller not related, otherwise... –Related parties Cases where Customs Administrations have reasons to doubt the truth or accuracy of the declared value Cases where Customs Administrations have reasons to doubt the truth or accuracy of the declared value

VAL: Methods 2 and 3 VAL: Methods 2 and 3 Method 2: Transaction value of identical goods (Article 2) Method 2: Transaction value of identical goods (Article 2) –Exceptions Method 3: Transaction value of similar goods (Article 3) Method 3: Transaction value of similar goods (Article 3) Other methods Other methods

PSI: Background and overview Functions of PSI Functions of PSI –conformity of goods with the terms of the sales contract –verification of invoice price Definitions Definitions Objectives Objectives

PSI: Obligations of user Members Non-discrimination (Article 2.1) Non-discrimination (Article 2.1) Governmental requirements (Article 2.2) Governmental requirements (Article 2.2) Site of inspection (Article 2.3) Site of inspection (Article 2.3) Standards (Article 2.4) Standards (Article 2.4) Transparency (Articles 2.5 to 2.8) Transparency (Articles 2.5 to 2.8) Protection of confidential business information (Articles 2.9 to 2.13) Protection of confidential business information (Articles 2.9 to 2.13) Conflicts of interest (Article 2.14) Conflicts of interest (Article 2.14) Delays (Articles 2.15 to 2.19) Delays (Articles 2.15 to 2.19) Price verification (Article 2.20) Price verification (Article 2.20) Appeals procedure (Article 2.21) Appeals procedure (Article 2.21) Derogation (Article 2.22 ) Derogation (Article 2.22 )

PSI: Obligations of exporter Members Non-discrimination (Article 3.1) Non-discrimination (Article 3.1) Transparency (Article 3.2) Transparency (Article 3.2) Technical Assistance (Article 3.3) Technical Assistance (Article 3.3)

PSI: Independent review procedures Purpose of the Independent Review Procedures Purpose of the Independent Review Procedures Independent Entity Independent Entity

RO: Background Definition Definition Where are rules of origin used? Where are rules of origin used? No specific provision in GATT No specific provision in GATT Interest in the harmonization of rules of origin Interest in the harmonization of rules of origin –Increased number of preferential trading arrangements –Increase in the number of origin disputes –Increased use of anti-dumping laws

RO: The UR Agreement Introduction Introduction Aims of the Agreement Aims of the Agreement –harmonization –general principles Coverage: all non-preferential rules of origin Coverage: all non-preferential rules of origin Institutions Institutions –WTO Committee on Rules of Origin –WCO Technical Committee

RO: Harmonization The Harmonization Work Programme (HWP) The Harmonization Work Programme (HWP) –Definitions of goods being wholly obtained –Last substantial transformation – Change of tariff heading – Supplementary criteria Overall architectural design Overall architectural design Results of the Harmonization Work Programme Results of the Harmonization Work Programme

RO: Other provisions Disciplines during the transition period Disciplines during the transition period Disciplines after the transition period Disciplines after the transition period Consultation and dispute settlement Consultation and dispute settlement Preferential rules of origin Preferential rules of origin

LIC: Background and definition Definition Definition Basic obligations Basic obligations –GATT Article VIII –GATT Article X From the Tokyo Round Code to the Uruguay Round Agreement From the Tokyo Round Code to the Uruguay Round Agreement

LIC: General principles Main objectives Main objectives General provisions General provisions –Neutral application, fair and equitable administration –Publication of rules and procedures –Simple forms and procedures –Other principles

LIC: Automatic import licensing Definition Definition Conditions Conditions Main provision for automatic import licensing Main provision for automatic import licensing –Approval of application within 10 working days –Use

LIC: Non-automatic import licensing Definition Definition Main provisions applicable to non-automatic import licensing Main provisions applicable to non-automatic import licensing –No additional restrictive or distortive effects –All relevant information to be published –No discrimination among applicants –Time limits for processing applications –Validity of a licence –Other provisions

Part IV. Market Access: Russian Federation On average the final legally binding tariff ceiling for the RF will be 7.8% On average the final legally binding tariff ceiling for the RF will be 7.8% –Average tariff ceiling for Agriculture, 10.8% –Average tariff ceiling for NAMA, 7.3% –Final tariffs will be bound at zero for cotton and information technology products (ITA) Implementation: 1/3 of tariff lines upon accession, another 1/4 cuts in 3 years. Longest tariff cuts on pork 8 years and cars 7 years. Implementation: 1/3 of tariff lines upon accession, another 1/4 cuts in 3 years. Longest tariff cuts on pork 8 years and cars 7 years. 44

45 Notification Obligations NOTIF: Customs valuation Art “one-time” Notification of laws and regulations All Members once they apply the Agreement, including Checklist of Issues Art “one-time” Notification of laws and regulations All Members once they apply the Agreement, including Checklist of Issues Decisions on Interest charges and media- carrier All Members if they apply the Decisions Decisions on Interest charges and media- carrier All Members if they apply the Decisions

46 NOTIF: Preshipment Inspection Art. 5 - “one-time” Notification of laws and regulations All Members Art. 5 - “one-time” Notification of laws and regulations All Members

47 NOTIF: Rules of Origin Art “one-time” Notification of non-preferential rules of origin All Members Art “one-time” Notification of non-preferential rules of origin All Members Annex II para. 4 - “one-time” Notification of preferential rules of origin All Members Annex II para. 4 - “one-time” Notification of preferential rules of origin All Members

NOTIF: Import Licensing Notifications Notifications –Copies of publications and full text of laws and regulations –Notification of changes –Reverse notification –Annual questionnaire (by 30 September each year)

49 NOTIF: Quantitative Restrictions Decision G/L/59 of the Council for Trade in Goods (1 December 1995) Decision G/L/59 of the Council for Trade in Goods (1 December 1995) Basic document: G/MA/NTM/QR/2 Basic document: G/MA/NTM/QR/2 Notification of all quantitative restrictions (by 31 January 1996 and at two-yearly intervals thereafter) All Members Notification of all quantitative restrictions (by 31 January 1996 and at two-yearly intervals thereafter) All Members

50 NOTIF: Integrated Data Base (IDB) Decision WT/L/225 of the General Council All Members Decision WT/L/225 of the General Council All Members Basic document: G/MA/IDB/W/6 Basic document: G/MA/IDB/W/6 Tariff data at the tariff line level Every year (by 30 March) Tariff data at the tariff line level Every year (by 30 March) Trade data at the tariff line level Every year (by 30 September) Trade data at the tariff line level Every year (by 30 September)

51 Thank you!