Willemien Viljoen, tralac Researcher, discusses the outcomes of the recently-concluded Ninth WTO Ministerial Conference in Bali

The Ninth World Trade Organization (WTO) Ministerial Conference was held in Bali, Indonesia from 3 to 6 December 2013. The main issues that were on the agenda included trade facilitation measures to streamline customs procedures and minimise delays at borders, measures to support least developed WTO member countries (LDCs), a review mechanism for the Special and Differential (S&D) provisions applicable to LDCs and developing countries in all WTO agreements and various issues related to agriculture, including export subsidies, tariff rate quotas and food security. Although the Conference finished a day later than expected (on 7 December), it concluded with agreement on a package of issues that includes trade facilitation, cotton, agriculture and issues related to LDCs under the broader Doha Development Agenda. The Bali Package consists of draft decisions and declarations in two parts: Part I regarding the regular work under the General Council and Part II regarding work under the Doha Development Agenda. The most significant part of the Bali Package is the Draft Ministerial Decision on trade facilitation as a multilateral commitment to simplify customs procedures by reducing costs and improving speed and efficiency.

The Agreement on Trade Facilitation requires the establishment of a Preparatory Committee under the General Council to review the legality of the agreement, receive notifications of Category A commitments under the S&D provisions and to draft a Protocol of Amendment to insert the Agreement into WTO law. The Agreement also requires the General Council to meet no later than 31 July 2014 to annex to the Agreement notifications received under the S&D provisions; adopt the protocol drafted by the Preparatory Committee and to open the protocol for acceptance until July 2015. In accordance with the Agreement, a Committee on Trade Facilitation must be established to meet at least once a year in order to give countries the opportunity to consult on any matters regarding the Agreement and to draft procedures and best practices where necessary. Each member state is also required to establish a National Committee on Trade Facilitation.

The Agreement consists of two sections containing 13 Articles and S&D provisions applicable to developing and least developed countries. The majority of the Agreement is aimed at creating transparency in measures applicable to imports, exports and transit traffic through various publication and notification requirements. The Agreement requires member states to promptly publish documentation and procedural requirements, applied import duties and taxes, government fees and charges (including the reason for the fees and charges, how and when payment must take place and the responsible authority), rules for the classification or valuation of products, rules of origin, appeal procedures and tariff rate quotas and administrative procedures applicable to exportation, importation and transit. Countries are also encouraged to publish the average release times of goods at their borders and any information regarding advanced rulings that may be of interest to other parties. Further, member states are required to make procedures and documentation requirements related to imports, exports and transit and the contact information of enquiry points available on the internet. Each member state is also required to establish a national enquiry point; however, countries that are a party to a customs union or a regional integration initiative can establish a common enquiry point at the regional level. Apart from these general provisions the Agreement also contains provisions related to specific areas of trade facilitation:

• An advance ruling is required to be given within a reasonable time after receiving the written request by a member state. If the advance ruling is declined, written notification must be given to the applicant with the facts and basis for the decision.

• A party to whom an administrative decision has been issued has a right to a process of appeal or administrative review.

• Any enhanced levels of control or inspection at the border in respect of food, beverages or foodstuffs to protect human, animal or plant life or health must be notified.

• The amount of government fees and charges must be limited to the cost of the services rendered for the specific import or export operation. Penalties are allowed where a breach of a customs law, regulation or procedural requirement has taken place; however the appropriate penalty will depend on the fact and circumstances of each case.

• Where appropriate, electronic payment of fees, charges, duties and taxes must be possible as well as filing documents electronically for pre-arrival processing.

• To the extent possible, members must adopt customs control based on a risk management system that includes selectivity criteria, including HS code, country of origin and the nature of the goods.

• The agreement makes provision for additional trade facilitation measures to be provided for authorised operators that have met specific criteria, including financial solvency and appropriate record of compliance with customs and other related laws and regulations. According to the Agreement these authorised operators must enjoy at least three of the following trade facilitation measures: low documentary and data requirements; rapid release of goods, low rate of physical inspections; deferred payment of duties, taxes, fees and charges; use of comprehensive or reduced guarantees; a single customs declaration; and clearance of goods at the premises of the authorised operator or another place authorised by customs.

• Member states are required to facilitate inter- and intra-agency cooperation at borders to improve exportation, importation and transit.

• Countries must review formalities and documentation requirements for imports, exports and transit traffic to ensure cumbersome formalities and requirements are removed.

• Countries must be able to accept electronic or paper copies of supporting documents where possible.

• All member states must strive to establish a single window.

• Countries must ensure that they apply common customs procedures and uniform documentation requirements throughout their own territory.

The S&D provisions applicable to developing and least developed countries apply to 12 of the 13 articles of the Agreement. The only article excluded from the S&D provisions is the one related to the establishment of Committees (multilateral and national level) on Trade Facilitation. The provisions of the Agreement to which the S&D provisions apply are divided into three categories with different notification and implementation requirements for each category:

• Category A contains provisions that a developing country or LDC designates for implementation upon entry into force of this agreement, or in the case of a LDC within one year after entry into force.

• Category B contains provisions that a developing country or LDC designates for implementation on a date after a transitional period of time following the entry into force of this Agreement.

• Category C contains provisions that a developing country or LDC designates 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.

Each developing country and LDC can determine its own division of the provisions according to the various categories. The extent and the timing of implementing the provisions of the Agreement are related to the implementation capacities of developing and least developed countries. Where a developing country or LDC lacks the necessary capacity, implementation of the provisions will not be required until implementation capacity has been acquired. According to the provisions, LDCs only have to undertake those commitments that are possible given the extent of their individual development, financial and trade needs and their administrative and institutional capacities.

The Bali Package also includes the following decisions and declarations regarding the regular work under the General Council, cotton, agriculture and development and LDC issues:

• Regular work under the General Council: As part of the regular work of the WTO the Ministers agreed that work should continue in the following five areas: electronic commerce under the Work Programme on Electronic Commerce; Trade-Related Aspects of Intellectual Property Rights under subparagraphs 1(b) and (c) of Article XXIII of the General Agreement on Tariffs and Trade 1994; the effect of non-tariff measures on small economies and the challenges and opportunities experienced by small economies when linking into the global value chains in trade in goods and services under the Work Programme on Small Economies; actions to support Aid for Trade commitments; and trade and the transfer of technology under the Working Group mandated by the Doha Ministerial Declaration.

• Cotton: The draft Ministerial Declaration regarding cotton deals with improving market access for cotton products from LDCs and providing development assistance for cotton production in LDCs. In particular, Ministers agreed to have bi-annual discussions in the context of the Committee on Agriculture to determine the effect of trade-related developments, especially export subsidies and export measures, domestic support, tariff measures and non-tariff measures on market access and export competition of cotton products exported from LDCs to markets of interest to them.

• Development and LDC issues: (a) Preferential rules of origin: Countries should aim to develop non-reciprocal preferential rules of origin for LDCs based on the various guidelines described in the decision, including transparency and simplicity. Other than wholly obtained, products origin may be conferred by substantial or sufficient transformation based on ad valorem percentage criteria, change of tariff classification or specific manufacturing or processing operation. Given the limited production capacity of LDCs the level of value addition based on the ad valorem percentage criteria must be kept as low as possible with foreign imports being a maximum of 75 percent of the value for goods to qualify for preferential LDC rules of origin. Regarding rules of origin based on specific manufacturing and processing operations countries must take cognisance of the limited productive capacity of LDCs. (b) Operationalisation of the waiver for preferential treatment to services and service suppliers of LDCs: The Council of Trade in Services has been tasked with convening a High-level meeting within six months of the submission of an LDC collective request regarding the services waiver for preferential treatment for services and service suppliers of LDCs, identifying the sectors and modes of supply of interest to these countries. (c) Duty-free and quota-free market access: The Ministerial decision requires developed countries to ensure that a minimum of 97 percent of products originating from LDCs enjoy duty-free and quota-free access to the markets of developed countries. Developing countries, to the extent possible, should improve duty-free and quota-free market access for products originating from LDCs. (d) Monitoring mechanism for S&D treatment: Member states have agreed to establish a monitoring mechanism to review all aspects of implementation regarding S&D treatment provisions in all WTO agreements and Ministerial and General Council decisions. However, the review process cannot alter or affect the rights or obligations of the member countries and can only make recommendations to the relevant WTO bodies to initiate negotiations on the various S&D provisions in the legal instruments.

• Agriculture: (a) Public stockholding for food security purposes: The members have agreed on an interim solution (until negotiations can provide a permanent solution) not to challenge measures, through the WTO Dispute Settlement Mechanism, utilised by developing countries to support traditional stable food crops to enable public stockholding programmes for food security purposes that exist as of the date of the decision. (b) Understanding of tariff rate quota administration provisions of agricultural products: According to the decision members must evaluate the allocation of import licenses and consider the allocation of new licenses when licenses held by private operators are under-filled for reasons other than those that would be expected to be followed by a normal commercial operator. If there is no commercial reason for under-filled licenses countries must request holders of these licenses whether they would be prepared to make them available to other potential users. Countries must provide for an effective re-allocation mechanism of import licenses when member states do not notify their quota-fill rate or if the fill rate is below 65 percent.

At the conclusion of the Ministerial Conference the Trade Negotiations Committee was tasked with drafting a clearly defined work programme within the next 12 months on the remaining Doha Development issues, building on decisions taken in Bali on agriculture, development and LDC issues and other issues that are important to conclude the Doha Round of Multilateral Trade Negotiations as soon as possible.

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Source:

Ninth WTO Ministerial Conference (http://mc9.wto.org/)