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Topics handled by WTO committees and agreements
Issues covered by the WTO’s committees and agreements

IMPORT LICENSING: TECHNICAL INFORMATION

Technical Information on Import Licensing

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Definition    back to top

Import licensing can be defined as administrative procedures requiring the submission of an application or other documentation (other than those required for customs purposes) to the relevant administrative body as a prior condition for importation of goods.

  

Basic obligations   back to top

GATT Article VIII  

Article VIII of GATT (entitled Fees and Formalities Connected with Importation and Exportation) deals with import licensing procedures in a non-specific manner.

—Paragraph 1(c) establishes a general obligation concerning formalities whereby Members recognize the need for minimizing the incidence and complexity of import and export formalities and for decreasing and simplifying import and export documentation requirements.

—Paragraph 2 requires each Member “to review the operation of its laws and regulations in the light of the provisions of this Article” upon request by another Member.

— Paragraph 3 prohibits Members from imposing “substantial penalties for minor breaches of customs regulations or procedural requirements.”
  

GATT Article X  

Article X requires Members to publish promptly laws, regulations, judicial decisions and administrative rulings of general application, including those pertaining to requirements on imports or exports and to administer them in a uniform, impartial and reasonable manner.

  

From the Tokyo Round Code to the Uruguay Round Agreement    back to top

The Tokyo Round Import Licensing Code was one of the agreements covering non-tariff measures concluded during the multilateral trade negotiations held between 1973 and 1979. It entered into force on 1 January 1980 with the objective of preventing import licensing procedures from unnecessarily hindering international trade. As a stand—alone agreement, it obligated only those countries which had signed and ratified it. During the Uruguay Round, it was revised to strengthen the disciplines on transparency and notifications. The revised Agreement entered into force on 1 January 1995. It is binding on all WTO Members.

  

Main objectives    back to top

The main objectives of the Agreement are to simplify, and bring transparency to, import licensing procedures, to ensure their fair and equitable application and administration, and to prevent procedures applied for granting import licences for having in themselves, restrictive or distortive effects on imports.

  

General provisions    back to top

Neutral application, fair and equitable administration   

Members are to apply import licensing procedures neutrally, and administer them in a fair and equitable manner (Article 1.3). Applications are not to be refused for minor documentation errors, not to be penalized heavily for any omissions or mistakes in documentation or procedures obviously made without fraudulent intent or gross negligence (Article 1.7). Licensed imports are to not be refused for minor variations in value, quantity or weight from the amount shown on the licence for reasons consistent with normal commercial practices (Article 1.8).
  

Publication of rules and procedures   

Rules and all information concerning procedures for the submission of applications, including the eligibility criteria for applicants, the administrative bodies to be approached and lists of products subject to import licensing are to be published, whenever practicable, 21 days prior to the effective date of the requirement but in all events not later than the effective date (Article 1.4 (a)).
  

Simple forms and procedures   

Applications forms and renewal forms are to be simple (Article 1.5). Application procedures and renewal procedures are to be simple. Applicants are to be allowed a reasonable period to submit licence applications. Where there is a closing date for applications, this period should be at least 21 days. The number of administrative bodies which an applicant has to approach in connection with an applications is not to exceed to a maximum of three (Article 1.6).
  

Other principles   

— Foreign exchange for licensed imports is to be allocated on the same basis as for goods not requiring import licences (Article 1.9).

— The security exception provisions of Article XXI of GATT 1994 apply (Article 1.10).

— Members are not required to disclose confidential information contrary to the public interest or which would prejudice the legitimate commercial interests of particular enterprises (Article 1.11).

  

Automatic import licensing
Definition  back to top

Automatic import licensing (licensing maintained to collect statistical and other factual information on imports) is defined as import licensing where the approval of the application is granted in all cases (Article 2.1).

  

Conditions   back to top

Automatic licensing procedures are not to be administered in such a way as to have restrictive effects on imports; there should be no discrimination among those applying for automatic licenses. Any person fulfilling the legal requirements should be equally eligible to apply for and obtain import licenses.

  

Main provision for automatic import licensing    back to top

Approval of application within 10 working days   

Licence applications may be submitted on any working day before customs clearance; they shall be approved immediately on receipt but in any case within 10  working days (Article 2.2 (a)). Developing country Members which were not a Party to the Tokyo Round Code may, upon notification to the Committee, delay the application of those two requirements for two years from their date of WTO Membership (footnote 5 to Article 2.2).
  

Use  

Automatic import licensing may be necessary whenever other appropriate procedures are not available. It is to be removed as soon as the circumstances which have given rise to its introduction no longer prevail (Article 2.2 (b)).

  

Non-automatic import licensing
Definition   back to top

Non-automatic import licensing is defined as licensing not falling within the definition of automatic import licensing (Article 3.1).

Non-automatic licensing is used to administer trade restrictions such as quantitative restrictions which are justified within the WTO legal framework.

  

Main provisions applicable to non-automatic import licensing    back to top

No additional restrictive or distortive effects 

Non-automatic import licensing must not have restrictive or distortive effects on imports additional to those caused by the imposition of the restriction, and is to correspond in scope and duration to the measure it is used to implement (Article 3.2).
  

All relevant information to be published   

Members are to publish all relevant information, including purposes other than the implementation of quantitative restrictions, exceptions or derogations, quota amounts, opening and closing dates of quotas and country-specific quota allocations. Whenever practicable, the information should be published 21 days prior to the effective date of the requirement, and in all events should be published not later than the effective date (Articles 3.3, 3.4, 3.5 (b)— (d)).
  

No discrimination among applicants  

There may be no discrimination among applicants. If a licence is refused, the applicant, on request, shall be given the reason for refusal, and shall have a right of appeal or review of the decision (Article 3.5 (e)).
  

Time limits for processing applications  

The period for processing applications shall not be longer than 30 days if applications are considered as and when received, and not longer than 60 days if applications are considered simultaneously (Article 3.5 (f)).
  

Validity of a licence   

The validity of a licence is to be of reasonable duration and not be so short as to preclude imports, including those from distant sources (Article 3.5 (g)). Full utilization of quotas is not to be discouraged (Article 3.5 (h)). Licences are to be issued in economic quantities (Article 3.5 (i)).
  

Other provisions   

— Members are to provide, upon the request of any Member having an interest in the trade in the product concerned, all relevant information (Article 3.5  (a)).

— In allocating licences, Members should consider the import performance of an applicant and are to ensure a reasonable distribution of licences to new importers, particularly to those importers importing products originating in developing and least-developed country Members (Article 3.5 (j)).

— If quotas are not allocated by country, licence holders are to be free to choose the sources of imports; if they are allocated among supplying countries, the licence must clearly stipulate the countries (Article 3.5 (k)).

— Compensating adjustments may be made in future licence allocations, under Article 1.8, where imports exceeded a previous licence level (Article 3.5 (l)).

  

Notifications   back to top

Copies of publications and full text of laws and regulations  

Members are required to submit copies of publications containing information on import licensing procedures and the full text of relevant laws and regulations (Articles 1.4 (a) and 8.2 (b)). In cases where the publications and legislation are not in a WTO official language, such notifications should be accompanied by a summary in one of the WTO official languages (G/LIC/3).
  

Notification of changes   

Members which institute licensing procedures or changes in these procedures are required to notify the Committee of them within 60 days of publication. Such notifications should include information on: products subject to licensing; contact point for information on eligibility; administrative bodies for submission of applications; date and name of publications where licensing procedures are published, together with copies of such publications; whether licensing is automatic or non-automatic; the administrative purpose of automatic import licensing procedures; measure implemented through non-automatic import licensing procedure; and expected duration of the licensing procedures (Articles 5.1-5.4).
  

Reverse notification   

Members have the possibility of making reverse notifications of non-notified import licensing procedures maintained by other Members (Article 5.5).
  

Annual questionnaire (by 30 September each year)  

Members are to complete the Questionnaire on Import Licensing Procedures by 30 September each year (Article 7.3, and appendix).

  

Committee on Import Licensing    back to top

The Committee on Import Licensing, open to all Members, has been established under Article 4. It meets as necessary to consult on matters relating to the operation of the Agreement or the furtherance of its objectives.