Substance of Accession Negotiations

5.2 Rules

Rules on trade in goods  back to top

Trading rights

While GATT provisions relate to imported products not to importers, the regulation of traders may create obstacles to trade in goods which contravene GATT provisions. Governments frequently adopt laws and regulations requiring traders to register the fact that they engage in the business of importing and exporting. Conditions attached to the right to trade in goods are inconsistent with the basic GATT principles of non-discrimination if they provide that goods imported from one country or set of countries are to be treated less favourably than those imported from other WTO Members (in terms of GATT Article I: MFN treatment), or if they treat imported goods less favourably than domestically-produced goods (GATT Article III: national treatment). Limitations on trading rights may also create restrictions on imports contrary to the provisions of GATT. These may be of two types: those that are quantity-based and those that are price-based. For example, any law which requires all traders to register and provides that no trader may import specified products amounts to a ban on imports of those products, i.e. to a quantity-based restriction (GATT Article XI). Regulations may also create import restrictions, for instance if they provide that traders may only import a specified quantity of a good during a given period of time, or that traders must obtain an authorization (which might be refused) each time they want to import goods (GATT Article XI). Price-based obstacles to trade would, for instance, be created if fees for the right to deal in imported goods are higher than the corresponding fees for the right to trade domestically-produced goods (GATT Article VIII).

Members of the WTO have been particularly interested in seeing if the basic GATT principle of non-discrimination is being observed. In recent Working Parties, some members have asked applicants if all enterprises in their country have the right to trade in all goods and have stated that any conditions attached to the right to trade, other than simple and automatic registration, would contravene GATT provisions and that the right of foreign-invested businesses to trade should not be restricted to importation for production purposes and exportation. They have therefore wished to establish that there are no restrictions on the right of individuals and enterprises in acceding countries to import or export goods into the territory of the acceder based on their registered scope of business, except as provided in WTO agreements.¹⁸⁶

Some members have also stated in recent Working Parties that limitations should not be imposed on foreign firms who wish to be importers of record, i.e. to engage in importing goods without being established in the acceding country and without selling or distributing the goods in that country. In particular applicants have been asked to confirm that importers of record are not subject to limitations on equity and are not required to invest in the acceding country.¹⁸⁷

Working Party discussions also relate to specific features of applicants’ measures. For instance, in one Working Party questions were asked about the scope and availability of trading rights and goods subject to designated trading — designated entities permitted to import goods and conditions attached to their right to trade in these goods.¹⁸⁸

The subject of trading rights was not dealt with in the first few accession Working Parties¹⁸⁹ but, all subsequent Working Parties have addressed this subject and all of these Working Party Reports contain Protocol commitments on it. A pattern was set by the Protocol commitments in an early Report which “confirmed that from the date of accession, [X] would ensure that all of its laws and regulations relating to the right to trade in goods, and all fees, charges or taxes levied on such rights would be in full conformity with its WTO obligations, including Articles VIII:1(a), XI:1 and III:2 and 4 of the GATT 1994 and that it would also implement such laws and regulations in full conformity with these obligations.”¹⁹⁰

This text forms the base of the commitments on the subject of many of the applicants that acceded thereafter.¹⁹¹ However recent Reports have tended to add further commitments and only one of these (on the accession of an LDC) maintains this basic text without additions.¹⁹² Another adds a commitment that “[X] would, in implementing its obligations under GATT 1994, modify the relevant laws, regulations and requirements to permit foreign firms, including sole proprietorships of other WTO Members, to register strictly to engage in importation without limitation on equity or requirement to invest in [X]”.¹⁹³ Some recent Reports contain an additional commitment to the effect that any registered entity could be an importer or exporter of record. One clarifies this by stating that “foreign firms and individuals with no commercial presence in [X], which were importers of record, would be able to register to engage solely in importation without limitation on equity or requirement to invest in [that country] and could obtain any necessary import licenses.”¹⁹⁴ Another uses similar language but goes on to deal in some detail with the relationship between importers of record and individuals and firms that have the right to distribute goods in the country concerned.¹⁹⁵ Commitments relating to importers of record now appear to have set a new standard.

The Protocol commitment of one acceding country provides, inter alia, for a three-year transitional period to progressively liberalize the scope and availability of trading rights, within which all enterprises in that country whether local-invested or foreign-invested would be granted the right to trade in all goods throughout its customs territory, with the exception of goods which continue to be subject to State trading. Except as otherwise provided for in the Protocol, all foreign individuals and enterprises, including those not invested or registered in the country, would be accorded treatment no less favourable than that accorded to enterprises in the country with respect to the right to trade. All necessary legislative procedures to implement these provisions would be completed during the transition period.¹⁹⁶

An LDC also negotiated a transitional period of eight months in order to bring its legislation into line with its commitments.¹⁹⁷

 

Notes:

186. E.g. Viet Nam, para 136; China, para 80; Chinese Taipei, para 19. back to text
187. E.g. Saudi Arabia, paras 90 and 101. back to text
188. China, paras 85 and 86. back to text
189. Panama, Mongolia, Bulgaria and Ecuador. back to text
190. Kyrgyz Republic, para 30. back to text
191. Tonga, para 52; Saudi Arabia, para 103; Nepal, para 36; Cambodia, para 50; the former Yugoslav Republic of Macedonia, para 65; Armenia, para 47; Moldova, para 54; Lithuania, para 42; Croatia, para 47; Oman, para 40; Albania, para 48; Georgia, para 44; Jordan, para 53; Estonia, para 41; Latvia, para 40. back to text
192. Nepal. back to text
193. Oman, paras 37 and 40, which contain some additional material, e.g. on the relationship between relevant provisions of GATT and GATS. back to text
194. This is the language of the Cambodian Report, para 50. The text of the Saudi Arabian para 103 commitment is more specific: “The representative of Saudi Arabia confirmed that … from the date of accession foreign firms and individuals with no commercial presence in Saudi Arabia, which were importers of record, would be able to register to engage solely in importation without limitation on equity or requirement to invest in Saudi Arabia and could obtain any necessary import licenses”. back to text
195. Viet Nam. For the full text, see paras 139, 146 and 147. back to text
196. China. For the full text, see paras 83, 84 86 and Protocol I:5. back to text
197. Cambodia, para 50. back to text