Substance of Accession Negotiations

5.2 Rules

Export regulation

Customs tariffs, fees and charges for services rendered, application of internal taxes to exports

Customs tariffs are imposed less frequently on exports than on imports and for different reasons, e.g. for revenue purposes, to relieve shortages of foodstuffs or to provide an incentive to process raw materials domestically. Under GATT 1994, WTO Members are obliged to apply these on an MFN basis, to provide transparency and to be prepared to negotiate for their reduction.²⁹¹ Very few tariff bindings on export duties have been negotiated in the history of the organization.

Members will seek full information on any export duties levied by acceding governments and these are described in the Working Party Report. They have demonstrated an interest in the elimination of any tariffs that may distort trade and reduce their access to supplies of basic materials. They expect to receive information on fees and charges and the application of internal taxes on exports but, as they have frequently dealt with them in connection with imports, rarely ask for separate Protocol commitments on these subjects.

One Working Party Report contains a Protocol commitment in which the acceding country agreed “to apply export duties, export fees and charges, as well as internal regulations and taxes applied on or in connection with exportation in conformity with GATT 1994”²⁹². Relatively few Protocol commitments deal specifically with export tariffs. One such is: “The representative of [X] confirmed that [X] would apply export duties only in accordance with the provisions of the WTO and any such duties would be published in [its] Official Journal. Changes in the application of such measures would also be published in the Official Journal.”²⁹³ Another commitment provides that “[X] would apply all fees and charges for services rendered to exports in accordance with WTO agreements, in particular Articles VIII:1(a) , XI:1 and III:2 and 4 of the GATT 1994”.²⁹⁴

Some commitments relate to individual measures. One acceding country accepted a Protocol commitment not to impose export duties on iron and steel scrap²⁹⁵ and another to reduce its export duties on ferrous and non-ferrous scrap metals²⁹⁶. A third agreed to charge export duties only on products specified in its Protocol and not to increase the currently applied rates on these products except under exceptional circumstances following consultations with affected Members.²⁹⁷ One LDC undertook to transform an ad valorem export service fee into a specific fee.²⁹⁸

Export restrictions

Quantitative restrictions on exports, including bans, quotas and restrictive licenses, are generally prohibited by GATT 1994 as are import restrictions. There are, however, a number of exceptions to this rule, that permit, inter alia, restrictions applied: temporarily to prevent or relieve critical shortages of foodstuffs or other essential products; to protect national treasures; to conserve exhaustible natural resources if domestic production or consumption is also restricted, etc. Restrictions which Members consider necessary for the protection of their essential security interests are also permitted.²⁹⁹

Applicants are expected to list all export restrictions that they maintain and any reasons for their continued application. They must expect to remove any that cannot be justified. They will also be asked to provide information on the entities responsible for the authorization of exports, the way in which they are implemented, including methods for allocating any licenses, and on measures taken to ensure transparency.³⁰⁰

The baseline Protocol commitment is: “The representative of [X] confirmed that, from the date of its accession, [X] would apply any export licensing requirements or other export restrictions in conformity with WTO provisions, including those contained in Articles XI, XVII, XX and XXI of the GATT 1994”.³⁰¹ A simpler version has recently been used in one case: “The representative of [X] confirmed that, on accession, any remaining export restrictions and management measures would be applied in a manner fully consistent with WTO provisions”.³⁰²

In some cases, Protocol commitments also contain publication and notification requirements.³⁰³

Export subsidies

The Agreement on Subsidies and Countervailing Measures prohibits the granting of subsidies on exports of non-agricultural products and defines these as subsidies contingent, in law or in fact, upon export performance. The Agreement contains an Illustrative List of such subsidies which, while not exhaustive, provides a guide to this matter.³⁰⁴ This prohibition does not apply to LDCs and low-income developing countries. The latter will be struck off the list when their GNP per capita reaches $1,000 per annum.³⁰⁵

Members will seek full information on existing export subsidy programmes and their compatibility with the disciplines of the Agreement on Subsidies and Countervailing Measures. Some applicants have granted export subsidies. Members’ main objective is to ensure that any such subsidies are eliminated by the date of accession.³⁰⁶

Many applicants have not had the resources to grant export subsidies but sometimes provide tax exemptions which could meet the definition of export subsidies. For instance, questions have been raised in more than one accession Working Party concerning the conformity of schemes to exempt certain investors in export-oriented industries from import duties on their inputs even if some of their production is not exported. WTO Members have insisted that these schemes be replaced by duty drawback schemes, even in the case of LDCs which have argued that they were entitled to maintain export subsidies and that they lacked the administrative resources to implement such a scheme properly at present.³⁰⁷

Subsidies contingent upon the use of domestic over imported goods are also prohibited and Working Parties usually deal with these together with export subsidies.³⁰⁸ The baseline Protocol commitment is therefore: “The representative of [X] confirmed that [X] did not/would not maintain subsidies, including export subsidies, that met the definition of a prohibited subsidy, within the meaning of Article 3 of the Agreement on Subsidies and Countervailing Measures and that it would not introduce such prohibited subsidies in the future.”³⁰⁹

This wording encompasses import substitution subsidies as these are also prohibited. Occasionally, Working Parties have found it necessary to be more specific on this subject and in one case a transition period of three years was granted to phase out subsidies provided to manufacturers of automobiles and motorcycles using domestically developed and designed parts.³¹⁰

While a few countries have been granted transitional periods to phase out prohibited subsidies³¹¹, the usual practice now is not to grant transitional periods and the words “… would therefore not seek a transitional period for the elimination of such measures” are sometimes added at the end of the baseline commitment.³¹²

In response to the suggestion by some Members that one acceding country should be added to the list of low-income developing countries permitted to maintain export subsidies because its per capita GNP was under $1,000 per annum, a Member noted that this list was of specific countries and was not a self-nominated or expanding list of countries. While ready to consider some flexibility as to how this developing country would phase out its prohibited export subsidies, this Member maintained that, as it would be acceding to the WTO after the lapse of the phase-out period for export subsidies by developing countries, it should phase out its export subsidy schemes upon accession. The acceding country in question agreed to eliminate all prohibited subsidies (i.e., subsidies contingent upon export performance or the use of domestic over imported goods) to the textile and garment industries, as of the date of accession and was granted a five-year grace period to phase out benefits to current beneficiaries of investment incentives contingent on export performance.³¹³

The Protocol commitments of the two LDCs to have acceded include two elements: one to eliminate certain programmes considered to constitute export subsidies and a second to administer its subsidy programmes in full conformity with the WTO Agreement on Subsidies and Countervailing Measures, including Article 27, which exempts least-developed Members from the Article 3 prohibition of export subsidies.³¹⁴ One of these LDCs agreed to replace a system of remission of import fees and waiver of certain duties by a duty drawback system within a period of nine years.³¹⁵

 

Notes:

291. GATT 1994, Articles I:1, X:1, XXVIII bis:1. back to text
292. Viet Nam, para 260. back to text
293. Croatia, para 101. back to text
294. Tonga, para 102. back to text
295. Saudi Arabia, para 184. back to text
296. Viet Nam, para 260. back to text
297. China, Protocol I.11. back to text
298. Nepal, para 79. back to text
299. General prohibition: GATT 1994, Article XI:1. For the exceptions quoted, see: GATT 1994, Articles XI: 2(a), XX and XXI. back to text
300. See, for instance, Saudi Arabia, paras 179 to 183 and China, paras 157 to 165. back to text
301. Tonga, para 106; Saudi Arabia, para 183; Nepal, para 84; Armenia, para 112; Oman, para 77; Georgia, para 86; Jordan, para 116; Estonia, para 83. back to text
302. Viet Nam, para 269. back to text
303. Saudi Arabia, para 179; China, para 165 and Protocol I: 8. back to text
304. For the full text of the definition of subsidies and export subsidies, see Agreement on Subsidies and Countervailing Measures, Articles 1 and 3. For the Illustrative list of export subsidies, see Annex 1 of that Agreement. For a discussion of agricultural export subsidies see section on agricultural support commitments below. back to text
305. Agreement on Subsidies and Countervailing Measures, Annex VII. back to text
306. Transitional periods provided for the other original Members of WTO to bring their existing export subsidy programmes into conformity with the relevant provisions of the Agreement have now expired. Agreement on Subsidies and Countervailing Measures, Articles 27, 28 and 29. back to text
307. See Cambodia, paras 116 to 120. back to text
308. Agreement on Subsidies and Countervailing Measures, Article 3: 1 (b).  back to text
309. Tonga, para 115; Saudi Arabia, para 186; the former Yugoslav Republic of Macedonia, para 132; Moldova, para 105; Lithuania, para 102; Oman, para 81; Albania, para 92; Georgia, para 89; Estonia, para 85; Bulgaria, para 57. Occasionally, more specificity may be added (China, para 167). back to text
310. See Chinese Taipei, paras 101, 113 and 116. back to text
311. Jordan, para 126; Kyrgyz Republic, para 84; Panama, para 63. back to text
312. Tonga, para 115; the former Yugoslav Republic of Macedonia, para 132; Lithuania, para 102; Croatia, para 108; Bulgaria, para 57. back to text
313. Viet Nam, paras 272, 286 and 288. It may be noted that in the case of this acceding country, information on export subsidies has been included in the section on Industrial Policies. Viet Nam’s Working Party Report does not include any separate section on export subsidies. back to text
314. Cambodia, para 120; Nepal, paras 88 and 89. back to text
315. Cambodia, para 120. back to text