Tariffs to Trade in Goods Dr. Juan C. Ochoa Postdoctoral Fellow, - PowerPoint PPT Presentation

Tariffs to Trade in Goods Dr. Juan C. Ochoa Postdoctoral Fellow, University of Oslo Faculty of Law/Norwegian Centre for Human Rights Oslo, 12 Sept. 2013

Tariffs to trade in goods Contents Customs Duties on Imports .................................................................................................................................................................. 4 Definition: .......................................................................................................................................................................................... 4 Types: ............................................................................................................................................................................................... 6 Purposes: .......................................................................................................................................................................................... 6 Regulation under WTO law: .............................................................................................................................................................. 6 Negotiations on the reduction of Customs Duties.............................................................................................................................. 7 Basic rules governing tariff negotiations ............................................................................................................................................ 7 Tariff bindings: ................................................................................................................................................................................... 8 Schedule of concessions: .................................................................................................................................................................. 8 Rules on tariff concessions under WTO .......................................................................................................................................... 10 Imposition of customs duties: .......................................................................................................................................................... 10 Other Duties and Charges on Imports ................................................................................................................................................ 15 1. Definition: .................................................................................................................................................................................. 15 2. WTO Rules ............................................................................................................................................................................... 15 Special cases: .................................................................................................................................................................................... 16 Customs Duties and Other Duties and Charges on Exports ............................................................................................................... 17 1. Definition ................................................................................................................................................................................... 17 2. Purposes: .................................................................................................................................................................................. 17 3. WTO Rules ............................................................................................................................................................................... 17

Tariffs to trade in goods Include:  Customs duties,  Other duties and charges Tariffs are a type of restriction to imports Which type? What CDs and other duties and charges have in common?

Customs Duties on Imports Definition: Not defined in any multilateral agreement on trade in goods. “Financial charge or tax on imported goods, due because of their importation ” (Bossche et al., at 430)  The obligation to pay the charge accrues at the moment and by virtue of the importation, not because an internal event. o To determine this, the characteristics of the measure and the circumstances of the case need to be considered o Relevant case: China – Auto Parts, AB report, 2009, paras. 158-166

Types of restrictions to market access for goods and services from other countries Border restrictions Internal restrictions Tariffs Taxes (to be studied) Includes:  Customs duties,  Other duties and charges Non-tariffs barriers: Regulations (to be residual category studied) Includes:  Quantitative restrictions  Other non-tariff barriers Affect trade in goods and services Relevant distinction as different rules apply to different types of restrictions

Types:  Ad valorem : calculated based on the value of the concerned good;  Non ad-valorem: can be specific, compound, mixed or ‘other’ custom duties.  Specific: based on unit of quantity such as weight, length, area, volume or number of the concerned good.  Compound: A duty comprising an ad valorem duty to which a specific duty is added or subtracted,  Mixed duty: duty that can be either an ad valorem duty or a specific duty, subject to an upper and/or a lower limit. Purposes: 1. Source of revenue for govs. 2. Used to protect and/or promote domestic industries . They make the ‘like’ domestic products relatively cheaper. Regulation under WTO law: Not prohibited under WTO law WTO has encouraged the conversion of non- tariff external restrictions into customs duties (‘tariffication’)  Why?

However Art. XXVIII bis of the GATT 1994 calls upon WTO Members to negotiate to ‘bound’ custom duties and to progressively reduce them through rounds of negotiation (Bossche et al., at 445).  Guzman et al., at 167: Although encouraged to do so, WTO Members are not obliged to bind all of their product lines Negotiations on the reduction of Customs Duties Have taken pla ce in the context of ‘Rounds’ of trade negotiations.  The first five under the GATT 1947 focused on the reduction of tariffs.  The subsequent rounds had a broader agenda. The Doha round was started in Nov. 2001.  Which is the main area of the current impasse of this round? Basic rules governing tariff negotiations At 429: 1) the principle of reciprocity and mutual advantage; and 2) the most-favoured nation treatment obligation. Is there an agreed method to measure reciprocity? If not, how many Members do it?

Does the principle of reciprocity apply in tariff negotiations btw. developed and developing country Members? Tariff negotiations are governed also by the MFN treatment obligation set out in Art. 1:1 of the GATT 1994.  “Any tariff reduction a Member grants to any country as the result of tariff negotiations with that country must be granted to all other Members, immediately and unconditionally. Various approaches to tariff negotiations:  Product-by-product approach.  Formula approach;  Sectorial approach. Since the 1963-1967 Kennedy Round, multilateral tariff negotiations have been primarily conducted on the basis of a formula approach. Tariff bindings: At 438: It is “a commitment not to raise the customs duty on a certain product above an agreed level.” Schedule of concessions: The tariff bindings of a member are set out in that Member’s Schedule of Concessions.

At 439: Each Member of the WTO has a schedule, except when the Member is part of a custom union, in which case the Member has a common schedule with the other members of the custom union.”  Custom union: type of a preferential trade agreement in which members eliminate tariffs and other barriers within the members’ territory and establish ‘substantially the same duties and regulation’ for goods coming from third countries. At 439: “Pursuant to Art. II:7 of the GATT 1994, the Schedules of Members are an integral part of the GATT 1994 .” Within each country schedule customs duties vary on a product-by-product basis. Most schedules are structured according to the Harmonized System.  In EC – Chicken Cuts (2005), AB considered that the Harmonized System is relevant for the purpose of int erpreting tariff commitments in the Members’ Schedules (para. 199) Whose obligation is to ensure that the scope of the tariff concession is unambiguous? The importing Member, the one which writes the tariff schedule.  Relevant case: EC-Customs Classification of Chicken Cuts

Rules on tariff concessions under WTO The schedule of concessions gives the multilaterally agreed tariff ceiling for the country and product in question.  WTO Members are under an obligation to keep their applied rates at or below the level of their bound rates ( GATT 1994, Article II:1). WTO Members can attach terms or conditions in their tariff concessions (GATT 1994, Art. II:1(b)  Are there limits to these terms and conditions? Can customs duties actually applied by a country be lower than the tariff binding? Imposition of customs duties: It may require three determinations to be made: 1. Determination of the proper classification of the imported good; 2. Determination of the customs value of the imported good. 3. Determination of the origin of the imported good.