Jacobs University Bremen International Trade Law - Lecture 9: Revised Kyoto Convention

JUB International Trade Law
Scope of Lecture 9
Spring Term 2011
Dr. Carsten Weerth BSc (Glasgow)

Lecture by Dr. Carsten Weerth BSc (Glasgow)
JUB Int. Trade Law Lecture 9
Part C.
Selected Problems of Global Customs Law
Revised Kyoto Convention: uniform customs
procedures around the world?
This lecture focusses on the RKC and whether it
is reality or fiction that customs procedures
around the world can be harmonized.
It also covers the topic of trade facilitation.

Kyoto Convention
The original International Convention on the
simplification and harmonization of Customs
procedures (so called Kyoto Convention) has
entered into force on 25 September 1974.
The EU Customs code as is now in force is based
on the KC 1974.
The KC has been amended into the so called
Revised Kyoto Convention in 2003 and has
entered into force on 3 February 2006.

Overall idea
The overall idea of customs harmonization and
simplification is that customs declarations should be used
in different countries / continents.
Example: Export declarations from the US that could be
used as import declarations in the EU.
Export declarations from the EU that could be used as
import declarations in Russia or China...
Faster and cheaper for trade companies - nice idea, but a
far way to go...

EU Customs Union
The EU Customs Union consists out of 27 national
customs authorities [remember lecture 5].
In 1995 the first electronic declaration systems were
intruduced.
In 2005 a common electronic Transit procedure was
created – New Computerized Transit System NCTS.
In 2009 a common electronic export system was created
– Automated Export System AES.
In 2011 there still are 27 different import systems...

Practical Problems
Before 1988 there were more than 150 different Customs
declarations within the EEC out of 12 member states – so
the situation of 2011 is much better than before :)
Electification of declarations by help of the so called UN
EDIFACT – messaging system does not make thinks
easier. The EU would have to align its IT with about 150
states of the World – an enormous and possibly
impossible task...
So what is the scope of the RKC and what is working
well?

Practical Problems
Scope of the RKC
The RKC consists of 20 Articles, a general Annex
and serveral specific annexes (A to K).
The RKC is signed and applied from 72 member
states (wherefrom 27 are the EU member states
and the EU itslef – so there are only 44 other
members of the WCO / WTO applying the RCK.
The MCC of the EU will be based on the RKC.

Practical Problems
Scope of the RKC
Article 2 covers the scope of the RKC
"Each Contracting Party undertakes to promote the
simplification and harmonization of Customs procedures and,
to that end, to conform, in accordance with the provisions of
this Convention, to the Standards, Transitional Standards and
Recommended Practices in the Annexes to this Convention.
However, nothing shall prevent a Contracting Party from
granting facilities greater than those provided for therein, and
each Contracting Party is recommended to grant such greater
facilities as extensively as possible. ".

Article 4 explains the Structure of the RKC:
"1. The Convention comprises a Body, a General Annex and
Specific Annexes.
2. The General Annex and each Specific Annex to this
Convention consist, in principle, of Chapters which
subdivide an Annex and comprise :
(a) definitions; and (b) Standards, some of which in the
General Annex are Transitional Standards. 4.
3. Each Specific Annex also contains Recommended
Practices.
4. Each Annex is accompanied by Guidelines, the texts of
which are not binding upon Contracting Parties.".

Scope of the RKC Annexes
Specific Annex A
Formalities prior to the lodgement of the Goods
declaration
Temporary storage of goods
Specific Annex B
Clearance for home use
Re-importation in the same state
Relief from import duties and taxes

Specific Annex C
"Definition
For the purposes of this Chapter : E1./ F1.
"outright exportation" means the Customs procedure applicable to goods which, being in free
circulation, leave the Customs territory and are intended to remain permanently outside it.
Principle
1. Standard
Outright exportation shall be governed by the provisions of this Chapter and, insofar as applicable,
by the provisions of the General Annex.
Documentation
2. Recommended Practice
National legislation should provide that goods may be declared in an alternative manner to the
standard Goods declaration on the condition that it provides the necessary particulars relating to the
goods to be cleared for outright exportation.
Evidence of arrival at destination
3. Standard
The Customs shall not require evidence of the arrival of the goods abroad as a matter of course.

Specific Annex D
Customs warehouses
Free zones
Specific Annex E
Transit
Transhipment
Carriage of goods coastwise

Specific Annex F
Inward processing
Outward processing
Drawback
Processing of goods for home use
Specific Annex G
Temporary admission

Specific Annex H
Offences
Specific Annex J
Special procedures:
Travellers
Postal traffic
Means of transport for commercial use
Stores
Relief consignments

Specific Annex K
Origin:
Rules of Origin
Documentary evidence of origin
Control of documentary evidence of origin
END of the RKC part
Read more under URL: http://www.wcoomd.org
-> Procedures and Facilitation

WTO / WCO perspectives on Trade Facilitation
There is no legal definition of 'trade facilitation' but
everybody is talking about it and international
organisations are aiming at it...
Andrew Grainger defines: "Trade Facilitation is the
simplification, harmonisation, standardisation and
modernisation of trade procedures". [see his PhD-Thesis
and paper in WCJ, Vol. 2 No. 1, pp. 17 – 30.]
WCO and WTO and other organisations are however
differing with their definitions: [contn.]

WTO: "The simplification and harmonisation of
internantional trade procedures", where trade procedures
are the 'activities, practices and formalities involved in
collecting, presenting, communicating and processing
data required for the movement of goods in international
trade' (WTO, 1998).
WCO: "Trade facilitation, in the WCO context means the
avoidance of unnecessary trade restrictiveness. It can
achieved by applying modern techniques and
technologies, while improving the quality of controls in an
internationally harmonized manner." (WCO, 2011).

Other organisations interested in trade facilitation:
UNECE, UN/CEFACT, IRU, ISO, UNCTAD, OECD,
UNESCAP...
The GATT contains three cruicial articles that are part
of the trade facilitation topic:
Articles V, VIII and X GATT
For a detailled introduction see paper from Bolhöfer, WCJ
Vol. 2 No. 1, pp. 31 – 40.

GATT rules and DSU cases
Many DSU cases have been tackling some of
these three issues:
Article V GATT Freedom of Transit
Article VIII GATT Fees and Formalities
Article X GATT Publication and Administration
of Trade Regulations

Article V GATT – Freedom of Transit
Article V GATT defines comprehensively the
meaning of transit, stipulates freedom of transit
and allows Members to regulate traffic in transit
through their territory, as long as the traffic is not
unnecessarily delayed or restricted and as long as
it is exemted from duties and other charges.
Members have asserted violation of Article V
GATT serveral times, but the parties to the
disputes always solved the matter before the
establish-ment of a panel – so there are no
rulings!

Article VIII GATT – Fees and formalities
Article VIII GATT addresses fees and formalities
associated with the import and export of goods. It
explicitly limits fees and charges in connection
with the importation and exportation of goods
(other than duties and internal taxes) to the
approximate cost of services rendered.
Serveral disputes have been settled by a panel or
the Appelate Body revolved around article VIII
GATT, e.g. WT/DS/56 and many pre-WTO-cases.

Article X GATT – Transparency and
availability of information
Article X GATT is about transparency and
availability of information to traders. The
publication requirement extends to administrative
rulings in individual cases where such rulings
establish or revise principles or criteria applicable
in future cases. Many DSU-cases were tackled by
a panel or the Appelate Body, e.g. WT/DS/24,
WT/DS27/R, WT/DS/44/R, WT/DS155/R and
many pre-WTO-cases.

Conclusions Kyoto-Convention:
- Harmonisation of customs procedures are
possible and this would facilitate trade (make
things easier and that would take less costs and
time for traders)
- However only 73 WCO Members have signed
out of 177 members (out of which 27 are EU
members and the EU itself)... that means that only
45 members apart from the EU are interested in
harmonising customs procedures, yet... (discuss)

Conclusions trade facilitation:
- serveral different definitions
- many organisations want it (hot topic)
- GATT Articles V, VIII and X are tackled
- long way until an export declaration can be used
as import declaration from the EU to Russia or
from China to the US...
- new technical systems are making things even
more complicated...
End of lecture...

Jacobs University Bremen International Trade Law - Lecture 9: Revised Kyoto Convention

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Jacobs University Bremen International Trade Law - Lecture 9: Revised Kyoto Convention