MARKET ACCESS

Dr. Dao Gia Phuc

 ?
Export country Import country

Dr. Dao Gia Phuc

1. What kind of measures can prevent or limit
market access?

Dr. Dao Gia Phuc

Border measures:
§  Tariffs;
§  Quantitative restriction.

Internal measures:
§  Technical barriers to trade;
§  Sanitary and Phyto-Sanitary
measures;
§  Environmental protection …

Import country Dr. Dao Gia Phuc

MARKET ACCESS

¨  Border measures
¤ Tariffs;
¤ Quantitative restrictions;
¨  Internal measures
¤ Technical barriers to trade;
¤ Sanitary and Phyto-Sanitary
measures;
¤ Environmental protection.

Dr. Dao Gia Phuc

MARKET ACCESS

¨  Border measures
¤ Tariffs or Custom duties:
n Definition, classification;
n Negotiations on tariff reductions;
n Tariff concessions and Schedule of
Concessions;
n Imposition of Customs duties.
¤ Quantitative restrictions.
Dr. Dao Gia Phuc
TARIFF BARRIERS

Dr. Dao Gia Phuc

 TARIFFS

What are “Tariffs” ?

A financial charge, in form of a tax, imposed on
products at the time of, and/or because of, their
importation/exportation.
Classification:
§  ad valorem
§  non – ad valorem

Dr. Dao Gia Phuc

 TARIFFS

Classification:

§  ad valorem: a percentage of the value of the

imported good.
Ex: a 15% ad valorem duty on computers worth $1000

Dr. Dao Gia Phuc

 TARIFFS
§  non – ad valorem (others):
o  Specific customs duties
Ex: a duty of $3000 on each car
o  Compound customs duties:
Ex: a customs duty on wool ($1000/ton) is 10% ad
valorem and $50 per ton. To import 03 tons ?
o  Mixed customs duties:
Ex: a customs duty on shirts of 10% ad valorem or
4$ per shirt, whichever duty is higher. Dr. Dao Gia Phuc
 TARIFFS

Meaning ?
§  A source of revenue for governments especially
developing countries;
§  Used to protect and/or promote domestic
industries.
In principle, imposing customs
duties is the only lawful instrument
of Protection
Dr. Dao Gia Phuc
 NEGOTIATIONS on the Reduction of
Customs Duties
Article XXVIII bis of GATT 1994:
“The contracting parties recognize that customs duties often
constitute serious obstacles to trade; thus negotiations on a
reciprocal and mutually advantageous basis, directed to the
substantial reduction of the general level of tariffs and other
charges on imports and exports and in particular to the
reduction of such high tariffs as discourage the importation
even of minimum quantities, and conducted with due regard to
the objectives of this Agreement and the varying needs of
individual contracting parties, are of great importance to the
expansion of international trade. The CONTRACTING
PARTIES may therefore sponsor such negotiations from time
to time.” Dr. Dao Gia Phuc
NEGOTIATIONS on the Reduction of
Customs Duties

-  One of the main instruments of WTO to

achieve its objectives;
-  The eight GATT Rounds of trade
negotiations were very successful in
reducing customs duties.

Dr. Dao Gia Phuc

 The average duty on industrial products imposed by developed
countries
40 Custom duties %

35

30

25

20

15

10

0
1947 1962 1972 1987 1995

Dr. Dao Gia Phuc

 NEGOTIATIONS on the Reduction of
Customs Duties

Whether customs duties remain a significant barrier in intl trade ?

-  Most developing country Members still impose relatively
high customs duties;
-  Developed as well as developing country Members still
have high duties on specific groups of ‘sensitive’ products;
-  In very competitive markets, a very low duty may still
constitute a barrier;
-  Customs duties may also impede the economic
development of developing country Members in case duties
increase with the level of processing.
Dr. Dao Gia Phuc
 NEGOTIATIONS on the Reduction of
Customs Duties
Whether customs duties remain a significant barrier in intl
trade?
Ex: customs duties of EU on aluminum products

= 0% = 3%

= 7,5% = 12%
Dr. Dao Gia Phuc
2. Why do countries usually impose 0% tariff
on raw materials but high tariff on finished
products?

Dr. Dao Gia Phuc

 NEGOTIATIONS on the Reduction of
Customs Duties

Basic Rules Governing Tariff Negotiations

-  Article XXVIIIbis of GATT 1994

-  Article I:1 of GATT 1994

Dr. Dao Gia Phuc

 NEGOTIATIONS on the Reduction of
Customs Duties

Basic Rules Governing Tariff Negotiations:

-  Article XXVIIIbis of GATT 1994: the principle of
reciprocity and mutual advantage
§  When a member request another member to
reduce its duties on certain products, it must be
ready to reduce its own duties;
§  This does not apply to negotiations between
developed and developing country Members
(Article XXXVI:8 of GATT 1994, Enabling
Clause)
Dr. Dao Gia Phuc
 NEGOTIATIONS on the Reduction of
Customs Duties

Basic Rules Governing Tariff Negotiations:

-  Article I:1 of GATT 1994: Most-Favoured-Nation
treatment
§  Any tariff reduction must be granted to all other
members, immediately and unconditionally;
§  This principle also grants exceptions for Regional
Economic Integration (Article XXIV of GATT
1994) and for developing country Members
(Enabling Clause).

Dr. Dao Gia Phuc

 TARIFF CONCESSIONS

-  The results of tariff negotiations setting out in Members’

Schedule of Concession;
-  Schedule of Members are an integral part of GATT 1994
(Article II:7), including:
§  Part I: MFN concessions with respect to agricultural
products and non-agricultural products;
§  Part II: Preferential Concession;
§  Part III: Concession on non tariff measures;
§  Part IV: specific commitments on domestic support
and export subsidies on agricultural products.
Dr. Dao Gia Phuc
TARIFF CONCESSIONS

Dr. Dao Gia Phuc

3. What is the main information contained in a
Schedule?

Dr. Dao Gia Phuc

 TARIFF CONCESSIONS

Schedules generally contains the following information:

(1)  HS tariff item number
(2)  Description of the product
(3)  Base rate of duty
(4)  Bound rate of duty
(5)  Initial negotiating rights (INRs)
(6)  Other duties and charges

Dr. Dao Gia Phuc

3. What is the difference between a "bound
tariff" and an “tariff rate at accession” ?

Dr. Dao Gia Phuc

 TARIFF CONCESSIONS

Protection of Tariff concessions :

Article II:1(a) and II:1(b) first sentence of GATT 1994:
“(a) Each Member shall accord to the commerce of the
other Members treatment no less favourable than that
provided for in the appropriate Part of the appropriate
Schedule …
(b) The products … relating to any Member, which are the
products of territories of other Members, shall, on their
importation into the territory to which the Schedule relates
… be exempt from ordinary customs duties in excess of
those set forth and provided therein.” Dr. Dao Gia Phuc
 TARIFF CONCESSIONS

Protection of Tariff concessions:

-  Artilce II:1(a) of GATT 1994: Members shall accord to the

commerce of other Members treatment no less favourable
than that provided for in their Schedule;

-  Article II:1(b) of GATT 1994: the obligation to exempt

products from customs duties in excess of those set forth
in the Schedule.
Dr. Dao Gia Phuc
TARIFF CONCESSIONS

CASE: EU – Chicken Cut (2005)

-  Complainant: Brazil, Thailand

-  Respondent: EU
-  Product: frozen salted chicken cuts 1-2%

Dr. Dao Gia Phuc

CASE: EU – Chicken Cut (2005)

= 102.4€/ 100kg

= 15.4% ad valorem
Dr. Dao Gia Phuc
CASE: EU – Chicken Cut (2005)

Dr. Dao Gia Phuc

5. Problem Solving (e-learning page)

Dr. Dao Gia Phuc

IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

Determinations need to be identified ?

-  Classification of imported goods;

-  Customs value;
-  The origin of the imported goods.

Dr. Dao Gia Phuc

IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

CUSTOMS CLASSIFICATION:

-  No obligation under GATT to classify goods;

-  International Convention on Harmonized
Commodity Description and Coding system –
HS Convention.
§  Issued by WCO to which most WTO Members
are a party.

Dr. Dao Gia Phuc

IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

CUSTOMS CLASSIFICATION:
HS Code
-  including:
§  21 Section
§  99 Chapter
§  1241 Heading
§  5000 commodity groups
-  HS is revised every 4 to 6 years.
Dr. Dao Gia Phuc
IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

CUSTOMS CLASSIFICATION:
HS Code

72 17 . 10 . 10
Dr. Dao Gia Phuc
Dr. Dao Gia Phuc
IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS
CUSTOMS CLASSIFICATION:
HS Convention: General Rules for the Interpretation
of the HS – (GRI):

…
2(a). Any reference in a heading to an article shall be
taken to include a reference to that article incomplete
or unfinished, provided that, as presented, the
incomplete or unfinished article has the essential
character of the complete or finished article …

Dr. Dao Gia Phuc

IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

Dr. Dao Gia Phuc

IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS
CUSTOMS CLASSIFICATION:
HS Convention: General Rules for the Interpretation
of the HS (GRI):

3. When goods are, prima facie, classifiable under two

or more headings, classification shall be effected as
follows:
a)  The heading which provide the most specific
description shall be preferred to headings
providing a more general description;
Dr. Dao Gia Phuc
IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

Dr. Dao Gia Phuc

 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

8467 Tools for working in the hand, pneumatic, hydraulic or with

self-contained electric or non-electric motor.

8509 Electro-mechanical domestic appliances, with self-contained

electric motor, other than vacuum cleaners of heading 85.08

8510 Shavers, hair clippers and hair-removing appliances, with self-

contained electric motor.

Dr. Dao Gia Phuc

 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS
CUSTOMS CLASSIFICATION:
HS Convention: General Rules for the Interpretation
of the HS (GRI):
3. When goods are, prima facie, classifiable under two or
more headings, classification shall be effected as follows:
b)  When goods cannot be classified as provided under
(a), mixtures, composite goods consisting of different
materials or made up of different components, and
goods put up in sets for retail sale, shall be classified
as if they consisted of the material or component
which gives them their essential character.
Dr. Dao Gia Phuc
IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

Dr. Dao Gia Phuc

 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

0406 Cheese and curd

1902 Pasta, whether or not cooked or stuffed (with meat or other

substances) or otherwise prepared such as spagetti, macaroni,
noodles, lasagne, gnocchi, ravioli, cannelloni; couscous, whether
or not prepared

2103 Sauces and preparations therefor; mixed condiments and

mixed seasonings; mustard flour and meal and prepared mustard

Dr. Dao Gia Phuc

 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS
CUSTOMS CLASSIFICATION:
HS Convention: General Rules for the Interpretation
of the HS (GRI):
3. When goods are, prima facie, classifiable under two
or more headings, classification shall be effected as
follows:
c)  When goods cannot be classified as provided
for (a) or (b), they shall be classified under
heading which occurs last in numerical order
among those which equally merit consideration.
Dr. Dao Gia Phuc
8201 Hand tools, the following: spades, shovels, mattocks, picks,
hoes, forks and rakes; axes, bill hooks and similar hewing tools;
secateurs and pruners of any kind, scythes, sickles, hay knives,
hedge shears, timber wedges and other tools of a kind used in
agriculture, horticulture or forestry.

8202 Hand saws; blades for saws of all kinds (including slitting,
slotting or toothless saw blades)

Dr. Dao Gia Phuc

IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS
CUSTOMS CLASSIFICATION:
HS Convention: General Rules for the Interpretation
of the HS (GRI):

4. Goods which cannot be classified in accordance

with the above rules shall be classified under the
heading appropriate to the goods to which they are
most akin, i.e. which which they bear most likeness.

Dr. Dao Gia Phuc

IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

VALUATION FOR CUSTOMS PURPOSES:

Legal basis:
-  Article VII of GATT 1994;
-  The Note ad Article VII;
-  Customs Valuation Agreement.

Dr. Dao Gia Phuc

 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS
Article VII: 2(a) GATT 1994
The value for customs purposes of imported merchandise
should be based on the actual value of the imported
merchandise on which duty is assessed, or of like
merchandise, and should not be based on the value of
merchandise of national origin or on arbitrary or fictitious
values.
Article 1.1 of the Customs Valuation Agreement
The customs value or imported goods shall be the
transaction value, that is the price actually paid or payable
for the goods when sold for export to the country on
importation … Dr. Dao Gia Phuc
 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS
‘Transaction value”: the price actually paid or payable for
the goods normally shown in the invoice, contract or
purchase order.
When the ‘transaction value’ cannot be determined, those
methods can apply:
§  Transaction value of identical or similar goods (Article
2, 3);
§  The deductive value method (Article 5);
§  The computed value method (Article 6);
§  The fall-back method (Article 7.1).
Dr. Dao Gia Phuc
 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

DETERMINATION OF ORIGIN
Why important ?
-  Customs duties applied to imported goods differ
depending on the country origin;
-  A basic instrument to impose: anti-dumping duties,
countervailing duties, etc.
-  In a global value chain, many industrial products
are produced with inputs and materials from more
than one country.
Dr. Dao Gia Phuc
 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

DETERMINATION OF ORIGIN
WTO regulations on ROOs:
-  Agreement on Rules of Origin make a distinction
between (1) non-preferential rules of origin; and
(2) preferential rules of origin;

-  The agreement provides a work program to

harmonize non-preferential rules of origin. However,
Members fail to meet the deadline in 1998. Dr. Dao Gia Phuc
 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS
WHOLLY-PRODUCED ORIGIN
(Kyoto Convention, Annex K Chapter 1)
a. mineral products extracted from its soil, from its territorial waters or
from its sea-bed;
b. vegetable products harvested or gathered in that country;
c. live animals born and raised in that country;
d. products obtained from live animals in that country;
e. products obtained from hunting or fishing conducted in that
country;
f. products obtained by maritime fishing and other products taken
from the sea by a vessel of that country;
g. products obtained aboard a factory ship of that country solely from
products of the kind covered by paragraph (f) above;
Dr. Dao Gia Phuc
 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS
WHOLLY-PRODUCED ORIGIN
(Kyoto Convention, Annex K Chapter 1)

…
h. products extracted from marine soil or subsoil outside that country's
territorial waters, provided that the country has sole rights to work that
soil or subsoil;
i. scrap and waste from manufacturing and processing operations, and
used articles, collected in that country and fit only for the recovery of
raw materials;
j. goods produced in that country solely from the products referred to
in paragraphs (a) to (ij) above

Dr. Dao Gia Phuc

 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

NON WHOLLY-PRODUCED ORIGIN:

(1) (2) (3) (4)

The method of ‘Qualifying process’
Dr. Dao Gia Phuc
 IMPOSITION OF CUSTOMS DUTIES ON
IMPORTS

NON WHOLLY-PRODUCED ORIGIN:

The method of ‘Value added’

Dr. Dao Gia Phuc
 GERMANY CHINA JAPAN
HS 8482 HS 7320 HS 8412

VIET NAM
HS 8508
The method of ‘Change in tariff classification’
Dr. Dao Gia Phuc
QUANTITATIVE RESTRICTIONS

Dr. Dao Gia Phuc

 DEFINITION AND TYPES

What is a ‘Quantitative restriction’ ?

A measure that limits that quantity of a product

that may be imported or exported:
•  1000 tonnes of cocoa power a year;
•  A limit on that importation of a certain product
to the value of $12.000.000 per year.

Dr. Dao Gia Phuc

 RULES ON QUANTITATIVE RESTRICTIONS

GENERAL PROHIBITION ON QRs

Article XI:1 of GATT 1994:
“No prohibitions or restrictions other than duties, taxes
or other charges, whether made effective through
quotas, import or export licenses or other measures,
shall be instituted or maintained by any contracting
party on the importation of any product of the territory
of any other contracting party or on the exportation or
sale for export of any product destined for the territory
of any other contracting party.” Dr. Dao Gia Phuc
 RULES ON QUANTITATIVE RESTRICTIONS

GENERAL PROHIBITION ON QRs

Panel report of Japan – Semi-Conductors (1988):
“in applied to all measures instituted or
maintained by a contracting party prohibiting or
restricting the importation, exportation or sale
for export of products other than measures that
take the form of duties, taxes or other charges.”
Dr. Dao Gia Phuc
 RULES ON QUANTITATIVE RESTRICTIONS

Scope of application
Not only limit in de jure measures but also de
facto measures:
•  Measures in which have in fact that effect are
also quantitative restrictions within the
meaning of Article XI:1.
Argentina – Hides and Leather (2001), Colombia
– Entry ports (2009)

Dr. Dao Gia Phuc

 Dr. Dao Gia Phuc

RULES ON QUANTITATIVE RESTRICTIONS

Scope of application
•  Export quotas (China – Raw materials);
•  Minimum import price requirements (EEC – Minimum
Import Prices);
•  Minimum export price requirements (Japan – Semi-
Conductors);
•  A discretionary and non-automatic licensing system (India
– Quantitative Restrictions);
•  Trade balancing requirements (India – Autos );
•  Restriction of ports of entry (Colombia – Ports of Entry).
 Dr. Dao Gia Phuc

RULES ON QUANTITATIVE RESTRICTIONS

Tariff quotas ?
 RULES ON QUANTITATIVE RESTRICTIONS

Voluntary Export Restrains (VERs):

Dr. Dao Gia Phuc

 RULES ON QUANTITATIVE RESTRICTIONS

QRs and Custom Duties ?

-  Customs duties are more transparent;

-  Customs duties are easier to negotiate;
-  Prices increase resulting from QRs ordinarily benefits
the importers;
-  The administration of QRs is more open to corruption;
-  QRs impose absolute limits on imports.

Dr. Dao Gia Phuc

 RULES ON QUANTITATIVE RESTRICTIONS

Exceptions:
-  To prevent or relieve critical shortages of essential
foodstuffs or other products (Article XI:2(a));
-  Necessary to the application of standards or regulations
for the classification, grading or marketing of
commodities in international trade (Article XI:2(b));
-  Import restrictions on any agricultural or fisheries
product necessary in certain situations (Article XI:2(c));
-  To safeguard the balance of payment (Article XII).

Dr. Dao Gia Phuc

 RULES ON QUANTITATIVE RESTRICTIONS

Administrations of QRs
-  Non-discrimination (Article XIII:1);
-  Rules on distribution of trade (Article XIII:2 – 4):
•  The Member applying the restrictions may seek agreement
with respect to the allocation of shares in the quota with all
other Members having a substantial interest in supplying
the product concerned;
•  If no agreement can be reached, the quota must be
allocated among the Members having substantial interest
on the basis of their share of the trade during a previous
representative period.
Dr. Dao Gia Phuc
 RULES ON QUANTITATIVE RESTRICTIONS

Administrations of QRs
-  Import-Licensing Procedures (Agreement on Import Licensing
Procedures)
•  Must be published in such a manner as to enable Members
and traders to become acquainted with them;
•  Distinguish between:
§  Automatic import licensing: the application is granted in
all cases;
§  Non-automatic import licensing: not granted in all cases
however it shall not have trade-restrictive effect on
imports additional to those caused by the imposition of the
restriction. Dr. Dao Gia Phuc