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I. Preamble back to top
A. Text of the Preamble
Members,
Having regard to the
Multilateral Trade Negotiations;
Desiring to further the
objectives of GATT 1994;
Taking into account the
particular trade, development and financial needs of developing country
Members;
Recognizing the usefulness of automatic import licensing for certain purposes and that
such licensing should not be used to restrict trade;
Recognizing that import
licensing may be employed to administer measures such as those adopted
pursuant to the relevant provisions of GATT 1994;
Recognizing the
provisions of GATT 1994 as they apply to import licensing procedures;
Desiring to ensure that
import licensing procedures are not utilized in a manner contrary to the
principles and obligations of GATT 1994;
Recognizing that the flow
of international trade could be impeded by the inappropriate use of
import licensing procedures;
Convinced that import
licensing, particularly non-automatic import licensing, should be
implemented in a transparent and predictable manner;
Recognizing that
non-automatic licensing procedures should be no more administratively
burdensome than absolutely necessary to administer the relevant measure;
Desiring to simplify, and
bring transparency to, the administrative procedures and practices used
in international trade, and to ensure the fair and equitable application
and administration of such procedures and practices;
Desiring to provide for a
consultative mechanism and the speedy, effective and equitable
resolution of disputes arising under this Agreement;
Hereby agree as follows:
B. Interpretation and Application of the
Preamble
1. In EC
— Poultry,
Brazil argued before the Appellate Body that Articles 1.2 and 3.2 of the
Licensing Agreement were not applicable to over-quota trade. In
addressing these issues, the Appellate Body referred to the Preamble of
the Licensing Agreement:
“The preamble to the Licensing Agreement
stresses that the Agreement aims at ensuring that import licensing
procedures ‘are not utilized in a manner contrary to the principles
and obligations of GATT 1994’ and are ‘implemented in a transparent
and predictable manner’.”(1)
II. Article 1
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A. Text of Article 1
Article 1: General Provisions
1. For the purpose of this
Agreement, import licensing is defined as administrative procedures(1)
used for the operation of import licensing regimes requiring the
submission of an application or other documentation (other than that
required for customs purposes) to the relevant administrative body as a
prior condition for importation into the customs territory of the
importing Member.
(footnote original)
1 Those procedures referred
to as “licensing” as well as other similar administrative
procedures.
2. Members shall ensure
that the administrative procedures used to implement import licensing
regimes are in conformity with the relevant provisions of GATT 1994
including its annexes and protocols, as interpreted by this Agreement,
with a view to preventing trade distortions that may arise from an
inappropriate operation of those procedures, taking into account the
economic development purposes and financial and trade needs of
developing country Members.(2)
(footnote original)
2 Nothing in this Agreement
shall be taken as implying that the basis, scope or duration of a
measure being implemented by a licensing procedure is subject to
question under this Agreement.
3. The rules for import
licensing procedures shall be neutral in application and administered in
a fair and equitable manner.
4.
(a) The rules and all information concerning
procedures for the submission of applications, including the eligibility
of persons, firms and institutions to make such-applications, the
administrative body(ies) to be approached, and the lists of products
subject to the licensing requirement shall be published, in the sources
notified to the Committee on Import Licensing provided for in Article 4
(referred to in this Agreement as “the Committee”), in such a manner
as to enable governments(3) and traders to become acquainted with them.
Such publication shall take place, whenever practicable, 21 days prior
to the effective date of the requirement but in all events not later
than such effective date. Any exception, derogations or changes in or
from the rules concerning licensing procedures or the list of products
subject to import licensing shall also be published in the same manner
and within the same time periods as specified above. Copies of these
publications shall also be made available to the Secretariat.
(footnote original)
3 For the purpose of this
Agreement, the term “governments” is deemed to include the competent
authorities of the European Communities.
(b) Members which wish to make comments in
writing shall be provided the opportunity to discuss these comments upon
request. The concerned Member shall give due consideration to these
comments and results of discussion.
5. Application forms and,
where applicable, renewal forms shall be as simple as possible. Such
documents and information as are considered strictly necessary for the
proper functioning of the licensing regime may be required on
application.
6. Application procedures
and, where applicable, renewal procedures shall be as simple as
possible. Applicants shall be allowed a reasonable period for the
submission of licence applications. Where there is a closing date, this
period should be at least 21 days with provision for extension in
circumstances where insufficient applications have been received within
this period. Applicants shall have to approach only one administrative
body in connection with an application. Where it is strictly
indispensable to approach more than one administrative body, applicants
shall not need to approach more than three administrative bodies.
7. No application shall be
refused for minor documentation errors which do not alter basic data
contained therein. No penalty greater than necessary to serve merely as
a warning shall be imposed in respect of any omission or mistake in
documentation or procedures which is obviously made without fraudulent
intent or gross negligence.
8. Licensed imports shall
not be refused for minor variations in value, quantity or weight from
the amount designated on the licence due to differences occurring during
shipment, differences incidental to bulk loading and other minor
differences consistent with normal commercial practice.
9. The foreign exchange
necessary to pay for licensed imports shall be made available to licence
holders on the same basis as to importers of goods not requiring import
licences.
10. With regard to
security exceptions, the provisions of Article XXI of GATT 1994 apply.
11. The provisions of this
Agreement shall not require any Member to disclose confidential
information which would impede law enforcement or otherwise be contrary
to the public interest or would prejudice the legitimate commercial
interests of particular enterprises, public or private.
B. Interpretation and Application of
Article 1
1. Article 1
(a) Scope of the Licensing Agreement
(i) Tariff quotas procedures
2. In EC
— Bananas III, the Appellate Body
considered that the European Communities licensing procedures for tariff
quotas were within the scope of the Licensing Agreement. After quoting
the definition of “import licensing” set out in Article
1.1, the
Appellate Body concluded that licensing procedures for tariff quotas
fell under the provisions of the Licensing Agreement:
“Although the precise terms of Article 1.1
do not say explicitly that licensing procedures for tariff quotas are
within the scope of the Licensing Agreement, a careful reading of that
provision leads inescapably to that conclusion. The EC import licensing
procedures require ‘the submission of an application’ for import
licences as ‘a prior condition for importation’ of a product at the
lower, in-quota tariff rate. The fact that the importation of that
product is possible at a high out-of-quota tariff rate without a licence
does not alter the fact that a licence is required for importation at
the lower in-quota tariff rate.
We note that Article 3.2 of the Licensing
Agreement provides that:
‘Non-automatic licensing shall not have
trade-restrictive or -distortive effects on imports additional to those
caused by the imposition of the restriction.’ (emphasis added)
We note also that Article
3.3 of the Licensing Agreement reads:
‘In the case of licensing requirements for
purposes other than the implementation of quantitative restrictions,
Members shall publish sufficient information for other Members and
traders to know the basis for granting and/or allocating licences.’
(emphasis added)
We see no reason to exclude import licensing
procedures for the administration of tariff quotas from the scope of the
Licensing Agreement on the basis of the use of the term ‘restriction’
in Article 3.2. We agree with the Panel that, in the light of the
language of Article 3.3 of the Licensing Agreement
and the introductory
words of Article XI of the GATT
1994, the term ‘restriction’ as used
in Article 3.2 should not be interpreted to encompass only quantitative
restrictions, but should be read also to include tariff quotas.
For these reasons, we agree with the Panel
that import licensing procedures for tariff quotas are within the scope
of the Licensing Agreement.”(2)
(ii) Licensing procedures for over-quota trade
3. In EC
— Poultry, the European Communities
regulation at issue applied, by its terms, only to in-quota trade in
frozen poultry meat. The Panel had found that “the Licensing
Agreement, as applied to this particular case, only relates to in-quota
trade”.(3) Brazil claimed that nothing in the text or context of
Articles 1.2 and 3.2 of the Licensing Agreement limits to in-quota trade
the requirement in Article 1.2 that licensing systems be implemented “with
a view to preventing trade distortions” or the prohibition in Article
3.2 of additional trade-restrictive or trade-distortive effects. The
Appellate Body stated as follows:
“The preamble to the Licensing Agreement
stresses that the Agreement aims at ensuring that import licensing
procedures ‘are not utilized in a manner contrary to the principles
and obligations of GATT 1994’ and are ‘implemented in a transparent
and predictable manner’. Moreover, Articles 1.2 and
3.2 make it clear
that the Licensing Agreement is also concerned, with, among other
things, preventing trade distortions that may be caused by licensing
procedures. It follows that wherever an import licensing regime is
applied, these requirements must be observed. The requirement to prevent
trade distortion found in Articles 1.2 and 3.2 of the Licensing
Agreement refers to any trade distortion that may be caused by the
introduction or operation of licensing procedures, and is not
necessarily limited to that part of trade to which the licensing
procedures themselves apply. There may be situations where the operation
of licensing procedures, in fact, have restrictive or distortive effects
on that part of trade that is not strictly subject to those procedures.
In the case before us, the licensing procedure
established in Article 1 of Regulation 1431/94 applies, by its terms,
only to in-quota trade in frozen poultry meat. No licensing is required
by Regulation 1431/94 for out-of-quota trade in frozen poultry meat. To
the extent that the Panel intended merely to reflect the fairly obvious
fact that this licensing procedure applies only to in-quota trade, we
uphold the finding of the Panel that ‘[t]he Licensing Agreement, as
applied to this particular case, only relates to in-quota trade’.”(4)
(iii) Licensing “rules”
4. In EC
— Bananas III, the Appellate Body
reversed the Panel’s finding that Article 1.3 of
the Licensing
Agreement “preclude[s] the imposition of one system of import
licensing procedures in respect of a product originating in certain
Members and a different system of import licensing procedures on the
same product originating in other Members”.(5) In doing so, the
Appellate Body drew a distinction between licensing rules per se, on the
one hand, and their application and administration, on the other:
“By its very terms, Article 1.3 of the
Licensing Agreement clearly applies to the application and
administration of import licensing procedures, and requires that this
application and administration be ‘neutral … fair and equitable’.
Article 1.3 of the Licensing Agreement does not require the import
licensing rules, as such, to be neutral, fair and equitable.
Furthermore, the context of Article 1.3 — including the
preamble,
Article 1.1 and, in particular, Article 1.2 of the Licensing Agreement
— supports the conclusion that Article 1.3 does not apply to import
licensing rules. Article 1.2 provides, in relevant part, as follows:
‘Members shall ensure that the
administrative procedures used to implement import licensing régimes
are in conformity with the relevant provisions of GATT 1994 … as
interpreted by this Agreement, …’
As a matter of fact, none of the provisions of
the Licensing Agreement concerns import licensing rules, per
se. As is
made clear by the title of the Licensing Agreement, it concerns import
licensing procedures. The preamble of the Licensing Agreement indicates
clearly that this agreement relates to import licensing procedures and
their administration, not to import licensing rules. Article 1.1 of the
Licensing Agreement defines its scope as the administrative procedures
used for the operation of import licensing regimes.
We conclude, therefore, that the Panel erred
in finding that Article 1.3 of the Licensing Agreement precludes the
imposition of different import licensing systems on like products when
imported from different Members.”(6)
5. In Korea
— Various Measures on Beef, the
Panel followed the distinction between licensing rules per se and their
administration, set out in the finding of the Appellate Body referenced
in paragraph 4 above. The Panel examined the United States’ claim that
Korea’s regulatory regime was inconsistent with Article 3.2 of the
Licensing Agreement by granting exclusive authority to the LPMO and the
SBS system to import beef, holding:
“[T]he Panel notes that many of the US
claims regarding alleged violations of the Licensing Agreement are
concerned with the substantive provisions of Korea’s import (and
distribution) regime (by the LPMO or SBS super-groups). It has been said
repeatedly that such substantive matters are of no relevance to the
Licensing Agreement which is concerned with the administrative rules of
import licensing systems.(7)
For these reasons, the Panel does not reach
any general conclusion on the compatibility of Korea’s import
licensing system with the WTO Agreement.”(8)
6. With respect to the distinction between
licensing rules per se and their administration, see also paragraph 13
below.
2. Article 1.2
(a) Interpretation
7. The Panel on
EC — Bananas III addressed the
issue of whether Article 1.2 in itself creates obligations additional to
those arising from GATT. The Panel considered the historical
developments of the GATT/ WTO rules on licensing and concluded that,
except for a reference to developing Members, “Article 1.2 of the WTO
Licensing Agreement has become largely duplicative of the obligations
already provided for in GATT” and “Article 1.2 … has lost most of
its legal significance”:
“[Article 1.2] derives from the 1979 Tokyo
Round Agreement on Import Licensing Procedures which was negotiated as a
self-standing agreement without a formal legal link to GATT 1947.
Accordingly, membership was open not only to GATT contracting parties
and the European Communities, but also to any other government.(9)
Therefore, provisions of GATT 1947 applied between the signatories of
the 1979 Licensing Agreement, by virtue of that agreement, only to the
extent that they had been explicitly referred to and incorporated into
the 1979 Licensing Agreement. In this context, Articles 1.10 and 4.2 of
the 1979 Licensing Agreement mention, inter alia, Articles
XXI, XXII and
XXIII of GATT 1947. Accordingly, the general rule that administrative
procedures used to implement import licensing regimes had to conform
with the relevant GATT provisions in fact added only to the obligations
which any non-GATT contracting parties among the signatories of the 1979
Licensing Agreement would have been subject to.
The wording of Article 1.2 remained unchanged
in the Uruguay Round. Given that the Agreement Establishing the WTO and
all the agreements listed in Annexes 1 through 3 thereto constitute a
single undertaking, however, Article 1.2 of the WTO Licensing Agreement
has become largely duplicative of the obligations already provided for
in GATT, except for the reference to developing country Members. Given
this context, Article 1.2 of the WTO Licensing Agreement has lost most
of its legal significance.”(10)
8. Despite its finding that
Article 1.2 of the
Licensing Agreement merely duplicates already existing obligations, the
Panel recalled the principle of effective treaty interpretation:
“However, the Appellate Body has endorsed
the principle of effective treaty interpretation by stating that ‘an
interpreter is not free to adopt a reading that would result in reducing
whole clauses or paragraphs of a treaty to redundancy or inutility’.(11)
In light of this, we have to give effect and meaning to Article 1.2 of
the Licensing Agreement.
For this reason, to the extent that we find
that specific aspects of the EC licensing procedures are not in
conformity with Articles I, III or
X of GATT, we necessarily also find
an inconsistency with the requirements of Article 1.2 of the Licensing
Agreement.”(12)
9. The Panel on
EC — Bananas III also
addressed the legal significance of the reference in Article 1.2 to
developing country Members:
“With respect to Article 1.2’s requirement
that account should be taken of ‘economic development purposes and
financial and trade needs of developing country Members’, the
Licensing Agreement does not give guidance as to how that obligation
should be applied in specific cases. We believe that this provision
could be interpreted as a recognition of the difficulties that might
arise for developing country Members, in imposing licensing procedures,
to comply fully with the provisions of GATT and the Licensing Agreement.
In the alternative, Article 1.2 could also be read to authorize, but not
to require, developed country Members to apply preferential licensing
procedures to imports from developing country Members. In any event,
even if we accept the latter interpretation, we have not been presented
with evidence suggesting that, in its licensing procedures, there were
factors that the EC should have but did not take into account under
Article 1.2.
Therefore, we do not make a finding on whether
the EC failed to take into account the needs of developing countries in
a manner inconsistent with the requirements of Article 1.2 of the
Licensing Agreement.”(13)
10. In
EC — Poultry, Brazil argued that the
European Communities had violated the prohibition of trade distortion
contained in Articles 1.2 and 3.2 of the Licensing Agreement. The Panel
had rejected Brazil’s claim. On appeal, Brazil argued that the Panel
had failed to address or examine properly certain evidence, including
evidence concerning Brazil’s falling share of the poultry market in
the European Communities, and had examined whether this falling market
share was caused by the introduction of the European Communities
licensing procedures for the tariff-rate quota for frozen poultry meat.
The Appellate Body found that Brazil had failed to establish a causal
link between the decline in market share and other indicators, on the
one hand, and the licensing requirements at issue, on the other:
“Under Regulation 1431/94, Brazil’s share
in the EC tariff-rate quota for frozen poultry meat is 7,100 tonnes out
of the total tariff-rate quota of 15,500 tonnes. This share is equal to
approximately 45 per cent of the tariff-rate quota. This is the same as
Brazil’s percentage share of the total exports of frozen poultry meat
to the European Communities during the reference period of the preceding
three years. In addition, the Panel noted, licences issued by the
European Communities for imports of frozen poultry meat from Brazil have
been fully utilized. This means that Brazil’s percentage share in the
tariff-rate quota has remained at the same level as Brazil’s share in
the total trade over the relevant period. Moreover, the absolute volume
of exports of frozen poultry meat by Brazil in the total exports of this
product to the European Communities has been rising since the imposition
of the tariff-rate quota for frozen poultry meat.
Brazil has not, in our view, clearly
explained, either before the Panel or before us, how the licensing
procedure caused the decline in market share. Brazil has not offered any
persuasive evidence that its falling market share could, in this
particular case — with a constant percentage share of the tariff-rate
quota, full utilization of the tariff-rate quota and a growing total
volume of exports — be viewed as constituting trade distortion
attributable to the licensing procedure. In other words, Brazil has not
proven a violation of the prohibition of trade distortion in Articles
1.2 and 3.2 of the Licensing Agreement by the European Communities.
Brazil argues that the Panel did not consider
a number of other arguments in its examination of the existence of trade
distortion: that licences have been apportioned in non-economic
quantities; that there have been frequent changes to the licensing
rules; that licence entitlement has been based on export performance;
and that there has been speculation in licences. These arguments,
however, do not address the problem of establishing a causal
relationship between imposition of the EC licensing procedure and the
claimed trade distortion. Even if conceded arguendo, these arguments do
not provide proof of the essential element of causation.
For these reasons, we uphold the finding of
the Panel that Brazil has not established that the European Communities
has acted inconsistently with either Article 1.2 or
Article 3.2 of the
Licensing Agreement.”(14)
11. With respect to the legal implication of
Article 1.2 for interpreting the scope of the Licensing Agreement, see
also the excerpt referenced in paragraph 3 above.
(b) Relationship with GATT provisions
12. With respect to the relationship between
Article 1.2 and provisions of the GATT 1994, see paragraph 7
above.
3. Article 1.3
(a) Import licensing on the basis of export
performance
13. In
EC — Poultry, the Panel, in a finding
not reviewed by the Appellate Body, examined Brazil’s claim that the
European Communities allocation of import licences on the basis of
export performance was inconsistent with Articles 1.3 and
3.5(j) of the
Licensing Agreement:
“The requirement of export performance for
the issuance of import licences on its face does seem unusual. However,
Brazil has not elaborated on how the export performance requirement was
administered and how it has affected the in-quota exports of poultry
products from Brazil.
We also note that the Appellate Body in the
Banana III case made the following observation:
‘By its very terms, Article 1.3 of the
Licensing Agreement clearly applies to the application and
administration of import licensing procedures, and requires that this
application and administration be ‘neutral … fair and equitable’.
Article 1.3 of the Licensing Agreement does not require the import
licensing rules, as such, to be neutral, fair and equitable.
Furthermore, the context of Article 1.3 — including the
preamble,
Article 1.1 and, in particular, Article 1.2 of the Licensing Agreement
— supports the conclusion that Article 1.3 does not apply to import
licensing rules.’(15)
In our view, the issue of licence entitlement
based on export performance is clearly that of rules, not that of
application or administration of import licensing procedures. Thus,
Article 1.3 is not applicable on this specific issue.”(16)
14. With respect to the distinction between
licensing rules per se and their application, see also paragraph 4
above.
4. Article 1.4(a)
(a) General
15. In
EC — Poultry, the Panel examined the
claim that the European Communities had failed to notify the necessary
information regarding the poultry tariff quotas to the Committee on
Import Licensing under Article 1.4(a) of the Licensing Agreement. The
European Communities responded that it had not made a notification
because it was unclear, prior to the Appellate Body report in the Banana
III case, whether the Licensing Agreement applied to tariff rate quotas
(“TRQs”). The Panel rejected the European Communities defence:
“While we note the EC’s explanation for
non-notification, we find this omission to be inconsistent with Article
1.4(a) of the Licensing Agreement. The fact that all the relevant
information is published and that the administration of all agricultural
TRQs in the EC has been notified to the WTO Committee on Agriculture
does not in our view excuse the EC from notifying the sources of
publication pursuant to this subparagraph.”(17)
16. Further, the Panel on
EC — Poultry, in a
finding not addressed by the Appellate Body, rejected the claim by
Brazil that frequent changes to the licensing rules and procedures
regarding the poultry TRQ had made it difficult for governments and
traders to become familiar with the rules, contrary to the provisions of
Articles 1.4, 3.3, 3.5(b),
3.5(c) and 3.5(d):
“We note that the transparency requirement
under the cited provisions is limited to publication of rules and other
relevant information. While we have sympathy for Brazil regarding the
difficulties caused by frequent changes to the rules, we find that
changes in rules per se do not constitute a violation of Article
1.4, 3.3, 3.5(b),
3.5(c) or 3.5(d).”(18)
(b) Procedures for notification and review
17. At its meeting of 12 October 1995, the
Committee on Import Licensing agreed on procedures for notification and
review under the Licensing Agreement.(19)
III. Article 2
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A. Text of Article 2
Article 2: Automatic Import Licensing(4)
(footnote original)
4 Those import licensing
procedures requiring a security which have no restrictive effects on
imports are to be considered as falling within the scope of paragraphs 1
and 2.
1. Automatic import licensing is defined as
import licensing where approval of the application is granted in all
cases, and which is in accordance with the requirements of paragraph
2(a).
2. The following provisions,(5) in addition to
those in paragraphs 1 through 11 of Article 1 and
paragraph 1 of this Article, shall apply to automatic import licensing procedures:
(footnote original)
5 A developing country
Member, other than a developing country Member which was a Party to the
Agreement on Import Licensing Procedures done on 12 April 1979, which
has specific difficulties with the requirements of subparagraphs (a)(ii)
and (a)(iii) may, upon notification to the Committee, delay the
application of these subparagraphs by not more than two years from the
date of entry into force of the WTO Agreement for such Member.
(a) automatic licensing procedures shall not
be administered in such a manner as to have restricting effects on
imports subject to automatic licensing. Automatic licensing procedures
shall be deemed to have trade-restricting effects unless, inter alia:
(i) any person, firm or institution which
fulfils the legal requirements of the importing Member for engaging in
import operations involving products subject to automatic licensing is
equally eligible to apply for and to obtain import licences;
(ii) applications for licences may be
submitted on any working day prior to the customs clearance of the
goods;
(iii) applications for licences when submitted
in appropriate and complete form are approved immediately on receipt, to
the extent administratively feasible, but within a maximum of 10 working
days;
(b) Members recognize that automatic import
licensing may be necessary whenever other appropriate procedures are not
available. Automatic import licensing may be maintained as long as the
circumstances which gave rise to its introduction prevail and as long as
its underlying administrative purposes cannot be achieved in a more
appropriate way.
B. Interpretation and Application of
Article 2
1. General
(a) Application of Article 2 to developing
country Members
18. The following developing country Members
invoked the provisions for delayed application under footnote 5 to
Article 2.2 of the Agreement on Import Licensing Procedures: Bangladesh
(1 January 1995), Bolivia (13 September 1995), Brazil (1 January 1995),
Burkina Faso (3 June 1995), Cameroon (13 December 1995), Colombia (30
April 1995), Costa Rica (1 January 1995), Côte d’Ivoire (1 January
1995), Dominican Republic (9 March 1995), El Salvador (7 May 1995),
Gabon (1 January 1995), Guatemala (21 June 1995), Honduras
(1 January 1995), Indonesia (1 January 1995), Kenya (1 January 1995),
Malaysia (1 January 1995), Myanmar (1 January 1995), Sri Lanka (1
January 1995), Thailand (1 January 1995), Tunisia (29 March 1995),
Turkey (26 March 1995), United Arab Emirates (10 April 1996), Uruguay (1
January 1995) and Venezuela (1 January 1995).(20)
19. In its annual report for 1998, with
reference to the delay in application, the Committee on Import Licensing
stated the following:
“It was noted that the two-year period of
delay allowed under the Agreement had expired for all these Members, and
accordingly the obligations of Article 2.2(a)(ii) and
(a)(iii) apply to
all current WTO Members. It was recalled that the invocation of the
above provisions did not exempt the Members concerned from the
obligation to notify under the Agreement. The mandatory notifications
included publications and legislation relevant to import licensing, and
replies to the Questionnaire on Import Licensing Procedures by 30
September each year. Those Members that had not yet made the necessary
notifications under the Agreement were urged to do so at the earliest
opportunity.”(21)
IV. Article 3
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A. Text of Article 3
Article 3: Non-Automatic Import Licensing
1. The following provisions, in addition to
those in paragraphs 1 through 11 of Article
1, shall apply to
non-automatic import licensing procedures. Non-automatic import
licensing procedures are defined as import licensing not falling within
the definition contained in paragraph 1 of Article
2.
2. Non-automatic licensing shall not have
trade-restrictive or -distortive effects on imports additional to those
caused by the imposition of the restriction. Non-automatic licensing
procedures shall correspond in scope and duration to the measure they
are used to implement, and shall be no more administratively burdensome
than absolutely necessary to administer the measure.
3. In the case of licensing requirements for
purposes other than the implementation of quantitative restrictions,
Members shall publish sufficient information for other Members and
traders to know the basis for granting and/or allocating licences.
4. Where a Member provides the possibility for
persons, firms or institutions to request exceptions or derogations from
a licensing requirement, it shall include this fact in the information
published under paragraph 4 of Article 1 as well as information on how
to make such a request and, to the extent possible, an indication of the
circumstances under which requests would be considered.
5. (a)
Members shall provide, upon the request
of any Member having an interest in the trade in the product concerned,
all relevant information concerning:
(i) the administration of the restrictions;
(ii) the import licences granted over a recent
period;
(iii) the distribution of such licences among
supplying countries;
(iv) where practicable, import statistics
(i.e. value and/or volume) with respect to the products subject to
import licensing. Developing country Members would not be expected to
take additional administrative or financial burdens on this account;
(b) Members administering quotas by means of
licensing shall publish the overall amount of quotas to be applied by
quantity and/or value, the opening and closing dates of quotas, and any
change thereof, within the time periods specified in paragraph 4 of
Article 1 and in such a manner as to enable governments and traders to
become acquainted with them;
(c) in the case of quotas allocated among
supplying countries, the Member applying the restrictions shall promptly
inform all other Members having an interest in supplying the product
concerned of the shares in the quota currently allocated, by quantity or
value, to the various supplying countries and shall publish this
information within the time periods specified in paragraph 4 of Article
1 and in such a manner as to enable governments and traders to become
acquainted with them;
(d) where situations arise which make it
necessary to provide for an early opening date of quotas, the
information referred to in paragraph 4 of Article 1 should be published
within the time-periods specified in paragraph 4 of Article 1 and in
such a manner as to enable governments and traders to become acquainted
with them;
(e) any person, firm or institution which
fulfils the legal and administrative requirements of the importing
Member shall be equally eligible to apply and to be considered for a
licence. If the licence application is not approved, the applicant
shall, on request, be given the reason therefor and shall have a right
of appeal or review in accordance with the domestic legislation or
procedures of the importing Member;
(f) the period for processing applications
shall, except when not possible for reasons outside the control of the
Member, not be longer than 30 days if applications are considered as and
when received, i.e. on a first-come first-served basis, and no longer
than 60 days if all applications are considered simultaneously. In the
latter case, the period for processing applications shall be considered
to begin on the day following the closing date of the announced
application period;
(g) the period of licence validity shall be of
reasonable duration and not be so short as to preclude imports. The
period of licence validity shall not preclude imports from distant
sources, except in special cases where imports are necessary to meet
unforeseen short-term requirements;
(h) when administering quotas, Members shall
not prevent importation from being effected in accordance with the
issued licences, and shall not discourage the full utilization of
quotas;
(i) when issuing licences, Members shall take
into account the desirability of issuing licences for products in
economic quantities;
(j) in allocating licences, the Member should
consider the import performance of the applicant. In this regard,
consideration should be given as to whether licences issued to
applicants in the past have been fully utilized during a recent
representative period. In cases where licences have not been fully
utilized, the Member shall examine the reasons for this and take these
reasons into consideration when allocating new licences. Consideration
shall also be given to ensuring a reasonable distribution of licences to
new importers, taking into account the desirability of issuing licences
for products in economic quantities. In this regard, special
consideration should be given to those importers importing products
originating in developing country Members and, in particular, the
least-developed country Members;
(k) in the case of quotas administered through
licences which are not allocated among supplying countries, licence
holders(6) shall be free to choose the sources of imports. In the case of
quotas allocated among supplying countries, the licence shall clearly
stipulate the country or countries;
(footnote original) 6 Sometimes referred to
as “quota holders”.
(l) in applying paragraph 8 of Article
1,
compensating adjustments may be made in future licence allocations where
imports exceeded a previous licence level.
B. Interpretation and Application of
Article 3
1. Article 3.1
(a) Scope of Article 3
20. With respect to the scope of
Article 3,
see paragraphs 2, 3 and 5
above.
2. Article 3.2
21. Regarding the application of
Article 3.2,
see paragraph 10 above.
22. With respect to the legal implication of
Article 3.2 for the scope of the Licensing Agreement, see paragraph 3
above.
3. Article 3.3
23. Concerning the issue of whether frequent
changes in licensing procedures are inconsistent with Article
3.3, see
paragraph 16 above.
4. Article 3.5(a)
24. In
EC — Poultry, Brazil argued on appeal
that the Panel had erred in restricting Brazil’s “comprehensive
claim in relation to a violation of the general principle of
transparency underlying the Licensing Agreement” to an analysis of
Article 3.5(a) of the Licensing Agreement. The contention of Brazil was
that “the administration of import licences in such a way that the
exporter does not know what trade rules apply is a breach of the
fundamental objective of the Licensing Agreement”. The Appellate Body,
however, upheld the Panel’s approach and the Panel’s finding that
the European Communities measure was not inconsistent with Article
3.5(a) of the Licensing Agreement:
“Brazil’s notice of appeal contained no
reference to a general issue of transparency in relation to the
Licensing Agreement. However, Brazil argued in its appellant’s
submission that the Panel erred in restricting Brazil’s ‘comprehensive
claim in relation to a violation of the general principle of
transparency underlying the Licensing Agreement’ to an analysis of
Article 3.5(a) of the Licensing Agreement. The contention of Brazil is
that ‘the administration of import licenses in such a way that the
exporter does not know what trade rules apply is a breach of the
fundamental objective of the Licensing Agreement’.
Brazil argued before the Panel that ‘underlying
the Licensing Agreement was the principle of transparency.’ Brazil
submitted, in particular, that the European Communities was obliged
under either Article 3.5(a)(iii) or (iv) of the Licensing Agreement to
provide complete and relevant information on the distribution of
licences among supplying countries and statistics on volumes and values.
According to Brazil, the European Communities failed to fulfil this
obligation. The Panel found that Brazil had not demonstrated that the
European Communities had violated either Article 3.5(a)(iii) or
(iv) of
the Licensing Agreement.(22) In the light of the existence of express
provisions in Article 3.5(a) of the Licensing Agreement relating to
transparency on which the Panel did in fact make findings, we do not
believe that the Panel erred by refraining from examining Brazil’s ‘comprehensive’
claim relating to a general principle of transparency purportedly
underlying the Licensing Agreement.”(23)
5. Article 3.5(b)
25. With respect to the issue of whether
frequent changes in licensing procedures are consistent with Article
3.5(b), see paragraph 16 above.
6. Article 3.5(c)
26. Regarding the issue of whether frequent
changes-in licensing procedures are consistent with Article
3.5(c), see
paragraph 16 above.
7. Article 3.5(d)
27. Concerning the issue of whether frequent
changes in licensing procedures are consistent with Article
3.5(d), see
paragraph 16 above.
8. Article 3.5(h)
28. In
EC — Poultry, Brazil claimed that
speculation in licences discouraged full utilization of the poultry TRQ
in violation of Articles 3.5(h) and 3.5(j). The European Communities
responded that licences awarded under the regulation at issue were
non-transferable, so as to avoid such speculation. The Panel, in a
finding not reviewed by the Appellate Body, rejected Brazil’s claim:
“While it may be true that Brazilian
exporters have had additional difficulties in exporting to the EC market
due to the speculation in licences, we note that the licences allocated
to imports from Brazil have been fully utilized. In other words, the
speculation in licences has not discouraged the full utilization of the
TRQ. Thus, we do not find that the EC has acted inconsistently with
Articles 3.5(h) or 3.5(j) of the Licensing Agreement in this regard.”(24)
9. Article 3.5(i)
29. In
EC — Poultry, Brazil claimed that the
allocation of licences where each applicant received a licence allowing
imports of about 5 tonnes was inconsistent with Article 3.5(i) regarding
issuance of licences in economic quantities. As a related matter, Brazil
claimed that the absence of a newcomer provision in the regulation
regarding the operation of the poultry TRQ was inconsistent with Article
3.5(j) of the Licensing Agreement. The European Communities responded
that licences for the quantity of about 5 tonnes were indeed being
issued to newcomers and that the allocation of licences in small
quantities was made in response to an ever increasing number of
importers. The Panel, in a finding not reviewed by the Appellate Body,
responded:
“We note Brazil’s argument that its
exporters are facing difficulties in dealing with licences for small
quantities, which is echoed in Thailand’s third-party submission also.
While the decline in the average quantity per licence may cause problems
for traders, we note at the same time that the total TRQ has been fully
utilized. The very fact that the licences have been fully utilized
suggests to us that the quantities involved are still ‘economic’,
particularly in combination with the significant amount of the
over-quota trade.”(25)
10. Article 3.5(j)
30. The Panel on
EC — Poultry examined Brazil’s
claim that the European Communities allocation of import licences on the
basis of export performance was inconsistent with Articles 1.3 and
3.5(j) of the Licensing Agreement. While the Panel opined that “the
requirement of export performance for the issuance of import licences on
its face does seem unusual”, it nevertheless held:
“[T]he provision of Article 3.5(j) in this
regard is hortatory and does not necessarily prohibit the consideration
of other factors than import performance.”(26)
31. Also, the Panel addressed Brazil’s claim
that the absence of a newcomer provision in the regulation was
inconsistent with Article 3.5(j) of the Licensing Agreement. See the
excerpt referenced in paragraph 29 above.
32. With respect to the issue of speculation
in licences, see paragraph 28 above.
C. Relationship with other WTO Agreements
1. GATT 1994
33. In
Canada — Dairy, the Panel addressed the
United States’ claim that Canada was in violation of Article II of the
GATT 1994 and Article 3 of the Licensing Agreement because it restricted
access to tariff quotas to certain cross-border imports by Canadians.
Having found that the restriction was inconsistent with Article II:1(b)
of the GATT 1994, the Panel did not find it necessary to examine whether
in so doing Canada also violated Article 3 of the Licensing
Agreement.(27)
V. Article 4
back to top
A. Text of
Article 4
Article 4: Institutions
There is hereby established a Committee on
Import Licensing composed of representatives from each of the Members.
The Committee shall elect its own Chairman and Vice-Chairman and shall
meet as necessary for the purpose of affording Members the opportunity
of consulting on any matters relating to the operation of this Agreement
or the furtherance of its objectives.
B. Interpretation and Application of
Article 4
1. Rules of procedure
34. At its meeting of 1 December 1995, the
Council for Trade in Goods approved the rules of procedure for meetings
of the Committee on Import Licensing, where the Committee follows,
mutatis mutandis, the rules of procedure for meetings of the General
Council with certain exceptions.(28)
35. The Committee on Import Licensing held 16
meetings from 1 January 1995 to 31 December 2002.(29) The Committee
reported to the Council for Trade in Goods on an annual basis.(30)
2. Procedures for the review of notifications
36. At its meeting on 23 October 1996, the
Committee on Import Licensing adopted the Understanding on Procedures
for the Review of Notifications Submitted under the Agreement on Import
Licensing Procedures.(31)
VI. Article 5
back to top
A. Text of
Article 5
Article 5: Notification
1. Members which institute licensing
procedures or changes in these procedures shall notify the Committee of
such within 60 days of publication.
2. Notifications of the institution of import
licensing procedures shall include the following information:
(a) list of products subject to licensing
procedures;
(b) contact point for information on
eligibility;
(c) administrative body(ies) for submission of
applications;
(d) date and name of publication where
licensing procedures are published;
(e) indication of whether the licensing
procedure is automatic or non-automatic according to definitions
contained in Articles 2 and 3;
(f) in the case of automatic import licensing
procedures, their administrative purpose;
(g) in the case of non-automatic import
licensing procedures, indication of the measure being implemented
through the licensing procedure; and
(h) expected duration of the licensing
procedure if this can be estimated with some probability, and if not,
reason why this information cannot be provided.
3. Notifications of changes in import
licensing procedures shall indicate the elements mentioned above, if
changes in such occur.
4. Members shall notify the Committee of the
publication(s) in which the information required in paragraph 4 of
Article 1 will be published.
5. Any interested Member which considers that
another Member has not notified the institution of a licensing procedure
or changes therein in accordance with the provisions of paragraphs 1
through 3 may bring the matter to the attention of such other Member. If
notification is not made promptly thereafter, such Member may itself
notify the licensing procedure or changes therein, including all
relevant and available information.
B. Interpretation and Application of
Article 5
1. General
37. Since the entry into force of the
WTO Agreement, the Committee on Import Licensing has received notifications
from 26 Members pursuant to Article 5 of the
Agreement.(32)
2. Duplication or overlapping of notifications
38. On the question of possible duplication or
overlapping of notifications, i.e. whether import licensing aspects
associated with the administration of tariff quotas resulting from “tariffication”
in agriculture should be notified to the Committee on Import Licensing
or to the Committee on Agriculture, at its meeting of 12 October 1995,
the Committee on Import Licensing agreed as follows:
“[A]ll import licensing procedures,
including those dealing with the administration of tariff quotas in
agriculture, should be notified to the Committee on Import Licensing.
Any problem that might arise relating to duplication or overlapping of
notifications, as well as related questions of simplification, could be
taken up as necessary, at the appropriate body, i.e. the Working Group
on Notification Obligations and Procedures.”(33)
39. In its report to the Council for Trade in
Goods, dated 21 August 1996, the Working Group on Notification
Obligations and Procedures concluded that efforts to remove the possible
duplication were not warranted.(34)
40. At its meeting of 19 February 1998, the
General Council adopted the following decision pursuant to the
recommendation of the Council for Trade in Goods:
“The notification obligations resulting from
the Decision of the CONTRACTING PARTIES to the GATT 1947 taken at their
twenty-eighth Session in November 1972 (SR.28/6, item 3) to adopt the
report of the Committee on Trade in Industrial Products, including the
Committee’s proposal regarding notification obligations on licensing
systems (L/3756, paragraph 76),(35) are hereby eliminated.”(36)
41. With regard to Procedures for the Review
of Notifications, see the excerpt referenced in paragraph 36
above.
3. Counter-notifications
42. With reference to
Paragraph 5 of Article 5
of the Licensing Agreement addressing the issue of so-called
counter-notifications, in its fourth biennial review, the Committee on
Import Licensing noted that so far, the Committee has not received any
notifications under this provision.(37)
VII. Article 6
back to top
A.
Text of Article 6
Article 6: Consultation and Dispute Settlement
Consultations and the settlement of disputes
with respect to any matter affecting the operation of this Agreement
shall be subject to the provisions of Articles XXII and
XXIII of GATT 1994, as elaborated and applied by the Dispute Settlement Understanding.
B. Interpretation and Application of
Article 6
43. The following table lists the disputes in
which panel and/or Appellate Body reports have been adopted where the
provisions of the Licensing Agreement were invoked:
|
|
Case Name |
Case Number |
Invoked Articles |
|
1 |
EC — Bananas III |
WT/DS27 |
Articles 1.2, 1.3, 3.2 and 3.5 |
|
2 |
EC — Poultry |
WT/DS69 |
Articles 1.2, 1.3, 1.4, 3.2 and 3.5 |
|
3 |
India — Quantitative Restrictions |
WT/DS90 |
Article 3(38) |
|
4 |
Canada — Dairy |
WT/DS103, WT/DS113 |
Article 3 |
|
5 |
Korea — Various Measures on Beef |
WT/DS161, WT/DS169 |
Articles 1 and 3 |
VIII.
Article 7 back to top
A. Text of
Article 7
Article 7: Review
1. The Committee shall review as necessary,
but at least once every two years, the implementation and operation of
this Agreement, taking into account the objectives thereof, and the
rights and obligations contained therein.
2. As a basis for the Committee review, the
Secretariat shall prepare a factual report based on information provided
under Article 5, responses to the annual questionnaire on import
licensing procedures(39) and other relevant reliable information which is
available to it. This report shall provide a synopsis of the
aforementioned information, in particular indicating any changes or
developments during the period under review, and including any other
information as agreed by the Committee.
3. Members undertake to complete the annual
questionnaire on import licensing procedures promptly and in full.
4. The Committee shall inform the Council for
Trade in Goods of developments during the period covered by such
reviews.
B. Interpretation and Application of
Article 7
1. Article 7.1
44. At its meeting on 12 October 1995, the
Committee on Import Licensing agreed on procedures for review under
Article 7.1 of the Licensing Agreement.(40)
At its meeting on 23 October
1996, the Committee concluded its first biennial review under Article
7.1 of the Licensing Agreement.(41) At its meetings on
20 October
1998,(42)
11 October 2000(43) and 24 September 2002,(44) the Committee concluded its
second, third and fourth biennial reviews.
2. Article 7.3
45. At its meeting on 12 October 1995, the
Committee on Import Licensing agreed on procedures for notification
under Article 7.3 of the Licensing Agreement.(45)
Article 7.3 of the
Agreement requires all Members to provide replies to the Questionnaire
on Import Licensing Procedures(46) by 30 September each year. Since the
entry into force of the WTO Agreement, 84 Members(47) have made
notifications under this provision. This includes replies to the
Questionnaire from 11 Members in 1995, 22 Members in 1996, 25 Members in
1997, 26 Members in 1998, 20 Members in 1999, 32 Members in 2000, 23
Members in 2001, 41 Members in 2002, 25 Members in 2003 and 16 Members
in 2004.(48) At the same meeting, the Committee agreed on the standard
form of the annual questionnaire which Members are required to complete
under Article 7.3.(49)
IX. Article 8
back to top
A. Text of
Article 8
Article 8: Final Provisions
Reservations
1. Reservations may not be entered in respect
of any of the provisions of this Agreement without the consent of the
other Members.
Domestic Legislation
2. (a)
Each Member shall ensure, not later
than the date of entry into force of the WTO Agreement for it, the
conformity of its laws, regulations and administrative procedures with
the provisions of this Agreement.
(b) Each Member shall inform the Committee of
any changes in its laws and regulations relevant to this Agreement and
in the administration of such laws and regulations.
B. Interpretation and Application of
Article 8
1. Procedures for notification and review
46. At its meeting on 12 October 1995, the
Committee on Import Licensing agreed on procedures for notification
under Article 8.2(b) of the Licensing Agreement.(50)
47. With regard to Procedures for the Review
of Notifications, see paragraph 36 above.
Footnotes:
1. Appellate Body
Report on EC — Poultry, para. 121. back to text
2. Appellate Body Report on EC — Bananas
III, paras. 193-195. back to text
3. Panel Report on EC — Poultry, para.
249. back to text
4. Appellate Body Report on EC — Poultry,
paras. 121-122. back to text
5. Panel Report on EC — Bananas III,
para. 7.261. back to text
6. Appellate Body Report on EC — Bananas
III, paras. 197-198. back to text
7. (footnote original) Appellate Body
Report on EC — Bananas III, para. 197. back to text
8. Panel Report on Korea — Various
Measures on Beef, paras. 784-785. back to text
9. (footnote original) 1979 Licensing
Agreement, Article 5. back to text
10. Panel Report on EC — Bananas III,
paras. 7.268-7.269. back to text
11. (footnote original) Appellate
Body Report on US — Gasoline, p. 23. back to text
12. Panel Report on EC — Bananas III,
paras. 7.270-7.271. back to text
13. Panel Report on EC — Bananas III,
paras. 7.272-7.273. back to text
14. Appellate Body Report on EC —
Poultry, paras. 125-128. back to text
15. (footnote original) Appellate Body
Report on EC — Bananas III, para. 197. back to text
16. Panel Report on EC — Poultry,
paras. 253-254. back to text
17. Panel Report on EC — Poultry,
para. 244. back to text
18. Panel Report on EC — Poultry,
para. 246. back to text
19. G/LIC/M/2, paras. 8-9, and 21-23. The
text of the agreed procedures for notifications and review can be found
in G/LIC/3, para. (1). Also, notifications filed under
Article 1.4(a)
and (Article 8.2(b)) are numbered G/LIC/N/1/-. back to text
20. G/LIC/1, and its addenda 1-3. The date in
brackets indicates the date of entry into force of the WTO Agreement
for the Member concerned. In this regard, with respect to the “date of
entry into force of the WTO Agreement”, see Chapter on WTO
Agreement, Section XV.B.2. back to text
21. G/L/264, para. 8. back to text
22. (footnote original) Panel Report
on EC — Poultry, para. 265. back to text
23. Appellate Body Report on EC —
Poultry, paras. 129-130. back to text
24. Panel Report on EC — Poultry,
para. 259. back to text
25. Panel Report on EC — Poultry,
para. 262. back to text
26. Panel Report on EC — Poultry,
para. 255. back to text
27. Panel Report on Canada — Dairy,
para. 7.157. back to text
28. G/C/M/7, para. 2.2. The text of the
adopted rules of procedure can be found in G/L/147. back to text
29. The minutes are contained in documents G/LIC/M/1-16.
back to text
30. The reports are contained in documents
G/L/29, 127, 203, 264, 336, 403, 493, 573, 652 and 715. back to text
31. G/LIC/M/4, para. 5. The text of the
adopted Understanding can be found in G/LIC/4. Questions and replies
circulated under these procedures are numbered G/LIC/Q/-. back to text
32. The notifications may be found in
document series G/LIC/N/2. back to text
33. G/LIC/M/2, paras. 21-23. With respect to
the Working Group on Notification Obligations and Procedures, see the
Chapter on the WTO Agreement, Section
V.B.6. back to text
34. G/NOP/W/16/Rev.1, paras. 25-28. back to text
35. (footnote original) The
paragraph reads as follows: “In addition, it [the Committee on Trade
in Industrial Products] proposes to the Council that contracting parties
should notify changes of licensing systems at the same time as
notifications are made on import restrictions, i.e. 30 September of each
year.” back to text
36. WT/L/261. back to text
37. G/LIC/9/Rev.1, para.15. back to text
38. The Panel stated:
“A claim of violation of Article 3 of the
Import Licensing Agreement is contained in the United States’ request
for establishment of a panel and thus, in our terms of reference. The
United States, however, did not develop any legal arguments relating to
such claim at any point of the proceedings, nor did it request a finding
on the basis of that provision. We therefore do not address that claim.”
Panel Report on India — Quantitative
Restrictions, para. 5.16. back to text
39. (footnote original) Originally
circulated as GATT 1947 document L/3515 of 23 March 1971. back to text
40. G/LIC/M/2, paras. 34. The agreed rules
are codified in G/LIC/3, para. 2. back to text
41. G/LIC/M/4, paras. 46-49; see also G/LIC/5.
back to text
42. G/LIC/M/8, para. 4; see also G/LIC/6. back to text
43. G/LIC/M/12, para. 5; see also G/LIC/7. back to text
44. G/LIC/M/16, para. 5; see also G/LIC/9/Rev.1.
back to text
45. G/LIC/M/2, paras. 18-19. The agreed rules
are codified in G/LIC/3, para. 3. back to text
46. Annexed to document G/LIC/3. back to text
47. The European Communities and its member
States counted as one Member. back to text
48. These notifications may be found in
document series G/LIC/N/3/-. back to text
49. G/LIC/M/2, paras. 17-18. The form of the
annual questionnaire can be found in G/LIC/2. Notifications submitted
under Article 7.3 are numbered G/LIC/N/3/-. back to text
50. G/LIC/M/2, paras. 6-16. The agreed rules
are set out in G/LIC/3, para. 4. Notifications filed under
Article
8.2(b) (and Article 1.4(a)) are numbered G/LIC/N/1/-. back to text
|
