Alexeyev V.S.

Oles’ Honchar Dnipropetrovsk National University (Ukraine)

WTO Law: Customs Formalities and Procedures

On 14 August 2013 the customs authorities of the Russian Federation (RF) unexpectedly strengthened control under customs clearance of all products arriving from Ukraine. All imported products went through a thorough verification, weighting and/or loading/unloading and additional scrutinized verification of all documents submitted for customs clearance purposes, etc. As a result, almost all Ukrainian imports were delayed and the Ukrainian importers faced sharp increase of transport expenses and losses. The RF’s official position was that the customs authorities have been acting in line with the Russian customs regulations. The import operations from Ukraine were renewed in almost 2 weeks. It goes without saying that the Ukrainian authorities tried and are still trying to find a solution how to counteract similar actions by the Russian customs authorities in the future.

In this article our aim is to provide an overview of Ukraine’s counteracting the actions of the Russian customs authorities based on the RF obligations within the WTO and/or the CIS.

It goes without saying that unfair and arbitrary application of national customs formalities and procedures’ complying with WTO Agreements as such, and the degree of uncertainty and unpredictability this generates for other states and traders, also constitutes significant barrier to trade in goods that restrict to various degrees and in different ways, market access for goods. Thus, we will focus our analysis on the said issue in this article.

Even though delays on the customs borders usually result in numerous losses for the importers and thus, customs clearance simplification is an issue of great concern, unfortunately only a few provisions of WTO Agreements address the above issues. In particular, only Article VIII of GATT 19942 stipulates several basic principles rather than mandatory obligations of the WTO Members.

The Agreement on Free Trade Zone2011, concluded within CIS countries, also stipulates a very brief requirement — fees shall be collected and all formalities related to import and export, trade rules application shall be made in line with Articles VIII and X of GATT 1994.

In the absence of the comprehensive regulation applicable to customs formalities and procedures, what should suppliers/traders do, while facing considerable obstacles within customs clearance procedures caused by actions of the customs authorities of WTO Members? In our view, one may refer to Article O:3 of GATT 1994 setting out the requirements to the administration of trade regulations.

In order to prevent unfair and arbitrary administration of trade measures, WTO Agreements stipulate the following mechanisms:

— Requirement to administer the relevant national legislation in a uniform, impartial and reasonable manner — Article O:3(a) of GATT 1994; and

— Requirement to ensure an objective and impartial review of administrative actions of the state authorities of WTO Members — Article O:3(b)-(n) of GATT 1994.

First of all, it is crucial that the legislative acts shall be of general application. According to the WTO jurisprudence, as the measure did not try to become specific as to the individual persons or entities engaged in exporting the products to the importing member and hence affected by the proposed restraint, the measure shall be regarded as a measure of general application. Moreover, under Article O:3 (a) of GATT 1994 not the legislative acts as such shall be challenged, but administration thereof. Article X of GATT 1994 relates to the publication and administration of “laws, regulations, judicial decisions and administrative rulings of general application”, rather than to the substantive content of such measures. The text of Article X:3 (a) of GATT 1994 clearly indicates that the requirements of “uniformity, impartiality and reasonableness” do not apply to the laws, regulations, decisions and rulings themselves, but rather to the administration of those laws, regulations, decisions and rulings. To the extent that the laws, regulations, decisions and rulings themselves are discriminatory, they can be examined for their consistency with the relevant provisions of GATT 1994. Without exception, Article X:3 (a) of GATT 1994 always relates to the application of laws and regulations, but not to laws and regulations as such.

At the same time, according to the WTO jurisprudence the scope of administration that is subject to a challenge under Article X:3 (a) of GATT 1994 includes (1) the manner in which the legal acts are applied or implemented in particular cases; (2) a legal instrument that regulates such application or implementation; (3) administrative processes leading to administrative decisions. In the latter case, the complainant must demonstrate how and why certain features of the administrative processes necessarily lead to a lack of uniform, impartial, or reasonable administration of legislative acts.

Moreover, under Article X:3 (a) of GATT 1994 should be verified the treatment accorded by government authorities to the traders in question6, rather than whether there has been discriminatory treatment in favour of exports to one member relative to another.

Additionally, as allegations that the conduct of a WTO Member is biased or unreasonable are serious under any circumstances, such allegations should not be brought lightly, or in a subsidiary fashion. Moreover, a claim under Article X:3 (a) of GATT 1994 must be supported by solid evidence; the nature and the scope of the claim, and the evidence adduced by the complainant in support of it, should reflect the gravity of the accusations inherent in claims under Article X:3 (a) of GATT 1994.

Article X:3 (a) of GATT 1994 sets out three distinct and legally independent obligations — an obligation to administer laws and regulations in a uniform, impartial and reasonable manner. It is worth emphasizing that WTO jurisprudence does not provide for exhaustive definitions of the above requirements. However, it goes without saying that analysis of the particular cases considered within the WTO and interpretations made therein provides an opportunity to understand the scope of the requirements.