Article 11: Freedom of Transit
What is covered?
The title of Article 11 is adopted from paragraph 2 of Article V of the GATT 94. In spite of Members’ obligations to grant freedom of transit to other Members, there was a need to reiterate core principles and lay down new binding multilateral obligations, mostly on procedural issues. Article 11 of the TFA regulates freedom of transit, in such a way that regulations, formalities, procedures or controls on traffic in transit do not become an unnecessary restriction to trade.
Freedom of transit was already disciplined in Article V of the GATT, 94 which disposed a set of fundamental principles related to freedom of traffic in transit, such as non-discrimination of traffic in transit, freedom from unnecessary delays or unreasonable charges and equal treatment of goods imported after transit, irrespective of the country of prior transit.
However, Article 11 of the TFA goes much further than Article V of the GATT, 94 enhancing the pre-existing provisions on freedom of transit through more specific obligations. In particular, Article 11 of the TFA stipulates the establishment of physically separate infrastructure for traffic in transit, the limitation of formalities, documentation, customs controls and guarantee requirements, and the attainment of stronger cooperation and coordination among WTO Members with a view of enhancing freedom of transit facilitated by the appointment of a national transit coordinator.
With regard to freedom of transit, this TFA Measure details:
- Mandatory provisions;
- Those where WTO Members are encouraged to undertake some steps for traffic in transit; and
- Those where the Members must try to – “shall endeavor to” – take some steps for transit facilitation.
This Measure aims to ensure movement of traffic in transit through application of the rules, regulations and processes in a non-trade restrictive manner, eliminating all unnecessary regulations and formalities, prohibiting any voluntary restraints to traffic in transit and securing a non-discriminatory treatment of the goods in transit.
Paragraph 1 requires Members to examine their measures relating to transit and weather they have out-lived their utility or a less trade restrictive alternative is available, and if the answer is in affirmative Member shall, not maintain the measure. Besides, any measure shall not be applied to constitute a disguised restriction to trade.
Cost of transit
Paragraph 2 mandates governments not to condition traffic in transit upon collection of fees or charges, except for transportation charges or those charges imposed for administrative expenses, commensurate to the cost of the service rendered.
Restraints and barriers
As for various restraints and barriers, TFA Article 11 states that Members must not apply any voluntary restraints or barriers to traffic in transit. In addition, it requires Members to accord to the products in transit the same treatment as if these were not passing through a third country while moving from the country of origin to the country of destination in order to ensure non-discrimination.
It is also provided that the goods in transit in one Member’s territory will not be subjected to any customs charges or unnecessary processes that may delay the movement of the goods, once these have been authorized to proceed from the point of origin in the Member’s territory to the point of culmination of the transit in that country. Moreover, this Article specifies that the goods in transit will not be subjected to the requirements of the Agreement on Technical Barriers to Trade (TBT).
Furthermore, as soon as the goods in transit reach the point of exit of a Member’s territory, customs must not delay their way out if transit requirements have been complied with, by swiftly completing the necessary procedures to conclude the transit operation.
Documentation and formalities requirements
When it comes to documentation, formalities and customs controls, Members are required not to apply cumbersome requirements for the submission of documents other than those which are sufficient to identify the goods in transit and to ensure fulfilment of the transit process requirements. Members are also mandatorily required to allow and provide for the advance submission and processing of the documents for the goods in transit, ahead of the arrival of the goods.
Guarantees and customs convoys
As far as guarantees for transit are concerned, the TFA does not prohibit Members to seek them. However, when such a guarantee is sought, Article 11 states that this instrument must be limited to ensure that the requirements imposed on traffic in transit are fulfilled. Moreover, once the transit requirements have been fulfilled, the guarantee must be immediately discharged without any delay by the transit country authorities.
Article 11 also requires Members to allow the submission of comprehensive guarantees covering multiple transactions for the same operators, or the renewal of guarantees without discharge for subsequent consignments. However, the qualifying language “in a manner consistent with its laws and regulations” waters down the implementing force of this Measure. In particular, this means that in case the measure includes something which is either non-consistent or not provided for in the national legislation, the obligation to implement this TFA provision would not be required. To ensure transparency and predictability, the TFA obliges Members to publish the relevant information regarding requirements and processes for setting and discharging the guarantees.
Paragraph 15 also provides for the possibility of Members to require the use of customs convoys or escorts in specific circumstances. Unambiguously, it states that Members enjoy the option to demand – “may require” – the use of customs convoys or escorts for traffic in transit only in cases of ‘high risks’ scenarios, and when the guarantees provided are not sufficient to ensure compliance with the customs laws and regulations. In the case customs escorts and convoys are used, Members have a binding obligation to publish and apply the corresponding applicable rules in accordance with Article 1 of the TFA, which sets forth the principle of access to information and transparency.
Paragraph 5 of Article 11 encourages WTO Members to set up separate physical infrastructure – including separate berths, lanes and corridors – to facilitate traffic in transit “where practicable”. Due to its best-endeavour nature, Members are not obliged to enforce this specific provision; nonetheless, they are encouraged to do so if they deem it feasible on the basis of their national resources and capacities.
Coordination and cooperation among Members
The last requirements of Article 11 call WTO Members to attempt to cooperate and coordinate with each other to improve the facilitation of traffic in transit. The Measure suggests that such cooperation could be achieved by strengthening the reciprocal understanding of the charges that apply to traffic in transit, the formalities and legal requirements, and the practical aspects of transit management.
The legal language “shall endeavour to” means that Members are not bound to obtain a certain outcome – mutual cooperation in this case – but have the binding obligation to demonstrate that they have at least tried to achieve the aim by undertaking some efforts. Moreover, it is worth noting that the suggested scope of cooperation in this Article is not exhaustive and definitive, but may include other aspects of trade facilitation, which can help expedite transit.
The use of the same language “shall endeavour to” is provided for in the closing provision of Article 11, which states that Members must try to identify and appoint a focal point for transit coordination to whom all the queries and information regarding traffic in transit may be directed. As previously explained, in the presence of the expression “shall endeavour to”, Members must undertake some steps to implement this Measure but are not obliged to achieve the sought-after result.