WASHINGTON - United States Trade Representative Robert B. Zoellick announced that the United States today is filing a World Trade Organization (WTO) case against the European Union regarding EU customs laws and regulations.

At issue is the fact that many important aspects of customs administration in the EU are handled differently by different member State customs authorities, resulting in inconsistencies from State to State. Although the EU is a customs union, there is no single EU customs administration. Lack of uniformity, coupled with lack of procedures for prompt EU-wide review, can hinder U.S. exports, particularly for small to mid-size businesses.

"We will continue to work with the EU to try to resolve our concerns over their customs administration," Zoellick said. "Today our exporters face a common market with non-common customs practices. We hope that the consultations we have requested today will help address some of the problems faced by U.S. exporters, and in the process strengthen the integration of the EU. We look forward to working with the new EU Commission on these issues, which we recognize cross various jurisdictional and bureaucratic boundaries. We hope there is an opportunity to combine uniformity throughout the EU with Europe’s effort to integrate its ten new members."

WTO rules require WTO Members to administer their customs laws in a uniform, impartial and reasonable manner. They also require Members to provide tribunals for prompt review and correction of administrative action relating to customs matters. The United States considers that the EU fails to meet either of these requirements.

Variations in the way that goods are treated by the different EU member States can cause problems that burden all traders. These problems are compounded by an inability to obtain prompt EU-wide review of national administrative decisions. An importer or other interested party has to wend its way through national administrative and/or judicial appeals before obtaining an authoritative determination from an EU-level tribunal.

The first step in a WTO dispute is to request consultations. If the consultations do not resolve the dispute, the countries that requested consultations may seek the formation of a dispute settlement panel. Dispute settlement procedures, including appeal, typically take about 18 months.

Background:

The lack of uniform customs administration by the EU affects U.S. producers, farmers, and exporters in a number of important ways. For example, goods may be classified differently and thus be subject to different tariffs depending on the EU member State through which they are imported. Similarly, a U.S. exporter may be able to obtain binding guidance in one member State on how its goods will be valued for tariff calculation purposes. But the exporter may not be able to rely on that guidance in another member State; indeed in some member States the exporter may not be able to obtain binding valuation guidance at all.

These problems fall particularly hard on small and mid-size businesses, which often lack the resources to work their way through member State and EU bureaucracies in order to reconcile inconsistencies in classification or valuation in different States.

There are three reasons for requesting WTO consultations now. First, the EU has just recently expanded from 15 member States to 25 member States. The trade barrier inherent in lack of uniform customs administration expanded when the new member States joined in May. As an indicator of the level of trade potentially affected by this barrier, it should be noted that U.S. goods exports to the EU-25 totaled $155.2 billion in 2003. By pressing this issue now, we hope to address this problem early in the EU’s process of dealing with the challenges of enlargement.

Second, enhancing trade facilitation is a key part of the Doha Development Agenda. The United States expects that pressing a major player in world trade to administer its customs laws and regulations in a uniform manner will help to advance that part of the agenda.

Third, over the past months we have tried to work with the Commission to address the concerns of U.S. exporters. Although Commissioner Lamy and his staff have tried to help with individual problems, it has become clear that the allocation of authorities within the EU and even the Commission has precluded achieving the necessary systemic solutions.