USTR - U.S. Requests WTO Panel Against EU Over European Customs System
                 
The Office of the United States Trade Representative

U.S. Requests WTO Panel Against EU Over European Customs System
01/13/2005


WASHINGTON – The office of the U.S. Trade Representative today asked the World Trade Organization (WTO) to form a dispute settlement panel in the case against the European Union regarding EU customs laws and regulations. This step follows the September 21, 2004 filing of a request for consultations with the EU. Consultations between the U.S. and the EU were held in mid-November, but were unable to resolve the dispute.

Many important aspects of customs administration in the EU are handled differently by different member State customs authorities, resulting in inconsistencies from country to country. 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.

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.

EU institutions -- including the Commission, the Court of Justice, and the Parliament -- have routinely noted the lack of uniformity in the administration of EU customs law. For example, in its comments on a March 2001 report by the EU Court of Auditors, the Commission stated, "The objective that for all trade in goods the Community should operate as a real customs union with uniform treatment of imported goods can be fully obtained only if the customs union is operating on the basis of a single customs administration, which is not the case." The United States fully agrees.

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.

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 four reasons to move this dispute to a WTO panel 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 last 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 year, we have tried to work with the Commission to address the concerns of U.S. exporters. Indeed, this was the culmination of efforts over the past seven years to address such concerns in various WTO fora. Although the Commission has 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.

Fourth, the United States and the EU held consultations on this matter in Geneva in mid-November. Six other WTO Members – Argentina, Australia, Brazil, India, Japan, and Taiwan – asked to join the consultations as third parties, demonstrating the level of concern about the EU system. Regrettably, the EU rejected these requests to join the consultations by major exporters to the EU. Ultimately, the consultations confirmed U.S. concerns and failed to resolve the dispute.