GENEVA – Deputy
U.S. Trade Representative Peter F Allgeier today announced that a WTO dispute
settlement panel today issued a report shining a spotlight on the lack of
uniform administration of customs laws in the European Communities (EC). The
report comes in a dispute brought by the United States in March 2005.
The United States claimed that the administration of EC customs law by 25
different agencies (one for each of the member States), coupled with a lack of
any procedures or mechanisms to reconcile the divergences that inevitably occur
on important matters including classification and valuation, is a violation of
the EC’s obligation to administer its customs laws in a uniform manner. The WTO
panel found that the EC had breached its WTO obligations, finding the EC system
of customs administration to be "complicated and, at times, opaque and
confusing."
"Today’s panel report calls attention to a serious trade facilitation problem
in the EC," Ambassador Allgeier said. "The obligation to administer customs laws
in a uniform manner goes back almost 60 years, to the original General Agreement
on Tariffs and Trade. A system of customs administration that varies from region
to region across the territory of a WTO Member makes the world trading system
less efficient and is especially vexing to small traders, as the panel itself
noted. If each of the 50 U.S. States administered U.S. customs law through a
separate agency, with no central authority to ensure uniformity, there would be
no end to the complaints by other WTO Members. The EC, as a WTO Member in its
own right, must be held to no less a standard."
Background
In this dispute, the United States challenged (a) the lack of uniform
administration of EC customs law, and (b) the lack of an EC tribunal or other
procedure for the prompt review and correction of customs administrative actions
whose decisions apply throughout the EC. The United States argued that these
features of the EC’s customs law administration and review system are
inconsistent with GATT Articles X:3(a) and X:3(b), respectively.
The EC’s lack of uniform administration means a good may be classified one
way when imported into Germany and an entirely different way, attracting a
different rate of duty, when imported into Spain, for example. In fact, even if
the customs authority in Germany issues an advance ruling to a given importer
stating how it will classify the good, that ruling is not binding in Spain
except with respect to the very same importer; the ruling does not bind the
customs authority in Spain with respect to identical goods entered by other
importers.
A prominent example of the problem, discussed during the dispute, involves
flat-panel liquid crystal display monitors with digital video interface ("LCD
monitors"). Some agencies classify LCD monitors as computer-related equipment
(drawing a zero duty rate), while others classify the goods as "other" monitors
(drawing a 14 percent duty rate). For well over a year, the EC Commission has
been unable to reconcile the divergent approaches of different agencies. The
panel agreed with the United States that the EC fails to administer its customs
law in a uniform manner when it comes to classification of LCD monitors.
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