Article VIII of GATT (1994, Fees and Formalities) connected with importation and exportation deals with simplification and reduction of the incidence and complexity of import and export formalities, and a reduction in the number and diversity of fees and charges. Article VIII covers all fees, charges and other duties, as well as formalities connected to import and export. This includes requirements relating to documents and clearance procedures. It stipulates that fees and charges levied should be appropriate to the level of service rendered, hence prohibiting ad valorem fees. These fees and charges include license and inspection fees, but not fees relating to the commercial nature of operations and procedures. Examples of the fees and charges covered are provided in Article VIII.4. It includes those relating to consular transactions, licensing, statistical services, documents, documentation and certification, analysis and inspection, and quarantine, sanitation and fumigation. Furthermore, Article VIII.3 requires member states not to impose substantial penalties for minor breaches, omissions and mistakes without fraudulent intent.
Relevance of GATT Article VIII
For the importation and exportation of goods, traders and transport service providers have to comply with many different regulations and procedures. They have to undertake multiple formalities and comply with various document and information requirements. Some of these formalities start well before the actual import/export operation. The Buy-Ship-Pay Model provides a simplified overview of the procedures, documents and actors that intervene during a cross-border trade transaction. The complexity of the procedures often leads to redundant document requirements and information requests, as well as lengthy formalities. Often the various public agencies do not cooperate. Working hours and goods inspections are not coordinated. Offices are located at distant locations and information is not exchanged. It is necessary to submit the same information several times. This causes delays and increases unpredictability and costs for the traders. Article VIII calls for the simplification and minimization of complexity. It therefore lies at the heart of trade facilitation. The current text, however, provides little guidance and no concrete obligations on what members need to do in order to simplify their procedures. However, Article VIII constitutes an important launching pad for rules for reducing and simplifying these procedures. Many of the proposals put forward by members relate to the introduction of modern Customs procedures.
Fees and charges have to be paid by traders and transport operators for many of the services provided by public agencies, e.g. for the processing of documents, for documents themselves, for inspection and testing, and for information services. Fees and charges are not only problematic because of their amount. Often, the amount of the individual fee is very small, but increases considerably if all fees and charges are summed up. Fees and charges also create indirect costs related to the lack of transparency on what fees need to be paid to whom for what service. This can lead to multiple payments at various cashier locations, so causing delays, and often frustration and non-compliant behaviour. For public agencies, costs related to monitoring and administering the payments are often higher than revenues from the fee. Reviewing the fees and charges and reducing the number of fees can therefore produce cost savings for public administrations.