Overview of the Agreement on Import Licensing Procedures
The Agreement on Import Licensing Procedures establishes a set of detailed rules and principles to prevent import licensing procedures from becoming obstacles to trade.
The Agreement was first negotiated in the Tokyo Round (1973-1979). However, the Tokyo Round Licensing "Code" only applied to a limited number of GATT Contracting Parties. It was revised and improved in the Uruguay Round (1986-1994). And, as one of the multilateral agreements annexed to the WTO Agreements, since 1995 it has applied to all WTO Members.
Governments generally use import licensing procedures for the following purposes: (i) to administer quantitative restrictions (i.e. to manage quota allocation); (ii) to apply import restrictions with a view to achieving other policy objectives, such as to protect human and animal health, to safeguard the environment, or to protect national security or undertake import prohibitions or restrictions so as to fulfil obligations under other international treaties (i.e. CITES, Montreal Protocol etc.), or (iii) to keep track of imports for statistical purposes.
The Agreement distinguishes two different categories of import licensing procedures: (i) automatic licensing procedures; and (ii) non-automatic licensing procedures. The Agreement contains general provisions that apply to both categories of import licensing procedure as well as certain provisions that apply specifically to one or other category of import licensing procedure.
The general provisions seek to reduce the scope for discrimination or administrative discretion in the application of import licensing procedures in general. For example, all rules relating to a particular import licensing procedure, as well as information regarding who is eligible to apply for an import licence, where the application should be made, and which specific goods are subject to import licensing procedures must, whenever practicable, be published by the authority 21 days prior to the effective date of the requirement, and in any event not later than the effective date itself. Rules are to be neutral in application and administered fairly and equitably. Import licence application and renewal forms, as well as the application and renewal procedures, should be simple and straightforward. Applicants should be allowed 21 days or more to respond when there is a closing date and should normally be requested to contact only one administrative body. Applications should not be refused because of minor errors in the documentation. And there should likewise be no undue penalties because of minor mistakes and omissions. Furthermore, licensed imports should be accepted even when there are minor variations between what is indicated on the licence in terms, for example, of value, quantity, or weight, and the imported goods themselves, provided that these variations are consistent with normal commercial practice. Foreign exchange for payment of import duties should be made available to licence holders on the same basis as that provided to importers of goods that require no import licence.
Automatic import licensing is defined as import licensing where approval of the application is granted in all cases, and there is no restrictive effect on trade. Article 2 of the Agreement provides clear qualifying conditions in the case of automatic import licensing, namely: (i) anyone legally qualified to import the products concerned must be able to apply for and obtain a licence; (ii) applications must be acceptable on any working day before the goods are cleared through customs; and (iii) applications correctly completed must be approved either immediately or within 10 working days. Upon accession to the WTO, developing countries that were not signatories to the Tokyo Round Code receive a two-year grace period before they are legally required to meet the latter two of the requirements listed above.
Import licensing procedures that do not meet the conditions listed above are regarded as non-automatic. The central requirement under the Agreement is that such import licensing procedures should not restrict or distort trade beyond the applied measure itself. Sufficient information must be published to allow traders to know the basis on which licences will or will not be granted, and governments with a trade interest have the right to request detailed information from a Member about how licences have been distributed and the trade in the products concerned. If the licences are administering import quotas, information must be published regarding the size or value of the quotas and the duration of their application. If the quotas are allocated among supplying countries, all interested supplying Members must be informed, and the requirement for publication again applies. Any importer that fulfils the legal and administrative requirements must be eligible to apply and be considered for a licence, and any potential importer refused a licence may request justification for such refusal, and shall enjoy also a right of appeal and review. If quotas are allocated on a first come first served basis, applications must be considered within 30 days. If they are considered simultaneously, the maximum period is 60 days. Other provisions call for import licences to be of reasonable duration so as to allow for imports from distant sources. Opportunities should also be given to importers new to a Member's market, and especially to importers who import their products from developing countries.
The Agreement includes particularly detailed requirements for notification and review of each Member's licensing laws (regulations), institutions, and measures. For example, any new or modified import licensing procedure must be notified within 60 days of publication. A Member may choose to report to the Committee any import licensing measure taken by another Member that has not been appropriately notified. Members must also complete their replies to the annual questionnaire before 30 September each year.
The Committee on Import Licensing oversees the Agreement and reviews its implementation. It serves as a platform for Members to discuss any trade policy issue concerning import licensing procedures.