Import licensing describes the administrative processes that call for applications or other paperwork to be submitted to the appropriate administrative authority before the importation of commodities for purposes other than those of customs. When granting import licenses, the World Trade Organization (WTO) countries have committed to follow the guidelines outlined in the Agreement on Import Licensing. All WTO members are parties to the Agreement, which became operative on January 1, 1995. It has no time limit.
Objectives
The Agreement’s key goals include streamlining and making import licensing processes more transparent and ensuring their just and equitable application and administration. It also aims to stop the processes used to grant import licenses from having their own restrictive or distorted impacts on imports.
GATT Article VIII
Article VIII of the GATT, which is titled Fees and Formalities connected with Importation and Exportation, deals in general terms with import licensing procedures. The text sets a general obligation for formalities, whereby Members acknowledge the need to reduce the incidence and complexity of import and export formalities. Members also acknowledge lessening and simplifying the requirements for import and export documentation as stated in the text. Each Member must, upon request from another Member, assess the functioning of its laws and regulations in light of the requirements of the Article. It expressly forbids Members from enforcing severe sanctions for slight infractions of customs laws or procedural requirements.
GATT Article X
Members are required by Article X to administer laws, rules, court rulings, and administrative decisions of universal application, including those of import or export obligations, uniformly and fairly.
Tokyo Round Code to the Uruguay Round Agreement
One of the agreements governing non-tariff measures reached during the international trade negotiations held between 1973 and 1979 was the Tokyo Round Import Licensing Code. To prevent import licensing procedures from unduly impeding global trade, it went into effect on January 1st, 1980. Only the nations that had signed and approved it were bound by it as a standalone pact. It was strengthened during the Uruguay Round to include more transparency and notice requirements. On January 1st, 1995, the new Agreement became effective. All WTO Members must abide by it.
General guidelines
According to the WTO Import Licensing Agreement, rules and procedures for submitting import license applications must be published before they take effect. This includes details on the qualifications needed for individuals, businesses, or institutions applying for licenses, as well as a list of all the products that need a license. Forms and procedures, including those for application and renewal, must be as straightforward as feasible. Importers should typically only need to contact one administrative body to obtain a license, and in no case can they be required to apply to more than three such bodies. Applicants must have a reasonable amount of time to submit their license applications. The deadline for submitting a license application should be at least 21 days, with room for an extension if necessary. In case of any changes, the list of products that require import licenses or the rules governing import licensing procedures must be published 21 days before the changes take effect. This data must also be provided to the World Trade Organization Secretariat, together with copies of any implementing rules or laws.
Import Licensing: Automatic and Non-automatic
The Licensing Agreement enables WTO members to put automatic or non-automatic import licensing systems in place. To collect trade data, origin statistics, or other information, governments may freely grant automatic permits that do not impose import restrictions. Non-automatic licenses, on the other hand, are not always given. They are employed to manage import limitations like quotas. The agreement states that non-automatic licenses must not be more burdensome than strictly necessary to administer the measure. They must also not have any additional trade-distorting impacts on imports beyond those brought on by the limitation they enforce.
Import Licensing Committee
According to Article 4, the Committee on Import Licensing has been created and is accessible to all Members. It convenes as required to consult on issues of the execution of the Agreement or the achievement of its goals.
