WORLD TRADE
ORGANIZATIONG/C/W/426
8 October 2002
(02-5406)
Council for Trade in Goods Original:  English
TRADE FACILITATION ISSUES IN THE DOHA MINISTERIAL DECLARATION
REVIEW OF THE GATT ARTICLES
ARTICLE V
Communication from the World Customs Organization
The following communication, dated 1 October 2002, has been received from the World
Customs Organization.
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I. Introduction
This paper on Article V of the GATT is a part of the WCO contribution to explain how the
WCO instruments support the WTO in implementing its rules.  As we explained in our earlier
submission on Article X ( Doc. G/C/W/392 ) and on Article VIII ( Doc.G/C/W/407 ), all the legal
provisions and the principles in the WCO instrume nts are compatible with, and complementary to, the
three GATT Articles.  The GATT Articles set out the rules for trade facilitation, while instruments of
the WCO, including the Revised Kyoto Convention, provide the basis and practical guidance and
information for the implementation of those rules.
Article V sets out the rules on freedom of transit on the basis of MFN and non-discrimination
principles.  The WCO instruments provide practical and technical means to implement this GATT
Article and to further facilitate transit insofar as the issues can be addressed by Customs.  However,
freedom of transit requires political commitment and the co-operation of other agencies; Customs
alone cannot assure smooth transit.  This is another area that demonstrates the complementaritybetween the WTO rules and the WCO instruments.
Transit necessarily involves regional co-operation because of the geographical proximity of
the Parties concerned.  Hence, the WCO encourages regional co-operation in developing and
implementing transit procedures.  In this connection, we regard Customs co-operation as one usefulmeans for capacity building in this area.
In a wider context, the WCO pursues three main capacity-building activities:
- Firstly, the WCO provides various instruments that will enable Customs to base their practice
on internationally accepted standards;
- Secondly, the WCO offers a forum for international co-operation at global and regional
levels; and
- Thirdly, we deliver training and technical assistance.
It is our intention to address this issue in a separate document: Compendium of WCO
Capacity Building Tools.G/C/W/426
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Article V of the GATT 1994 as reflected in WCO instruments
i) Article V of the GATT 1994 refers to freedom of transit.  From the outset, the WCO
recognizes that this Article has a wider scope than the Customs transit  issues that are covered
by the WCO instruments.  The conditions set out in the GATT Article that regulate theconditions a Member may impose on goods transported through its territory by another party
to a foreign destination and the obligations imposed by the Article, go beyond the purely
Customs domain.
ii) This paper clarifies, insofar as it relates to Customs, how the requirements of Article V of
GATT 1994, including the procedures and formalities for the Customs transit procedure, are
dealt with in the Revised Kyoto Convention and other WCO instruments.
iii) The principles of the Customs Transit procedure are covered in detail in Specific Annex E,
Chapter E1 of the Revised Kyoto Convention, and provide for a safe, secure and standard
transit procedure.  Other WCO instruments - such as the Istanbul Convention and the ATA
Convention - also facilitate transit  procedures for temporary admission of goods using the
ATA carnet procedures.
iv) The provisions of the Revised Kyoto Convention and the other WCO instruments that relate
to transit procedures are aligned with, and respect the requirements that are set out in Article
V of GATT 1994 insofar as the issues can be addressed by the Customs.  In addition, theyprovide for additional facilitative procedures and simplified documentary requirements for
goods in transit.
v) To facilitate the international transport of goods passing through a number of Customs
territories, other international bodies also provide for agreements and special arrangements,including the TIR Convention of the UN/ECE.  The Revised Kyoto Convention encourages
the application of these other international agreements by Customs to facilitate transit
arrangements.  The WCO recommends its Member administrations to develop their national
transit procedures based on the principles in the Revised Kyoto Convention or other existing
international instruments relating to transit.
II. Article V as supported and enhanced by the provisions of the Revised Kyoto Convention
and other WCO instruments
A. Article V (1) Scope of the term "traffic in transit"
i) Article V (1) states that goods (including baggage), and also vessels and other means of
transport, shall be deemed to be in transit acro ss the territory of a contracting party when the
passage across such territory is only a portion of a complete journey.  Traffic of this nature is
termed "traffic in transit" in this Article.
ii) The definition of “Customs transit” in the Revised Kyoto Convention covers both transit
within one Customs territory and transit involving more than one territory, since the
principles applicable are the same. When the goods are required to move from one Customs
office to another within one Customs territory for control purposes, this is referred to as
national transit.  When the Customs offices are in more than one Customs territory, this isinternational transit.
iii) The coverage of international Customs transit is, in principle, the same as that of “traffic in
transit” defined by GATT.  Article V indicates that “traffic in transit” may be “with orG/C/W/426
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without transhipment, warehousing or breaking bulk or change in the mode of transport”.  It is
assumed that, where necessitated, all these procedures will be accomplished under Customs
control as a part of Customs transit.  However, there are two exceptions where “traffic in
transit” is dealt with in other provisions of the Revised Kyoto Convention outside the scope of
Customs transit proper :
- First, the Customs transit procedure does not apply to goods carried by post since postal
goods are normally governed by the Conven tion of the Universal Postal Union (UPU).
However, this is addressed in Specific Annex J, Chapter 2 related to Postal Traffic.
- Second, goods being carried in a traveller's baggage will be subject to procedures
applicable to travellers specified in Specific Annex J, Chapter 1 relating to Travellers .
However, unaccompanied baggage in transit will be treated in the same manner as other
goods under Customs transit.
B. Article V (2) Freedom of transit
This specific requirement assures freedom of transit based on the principle of non-
discrimination.  The WCO instruments provide technical and operational means to implement
this rule.
C. Article V (3) Requirement for traffic in transit
- to be entered at the proper Custom house, not to be subject to unnecessary delays
and to be exempt from Customs duties,
- except in cases of failure to comply with applicable Customs laws and regulations,
such traffic coming from or going to the territory of other contracting parties shall
not be subject to unnecessary delays or restrictions.
Provisions relating to Customs transit of goods in the Revised Kyoto Convention fully support
the requirements above as set out in Article V (3)  and give detailed guidance to implement those
requirements.  This paragraph contains the requirements regarding fees and charges, as well as
the obligation to avoid unnecessary delays, similar to the obligation under Article VIII.  The
provisions of the General Annex to the Revised Kyoto Convention also apply in this regard.
(See the WCO submission on Article VIII(Doc. G/C/W/ 407) ).
Furthermore, the Revised Kyoto Convention provides additional measures to further facilitate
transit by endeavouring to avoid any unnecessary restrictions or delays related to transit.  These
include:
i) Simplified procedures for authorized consignors and consignees involved in the
transit procedure
Similar to the principles of "simplified procedures for authorized persons"(see WCO
submission on Article VIII - Doc. G/C/W/407 ), the Revised Kyoto Convention
provides simplified procedures for authorized consignors and consignees under the
Customs transit procedure.  In this respect, the Customs designates traders with goodcompliance records as authorized consignors and consignees.  They are permitted to
carry out specified Customs operations on their premises.
BenefitsG/C/W/426
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The special procedure for transit has benefits for both the trader and the Customs
since carrying out the Customs operations at the traders' premises avoids delays at the
borders.  It allows the Customs to exercise better controls and deploy its resources
more effectively through the use of compliant trader control systems.
ii) Use of a commercial or transport document as the descriptive part of the goods
declaration and the acceptance of a commercial or transport document as the goods
declaration for the consignment concerned
The Revised Kyoto Convention recommends that, in order to minimize data
requirements for the purposes of the goods declaration for transit, the commercial
document should be accepted as the descriptive part of the declaration.  Similarly, giventhe legal nature of a transport contract (e.g. rail or road waybill) or a commercial
invoice, it is recommended that these documents be accepted as a transit declaration
provided they meet the Customs requirements.
Both these recommendations help to minimize the documentary and data requirements
for a transit declaration.
iii) Simple and clear procedures for sealing and identification of consignments, thus
reducing delays in the transit procedure
Procedures for sealing and identification of consignments  are very important in the
present environment where attention is focused on security issues, particularly on
consignments carried in containers.  Secure seals and developments in technology for
affixing special types of seals are very important for facilitating the through movement
of goods in transit, particularly international transit.  Seals which are intact and areaccepted under national legislation allow consignments to be cleared without opening,
and therefore minimize delays in the transit operations.
D.  Article V (4) Charges and regulations
i) The charges and regulations of the type referred to in this Article are not normally imposed by
Customs laws or regulations.  However, there are instances where Customs is required tocollect charges and enforce regulations on behalf of other agencies.
ii) It should be noted that if the Customs is required to perform any functions related to a
Customs procedure or practice  - in this case for purposes of Customs transit - outside the
designated hours of business or away from  Customs offices, the General Annex of the
Revised Kyoto Convention provides that any expenses chargeable by the Customs shall be
limited to the approximate cost of the services rendered. (See the WCO submission on Article
VIII of the GATT (G/C/W/407) ).
E. Article V (5) (6) MFN and non-discrimination
These principles are prerequisites in respect of which WCO instruments provide practical
guidance for Customs.
F. Article V (7) Non application to aircraft in transit
The original Kyoto Convention excluded aircraft along the same lines as the GATT Article.
However, the Revised Kyoto Convention includes aircraft in its scope for transit since it was pointed
out that there is no particular reason to distinguish aircraft from other means of transport.G/C/W/426
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III. International agreements relating to Customs transit
i) The WCO encourages its Members to accede to international instruments relating to Customs
transit.  The WCO itself has been actively involved with the development and revision of the
UN/ECE TIR Convention and maintains close relations with the IRU which implements theTIR system.  This system is the most widely used for transit of goods by road.
ii) The Revised Kyoto Convention states that Contracting Parties should give careful
consideration to the possibility of acceding to international instruments relating to Customs
transit.  When they are not in a position to  accede to such international instruments they
should, when drawing up bilateral or multilatera l agreements with a view to setting up an
international Customs transit procedure, take account therein of Standards and RecommendedPractices in the Kyoto Specific Annex on Transit.
iii) There are several international instruments containing provisions relating to Customs transit.
The most well known are
- The Customs Convention on the International Transport of Goods under cover of TIR
carnets (TIR Convention), Geneva, 14 November 1975.
- WCO Conventions on the use of ATA carnets
The ATA carnet is a single document that serves as the export, transit and import goods
declaration for goods and also serves as a guarantee for the duties and taxes that the
goods may be liable to.  This is normally used in the case of goods that are allowed to be
imported temporarily for a variety of purposes.  To simplify the procedures for such
import, the WCO has two Conventions that recommend the use of ATA carnets.  TheInternational Bureau of Chambers of Commerce (IBCC) issues these carnets through an
international guaranteeing chain which is authorized to issue the carnets under the WCO
Conventions.
ATA carnets are relevant in the context of the transit of goods  which have to be
conveyed through a Customs territory or countries between those of exportation and
importation for temporary admission.
The text of Revised Kyoto Chapter E1 is annexed to this paper.
IV. Technical assistance
i) The WCO technical assistance programmes, including dedicated assistance to individual
Members as well as regional seminars and other programmes, are available for WCO
Members.  These are aimed at : explaining the legal provisions; examining national
legislation with a view to making changes to provide for compliance with the Revised Kyoto
principles; and reviewing national legislation that is revised or in the process of being drafted.
ii) In addition, as far as Customs transit is concerned, through these technical assistance
programmes the WCO promotes the principles of Customs transit procedures that are set out
in the Revised Kyoto Convention, as well as other international instruments that deal withtransit.  The WCO also encourages regional co-operation in developing and implementing
transit procedures since this is particularly relevant and important in the case of landlocked
countries and enables standard regional procedures to be implemented for intra-regional trade .G/C/W/426
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iii) Wherever possible, Customs is encouraged to base the drawing up of procedures for such
regional or intra-regional agreements on the principles on Customs transit contained in the
Revised Kyoto Convention or on other regional agreements that exist in this regard.
iv) A separate paper on the technical assistance programmes of the WCO is also being made
available to the Members.
V. Additional information
The legal texts of the revised Kyoto Convention and its implementation Guidelines and other
related instruments - such as the WCO Data Mo del and the Guidelines for Immediate Release
of Consignments by Customs - are available on the WCO Web site – www.wcoomd.org
Texts and Guidelines on the General Annex to the Revised Kyoto Convention
are available on the WCO Web site at
http://www.wcoomd.org/ie/En/Topics_Issues/FacilitationCustomsProcedures/kyoto/kyreport.h
tml
Texts and Guidelines of Annex E1 (Customs Transit) to the Revised Kyoto Convention  are
available on the WCO Web site at
http://www.wcoomd.org/ie/En/Conventions/conventions.htmlG/C/W/426
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Specific Annex E
Chapter 1
Customs transit
Definitions
For the purposes of this Chapter :
E1./
F4.“authorized consignee” means a person empowered by the Customs to receive goods
directly at his premises without having to present them at the office of destination;
E2./
F5.“authorized consignor”  means a person empowered by the Customs to send
goods directly from his premises without having to present them at the office ofdeparture;
E3./
F1.“control office”  means the Customs office responsible for one or more “authorized
consignors” or “authorized consignees” and, in this respect, performing a special control
function for all Customs transit operations;
E4./
F7.“Customs transit”  means the Customs procedure under which goods are transported under
Customs control from one Customs office to another;
E5./
F6.“Customs transit operation” means the transport of goods from an office of departure to
an office of destination under Customs transit;
E6./
F2.“office of departure”  means any Customs office at which a Customs transit operation
commences;
E7./
F3.“office of destination”  means any Customs office at which a Customs transit operation is
terminated;
E8./ “transport-unit”  means :G/C/W/426
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F8.
(a) containers having an internal volume of one-cubic metre or more, including
demountable bodies;
(b) road vehicles, including trailers and semi-trailers;(c) railway coaches or wagons;(d) lighters, barges and other vessels; and
(e) aircraft.
Principle
1. Standard
Customs transit shall be governed by the provisions of this Chapter and, insofar as applicable,
by the provisions of the General Annex.
Field of application
2. Standard
The Customs shall allow goods to be transported under Customs transit in their territory :
(a)  from an office of entry to an office of exit;(b)  from an office of entry to an inland Customs office;(c)  from an inland Customs office to an office of exit; and(d)  from one inland Customs office to another inland Customs office.
3. Standard
Goods being carried under Customs transit shall not be subject to the payment of duties and
taxes, provided the conditions laid down by the Customs are complied with and that any security
required has been furnished.
4. Standard
National legislation shall specify the persons who shall be responsible to the Customs for
compliance with the obligations incurred under Customs transit, in particular for ensuring that the
goods are produced intact at the office of destination in accordance with the conditions imposed by
the Customs.G/C/W/426
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5. Recommended Practice
The Customs should approve persons as authorized consignors and authorized consignees
when they are satisfied that the prescribed conditions laid down by the Customs are met.
Formalities at the office of departure
(a)  Goods declaration for Customs transit
6. Standard
Any commercial or transport document setting out clearly the necessary particulars shall be
accepted as the descriptive part of the Goods declaration for Customs transit and this acceptance shall
be noted on the document.
7. Recommended Practice
The Customs should accept as the Goods declaration for Customs transit any commercial or
transport document for the consignment concerned which meets all the Customs requirements.  This
acceptance should be noted on the document.
(b) Sealing and identification of consignments
8. Standard
The Customs at the office of departure shall take all necessary action to enable the office of
destination to identify the consignment and to detect any unauthorized interference.
9. Recommended Practice
Subject to the provisions of other international conventions, the Customs should not generally
require that transport-units be approved in advance for the transport of goods under Customs seal.
10. Standard
When a consignment is conveyed in a transp ort-unit and Customs sealing is required, the
Customs seals shall be affixed to the transport-unit itself provided that the transport-unit is so
constructed and equipped that :
(a)   Customs seals can be simply and effectively affixed to it;(b)  no goods can be removed from or introduced into the sealed part of the transport-unit
without leaving visible traces of tampering or without breaking the Customs seal;
(c )it contains no concealed spaces where goods may be hidden; and(d) all spaces capable of holding goods are readily accessible for Customs inspection.
The Customs shall decide whether transport-units are secure for the purposes of Customs
transit.G/C/W/426
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11. Recommended Practice
Where the accompanying documents make it possible unequivocally to identify the goods, the latter
should generally be transported without a Customs seal or fastening. However, a Customs seal or
fastening may be required :
- where the Customs office of departure considers it necessary in the light of risk
management;
- where the Customs transit operation will be facilitated as a whole; or- where an international agreement so provides.
12. Standard
If a consignment is, in principle, to be conveyed under Customs seal and the transport-unit
cannot be effectively sealed,  identification shall be assured and unauthorized interference rendered
readily detectable  by :
-  full examination of the goods and recording the results thereof on the transit
document;
-  affixing Customs seals or fastenings to individual packages;
- a precise description of the goods by reference to samples, plans, sketches,
photographs, or similar means, to be attached to the transit document;
- stipulation of a strict routing and strict time limits; or
- Customs escort.The decision to waive sealing of the transport- unit shall, however, be the prerogative of the
Customs alone.
13. Standard
When the Customs fix a time limit for Customs tran sit, it shall be sufficient for the purposes
of the transit operation.
14. Recommended Practice
At the request of the person concerned, and for reasons deemed valid by the Customs, the
latter should extend any period initially fixed.
15. Standard
Only when they consider such a measure to be indispensable shall the Customs :
(a) require goods to follow a prescribed itinerary; or(b) require goods to be transported under Customs escort.G/C/W/426
Page 11
Customs seals
16. Standard
Customs seals and fastenings used in the application of Customs transit shall fulfil the
minimum requirements laid down in the Appendix to this Chapter.
17. Recommended Practice
Customs seals and identification marks affixed by foreign Customs should be accepted for the
purposes of the Customs transit operation unless :
- they are considered not to be sufficient;
- they are not secure; or- the Customs proceed to an examination of the goods.When foreign Customs seals and fastenings have been accepted in a Customs territory, they
should be afforded the same legal protection in that territory as national seals and fastenings.
18. Recommended Practice
Where the Customs offices concerned check the Customs seals and fastenings or examine the
goods, they should record the results on the transit document.
Formalities en route
19. Standard
A change in the office of destination shall be accepted without prior notification except where
the Customs have specified that prior approval is necessary.
20. Standard
Transfer of the goods from one means of transport to another shall be allowed without
Customs authorization, provided that any Customs seals or fastenings are not broken or interfered
with.
21. Recommended Practice
The Customs should allow goods to be transported under Customs transit in a transport-unit
carrying other goods at the same time, provided that they are satisfied that the goods under Customs
transit can be identified and the other Customs requirements will be met.
22. Recommended Practice
The Customs should require the person concerned to report accidents or other unforeseen
events directly affecting the Customs transit operation promptly to the nearest Customs office or other
competent authorities.G/C/W/426
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Termination of Customs transit
23. Standard
National legislation shall not, in respect of the termination of a Customs transit operation,
require more than that the goods and the relevant Goods declaration be presented at the office of
destination within any time limit fixed, without the goods having undergone any change and without
having been used, and with Customs seals, fastenings or identification marks intact.
24. Standard
As soon as the goods are under its control, the office of destination shall arrange without
delay for the termination of the Customs transit operation after having satisfied itself that all
conditions have been met.
25. Recommended Practice
Failure to follow a prescribed itinerary or to comply with a prescribed time limit should not
entail the collection of any duties and taxes potentially chargeable, provided the Customs are satisfied
that all other requirements have been met.
International agreements relating to Customs transit
26. Recommended Practice
Contracting Parties should give careful cons ideration to the possibility of acceding to
international instruments relating to Customs transi t.  When they are not in a position to accede to
such international instruments they should, when drawing up bilateral or multilateral agreements with
a view to setting up an international Customs transit procedure, take account therein of Standards and
Recommended Practices in the present Chapter.G/C/W/426
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APPENDIX
Minimum requirements to be met by Customs seals and fastenings
A. Customs seals and fastenings shall meet the following minimum requirements :
1. General requirements in respect of seals and fastenings :
The seals and fastenings shall :
(a)  be strong and durable;(b)  be capable of being affixed easily and quickly;(c)  be capable of being readily checked and identified;
(d)  not permit removal or undoing without breaking or tampering without leaving traces;
(e)  not permit use more than once, except seals intended for multiple use (e.g. electronic
seals);
(f) be made as difficult as possible to copy or counterfeit.
2. Physical specification of seals :
(a)  the shape and size of the seal shall be such that any identifying marks are readily
distinguishable;
(b)  each eyelet in a seal shall be of a size corresponding to that of the fastening used, and
shall be positioned so that the fastening will be held firmly in place when the seal is
closed;
(c)  the material used shall be sufficiently strong to prevent accidental breakage, early
deterioration (due to weather conditions, chemical action, etc.) or undetectable
tampering;
(d)  the material used shall be selected by reference to the sealing system used.
3. Physical specification of fastenings :
(a)  the fastening shall be strong and durable and resistant to weather and corrosion;(b)  the length of the fastening used shall not enable a sealed aperture to be opened or
partly opened without the seal or fastening being broken or otherwise showing
obvious damage;
(c)  the material used shall be selected by reference to the sealing system used.G/C/W/426
Page 14
4. Identification marks :
The seal or fastening shall be marked :
(a)  to show that it is a Customs seal, by application of the word "Customs" preferably in
one of the official languages of the Council (English or French);
(b)  to show the country which affixed the seal, preferably by means of the sign used to
indicate the country of registration of motor vehicles in international traffic;
(c)  to enable the Customs office which affixed the seal, or under whose authority the seal
was affixed, to be identified, for example, by means of code letters or numbers.
B. Seals or fastenings affixed by authorized consignors and other authorized persons for Customs
transit purposes to ensure security for Customs purposes shall offer physical security comparable
to that of seals affixed by the Customs and shall make it possible to identify the person who
affixed those seals, by means of numbers to be entered on the transit document.
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