1 Széchenyi István University
László Pardavi
Basic questions of the global economy's customs law (with special regard to preferential agreements)
Thesis of Doctoral (PhD) Dissertation
Széchenyi István University
Postgraduate Doctoral School of Law and Political Sciences
Supervisor:
Dr. habil. Attila Marján
Győr 2015
2 Table of contents:
I. Summary of the research task, hypotheses………3
Hypotheses……….4
II. Research methodology………..6
III. Summary of the research's scientific results………..8
IV. List of the author's publications written in the subject of the doctoral dissertation.………20
3
I. Summary of the research task, hypotheses
The doctoral dissertations’ subject is the investigation of global economy's custom and customs law institutions, with special regard to the customs relevance legal science evaluation of preferential agreements applied in the 21st century. To the best of my knowledge, summarizing scientific volumes or monographs in Hungarian language have not been born in this subject so far, authors1 investigating this research area have examined the subject in another context.
It is a widely-known fact that the world economy has been suffering from recession since 2008. Hence, this research does not wish to discover or investigate the crisis' financial reasons analyzing their economic, legal or social characteristics.
However, the crisis and measures taken against it have resulted in significant changes in the system of international customs law and its actual rules. We may get answer to the following question these days: will a new global and hence coherent world trade system be formed with basically similar customs regulations, or will regulations and structure based on GATT/WTO be outdated and the current system of world trade will be exchanged – or maybe only supplied – by the increasing number of preferential agreements having widening content.
The dissertation wishes to present the latest changes in the system of international customs law and its basic institutions, pointing out the changes' most significant reasons and their possible consequences. Of course, it cannot be conducted only in frames of legal science, hence, the research becomes multidisciplinary nature (always eager for the approach of financial legal science), utilizing several results of the research of the world system as well as economic science.
However, it is not the research's objective to analyze or evaluate customs organizations, the situation of custom authorities, their tasks, system or operation in general, hence, these questions are only partially dealt by the dissertation. Certain financial and procedural customs legislation's specific analysis is not included in the dissertation either as these norms belong to the research subject only indirectly.
Aims of the dissertation:
1. With researching the history and sources of law of customs, among them preferential agreements containing customs preferences and structuring requirements set out for the latter ones, searching bases for the further analysis of the dissertation. Determining international custom law's structure.
2. Analysis of preferential agreements' place and system
3. Presentation, analysis and criticism of elements applied by the most significant integrations' preferential agreements
1See for instance Balázs Horváthy: Foreign trade defence measures in community law. (Doctoral dissertation) Budapest, 2009
4 4. The future of customs, preferential agreements, possible ways of their improvement,
suggestions
The dissertation's scientific question pro primo: Can customs regulations connected to the current system of GATT/WTO be sustained, and has the time for the transformation and formation of global customs system and customs law arrived?
Pro secundo: Can changes of international trade policy result in the significant alteration, ad absurdum cease of customs and customs law's functions and the latter one's institutions?
Hypotheses:
1. For centuries, the prior content and objective of the application of customs – and according to it their legal concept – was to ensure the income of treasuries and public finance and to cover their expenses, also, it was the financial policy tool to realize all these. From this point of view, customs can be regarded as such public revenues like taxes and levies, their specialty stands (stood) in that authorities impose(d) them after goods (had) entered the territory of a state (in special cases leaving territory of the state). Hence, when analyzing the concept and characteristics of customs, we frequently bump into the classic dogma that customs are basically fiscal incomes.
Starting from the second half of the 20th century, primarily owing to the development of global trade and the formation of economic integrations, this paradigm became overcome.
Countries applying liberal customs and trade policy strive to cease or decrease tools that obstruct trade. Even in the GATT/WTO system member states’ general trade policy tools are customs, with regards to import and export they can only apply other instruments exceptionally. In accordance with this, the European Union lists customs tariffs, and customs tariff and trade agreements connected to the trade of services and goods among tools of common trade policy.
In those states which participate in trade and economic integrations, the general degree of customs continuously decreases and in most times these are not even regarded as incomes of certain member states’ but rather the integrations formed by the states.2
2. In the European continental law (under this we do not refer to the law of the EU as it basically operates like this), it is more and more obvious that customs (customs tariffs) have become dominant tools of trade policy by these days. Customs as tools of trade policy have long ago overstepped their exclusive fiscal role and regarding their function and objectives, now they cover the whole area of trade policy and foreign economic policy, hence, the traditional legal categorization of customs law has also underwent changes, its certain subjects of regulation could leave the area of financial law (law of public revenue), moving
2In the European Union, customs are incomes of the Union’s budget. The average degree of customs here is only 1,2 %. At the same time, customs form 11% of the Union’s budgetary income. Source: European Committee: Taxation and customs Union, Customs duties mean revenue
http://ec.europa.eu/taxation_customs/customs/policy_issues/facts_and_figures/customsean_revenue_en.htm; retrieved 11th. October 2014
5 into the area of trade-economic law (law of international economic relations). Therefore, they will have an effect on the execution of smooth trade – under necessary supervision –, and the protection of healthy environment, nature and workforce. Because of the GATT/WTO agreements, the level of customs decreases worldwide3 and customs preferences set in trade agreements affect an increasing part of the world trade. However, for countries falling out of customs unions, free trade areas and preferential agreements, these agreements could mean economic and trade discrimination. The GATT/WTO Agreement and its articles XXIV and XXXVI consider customs preferences may be allowed along certain conditions; however, it seems that as the effect of the world economic crisis, member states have already overstepped these limited possibilities. That is, protectionism regains its importance and besides regular administrative measures primarily the application of national subventions and other foreign trade defense measures arise in its frame (recalling the German and French tools of the 1930s).
3. Customs preferences, as common results of the world economic crisis’ constraining effects and the difficult decision-making of the GATT/WTO system, may spread in the future connecting more to the system of GATT/WTO, in the form of co-existing and increasing number of new integrations and bilateral agreements. Agreements, or their initiatives between the greatest economic and trade integrations gain importance these days. We are very close to the signing of the Agreement of Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership Free Trade Agreement.
The above mentioned, mainly economic procedures require and form new but customs-like trade policy tools and principles. Rules of customs clearance, determination of customs degree and origin rules will become unified. I aim at the investigation of these changes.
II. Research methodology
1. I basically aim to have a functionalist approach, meaning that the concept and functions of customs and preferential agreements are investigated within the (tool)system of trade policy, however, normative thinking is unavoidable, hence, I primarily evaluate information of international agreements. During the research historical analysis and international comparison of law are applied as well, searching for relations between certain institutions, discovering the “evolution” of legal institutions, making their specific features clear. Besides
3As the result of the first eight GATT rounds of negotiations, member states’ custom degree decreased according to the followings:
1. Genf (1947) -19%
2. Annecy (1949) -2%
3. Torquay (1950-51) -3%
4. Genf (1955-56) -2%
5. Genf (1961-1962 “Dillon-Round”) -7%
6. Genf (1964-1967 “Keneddy-Round”) -35%
7. Genf (1973-1979 “Tokyo-Round”) -33%
8. Uruguay (1986-1994) -40%
The other round of negotiations (Seattle 1999 and Doha 2001-) did not result in the decrease of custom. Source: Carsten Weerth:
Tariffs of the World: Are Custom Duties Really Growing Unimportant?, In: Global Trade and Customs Journal, Volume 4. Issue 2., Kluwer International, 2009. 53., HeinOnline Citation: 4. J. Global Trade & Cust. J. 53, 2009. http://heinonline.org; retreived: 24th February 2013.
6 the application of comparative method, the very limited processing of positive law is necessary, although I endeavor to handle research questions abstractly from a certain time of legislation. During the preparation of the dissertation, wishing to achieve some kind of progressive realism4, I tried to analyze the trade sector of global economy from certain (customs)law point of view, analyzing the origin and development of certain legal institutions.
2. Using special literature in the light of the above mentioned methodology and aims is an essential research activity. The dissertation is basically a synthesis and further reflection of special literature and was written upon the analysis of certain international documents and inner legal legislation, with the approach of legal science. Besides the not satisfying amount of domestic literature connecting to the subject of the dissertation, primarily British and North-American authors’ volumes form the applied special literature’s vast majority, however, certain German language works of continental literature also belong to the applied sources, as well as works published on the Internet which knowledge could strengthen the dissertation’s actuality. The dissertation applies the results of international law and economics, as well as research results from the author’s studies and other texts listed in the bibliography, however, the author wishes to publish new scientific results via synthetizing and integrating them.
3. The research of legal science’s inevitable attendant is the researchers resort to document analysis as method for their dissertation (mainly for the verification of hypotheses). In my case I refer minutes, reminders, reports and analyses of acceptation, modification or execution of certain international agreements to documents, which owing to their nature cannot be regarded as legal sources but have significant information from the point of view of the research.
4. In my dissertation I present preferential agreements existing all over the world but at least formed ones considered as significant by me, basically according to their territorial location.
However, the “territorial principle” chosen by me cannot result in a perfect solution as certain preferences do not necessarily belong to continents, regions but rather surpass their boarders. Hence, I aim at presenting agreements and integrations from European point of view in that region where they have the greatest economic effect.
III. Summary of the research’s scientific results
Customs, state sovereignty and trade are closely linked notions. The historical part of the dissertation and the chapter analyzing the actual preferential agreements seem to justify the fact that besides its initial financial function, customs have shown characteristics of trade policy starting from the ancient times but up until the end of the 19th century customs were basically regarded as treasuries and public finance’s income element; coming from this, legal science also regarded them as one of the institutions of financial law. Because of the new world trade system identifiable with the appearance of GATT and international agreements regulating it, instead of the fiscal function of customs their trade policy role became dominant by the middle of the 20th
4Attila Marján: Europe’s faith. The old lady and the bull. HVG Publisher, Budapest, 2009, p. 93.
7 century. Today customs form a decreasing part of public revenues of states having joined the GATT/WTO system or they have even gotten out of it (in case of customs union, the union is entitled of customs, hence, Hungarian laws on public revenue do not name customs among public revenues since May 2004), but as a basic instrument of trade policy customs have further inevitable role in the regulation of international trade. With the so called “autonomous” customs states determine the bases and degree of their import (more rarely export, on transit goods) customs individually based on their own sovereignty and set up their own system of customs.
However, we can hardly bump into such states (today maybe only Myanmar and a few island of the Pacific-ocean) these days which have autonomous customs and customs system and do not enter into trade agreements with their partners. These agreements (hereinafter referred to as preferential agreements or PTA-s) besides other not concretely customs-related regulations can contain customs decreases based on one-sided reciprocity which can even reach the level of free trade agreements or customs unions.
The basic type of preferential agreements – according to article XXIV of GATT, temporary agreements – was entered into by contracting states with the aim of creating a free trade zone or customs union after the transitional period. This limitation and objective did not lead to the conspicuous increase in the number of PTA-s up until 1995. Until then preferential agreements were nothing else but the elemental building stones of multilateral trade liberalization (GATT).
However, from 1995 the number of preferential agreements has constantly increased and there was only one temporary-like halt in this tendency in 2013 and 2014.
Legal reasons in the increase of preferential agreements shall primarily be traced in the weakness and inaccuracy of the GATT/WTO regulation. As I have previously stated, article XXIV of GATT left a loophole for member states with the further application of “transition period” as regulative condition. The problems of the Doha Round of WTO and the world economic crisis have contributed to this regulative inadequacy, kind of strengthening its effect.
The consequent failures of the Doha Round’s negotiations and the increasing number of bilateral PTA agreements seemed to justify the strengthening of protectionism and together with it the financial sovereignty facing discrimination and GATT/WTO, which tendencies appear anyway in times of world crises. This tendency is further strengthened by the race for raw material and energy and they jointly threaten globalization itself, free trade and its institutions.5 Consequently, more trade ministers of WTO member states strongly defended the open and regulated international trade norms in 2009 – again in Davos – which is a basic condition for economic increase and the formation of new workplaces. Hence, they called upon all members of the World Trade Organization to stay away from the introduction of new limiting measures in international trade which would further deepen the crisis.
However, the European Union – although it accepted the termination of agricultural supports – did not give up its policy aiming at new bilateral agreements; one of its proofs is the mutual agreement on Eastern Partnership entered into on 7th May 2009 in Prague, in which points 1-4 the emphasis is made on the formation and deepening of bilateral relations, kind of providing a
5Attila Marjan: The old lady and the bull. HVG Publisher Zrt., Budapest, 2009, p. 93.
8 negative answer to the questions of Davos; we can also mention the free trade agreement between the European Union and the South-Korean Republic signed on 7th October 2010 as an example.
The analysis of customs preferences’ global system led to the result that currently preferential agreements entered into between the two greatest trade powers of the world trade, the EU and the USA are the directive, they are the models to be followed. Almost all states or integrations have already entered into agreements with either of them. Even integrations formed by China count on the potential membership of the EU and/or the USA. Consequently, it is worth comparing preferential agreements entered into by the two world powers, including their relationships with article XXIV of GATT.
In connection with the agreements it can be established that they seem similar regarding their main elements or rather their regulative themes, however, the regulations’ details significantly alter from one another, a unified practice regarding the areas of origin rules, goods’
marking, investment rules, decrease of customs or electronic (online) customs tariff has not yet been formed. Therefore, in the future WTO and states shall move forward and harmonize their regulations at least in the above mentioned areas in order to make international trade liberalized and freer of obstacles. In this harmonization the EU and the USA may play a crucial role given their role in world trade and regarding agreements to be entered into by them.
Another reason for the spread of preferential agreements is connected to the crisis of GATT/WTO. The reason is being the substantive alteration of developing countries’ trade policy.
Traditionally, developing countries participated in trade policies via gathering around a developed country (such as the USA) and entered into so called hegemon based PTA-s with defense policy and/or trade-diversion (named by Jacob Viner) aims. However, in the past twenty years it has clearly been seen that they stepped out of their previous role and entered into preferential agreements between themselves6, which agreements are referred to as “intra- developing-country PTA-s” by J. Bhagwati7.
As analyzing PTA-s, Baldwin8 considers 21st century RTA-s as still traditional trade agreements and simultaneously as production-sharing agreements. He highlights that with the appearance of these agreements the free trade paradigm of the 19-20th century seems to be overthrown which paradigm wished to regulate the transmission of goods at boarders basically with the decrease of customs tariffs, the introduction of origin rules, in frames of multilateral agreements. As far as he is concerned, agreements of the 21st century do not set multilateralism as a goal anymore but regionalism (so called mega-regionalism) is enough for them, and not the decrease of customs degree is dominant in them but the termination of other trade obstacles as they are able to transport a good into a given country’s market without transporting them through boarders, through production investments carried out in other states.
6Such as the free trade agreement of 2005 between Pakistan and Sri Lanka
7Jagdish Bhagwati: Termites in the Trading System. OXFORD University Press, Oxford, 2008. p. 41-45.
8Richard BALDWIN: Multilateralising 21st century Regionalism. In: Global Forum On Trade Reconciling regionalism and Multilateralism in a Post-Bali World. OECD Conference Centre, Paris 11-12 (a.m.) February, 2014. p. 27-79.
9 However, Baldwin’s theory only seems to be applicable in the world’s most developed countries (and even here only regarding industrial goods). Regarding those countries which produce agricultural products due to their domestic resources suited to their climate or because of their specific raw materials, industry and technology they produce special products (which cannot be produced elsewhere), traditional export is vital. Also as the price of import goods is also influenced by customs, as far as I am concerned, the decrease of duties will remain a central question of preferential agreements for a long time.
It is a fundamental question whether in connection with preferential agreements we can talk about only the future of GATT/WTO or the future of global economy in a wider sense.
Today it seems nearly certain that the period of traditional global trade formed in frames of the General Agreement on Tariffs and Trade came to an end with the years starting after 1st January 1995, when the Marrakesh Treaty forming the World Trade Organization entered into force. The Bali-package accepted in 2013 can actually be regarded as a last effort in order to save WTO; accepting its modest content may justify towards the members of WTO and the world that WTO still operates and is able to influence world trade. The Bali-package justifies that the European Union and the USA considers the operation and gradual improvement of multilateral trade system important. Hence, the Bali Conference means a significant move towards completing this aim; it may lead to a settlement regarding the acceptance of the WTO- agreement aiming at the simplification of trade procedures, ending the Doha Round with limited success. Another theoretical and almost surreal possibility of the innovation of global trade system could be that the system would be rebuilt in frames of the UN – maybe connected to UNCTAD. The decision making mechanism could be formed based on the example of the Security Council, only with that India and Brazil would also get permanent membership.
If GATT/WTO would further exist with the reform of the decision-making mechanism (or without it), legal reforms would also be necessary, during which states should come to terms regarding the unification of origin rules and the closer cooperation of customs authorities. During this process, the decision on the agreement on global trade facilitations part of the Agreement of Kyoto and the Bali-package shall also be taken into consideration.
This decision is extremely significant from the point of view of international customs. On the one part it is important as it seems that a tendency lasting for 18 years turns around, due to which states instead of bilateral trade facilitation i.e. preferential agreements applied in this period (or rather next to them these days) start to use multilateral ones again9. On the other hand, choosing this multilateral frame simultaneously means the return to the system of WTO, hence stabilizing WTO’s status that has been lurched lately10. On the third part, agreements formed as the result of the decision bring about a new legal environment for those signing it; a
9 Nora Neufeld: The Long and Winding Road: How WTO Members Finally Reached a Trade Facilitation Agreement. World Trade Organization Economic Research and Statistics Division, Staff Working Paper ERSD-2014-06 Date: April 7, 2014, p. 3., http://www.wto.org/english/res_e/reser_e/ersd201406_e.pdf; retreived: 19th March 2014.
10 „We have saved the World Trade Organization” – commented the European Union’s Commissioner for Trade the trade facilitating agreement entered into in Bali. http://www.bruxinfo.hu/cikk/20131207-eletmento-megallapodas-a-wto-szamara.html. retrieved 9th December 2013
10 much more direct regulation steps into the place of the previous looser practice resting on principles and policy. This could be a starting point for a unified international customs code.
Furthermore, investigation rules and activities against fraud shall also be improved both regarding effectivity and technical points of view; even with the aim of decreasing the costs that are incumbent on economic actors complying with the rules of customs law.
If states cannot come to terms regarding whether they organize their preferential agreements under a new or renewed global system, the liberalization lasting from 1947 could turn into a new type of protectionism with the characteristics that regions, regional centers will be formed independently from nation states, wasting away states’ economy11 and limiting their financial sovereignty. In this case the solution could be that regions decrease the trading obstacles among themselves, hence, advantages would expand to all (probably former) WTO states through the principle of the greatest reduction. However, we cannot seriously take this solution into consideration as countries not decreasing burdens would gain serious and unrequited advantages12.
Hence the most significant question is that how China, India, Brazil and the developing countries can validate their interests besides or against the interest of the EU, the USA and Japan, that is, will there be a possibility for world trade system lead by the USA to become multi-poled.
It seems that within a decade developing countries will provide a firm answer to this question so we can wait for the “wonderful new world” of 2020. We will soon have the answer to this question as the parties have advanced negotiations for entering into the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership Free Trade Agreement (TPP), which could separately transfer and change the world economy’s current power relations.
In my dissertation I also investigate the tendency that the number of PTA’s has significantly increased in the past twenty years and now their number is more than 400 worldwide. Besides PTA-s, another trade system affecting and applying customs exists simultaneously, forming multilateral or rather global rules in frames of GATT/WTO.
Providing answer to the question that what is the two system’s relationship, are there interactions between them and whether we can talk about national customs law or only international in the 21st century is inevitable, and from the point of view of the previous ones, what can be the area and subject of international regulation.
Thanks to the customs law integration, national customs law – except questions of customs administration – gradually loses its original regulation areas13 which primarily will become integrations’ customs law, then (in some cases right then) will be moved to the area of international customs law based on international agreements calling for legal harmonization. As its consequence, there is not any explicit attempt by international literature for the separation of
11 Péter Szigeti: Analysing the global system. Napvilág Publishing House, Budapest. 2005. p 73.
12 László Pardavi: Preferential (customs) agreements’ new role in the global system. In: RATIO LEGIS – RATIO IURIS LIBER AMICORUM STUDIA A. TAMÁS DEDICATA. Saint Stephen Association, Budapest. 2011. p. 450-458.
13 Custom-statements, conditions connected to customs tariffs, import and export customs, provisional duty, methods of clearance, investigation system – except customs management – gradually become parts of international customs law.
11 national and international customs law, customs law is mostly defined as the totality of international customs law, integration customs law and national customs law.14
However, national customs law has a strengthening relationship with liberalized international trade, besides the demolition of national customs and other fees having the same effect as customs, newer agreements also regulate the non-tariff trade obstacle’s abolition, counter- subvention and compensatory customs, trade limiting measures, the fight against forgery, the protection of intellectual property and the modernization and simplification of international trade in a complex way and approach.
I have already mentioned the free trade agreement between the European Union and South- Korea twice, which is one of the most significant achievements of the more direct merging of international customs law and new trade agreements as it has been written based on rules adhering to GATS, so it also regulates services in detail. However, we must not forget the new model of preferential agreements accepted by Australia, Brunei, Chile, Malaysia, Singapore, New- Zealand, Peru, the USA and Vietnam on 12nd November 2011, known as TPP, which can probably be a new multilateral type of agreement of the new world without WTO or existing besides the renewed WTO. The draft of TPP tries to regulate questions concerning the world trade in frames of a single agreement. Of course, besides regulations referring to intellectual property, technical obstacles of trade, HR and protection of the environment and finance, traditional type of regulations regarding the trade of goods can also be found in it. The most significant innovations are regulations of innovative services and products such as digital technologies, telecommunication and trading competition. TTIP meant to be negotiated between the European Union and the USA can bring about similar innovative thoughts.
From all these developments we can infer that international customs law significantly loses its characteristics of financial law, hence, its legal branch of law will also change and it will become a special public law-like element of the 21st century’s international trade-economic law, hence, the rethinking of regulation may become necessary.
As far as I am concerned, after the crisis of the past few years the improvement of the liberalized world trade and together with it international customs law have both reached the level where states and/or members of WTO – surpassing general principles or suggested practice – shall create concrete norms affecting all parts of customs law and these should be recorded in an international agreement15 one by one. This source of law could be a customs law or maybe a more universal trade agreement, with one part being a chapter containing regulations of customs law.
If a customs code summarizing international customs rules would be realized, it would have a significant effect on theories legally classifying international customs law. An individual international customs law agreement could also make one believe that besides and next to international trade law and international financial law, international customs law exists as an
14B. J. M. Terra: Introduction to Customs Law. In: Legal Issues of European Integration, Amsterdam 1983. No. 2., p. 77.
15In other areas such as financial and capital relations there is no need for the formation of universal international norms. See: Dienes- Oehm Egon – István Erdős – Miklós Király – János Martonyi – Réka Somssich – Tamás Szabados: cited work p. 279.
12 individual branch of law. However, we must accept that it does not meet the conditions of an individual branch of law anymore. Although based on the international customs code we could say that it is a branch of law having its own legal sources of which subjects of regulation, institutions part from other legal areas, but it is clear that as tools of trade policy these institutions significantly connect to trade law16, they assist the objectives of trade policy, hence international customs law cannot become an individual branch of law these days.
According to my de lege ferenda-like viewpoint, the international customs law code (or the customs law chapter of the trade code) formed as a gradual legal harmonization’s result could collect customs law institutions which were so far harmonized in multilateral agreements and PTA-s17. Therefore, it would contain the most important financial and procedural rules of customs law. Therefore, it would contain the subjects of legal entity, notion and types of customs clearance, rules referring to adhering to them, forms and cases of customs control, rights and obligations of authorities and clients, rules referring to customs’ base, customs documents and electronic clearances and of course, origin rules.
As a new element, detailed regulation of customs administration clearance would also be necessary. I believe that if the new code would apply the currently applied general solutions which keep customs administration rules in the hands of member states, member states’ varied, hence, not harmonized public administration/customs administration clearance rules would mean obstacles in the effectiveness of the application of international customs code. It is possible that for instance legal remedies or administration deadlines, maybe rights of clients and legislation practice coming from this would be different. Itemized administration rules of the international customs code could create possibility for the formation of a unified legislative practice which could result in the decrease of legal debates.
The international customs law code, or more shortly international customs code could be used as an example for the European Union’s newest – true, not yet valid customs code (regulation 952/2013/EU of the European Council and the European Parliament). Of course, this regulation is the legal source of a customs union, hence, during preparation of an international customs code the mediated transfer of its certain elements can only be realized without measures containing expressly customs union content.
Besides its regulation subjects, the system of the new EU Customs Code would also be worth investigating from the point of view of the international customs code imagined by me.
According to me, the international customs code shall not follow this system. Because of the number of countries accepting the code and due to their different legal system a more transparent legal source is necessary which conservatively could consist of a general and specific section. Rules, interpreting parts referring to territory, person, subject and period could form the general section of the agreement. The international customs law code shall also have a clearance
16 Section 3 of the Customs Code of the European Union strengthens my viewpoint, which points b) and d) contains the adequate balance’s maintenance between action of customs authorities against unfair and illegal trade and custom controls and legal trade.
17 Similarly gradual and periodical legal improvement’s result was the European Community’s Customs Code (regulation 2913/92/ECC of 12nd October 1992 on the formation of Community Customs Law) too, which integrated community customs rules (regulations for people dealing with customs, active processing from 1985, referring to goods’ transfer from 1986, the one regulating temporary import and passive processing from 1987, the one referring to custom-free areas and customs storage from 1988)
13 part in the general section in which the above mentioned rules of the EU Customs Code could be found as an example except approved status farming and maybe regulations connecting to the execution of customs regulations’ applicability in all member states. According to me, this procedural section could also contain the detailed rules of customs administration procedures and questions that have already been largely harmonized with other international agreements such as norms of origin rules, determination of customs value, provision of customs duty and customs payment, and regulations connected the content of electronic or traditional statements.
The special section of the international customs code could contain certain customs clearances’ (handling methods) determination as well as special clearance rules. In this case results of valid international agreements would be normative; hence, customs handling methods of the modified minute of the Agreement of Kyoto and rules of the Agreement on the Global Trade facilitation’s draft could serve as a base of the regulation and could be supplemented with the latest rules. Rules of electronic procedures and data processing could play a special part here, customs declaration, value declaration; moreover, certification of origin could be done by clients online.
If states could not agree in accepting an international customs code, as an alternative and temporary solution I can think of developing a recommendation or model referring to the content of preferential agreements, which would be suitable for decreasing the diversity of preferential agreements and for minimalizing the debates connected to them. We have already seen an endeavor to this in the field of international customs law, which I have referred to the model suggestions published by the Trade and Investment Committee of APEC in 2008 which has been modified since then; these suggestions are connected to customs administration and trade facilitation as well as recommendations for rules of origin18.
Model agreements referring to tax agreements aiming to avoid double taxing applied in and known from international tax law can serve as further examples, which are again only recommendations due to their legal nature.
OECD, the UN and the USA has also developed model agreements in the topic in question19, therefore, introduction of a custom law and trade content model would not be quite innovative.
It is a question though that which organization or institution shall be the developer of the recommendations. In the area of double taxing the OECD agreement first published in 1995 is the most frequently applied, however I believe that in this area traditionally WCO would work out the recommendations which would be then accepted by WTO.
Regarding the model’s content – but not the actual liabilities – I think that the normative ones are EPA-like agreements, among them primarily the free trade agreement on the one part signed by the European Union and its member states and on the other part by South-Korea on 6th October 2010 in Brussels.
While, custom rules seem to be suitable for unification, the entitlement for determining customs duties and custom tariffs would remain in the hands of member states (of the customs
18 In detail see page 114.
19 Tibor Nagy: International tax law. In: István Simon (ed.): Financial Law II. Osiris Publishing House, Budapest, 2007, p. 412-439.
14 union), hence, the determination of member states' (the integration') customs income and limitedly the practice of an individual trade policy would become possible. Together with this the degree of tariff elimination and decrease under the aegis of WTO would be further regulated.
The effectiveness of WTO negotiations, the sticking to consensus decision making or the decrease of member states’ sovereignty resulting from the introduction of a decision system having the principle of majority are basic questions in this area as well.
According to my researches on the analysis of international customs law’s legal sources, the current structure is following:
- Legal sources determined in multilateral international agreements and some examples:
General Agreement on Tariffs and Trades (GATT, 1947-1994)
Customs agreement referring to A.T.A license necessary for the appointment import of goods (Brussels1 6th December 1961)
International customs agreement and its modifications referring to international transport with TIR license
Agreement on the Common Transit Procedure of 20th May 1987, Interlaken
Convention on the Simplification of Formalities in Trade in Goods of 20th May 1987, Interlaken
International agreement on the simplification and harmonization of custom clearances of Kyoto, 18th May 1973
Modifying minute on the simplification and harmonization of custom clearances Agreement on the temporary import of goods, 26th June 1990, Istanbul
International agreement on Harmonized Goods Description and Code system (Brussels, 14th June 1983)
- Legal sources determined in regional agreements: agreements listed in chapter V. belong here
- Legal principles: listed in chapter IV.
Decisions of courts and various bodies of settling disputes: their number is undetermined but primarily resolutions of the Court of the European Union, the US Court of International Trade, the US Court of Appeals for the Federal Circuit and the Supreme Court and decisions of the WTO’s Dispute Settlement Body are normative.
I suggest that this system shall somewhat be altered. A legal source referred to as
“international customs code” by me could be listed among multilateral agreements, which code
15 could be accepted in form of an individual agreement or as part of a comprehensive trade agreement as well.
If it would not be realized, WTO or other international organizations’ (such as OECD, ASEAN, maybe WCO) recommendations could appear among the legal sources in the hierarchy of agreements and legal principles, which would not have a direct legal bound but based on the example of standards known as “soft law” which has been successfully applied in international accountancy they could contain prescriptions with the aim of unifying custom clearances.
The future and system of international customs law basically depends on the question whether WTO approaches preferential agreements or the two systems will operate next to each other and often as each other’s competitor. This question will be inseparable from the regulative reform of the WTO’s organization like we can see it from the example of Ukraine and Russia that is, the actual world politics.
The research’s theme can be regarded as new as it has not been developed by national special literature yet (in this sphere and length), hence it can attract the attention of ones interested in financial law, trade policy and their practice. The author has already published certain partial results of the research in forms of foreign language studies and presentations.
The doctoral dissertation provides a comprehensive theoretical and partial analysis of the inconsistencies, deficiencies and other problems existing in the current system of customs law, as well as the author tries to provide solutions for these with the dissertation as a scientific method in the domestic special literature of international financial law. In its frame, he develops de lege ferenda suggestions regarding the rules of the future international customs law’s basic institutions with the analysis and synthetization of theoretical analysis of international agreements and special literature.
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IV. Index of the author’s publications written in the subject of the doctoral dissertation
PARDAVI, László: Customs Preferential Elements of the Cotonou Agreement. In: Simon István (ed.):
Studies in the honor of Tibor Nagy. Saint Stephen Association, Budapest, 2009.
PARDAVI, László: The evolution of trade customs in the ancient times and the middle ages. Paper of the History of Law 2012. issue 2..
PARDAVI, László: Signs of financial sovereignty's strengthening in the latest sources of international customs law. Presentation at the scientific conference of Széchenyi István University' Postgraduate Doctoral School of Law and Political Sciences entitled „Basic values of the state and law”, 10th December 2010., Published in printing in: Smuk Péter (ed.): „ Basic values of the state and law I.”, Széchenyi István University, Postgraduate Doctoral School of Law and Political Sciences Győr, 2010.
PARDAVI, László: The new role of preferential (customs) agreements in the global system: RATIO LEGIS – RATIO IURIS LIBER AMICORUM STUDIA A. TAMÁS DEDICATA Saint Stephen Group, Budapest 2011.
PARDAVI László: Legal status of customs preferences. Presentation entitled „Financial law on the path of European development” presented at the I. National Conference of Financial Lawyers, university of Miskolc, 2006. November 30. Published in printing: In: Erdős Éva (ed.) Conferences of Tutors Teaching Financial Law, Novotni Publishing House, Miskolc, 2010.
PARDAVI, László: The analysis of regional agreement between the European Union and the Mediterranean countries from the point of view of their system and the rule of GATT/WTO.
presented at the II. National Conference of Financial Lawyers, university of Miskolc, 22nd June 2009.
Published in printing: In: Erdős Éva (ed.) .) Conferences of Tutors Teaching Financial Law, Novotni Publishing House, Miskolc, 2010.
PARDAVI, László: Public Customs Law. In: Simon István (ed.) Financial Law II. Osiris Publishing House, Budapest 2012.
PARDAVI, László: A few thoughts on the new role and system of international customs law. In:
Szoboszlai-Kiss Katalin, Deli Gergely (ed.): Studies in the honor of the 70-year old Mihály Bihar.
UNIVERSITAS-GYŐR Nonprofit Inc., Győr, 2013.
PARDAVI, László: On the Legal Status Of The Preferences of Customs In The European Union. „Days of Public Law” Brno, Masaryk University, 2008.
PARDAVI, László: System of the Preferential Agreements among the European Union and the Mediterranean Countries. Brno, Masaryk University, 2009.
PARDAVI, László: Customs law 2011. Electronic teaching aid. Széchenyi István University, Győr, 2011
