Import and Export Restrictions and Related Border Measures

• Author: Jon R. Johnson
• Pages: 100-123

CHAPTER

4

IMPORT

AND

EXPORT

RESTRICTIONS

AND

RELATED

BORDER

MEASURES

This chapter covers

the

rules under

the

trade agreements

to

which Can-

ada

is a

party respecting import

and

export restrictions

and

various

other

non-tariff

measures that

affect

the

trade

in

goods.

Import restrictions range

from

outright

prohibitions

to

quantitative

restrictions

or

quotas (under which only specified quantities

of a

good

are

admitted)

to

import licencing requirements (under which

a

licence

must

first

be

obtained

before

importing

a

good)

to

"voluntary" export

agreements

(under

which

imports

are

limited

by

having

the

exporting

country

control

the

volume

of its

exports).

Import restrictions

are

less

transparent than

tariffs

and are

much more

effective

barriers

to

trade.

Quantitative

restrictions involve quota allocation issues that

are

diffi-

cult

to

resolve equitably. Allocation

on a

historical

basis

is

unfair

to new

entrants, while ignoring pre-quota importing patterns

can be

grossly

unfair

to

existing importing

businesses.

Allocation

by

auction

and

fees

can

result

in

breaches

of

tariff

bindings. Quotas generate "economic

rents"

or

windfall

profits

to

those

who

hold

them because

of the

scarcity

that they

artificially

induce. Import restrictions must conform

to the

requirements

of

Article

XIII

of

GATT

1994 which, inter alia, requires

that

import restrictions

be

applied

in a

non-discriminatory manner.

Import

restrictions

of

various sorts have been widely used

in the

sensi-

tive

agricultural

and the

textile

and

apparel sectors. Until

the

Textile

Agreement

came into

effect,

the

trade

in

textile

and

apparel goods

was

governed

by the

Arrangement

Regarding

International

Trade

in

Textiles

(Multifibre

Arrangement

or

MFA),

which

sanctioned bilateral restraint

100

Import

and

Export Restrictions

and

Related Border Measures

101

agreements with export quotas

for

various categories

of

textile

and

apparel

goods.

Export

restrictions

can

also take

a

variety

of

forms ranging

from

out-

right

prohibitions

to

export

licensing

requirements

to

export quotas.

Export

restrictions

are

most likely

to be

applied

in

strategic sectors

such

as

energy

goods. Export restrictions

are

also sometimes implemented

as an

industrial policy

to

ensure

further

domestic processing

of raw

materials.

Export

quotas

entail

the

same

administrative

nightmares

as

import

quotas.

The

basic rules governing import

and

export restrictions

are set out in

GATT

1994.

NAFTA,

CCFTA,

and,

to a

lesser extent,

CIFTA

build upon

the

regime

set out in

GATT

1994.

The

Agriculture

Agreement

converts

import

restrictions

on

agricultural

goods

into

tariff

rate quotas

and

prohib-

its the

imposition

of new

import restrictions, while

the

Textile

Agreement

dismantles

the

Multifibre

Arrangement

and, over

a

ten-year period, will

bring

the

trade

in

textile

and

apparel goods back under

GATT

rules.

A.

ARTICLE

XI OF

GATT 1994

Article

XI:

1 of

GATT

1994

prohibits

both

import

and

export restrictions

other than duties

and

other charges

on

imports

and

exports.

The

prohi-

bition

of

import restrictions applies

to

products

of

territories

of

other

contracting parties. Until

the

Rules

of

Origin

Agreement became

effec-

tive,

the

determination

of the

country

of

origin

of

goods

was

left

to

indi-

vidual

member countries.

As

discussed

in

chapter

5, the

Rules

of

Origin

Agreement

requires that

the WTO

member countries develop objective

rules

for

determining

the

country

of

origin

of

goods.

The

prohibition

of

export restrictions applies

to any

product

destined

for

export

to the

ter-

ritory

of

another contracting party.

Article

XI

sets

out

three exceptions

to the

general prohibition

of

import

and

export restrictions. Article

XI:2(a)

permits restricting exports

in

order

to

relieve critical shortages. Article

XI:2(b)

allows import

or

export

restrictions necessary

for the

application

of

classification,

grading,

or

marketing standards

or

regulations. Article

XI:2(c)

sanctions import

restrictions

of

agricultural

and

fisheries products that

are

part

of

govern-

ment schemes

to

restrict domestic supply.

Before

the

Agricultural Agree-

ment

became

effective,

Article

XI:2(c)

was

used

by

Canada

to

justify

agri-

cultural

supply management programs

in the

dairy

and

poultry sectors.

As

discussed below,

the

application

of the

Article

XI

exceptions

to

agri-

cultural

goods

has

been substantially modified

by the

Agriculture Agree-

ment.

Import

and

export restrictions

can

also

be

justified

under

the

gen-

eral

exceptions

in

Article

XX of

GATT

1994 (see chapter

2).