GATT Article VIII (entitled Fees and Formalities connected with Importation and Exportation) deals with import licensing procedures in a non-specific manner.
GATT Article X mandates the members to issue and administer the regulations, laws, judicial decisions, and administrative rulings of general application, including those relating to the requirements on imports or exports in an even, fair, and reasonable manner.
Import licensing is a regulatory procedure that expresses that so as to import products one needs to present an application or other documents, aside from those required for customs purposes, to the significant administrative body.
On 1 January 1980, it was entered into force with an objective to prevent import licensing procedures from unreasonable hampering in international trade. Only those countries which had signed and ratified it are indebted under this agreement. The Agreement was revised during Uruguay Round to strengthen the disciplines on transparency & notifications and was binding on all the WTO members & was entered into force on 1 January 1995.
The Tokyo Round Import Licensing Code covers non-tariff measures that were concluded during the multilateral trade negotiations (1973-1979).
Import Licensing is categorised as follows:
- Automatic import licensing
- Non-automatic import licensing
The main objectives of the Agreement are to-
- Avert systems applied for yielding import licenses for having in themselves, prohibitive or distortive consequences on imports.
- Ease out and bring transparency to import licensing procedures,
- confirm their fair and equitable application and administration,
Automatic import licensing
Article 2.1 characterizes Automatic import licensing as import licensing where the authorization of the application is permitted in all cases.
Article 2.2 (a) states that Licence applications ought to be approved promptly or within 10 working days on the receipt of use.
Automatic import licensing is important in cases where no other appropriate procedure is available.
Article 2.2 (b) states that as soon as the circumstances which have given rise to it stop prevailing, they have to be removed.
- Any individual who satisfies the legitimate requirements is equally qualified to apply for and acquire import licenses.
- Automatic licensing procedures are to be administered in a manner so that they don’t have any restrictive effects on imports.
- No discrimination among those who apply for automatic licenses.
Committee on Import Licensing
A Committee on Import Licensing which is open to all Members has been established under Article 4 which meets to consult on matters relating to the operation of the Agreement or the persistence of its objectives.
Non-automatic import licensing
It administers trade restrictions that are justified within the WTO legal framework. Article 3.1 defines Non-automatic import licensing as a license which do not fall in the category of automatic import licensing.