Trade and Investment Working Paper Series Trade facilitation potential of Asian transit agreements in the context of the WTO negotiations Louis Cousin and Yann Duval

Abstract

This paper examines how freedom of transit and transit facilitation are addressed in trade, transport as well as transit specific agreements in the ESCAP region, with a view to identify good practices and the extent to which ex-isting agreements meet the transit facilitation provisions set out in the draft text of the WTO trade facilitation agreement as of July 2013.

Full text

Trade and Investment
Working Paper Series
NO. 01/14| 27 January 2014
Trade facilitation potential of
Asian transit agreements in
the context of the WTO
negotiations
Louis Cousin and Yann Duval

2
ESCAP is the regional development arm of the United Nations and serves as
the main economic and social development centre for the United Nations in
Asia and the Pacific. Its mandate is to foster cooperation between its 53
members and 9 associate members. ESCAP provides the strategic link be-
tween global and country-level programmes and issues. It supports Govern-
ments of the region in consolidating regional positions and advocates regional
approaches to meeting the region’s unique and socio-economic challenges in
a globalizing world. The ESCAP office is located in Bangkok, Thailand. Please
visit our website at www.unescap.org for further information.
Disclaimer: The views expressed in this Working Paper are those of the author(s)
and do not necessarily represent those of the United Nations. Working Papers de-
scribe research in progress by the author(s) and are published to elicit comments for
further debate. They are issued without formal editing. The designation employed
and the presentation of the material in the Working Paper do not imply the expres-
sion of any opinion whatsoever on the part of the Secretariat of the United Nations
concerning the legal status of any country, territory, city or area or of its authorities,
or concerning the delimitation of its frontiers or boundaries. The United Nations bears
no responsibility for the availability or functioning of URLs. Opinions, figures and es-
timates set forth in this publication are the responsibility of the authors, and should
not necessarily be considered as reflecting the views or carrying the endorsement of
the United Nations. Any errors are the responsibility of the authors. Mention of firm
names and commercial products does not imply the endorsement of the United Na-
tions.

3
NO. 01/14| 27 January 2014
TRADE FACILITATION POTENTIAL OF
ASIAN TRANSIT AGREEMENTS IN THE
CONTEXT OF THE WTO NEGOTIATIONS
Louis Cousin and Yann Duval*
*Louis Cousin is a graduate student in law at Pantheon-Sorbonne University (Paris, France) and Yann
Duval is Chief, Trade Facilitation, Trade and Investment Division, at United Nations ESCAP. Authors are
grateful to the inputs, suggestions or comments received from Pierre Latrille Nora Neufeld, Maxence
Orthlieb, Teemu Putio and Tengfei Wang, during preparation of this paper. Research assistance from
Atchara Dokkulab is also gratefully acknowledged.
WORKING PAPER SERIES
Trade and Investment
Please cite this paper as: Cousin, Louis and Yann Duval (2014). Trade facilita-
tion potential of Asian transit agreements in the context of the WTO negotiations,
ESCAP Trade and Investment Division, TID Working Paper NO. 01/14, 27 January
2014. Bangkok.
Available at www.unescap.org/tid/publication/

4
Abstract: This paper examines how freedom of transit and transit facilitation are ad-
dressed in trade, transport as well as transit specific agreements in the ESCAP re-
gion, with a view to identifying good practices and the extent to which existing
agreements meet the transit facilitation provisions set out in the draft text of the WTO
trade facilitation agreement (TFA). Following an overview of the provisions on transit
found in 153 preferential trade agreements involving ESCAP countries, the study
provides a more detailed analysis of a sample of 19 international transport and transit
agreements in Asia in terms of their trade facilitation potential. Although some useful
provisions for transit facilitation considered during the WTO negotiations did not find
their way into the final TFA, the text agreed in Bali strengthens the basis for imple-
mentation of freedom of transit in the Asia-Pacific region. At the same time, the anal-
ysis highlights the complexity of the existing legal environment for transit and sug-
gests a need for further enhancing inter-agency coordination and strengthening of
multilateral rules in this area, building on the “good practices” found in the many ex-
isting bilateral, regional and multilateral instruments.

5
Contents
INTRODUCTION ....................................................................................................................... 6
FREEDOM OF TRANSIT AS A KEY COMPONENT OF TRADE FACILITATION ...................................... 7
TRANSIT FACILITATION: A COMPLEX SYSTEM OF LEGAL INSTRUMENTS ...................................... 10
TRANSIT PROVISIONS IN PREFERENTIAL TRADE AGREEMENTS .................................................. 11
TRADE FACILITATION POTENTIAL OF SELECTED TRANSPORT AND TRANSIT
AGREEMENTS ....................................................................................................................... 14
SAMPLE AND ANALYTICAL TEMPLATE ...................................................................................... 14
FINDINGS AND DISCUSSION .................................................................................................... 17
a. Scope ....................................................................................................................... 17
b. Charges, regulations and formalities ....................................................................... 19
c. Non-discrimination ................................................................................................... 21
d. Transit procedures and controls .............................................................................. 21
e. Guarantees and escorts .......................................................................................... 25
f. Cooperation and coordination ................................................................................. 26
CONCLUSION AND IMPLICATIONS ..................................................................................... 30
ANNEX 1 – FREEDOM OF TRANSIT IN THE DRAFT CONSOLIDATED NEGOTIATING TEXT
(TN/TF/W/165/REV.17; 29 JULY 2013) AND IN THE FINAL WTO TRADE FACILITATION
AGREEMENT .......................................................................................................................... 33
List of Tables
TABLE 1: LIST OF AGREEMENTS SELECTED FOR ANALYSIS ........................................................... 16
TABLE 2: SCOPE AND PROVISIONS OF SELECTED ASIAN TRANSPORT AND TRANSIT AGREEMENTS
FOR TRADE FACILITATION ................................................................................................... 27
List of Figures
FIGURE 1: TRADE COSTS (EXCLUDING TARIFFS) OF ASIAN LANDLOCKED COUNTRIES AND THEIR MAIN
TRANSIT COUNTRIES WITH THE UNITED STATES OF AMERICA ................................................. 6
FIGURE 2: RELATIVELY LESS PTAS INCLUDE FREEDOM OF TRANSIT ............................................. 12
FIGURE 3: DISTRIBUTION OF SELECTED TRANSIT AGREEMENTS BY ESCAP SUBREGIONS ............. 15
FIGURE 4: TRADE FACILITATION POTENTIAL OF SELECTED TRANSPORT AND TRANSIT AGREEMENTS
......................................................................................................................................... 31
List of Boxes
BOX 1: GATT ARTICLE V ............................................................................................................. 8
BOX 2: REQUIREMENTS CONTAINED IN THE WTO DRAFT CONSOLIDATED NEGOTIATING TEXT
(REV.17, JULY 2013) ........................................................................................................... 9
BOX 3: TRANSIT FACILITATION IN PTAS: EXAMPLES FROM THE JAPAN-PHILIPPINES AND ARMENIA-
KAZAKHSTAN AGREEMENTS ................................................................................................ 12
BOX 4: DCNT’S REQUIREMENTS ON NON-DISCRIMINATION. ......................................................... 21
BOX 5: A “BEST PRACTICE” EXAMPLE: THE GMS-CBTA PREFERENTIAL FACILITATION MEASURES
FOR THE GOODS ................................................................................................................ 23

6
Introduction
Freedom of transit is an issue particularly relevant to the ESCAP region, host of 12 of
the world’s 31 landlocked developing countries, among which 4 least developed
countries (Afghanistan, Bhutan, Lao People’s Democratic Republic, Nepal).
1
Due in
large part to their lack of direct access to the sea, these countries face higher costs
of trade (see figure 1), making it more difficult for them to maintain competitiveness in
terms of both trade and investment. Freedom of transit is fundamental to landlocked
countries’ integration to international economy and economic development and their
ability to move from landlocked to “land-linked”.
2
Figure 1: Trade costs (excluding tariffs) of Asian Landlocked Countries and their
main transit countries with the United States of America
Source: ESCAP-World Bank Trade Cost Database (Aug. 2013 update).
Recognizing that transit issues are of the utmost importance to the many landlocked
countries, ESCAP Member States on their 67th annual commission session endorsed
the recommendation that transit facilitation should be addressed as part of an inte-
1
www.unescap.org/media-centre/impact-story/new-vision-landlocked-development-countries
2
Economic development in the Asian region raised awareness from landlocked countries about the
potential benefits for a country to support international transit through its own territory by increasing the
efficiency of transit services to their neighbors. This created a subsequent demand from landlocked
countries to be seen as “land-linked” countries, enhancing their strategic position and contribution to the
development of international trade in Asia. See for example, Economic and Social Commission for Asia
and the Pacific (ESCAP), “Landlocked Developing Countries Series, No. 1: Transit Transport Issues in
Landlocked and Transit Developing Countries”, New York, 2003.
0 100 200 300
Bhutan
India
Kyrgyz Republic
Russian Federation
Tajikistan
Russian Federation
Lao PDR
Thailand
Nepal
India
Afghanistan
Pakistan
Armenia
Turkey
Azerbaijan
Turkey
Uzbekistan
Russian Federation
Mongolia
China
Kazakhstan
Russian Federation
2006-2011
2000-2005

7
grated approach to trade facilitation. In ESCAP Resolution 68/3 on Enabling paper-
less trade for inclusive and sustainable intraregional trade facilitation, ESCAP Mem-
ber States also mandated the Secretariat to, interalia, “continue and further strength-
en [its] support for capacity-building activities related to trade facilitation […], includ-
ing transit facilitation, particularly with regards to least developed and landlocked de-
veloping countries […]”.
In line with these mandates, this paper examines how freedom of transit and transit
facilitation are addressed in trade, transport as well as transit specific agreements in
the ESCAP region, with a view to identify good practices and the extent to which ex-
isting agreements meet the transit facilitation provisions set out in the draft text of the
WTO trade facilitation agreement as of July 2013.
The paper is structured as follows: the next section provides an introduction to the
concept of Freedom of Transit and how it has been addressed through various types
of agreements, in particular preferential trade agreements. An analysis of the trade
facilitation potential of selected international transport and transit agreements involv-
ing Asian landlocked developing countries is then presented, followed by conclusion
and implications.
Freedom of Transit as a Key Component of Trade Facilitation
Trade Facilitation is a notion of flexible and evolving scope, adaptable to the diversity
of situations to which it is applied.
3
The definition developed by the World Trade Or-
ganization (WTO) recognizes freedom of transit (Article V of the General Agreement
on Tariffs and Trade (GATT) – see Box 1 below) as an integral component of Trade
Facilitation, in addition to the disciplines on fees and formalities connected with im-
portation and exportation (GATT art. VIII) and to the transparency requirements
(GATT art. X).
The definition of transit in GATT art. V is limited to so-called through transit, involving
at least three countries: traffic is qualified as being “in transit when the passage
across [the] territory [of a State] is only a portion of a complete journey beginning and
terminating beyond the frontier” of this State.
4
However, this definition, along with the
concepts of Trade Facilitation and Freedom of Transit at the WTO, are prone to evo-
lution since WTO Members have been negotiating in order to “clarify and improve”
related GATT provisions.
Freedom of transit is currently dealt with under Article 11 of the Draft Consolidated
Negotiating Text (DCNT) (see Box 2 below). Freedom of transit is a development of
3
While Trade Facilitation is understood as broadly as “the simplification, standardization and harmoni-
zation of procedures and associated information flows required to move goods from seller to buyer and
to make payments” by UN/CEFACT, a narrower definition was developed in the WTO context.
4
“It should be noted that in the context of Customs transit regimes (see UNCTAD Technical Note on
Customs Transit), other parts of a journey are also defined as constituting transit, notably inward transit
(from a Customs office of entry to an inland Customs office), outward transit (from the inland Customs
office to the Customs office of exit) and interior transit (from one inland Customs office to another in the
same country).” UNCTAD Trust Fund for Trade Facilitation Negotiations, Technical Note 8: “Freedom of
Transit”, Rev2, February 2009.

8
the original landlocked countries’ right to access to the sea. Although numerous in-
ternational conventions grant freedom of transit – especially for landlocked States,
they also protect the rights and “legitimate interests” of the transit country: freedom of
transit is thus balanced with national sovereignty. International treaties on transit aim
to solve this tension, allowing the transit State to set the conditions under which the
other Member State’s traffic will be allowed to cross its territory.
5
In this paper, the
term “freedom of transit” combines both GATT art. V and DCNT art. 11.
Box 1: GATT Article V
Article V of the GATT 1994 grants freedom of transit to goods, vessels and other
means of transport across the territory of another WTO via the routes most conven-
ient for international transit. It stipulates the following principles:
(i) equal treatment independent of flag of vessel, origin, departure, entry, exit, des-
tination or ownership of the goods, vessels;
(ii) prohibition to make traffic in transit subject to unnecessary delays or re-
strictions;
(iii) prohibition to levy customs duties, transit duties and other transit related
charges (except for charges for transportation or those commensurate with adminis-
trative expenses entailed by transit, or with the cost of services rendered);
(iv) level of charges levied should be reasonable to the conditions of traffic);
(v) most favored nation treatment in terms of charges, regulations and formalities.
Source: UNCTAD Trust Fund for Trade Facilitation Negotiations, Technical Note 8: “Freedom
of Transit”, Rev2, February 2009.
5
UNCTAD Trust Fund for Trade Facilitation Negotiations, Technical Note 8: “Freedom of Transit”, Rev2,
February 2009.

9
Box 2: Requirements Contained in the WTO Draft Consolidated Negotiating Text
(Rev.17, July 2013)
1. GATT/WTO transit obligations shall apply to:
6
- Goods moved via a fixed infrastructure, such as energy products carried by pipe-
lines or electrical power lines, and
- State enterprises (e.g., state-owned railroad) or private enterprises that have
monopoly position or special privileges (e.g., transit pipeline owners/operators).
Members shall not be required to build or permit others to build infrastructure of any
kind (e.g., railroads, roads, pipelines) to facilitate transit, and shall not be required to
provide access to such infrastructure unless it is open to general use by third parties.
2. Charges, regulations or formalities on transit shall not be more restrictive
than necessary, and shall be eliminated or reduced if no longer required or a less
trade-restrictive solution becomes available.
Charges may be imposed on transit only for transit administrative procedures en-
tailed or transit services provided, and shall be limited in amount to the expense of
such procedures or cost of such services.
Members must periodically review any charges imposed on transit traffic for possible
reductions, and must regularly notify the WTO Committee of the reasons and dura-
tion of any such charges, regulations or formalities .
Members shall not seek, impose or maintain voluntary restraints or similar measures
on traffic in transit.
3. Non-discrimination
Non-discrimination: A Member shall not discriminate against goods in transit or
transport means of other Members except as permitted by other WTO agreements
and for justified reasons.
National Treatment: A Member’s regulations and formalities affecting traffic shall not
treat transit movements less favourably than domestic traffic or export or import
movements.
Treatment Preceding Transit: A Member shall not treat goods that will pass in transit
through another Member’s territory to the final destination less favourably than if the
goods were shipped to the destination without passing through that other Member’s
territory.
4. In processing and control of transit movements, a Member:
- shall allow pre-arrival declaration.
6
Some of the provisions featured in the DCNT, such as those clarifying the scope and coverage of
freedom of transit, are not included in the final WTO trade facilitation agreement text agreed in Bali in
December 2013.

10
- shall not apply formalities, documentation requirements or controls other than those
necessary to identify the goods and ensure compliance with transit requirements.
- shall not apply customs charges, formalities or inspections other than at the offices
of departure and destination (and not en-route).
- shall promptly terminate the transit operation once goods reach the office of exit, if
all requirements are met.
Members are encouraged to make separate lanes or similar infrastructure for transit
in traffic.
5. Any guarantee that Customs requires for a transit movement:
- shall not exceed in amount the potential duty and charges;
- shall be discharged by Customs without delay once the transit is completed; and
- may be renewed by the trader thereafter. Customs may require a convoy to accom-
pany goods only if the goods are high risk and so specified in the Member’s laws and
regulations.
Source: WTO Negotiating Group on Trade Facilitation, “WTO Negotiations on trade facilita-
tion self-assessment guide”, TN/TF/W/143/Rev.6, 22 August 2013.
Transit facilitation: a complex system of legal instruments
Freedom of transit is addressed through a wide range of international legal instru-
ments. These instruments vary in type as well as geographical scope. For example,
transit is sometimes covered by international trade agreements, but also often by
road transport agreements or even specific transit agreements. In addition, if global
legal instruments (such as the GATT) provide – usually broad – principles related to
transit, these are usually coupled with – more specific – (sub) regional and bilateral
treaties.
Kunaka et al. (2013)
7
found several reasons explaining this tendency for States to
negotiate and conclude such a diversity of agreements addressing transit. The first is
political in nature: formally expressing through one –or more- treaty their will to coop-
erate and improve their relations makes it easier to implement reform. Other stem
from economic considerations and include needs to set the conditions under which
transit can be performed across respective territories in an equitable manner; to de-
tail bilaterally the implementation of broader commitments, such as the ones con-
tained in multilateral treaties; or to send a positive signal to markets.
This diversity of instruments raises a number of issues, which can have positive or
negative impacts in terms of trade facilitation. On the one hand, the ability for coun-
tries to negotiate and conclude various bilateral transit-related treaties can constitute
7
Kunaka C., Tanase V., Latrille P. and Krausz P., “Quantitative Analysis of Road Transport Agreements
(QuARTA)”, World Bank, 2013.

11
a quicker and more flexible way for cooperation than multilateral instruments, thanks
to a smaller number of individual interests to conciliate. Initiation and gradual im-
provement of varied transit mechanisms on a smaller scale may also facilitate the
emergence of best-practice models to be transposed at a multilateral level. Inclusion
of transit facilitation provisions in both trade agreements and transport agreements
may also in principle provide for a more broad-based support for implementation of
freedom of transit.
On the other hand, there is no guarantee that provisions related to transit are con-
sistent across the different agreements signed by a given country, in particular since
the line ministries in charge of negotiating often differ according to the type of
agreement being signed. The multiplicity of bilateral instruments also inherently cre-
ates a legal environment difficult to apprehend and analyze comprehensively. This is
particularly true in relation to transit facilitation: apart from the Vienna Convention ar-
ticle 80
8
– which is very partially implemented – and the WTO transparency mecha-
nism for regional trade agreements (RTAs),
9
States are not committed to publish
their international transit-related treaties. Importantly, bilateral agreements tend to
reflect the relative bargaining power of the negotiating partner, leading to transit-
related provisions and agreements that provide for differential amounts of freedom of
transit and transit facilitation – which might ultimately conflict with multilateral com-
mitments.
Transit provisions in preferential trade agreements
Freedom of transit is an important component of the WTO trade facilitation agree-
ment. However, analysis of bilateral and regional trade agreements in the ESCAP
region suggests that only few such agreements include provisions on transit facilita-
tion.
10
In a first attempt to understand the extent to which preferential trade agreements
(PTAs) entered into by ESCAP countries may facilitate transit, we searched for trans-
it-related provisions in PTAs involving countries of the Asia-Pacific region.
11
Interna-
tional transit was found to be only marginally addressed in PTAs, with only a minority
of these agreements covering international transit directly (i.e., by specifying their
own rules on transit) or indirectly (i.e., by referring to another agreement, e.g., GATT
art. V).
Out of 153 agreements, 66 grant freedom of transit for all contracting parties. Among
those, 32 refer explicitly to GATT art. V. Although the number of PTAs covering
transit has continued to grow in absolute terms, such agreements have become pro-
portionally less prevalent (see figure 2).
8
Vienna Convention on the Law of the Treaties, 1969, art. 80(1): “Treaties shall, after their entry into
force, be transmitted to the Secretariat of the United Nations for registration or filing and recording, as
the case may be, and for publication.”
9
GATT art. XXIV (7).
10
ESCAP, Asia-Pacific Trade and Investment Report 2011, United Nations, 2011. See also, Duval,
Yann, Trade Facilitation in Regional Trade Agreements: Recent Trends in Asia and the Pacific, ESCAP
Trade and Investment Division Working Paper, No. 02/1125, March 2011.
11
Source: Asia-Pacific Trade and Investment Agreement Database (APTIAD).

12
Figure 2: Relatively less PTAs include Freedom of transit
In the agreements where it is mentioned, freedom of transit is essentially considered
from a broader trade facilitation viewpoint. It is generally granted, but its technical
aspects related to implementation are not covered. A detailed review of the 66
agreements with transit-related provisions show that none of them mention anything
about key underlying transit facilitation measures such as those related to recognition
of customs seals, escort fees or transit guarantees. Two representative examples of
transit provisions found in PTAs are provided in Box 3.
Box 3: Transit Facilitation in PTAs: Examples from the Japan-Philippines and Arme-
nia-Kazakhstan Agreements
The two trade agreements quoted below are among the most comprehensive found
in terms of transit facilitation. They are representative of the two different approaches
identified: (1) a simple reference to the WTO agreements and GATT art V.; or (2) one
specific article on freedom of transit and its different aspects. The second approach
is typical of agreements where not all parties are members of the WTO.
Japan-Philippines
Article 11
Relation to Other Agreements
1. The Parties reaffirm their rights and obligations under the WTO Agreement or any
other agreements to which both Parties are parties.
0
20
40
60
80
100
120
140
160
1975-1984 1985-1994 1995-2004 2005-2012
Signed RTAs (total)
RTAs w/ freedom of transit provisions (total)
Signed RTAs (cumulated total)
RTAs w/ freedom of transit provisions (cumulated total)

13
2. In the event of any inconsistency between this Agreement and the WTO Agree-
ment, the WTO Agreement shall prevail to the extent of the inconsistency.
(…)
Article 52
Transparency
1. Each Party shall ensure that all relevant information of general application pertain-
ing to its customs laws is readily available to any interested person.
2. When information that has been made available must be amended due to changes
in its customs laws, each Party shall, wherever possible, continue to make the re-
vised information publicly available prior to the entry into force of the changes.
3. At the request of the interested person, each Party shall provide, as quickly and as
accurately as possible, information relating to the specific matters raised by the inter-
ested person and pertaining to its customs laws. Each Party shall supply not only the
information specifically requested but also any other pertinent information which it
considers the interested person should be made aware of.
Each Party shall endeavor to provide such information in language mutually under-
standable within its available resources.
Article 54
Goods in Transit
Each Party shall continue to facilitate customs clearance of goods in transit from or to
the other Party in accordance with paragraph 3 of Article V of the GATT 1994.
Armenia – Kazakhstan
Article 10
Each Party shall provide free transit over the territory of its country for goods origi-
nated within the customs territory of the other Party or having originated in third
countries and destined for the customs territory of the other Party or any third coun-
try, and shall supply the exporters, importers, and shipping companies involved in
such transit operations with all the available resources and services required for the
execution of these transit operations on terms (including financial) that are not worse
than the terms for providing the same resources and services to exporters, importers,
and national shipping companies of any other third country.
Each Party guarantees waiving any customs duties and transit fees on trans-
shipment of goods originated within the customs territory of the other Party, and this
shall be formalized by a separate agreement.
Rates on trans-shipment by any means of transportation, including the rates for load-
ing and unloading operations, shall be economically justified and shall not exceed
normal operating expenses, including reasonable profit rates.

14
Sources: Ministry of Foreign Affairs of Japan website, “Agreement between Japan and the
Republic of the Philippines for an economic partnership” (www.mofa.go.jp/region/asia-
paci/philippine/epa0609/main.pdf);
World Trade Organization website, “Free trade agreement between Armenia and Kazakh-
stan” (rtais.wto.org/UI/PublicShowMemberRTAIDCard.aspx?rtaid=50).
No PTA was identified which featured transit provisions that clearly exceeded those
of GATT art. V – or the WTO trade facilitation agreement. To the extent that they
specify that WTO rules prevail in the case of inconsistencies between the PTA and
the WTO agreement, as in the case of the Japan-Philippines agreement (art. 11),
PTAs covering transit may have at best a potential to facilitate transit similar to that of
the WTO trade facilitation agreement.
Trade Facilitation Potential of Selected Transport and
Transit Agreements
Sample and analytical template
The methodology followed in this analysis is inspired by the Quantitative Analysis of
Road Transport Agreements (QuARTA) approach of Kunaja et al. (2013), including
selection of a sample of agreements and development of an analytical template. A
sample of 19 international transport and transit agreements is selected with a view to
ensuring adequate representation across ESCAP sub-regions (figure 3).
12
Given the
importance of international transit for landlocked countries, priority is given to agree-
ments to which at least one landlocked State is a member – all 12 ESCAP land-
locked States are represented at least once. The sample is also representative of the
diversity in the types of agreements: bilateral and multilateral, “transit” and “road
transport” agreements, and “water transit” agreements. Table 2 provides a detailed
list of agreements selected.
12
Unlike for trade agreements, existing databases on transit-related agreements are few and far from
exhaustive. Collection by ESCAP Trade and Investment Division of texts of international transport and
transit agreements through the United Nations Treaties website and other relevant online sources as
well as through collaboration with the WTO Secretariat resulted in an initial database of 116 bilateral
agreements involving States from the ESCAP region - many more agreements exist but their text could
not be located.

15
Figure 3: Distribution of selected transit agreements by ESCAP subregions
Since our analysis aims at determining the potential trade-facilitating effect of Asian
transit agreements by comparing the requirements of the selected agreements with
those provided in WTO rules and DCNT art. 11, the QuARTA analytical template is
both simplified as well as completed with transit-related requirements specified in
GATT art. V and the DCNT text.
13
Our template generally follows the structure pro-
vided for in DCNT art. 11 as detailed in the WTO Trade Facilitation Negotiations Self-
Assessment Guide: (a) scope and coverage, (b) charges, regulations and formalities,
(c) non-discrimination principle, (d) transit procedures and controls, (e) guarantees-
related provisions, and (f) cooperation and coordination.
14
In each case, we tried to
determine whether the transit agreement provisions are generally consistent with,
more restrictive than, or more facilitative than the DCNT requirements.
13
It is worth noting that the DCNT of July 2013 is arguably more facilitating than the final WTO TFA text
agreed at the Bali Ministerial, as a lot of the bracketed text in the draft art. 11 of the DCNT was ultimate-
ly deleted, including for example two of the three provisions on strengthening non-discrimination (see
Annex 1).
14
See WTO Document TN/TF/W/143/rev.6 for the DCNT text and its explanation. Available on the WTO
website as well as at: www.wcoomd.org/en/topics/facilitation/activities-and-programmes/wto-trade-
facilitation-
negotia-
tions/~/media/WCO/Public/Global/PDF/Topics/Facilitation/Activities%20and%20Programmes/TF%20Ne
gociations/WTO%20Docs/TNTF/tnTFW143R6.ashx
0
2
4
6
8
10
12
Pacific East and
North-East
Asia
North and
Central Asia South and
South-West
Asia
South-East
Asia Other (non-
ESCAP)
Number of agreements
ESCAP sub-regions
Non land-locked countries Land-locked countries

16
Table 1: List of agreements selected for analysis

17
Findings and discussion
It is important to remember at the outset that our analysis provides an analysis of the
scope and potential facilitation effect of agreements – and specific provisions within
them - from a legal point of view, and does not reflect the actual environment for
goods in transit. Indeed, depending on practical constraints faced during implementa-
tion of the agreements and the willingness and intent of the parties, even identical
provisions in two different agreements can lead to different level of facilitation on the
ground.
The findings are summarized in table 3. This comparative table shows the scope of
each of the 19 agreements in our sample and the extent to which they feature vari-
ous transit facilitating provisions. The provisions reviewed are introduced and dis-
cussed in turn below, in light of WTO rules and the DCNT text and with a view to
identifying good practices.
a. Scope
As mentioned earlier, WTO rules
15
provide that contracting parties shall grant free-
dom of transit through their territories to “[g]oods (including baggage) and also ves-
sels and other means of transport […] via the routes most convenient for internation-
al transit, for traffic in transit to or from the territory of other contracting parties”. Traf-
fic in transit includes passage across a territory “with or without trans-shipment,
warehousing, breaking bulk, or change in the mode of transport”.
Definitions of “international transit”
Definitions of “international transit” were found in 14 agreements of our sample. The
form of transit covered then is systematically through transit, i.e. “when the passage
through [the] territory [of a Contracting Party] is only a portion of a complete journey
starting and ending beyond the frontiers of a Contracting Party across whose territory
the traffic passes”.
16
However, a certain disparity appears in several respects. Two
agreements provide additional geographical restrictions, mainly in relation to the
goals and purposes of the agreements: Bangladesh-India limits its definition of transit
to the “passage of goods between two places in one country through the territory of
the other”
17
contracting party – thereby excluding transit to a third country. Kazakh-
stan-Turkmenistan
18
on the contrary excludes transit between two places of the same
territory, specifying that traffic in transit must reach a third country.
Disparity is also observable in the transport operations encompassed under the defi-
nition of transit. Most of the agreements are less extensive than WTO rules, some-
times not evoking such operations (e.g., Iran-Uzbekistan) or only some of them (e.g.,
Afghanistan-Pakistan includes the passage of goods “with or without transshipment,
or change in the mode of transport”
19
but does not refer to warehousing nor breaking
15
GATT art. V:1 and :2.
16
GMS-CBTA art. 3(u).
17
Protocol on inland water transit and trade, Préambule.
18
Art. 2(8).
19
Art. 2.

18
bulk). Two of them seem actually more extensive than GATT art. V in this regard:
“the assembly, disassembly or reassembly of machinery and bulky goods” is includ-
ed under the Nepal-Bangladesh and Nepal-India agreements’
20
definition of transit.
Freedom of Transit
All the agreements selected cover transit of goods. Furthermore, a majority of them
go beyond GATT requirements (limited to goods), encompassing passengers in their
scope (e.g. Kazakhstan-Kyrgyz Republic: freedom of transit for passengers
21
).
Freedom of transit is also almost always granted to the vessels, in accordance with
GATT art. V. Yet, additional restrictions seem to be generally imposed in this regard:
a large number of agreements require that the vessels be registered in one of the
contracting parties to benefit from freedom of transit. Only a few marginal exceptions
to that requirement can be found. For example, Kazakhstan-Tajikistan agreement
22
provides that while motor vehicles in transit have to be registered in a contracting
party, trailers may be registered in a third country.
Modes of Transport and Trade routes
Although GATT art. V suggests that traffic should be allowed to transit freely via any
available route, agreements selected show that traffic in transit can face different
conditions according to the mode of transport or route used.
Firstly, most agreements apply to some specific modes of transport only. Eight of the
19 agreements in our sample only cover one mode of transport (i.e., one inland water
transit and 7 international road transport agreements). As for the other 11 agree-
ments, while all of them deal with road transport, only some of them also provide
freedom of transit for rail transport (7), inland water transport (4), maritime transport
(6), and air transport (4). With regards to the goods “moved via fixed infrastructures”
mentioned in the WTO DCNT, only the TRACECA agreement refers to pipelines.
Secondly, it appears that agreements covering different modes of transport institute
different treatments among them. For instance, the Afghanistan-Pakistan agreement
(covering road, railway and sea) institutes two different types of permits: “permit A”
for the goods imported or exported by sea, valid for 15 days; “permit B” for the goods
not imported or exported by sea, valid for 30 days.
23
In that particular case, this dif-
ferentiated treatment is more favorable to the goods transiting by road and railway
than to the ones transiting by sea.
Thirdly, an obvious limitation to the Freedom of Transit principle is prescription of
designated trade routes and/or of designated exit and entry points. Although such
measures may be contradictory to GATT art. V, they were found in a majority of trea-
ties from our sample. Such a limitation could fall under some exceptions listed in the
GATT agreement, such as security exceptions (GATT art. XXI). However, these ex-
ceptions are specific to certain circumstances and require justifications (e.g. “protec-
20
Art. 2.
21
Art. 1.
22
Art. 6(2).
23
Protocol 1 art. 25(2).

19
tion of its essential security interests”). From our sample, it appears that only one
agreement specifies the criteria used to determine these routes (Kazakhstan-China:
prescribed routes for oversized and overweighed vehicles, and transport of danger-
ous goods
24
).
b. Charges, regulations and formalities
Exemption from charges and reasonableness principles
The WTO law
25
states that traffic in transit “shall be exempt from customs duties and
from all transit duties or other charges imposed in respect of transit, except charges
for transportation or those commensurate with administrative expenses entailed by
transit or with the cost of services rendered.” Moreover, all charges imposed on traf-
fic in transit “shall be reasonable.”
From the sample studied, it appears that the general exemption of traffic in transit
from customs duties, fees and charges principle is generally granted. Likewise, the
reasonableness principle is present in a majority of agreements – although a signifi-
cant number of them do not stipulate anything in this respect.
Transit Traffic Quotas
According to WTO DCNT, this reasonableness principle applies also to regulations:
“regulations or formalities in connection with traffic in transit […] shall not be more
restrictive on traffic in transit than necessary and shall not be applied in a manner
that would constitute a disguised restriction on transit traffic”.
26
If quotas are not expressly mentioned in this provision, such restrictions to interna-
tional transport can safely be qualified as a regulation “in connection with traffic in
transit”. Consequently, a very facilitative agreement would ideally prohibit the use of
quotas. When such restrictions are considered as being necessary, an international
agreement authorizing quotas should preferably explicitly limit their use to the cir-
cumstances justifying their allowance, so as to prevent unnecessary or disguised re-
strictions to traffic in transit.
Quotas are mentioned in ten agreements in our sample. Half of them prohibit the use
of quotas, allowing transit in an open-ended manner. Among the five other agree-
ments authorizing transport quotas, two different situations can be found:
- Agreements justifying quotas or restricting the use of quotas to specific situa-
tions. Two agreements of our sample fall under this category. The Afghani-
stan-Pakistan agreement stipulates that the parties may agree to set up a
quota system for the issuance of transit permits “to respect a fair share of traf-
fic between the two Contracting Parties”. In like manner, Bangladesh and In-
dia agreed to respect “as far as practicable” an equitable share of transit car-
go on an equal tonnage basis.
24
Art. 7(1).
25
GATT art. V:3 and :4.
26
DCNT art. 11(3).

20
- Agreements allowing quotas without justification or limits: the Iran-Turkey
agreement for instance simply states that the carriage of goods in transit
“shall be subject to prior permit based on quota”.
Periodical review
In order to further trade and transit facilitation, the DCNT institutes a requirement for
the States to “periodically review [their] charges on traffic in transit with a view to re-
ducing them”.
27
It appears from our sample that such commitment is rarely present in international
transit agreements. It is also worth noting that the few agreements providing an obli-
gation of periodical review systematically apply it more broadly to “all documents and
procedures” prescribed for transit.
28
Transparency
DCNT also provides new rules in terms of transparency, stating that “[e]ach member
shall notify the Committee on the objective and duration of all charges, regulations or
formalities in connection with traffic in transit on a regular basis.”
29
It appears from the sample selected that transparency requirements are mentioned
in only a minority of agreements, and that the related obligations can be very variable
from one agreement to another. In some instances, this obligation is worded in
broader and more flexible terms than the WTO provision: the Kazakhstan-Kyrgyz
Republic agreement’s
30
transparency requirement consists in an obligation to ex-
change information about the changes of national laws that affect the implementation
of the agreement, without explicitly clarifying the kinds of regulations covered under
this statement.
Some of the other agreements’ obligations are however more extensive. For exam-
ple, while DCNT art. 11 requires periodical notification (which can be whether a priori
or a posteriori) without imposing explicit timeframes,
31
the TTFA stipulates that the
parties “shall give due advance notice […] of any additional requirement or modifica-
tion in prescribed documentation and procedures to be introduced in regard to traffic
in transit”.
32
This allows in principle those agencies and operators to anticipate the
upcoming modifications in transit regulations and procedures.
In some instances, States also commit themselves to providing transport operators
with additional and operational tools designed to facilitate transit operations. These
include among others the publication of transit regulations and procedures in Eng-
27
Idem.
28
Although it is not expressly mentioned, the context in which these provisions were found suggests
that the term “procedures” implicitly integrates transit charges.
29
DCNT art. 11(3bis).
30
Art. 17(1).
31
The text of the WTO trade facilitation agreement (art. 2) adopted in Bali in December 2013 does re-
quire consultation and advance notification of changes “in laws and regulations of general application
related to the movement, release and clearance of goods, including goods in transit”.
32
TTFA art. 31.

21
lish
33
and the establishment of enquiry points where transporters can acquire infor-
mation on relevant measures.
34
c. Non-discrimination
The principle of non-discrimination is a key aspect of general WTO law. The DCNT
35
transposes this principle to traffic in transit. In this context, non-discrimination princi-
ple encompasses three different aspects (see box 4 below): non-discrimination per
se, national treatment and treatment preceding transit.
Box 4: DCNT’s requirements on non-discrimination.
36
Non-discrimination: A Member shall not discriminate against goods in transit
or transport means of other Members except as permitted by other WTO agreements
and for justified reasons.
National Treatment: A Member’s regulations and formalities affecting traffic
shall not treat transit movements less favourably than domestic traffic or export or
import movements.
Treatment Preceding Transit: A Member shall not treat goods that will pass in
transit through another Member’s territory to the final destination less favourably than
if the goods were shipped to the destination without passing through that other Mem-
ber’s territory.
Source: WTO, “WTO negotiations on trade facilitation – self assessment guide”,
TN/TF/W/143/Rev.6, 22 August 2013.
The general idea of non-discrimination with regards to traffic in transit was found in a
majority of agreements. However, only two of them actually cover the three aspects
of non-discrimination as generally provided by WTO law. The non-discrimination sub-
principle is the most usually referred to, with 10 agreements granting it, followed by
treatment preceding transit (5 agreements) and national treatment (4 agreements).
d. Transit procedures and controls
DCNT completes GATT art. V with a new set of requirements designed to simplify
transit procedures and controls applied to traffic in transit. Interestingly, these re-
quirements find few, if any, direct equivalence in the treaties from our sample. Thus,
the analysis here proposes to group the different requirements under broader topics.
Preferential facilitation measures for the goods
33
GMS-CBTA art. 1.
34
Afghanistan-Pakistan art. 29(b).
35
Art. 11(4), (5) and (6).
36
In contrast to the DCNT which contained such provisions in bracketed text, the unedited final text of
the trade facilitation agreement adopted as part of the Bali package on 8 December 2013 does not in-
clude specific provisions on non-discrimination or national treatment under the Freedom of Transit Arti-
cle. https://mc9.wto.org/system/files/documents/w8_0.pdf

22
Several DCNT provisions fall under this category. First, DCNT art. 11(8) states that
“[f]ormalities, documentation requirements and customs controls, in connection with
traffic in transit, shall not be more burdensome than necessary to: (a) identify the
goods and (b) ensure that transit requirements are have been met.”
Second, DCNT art. 11(9) requires that goods in transit that have been authorized at
the border be exempted from “further customs charges, formalities or customs in-
spections until they conclude their transit”, such as en-route controls. Third, DCNT
art. 11(10) prohibits “quality controls or controls of compliance with technical stand-
ards on goods in transit.” Forth, DCNT art. 11(11) provides an obligation of “advance
filing and processing of transit documentation and data prior to the arrival of goods”.
A small minority of selected treaties provides such facilitative measures (8 out of 19).
Moreover, requirements provided can be very different from one treaty to another,
and few match DCNT requirements: international treaties deal with these issues
whether in a broader way, or through other obligations having a facilitative effect on
the transit procedures.
Some treaties provide specific provisions affecting procedures and customs controls.
These include provisions on (i) simplification of customs formalities, (ii) exemption
from physical inspections, (iii) exemption from en route inspections, and on (iv) ad-
vance clearance of goods. While such provisions individually contribute to the gen-
eral preferential facilitation measures for goods in transit, they must be cumulated to
reach the level of facilitation envisaged in the DCNT.
Obligation to exempt traffic in transit from physical customs inspections is the most
commonly specified. The Mongolia-Russia agreement is a pertinent illustration:
“The cargo and means of transport of the State lacking access to the sea
shall as a rule be subject only to external customs inspection unless, for
reasons of ordre public and, in particular, public security, morals and
health, or with a view to protecting the environment, cultural heritage or in-
dustrial, commercial and intellectual property, it is necessary to conduct a
full or partial internal inspection.”
37
Even though the definition of “ordre public” provides a large interpretation margin to
the Russian administration, this article seems to cover obligations from both DCNT
art. 11(8) and 11(10): external inspection is a particularly non-burdensome customs
control (DCNT art. 11(8)), and quality controls or controls of compliance with tech-
nical standards don’t seem to fall under the “reasons of ordre public” allowing internal
inspection (DCNT art. 11(10)). However, this obligation doesn’t provide for simplifica-
tion of formalities and document requirements (DCNT art. 11(8)), or exemption from
en-route controls (DCNT art. 11(9)).
In the same way, prohibition to impose formalities, procedures and controls “more
burdensome than necessary” is addressed in some of the agreements through the
broader obligation of periodical review of formalities mentioned earlier. For example,
the GMS-CBTA provides an obligation to “review periodically the need for and use-
37
Mongolia-Russia art. 7(2).

23
fulness of all documents and procedures required for cross border traffic”,
38
and to
“reduce to the extent possible, procedures and formalities required for cross-border
traffic”.
39
It is noteworthy that the only one non-binding provision on advance clearance of
goods in transit in the sample was found in GMS-CBTA.
40
With regards to the other
three requirements, they are punctually evoked in several treaties – but none of the
agreements studied covers them all.
However, some agreements provide facilitation measures that arguably go beyond
the DCNT’s requirements, such as single-window inspection, single-stop inspection,
or establishment of a Customs Transit System
41
. In this regard, the GMS-CBTA
clearly represents a best-practice example as it not only cumulates most DCNT re-
quirements, but also provide for single-window inspection and single-stop inspection
measures (see Box 5).
Box 5: A “best practice” example: the GMS-CBTA Preferential facilitation measures
for the goods
Simplification of customs formalities:
“The Contracting Parties […] undertake to:
(i) limit the number of documents and reduce to the extent possible, procedures and
formalities required for cross border traffic;[…]
(vi) eliminate any documents and formal requirements that are superfluous or do not
serve any particular purpose; […]”
Article 35(b)
Exemption from physical en route inspections:
“[…] the cargoes carried cross border […] shall as a general rule be exempted from
routine physical customs inspection en route […]”
Annex 6 art. 2(a)
Single-window inspection
“Single-window inspection: The different inspections and controls of people […], ve-
hicles […], and goods […] shall be carried out jointly and simultaneously by the re-
spective Competent Authorities involved (e.g., customs, police, immigration, trade,
agriculture, health department).”
38
Art. 35(b)(v).
39
Art. 35(b)(i).
40
Art. 4(d).
41
A Customs Transit System is established in the Afghanistan-Pakistan agreement. However this
measure would need to be clarified so as to be able to assess its legal – and facilitative - effects.

24
Article 4(a)
Single-stop inspection
“Single-stop inspection: The officials of the country pairs shall assist one another to
the extent possible in the performance of their duties. The two adjacent national au-
thorities will carry out their inspections jointly and simultaneously.”
Article 4(b)
Immigration formalities
Immigration formalities aren’t specifically covered by WTO rules. However, some –
mainly multilateral – agreements in the sample do include provisions to facilitate de-
livery of visas to the drivers and persons engaged in international transit operations.
The modalities vary from one agreement to another, but some common features in-
clude: a multiple-entry visa for a minimum validity period ranging from six months
(Afghanistan-Pakistan
42
) to one year (ECO, TTFA
43
). Requirements in terms of length
of stay can be flexible (GMS-CBTA: “multiple entry/exit visa for a minimum validity
period of one year”)
44
or more specific (ECO-TTFA: “multiple entry and transit visas
valid for a period of one year with a right of staying on the territory of each Contract-
ing Party for 15 days in transit for each trip and for up to 5 more days in place of
loading and discharge”).
45
Customs seals
Customs sealing is another aspect not evoked in WTO texts but found in several bi-
lateral or multilateral agreements on transit. Customs sealing regulations can be
grouped under two different categories: mutual recognition of customs seals, and
unilateral recognition of customs seals.
Mutual recognition means that customs authorities of each country will recognize
seals apposed by the other country’s customs authorities. This potentially greatly fa-
cilitates transit, by exempting sealed cargoes from physical inspections and double-
checks.
From our sample, mutual recognition of customs seals seems to typically belong to
multilateral agreements (ECO-TTFA and GMS-CBTA agreements), but some bilat-
eral treaties also provide such provisions: “If the lead seals affixed by the customs
authorities of one of the Contracting Parties […] are found intact […], vehicles will be
inspected by the customs authorities of the other Contracting Party externally; be
sealed off and be permitted to enter and leave the country.” (Iraq-Turkey
46
).
In contrast, unilateral recognition is found exclusively in bilateral agreements. In
some instances, one party has exclusivity on the recognition of Customs seals (Ne-
42
Art. 20.
43
Art. 12.
44
Annex 5 art. 2(b)(ii).
45
Art. 12(1).
46
Protocol art. 3.

25
pal-Bangladesh
47
). For example, in Nepal-Bangladesh, the coastal state (Bangla-
desh) unilaterally grants a right of transit to the state lacking access to the sea (Ne-
pal). Generally, mutual recognition is agreed on when both countries believe they
have a clear reciprocal interest in facilitated transit through the other’s territory.
e. Guarantees and escorts
Guarantees (limitations of)
DCNT adds new requirements to WTO rules regarding transit guarantees: guaran-
tees imposed by the customs “shall not exceed the full amount of the duties or
charges which may be incurred”,
48
“shall be discharged without delay” when the
transit operation is done
49
and “be renewed for subsequent consignments once a
previous one is proved to have reached its destination”.
50
Few of these requirements were found in our sample as guarantees are rarely
evoked. Only three treaties provide a limit on the maximum amount of guarantees.
The limit in two of the agreements are expressed in absolute terms (GMS-CBTA:
“The amount of security to be provided […] shall be a maximum of SDR 70,000”.
51
Iraq-Turkey: “Enterprises and companies of transport […] will, as custom guarantee,
deposit a sum equivalent to $12,000 in local currency which can be either in cash or
in letter of credit”
52
), and in one of the agreements in relative terms (Nepal-India:
goods “shall be covered by an insurance company or a bank guarantee, at the option
of the importer, for an amount equal to the Indian customs duties on such goods”
53
).
The rules on guarantees also can differ within the same treaty according to the
means of transportation. For example, in Nepal-India, a distinction is made between
goods moving by rail and goods moving by road in trucks belonging to listed compa-
nies on the one hand, and goods moving by road in trucks of other companies on the
other hand
54
).
None of the treaties analyzed provide a time limit on discharge of guarantee. In addi-
tion, the possibility of renewable guarantees was found only once, in the Afghani-
stan-Pakistan treaty: “Persons who regularly carry out Customs transit operations
shall be entitled to lodge a revolving guarantee, acceptable to customs, valid for at
least one year”.
55
47
Protocol art. 3.
48
DCNT art. 11(13).
49
DCNT art. 11(14).
50
DCNT art. 11(15).
51
Annex 6 art. 11(c).
52
Exchange of letters I, a.
53
Memorandum, Import procedure par. 9(b).
54
Memorandum, Import procedure par. 9.
55
Afghanistan-Pakistan Protocol 3 art. 9(3) and (4).

26
Escorts (limitation of)
Based on the DCNT, future international trade law may also limit escorts: “Members
shall not require the use of customs convoys for traffic in transit, except for circum-
stances presenting high risks”.
56
The issue of Escorts is actually addressed only by a small minority of treaties. A few
are consistent with DCNT, limiting mandatory escorts on traffic in transit to some ex-
ceptional circumstances (Afghanistan-Pakistan: escorts required “in very exceptional
cases, where goods are precious and highly susceptible to diversion en route”
57
) or
on some specific routes. One treaty, GMS-CBTA,
58
goes further than the DCNT by
exempting all traffic in transit from mandatory escorts.
f. Cooperation and coordination
DCNT provides additional facilitative measures through cooperation between the par-
ties. This includes a general obligation to “cooperate and coordinate with one another
with a view to enhance freedom of transit”,
59
and an incentive to “appoint a national
transit coordinator”.
60
Cooperation measures are provided by a large number of treaties, mainly through an
obligation to exchange information related to transit. In most cases, they consist in a
transposition of GATT art. X, with an obligation of transparency on procedures and
regulations (ASEAN Framework Agreement: “The Contracting Parties shall ensure
transparency of its respective laws, regulations and administrative procedures which
affect the facilitation of transit transport of goods under this Agreement. […] Parties
shall deposit with the ASEAN Secretariat [their] laws, regulations and procedures”
61
).
However, they also include an obligation to exchange operational information de-
signed to improve enforcement of national transit regulations: “The Customs authori-
ties [shall] communicate to each other as promptly as possible: (a) Information relat-
ing to Goods declarations, completed and accepted in their territory which are sus-
pected to be false; (b) Information to enable the authenticity of seals claimed to have
been affixed in their territory to be verified”,
62
and “any serious inaccuracy in a Goods
declaration or of any other serious irregularities discovered”
63
(ECO-TTFA).
Obligation to designate a “national transit coordinator”, although rarely evoked, was
found in two treaties: ASEAN Framework Agreement
64
and GMS-CBTA.
65
This can
be seen as an encouraging sign from a WTO prospective.
56
DCNT art. 11(16).
57
Protocol 3 art. 16(a).
58
Art. 7(a).
59
DCNT art. 11(17).
60
DCNT art. 11(18).
61
Art. 27(1)&(2).
62
ECO TTFA Annex 7 Section 2 art. 10.
63
ECO TTFA Annex 7 Section 2 art. 11.
64
Art. 29.
65
Art. 28.

Table 2: Scope and Provisions of Selected Asian Transport and Transit Agreements for Trade Facilitation
Afghanistan -
Pakistan
Nepal - India
Irak - Turkey
GMS - CBTA
ECO TTFA
TRACECA
Nepal - Bangla-
desh
Iran - Uzbekistan
Iran - Turkey
Mongolia - Rus-
sia
Bangladesh - In-
dia
Kazakhstan -
Kyrgyz Republic
Kazakhstan - Ta-
jikistan
Kazakhstan -
Mongolia
AFAFGIT
Kazakhstan -
Turkmenistan
Cambodia - Vi-
etnam
India-Bhutan
Kazakhstan -
China
GATT / DNCT
Scope
Explicit allowance of transit for vehicles
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Traffic types
Goods
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Passengers
X
X
X
X
X
X
X
X
X
X
Transport modes
Roads
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Railways
X
X
X
X
X
X
X
X
Inland waters
X
X
X
X
X
X
Sea
X
X
X
X
X
X
X
Air
X
X
X
X
X
Pipelines
X
X
Prescribed routes
No prescribed routes for transit
X
X
X
X
X
X
X
X
X
If routes prescribed, criteria used for route
specification are indicated
X
(cont’ed)

28
Afghanistan -
Pakistan
Nepal - India
Irak - Turkey
GMS - CBTA
ECO TTFA
TRACECA
Nepal - Bangla-
desh
Iran - Uzbekistan
Iran - Turkey
Mongolia - Rus-
sia
Bangladesh - In-
dia
Kazakhstan -
Kyrgyz Republic
Kazakhstan - Ta-
jikistan
Kazakhstan -
Mongolia
AFAFGIT
Kazakhstan -
Turkmenistan
Cambodia - Vi-
etnam
India-Bhutan
Kazakhstan -
China
GATT / DNCT
Charges, regulations and formali-
ties
Duties, fees and charges
Exemption from charges
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Reasonableness and cost-related fees princi-
ples
X
X
X
X
X
X
X
X
X
X
X
Quotas
Transit allowed in an open-ended manner,
unless WTO-consistent justification
X
X
X
X
X
X
X
Periodical review
Obligation of periodical review of formalities
and/or elimination of superfluous procedures
X
X
X
X
Transparency
Obligation to publish/make publicly available
transit requirements
X
X
X
X
Non-
discrimination
Non-discrimination obligations
Non-discriminatory treatment of goods, vehicle
and driver
X
X
X
X
X
X
X
X
X
X
X
X
Most-Favoured Nation principle
X
X
X
X
X
X
X
X
X
X
X
National treatment principle
X
X
X
X
X
Treatment preceding transit principle
X
X
X
X
X
X
(cont’ed)

29
Afghanistan -
Pakistan
Nepal - India
Irak - Turkey
GMS - CBTA
ECO TTFA
TRACECA
Nepal - Bangla-
desh
Iran - Uzbekistan
Iran - Turkey
Mongolia - Rus-
sia
Bangladesh - In-
dia
Kazakhstan -
Kyrgyz Republic
Kazakhstan - Ta-
jikistan
Kazakhstan -
Mongolia
AFAFGIT
Kazakhstan -
Turkmenistan
Cambodia - Vi-
etnam
India-Bhutan
Kazakhstan -
China
GATT / DNCT
Transit procedures and controls
Preferential facilitation measures for goods
- Simplification of customs formalities
X
X
X
X
X
X
- Exemption from physical routine customs
inspection
X
X
X
X
X
X
- Exemption from en route inspections
X
X
X
X
- Single-window inspection
X
- Single-stop inspection
X
- Advance clearance of goods
X
- Establishment of a Customs Transit System
X
X
Expeditious treatment of special cargoes
X
X
X
X
X
X
X
Immigration formalities & Customs seals
Simplified immigration formalities for the driv-
ers
X
X
X
X
X
Mutual recognition of customs seals
X
X
X
X
X
Guarantees and
escorts
Guarantees & Escorts
Disciplines on the amount of guarantees
X
X
X
X
Time limit on discharge of guarantee
X
Renewal of guarantee allowed
X
X
Exemption from customs escorts
X
X
Conditional allowance of customs escorts
X
X
X
Coopera-
tion
Prescribed means of cooperation
Obligation to exchange information on transit
X
X
X
X
X
X
X
Designation of national transit coordinators
X
X
X

30
Conclusion and Implications
The importance of transit facilitation for the development of landlocked developing countries
cannot be overstated: effective participation of these countries in global trade is likely to re-
main elusive without freedom of transit. The negotiations on trade facilitation at the WTO
identified transit as a key component of the trade facilitation agenda and provided a unique
opportunity to clarify and strengthen the rules in this area.
The analysis of selected Asian transit-related agreements presented in this paper suggests
that little attention has generally been given to transit facilitation matters in preferential trade
agreements, with many countries dealing with these matters through a variety of other bilat-
eral and regional instruments, notably international transport or transit specific agreements.
In fact, it appears that PTAs and international transit agreements do not play the same role
with regards to transit facilitation. The first ones tend to provide general political support for
freedom of transit without providing extensive implementation tools. The second ones do al-
so have political implications, but often go far deeper into concrete implementation aspects.
As such, the use of the two types of instruments may be seen as complementary.
At the same time, our analysis highlighted some of the challenges arising from addressing
transit issues through a variety of separate trade, transport, and/or transit specific treaties
and instruments – rather than through a more integrated approach. Such an approach in-
deed can lead to legal contradictions and inconsistencies, possibly best illustrated by the fact
that WTO rules grant freedom of transit through the most convenient routes while a large
number of bilateral transport and transit specific agreements reviewed prescribe specific
trade routes for traffic in transit, some of which may or may not be most convenient. Address-
ing such legal inconsistencies would be important in ensuring the continuing credibility of the
multilateral trading system.
As illustrated in figure 4, with the notable exception of the Afghanistan-Pakistan transit trade
agreement, “good practices” and innovative transit facilitating measures were found in multi-
lateral rather than bilateral agreements, confirming the general superiority of such instru-
ments over bilateral ones for achieving more balanced outcome and inclusive growth. In bi-
lateral agreements, international transit is addressed through each party’s interest and a bal-
anced outcome may be particularly difficult to achieve when the treaty is being negotiated
between a landlocked and a coastal country. On the contrary, multilateral agreements may
reflect a common interest at a regional or global level. An integrated approach, granting free-
dom of transit as a regional common interest would thus allow transit facilitation to be con-
sidered as part of an overall regional development strategy – as it was considered, in the
context of the WTO negotiations, as part of a global development agenda.

31
Figure 4: Trade Facilitation Potential of Selected Transport and Transit Agreements
Source: authors
Note: score calculated as the sum of X marks in table 3 for each agreement. GATT+TFA score calcu-
lated using the same analytical template shown in that table. Higher score indicates wider scope and
higher overall trade facilitation potential. Maximum score possible is 38.
Referring to figure 4, the DCNT – as of July 2013 – included particularly ambitious and inno-
vative measures not or rarely found in the bilateral or regional transport or transit agreements
reviewed in this paper. Some of these measures included, for example, advance clearance
of goods in transit (found in 1 treaty only), renewal of guarantees (1 treaty) and designation
of national coordinators (3 treaties). At the same time, however, some measures widely
found in bilateral and multilateral treaties were found to be absent from WTO rules and the
DCNT, e.g., mutual recognition of customs seals (5 treaties), simplified immigration formali-
ties for the drivers (5 treaties) and freedom of transit for passengers (10 agreements). Such
positive practices at a regional level could be transposed at a global level; possibly in a future
update to art. 11 of the WTO Trade Facilitation Agreement (TFA).
Generally, the differences found in the transit facilitation measures included in trade agree-
ments and those included in international transport and transit specific agreements suggest a
need for closer collaboration and coordination between the agencies responsible for trade
(who lead trade negotiations), those responsible for transport (who lead transport agreement
negotiations), as well as the various control agencies and private sector operators at the rel-
evant border crossings and along transit corridors. Closer – and earlier – collaboration would
contribute not only to a more transparent and less conflicting rules on transit but also in-
crease the chance that transit facilitation measures will be effectively applied and implement-
ed on the ground. The WTO TFA is promising in this regard, as it mandates the establish-
ment of national transit coordinators in addition to requiring Members to “establish and/or
0
5
10
15
20
25
30

32
maintain a national committee on trade facilitation or designate an existing mechanism to fa-
cilitate both domestic coordination and implementation of provisions of this Agreement.”
66
The DCNT text of July 2013, used as the benchmark for the trade facilitation potential analy-
sis of bilateral and regional transit agreements in this paper, looked particularly promising for
transit countries, as art. 11 on Freedom of Transit then contained (albeit in brackets) many
very specific provisions, in particular broadening the scope of GATT art. V and strengthening
non-discrimination. A number of these provisions did not find their way into the final text of
art. 11 agreed by WTO members in Bali on 8 December 2013 (see Annex for a comparison
of the July DCNT text and the final text). Nonetheless, as reflected in Figure 4, the Bali text
clearly enhances the freedom of transit of WTO members, with specific provisions on guar-
antees and institutional aspects having been agreed upon.
67
This should be welcome news
for WTO landlocked developing economies in particular, which may have a unique opportuni-
ty to further advance Freedom of Transit through the new WTO Committee on Trade Facilita-
tion, established to afford “Members the opportunity to […] consult on any matters related to
the operation of this Agreement or the furtherance of its objectives”.
68
It may be worth reminding once again that the analysis presented here only provided a pre-
liminary assessment of the trade facilitation “potential” of various transit related agreements
based on legal provisions they contained. However, it remains to be established whether the
agreements with the highest “potential” do lead to the highest level of transit facilitation in
practice. For example, while the Afghanistan-Pakistan transit agreement was found to have
the highest legal potential among other bilateral agreements reviewed, informal discussions
with officials from both countries suggest that implementation has been very challenging.
Similarly, discussions with cross-border logistics service providers in the Greater Mekong
subregion suggest that the GMS CBTA, while featuring leading edge transit facilitation
measures, may not as yet have facilitated transit more than some of the much simpler bilat-
eral transit treaties among GMS countries.
Another issue that may deserve some further attention is the relationship between the multi-
lateral trade and transport instruments and how to enhance linkages between them. Indeed,
instruments such as The Convention on International Transport of Goods Under Cover of
TIR Carnets (TIR Convention),
69
while not mentioned in the WTO TFA, provide for very
concrete and detailed mechanisms for transit facilitation.
70
As the WTO TFA implementation
begins, incorporating these existing instruments into implementation plans may be an effec-
tive way to further the objectives of the new WTO agreement.
71
66
WTO TFA, art.13.2.
67
Using our analytical template, the GATT+WTO TFA gets a trade facilitation potential score only four
points lower than the GATT+DCNT, i.e., a much higher score than most bilateral and regional transit
agreements reviewed.
68
WTO TFA, art.13.1.
69
As of May 2013, there were 68 parties to the Convention, including 67 states and the European Un-
ion. See http://www.unece.org/tir/welcome.html .
70
See also ESCAP (2007), Towards a Harmonized Legal Regime on Transport Facilitation in the ES-
CAP Region, ST/ESCAP/2489, for a list of other relevant transport instruments and useful guidelines
on legal frameworks for transport facilitation.
71
Exploring the links between the transit facilitation objectives of the WTO TFA and transportation ser-
vices covered in the General Agreement on Trade in Services may also be useful in that context.

33
Annex 1 – Freedom of Transit in the Draft Consolidated Negotiating Text
(TN/TF/W/165/Rev.17; 29 July 2013) and in the final WTO Trade Facilitation
Agreement
Text found in the DCNT which was deleted in the final text is shown in Italic font in brackets.
Text not found in the DCNT that was added in the final text is shown in Underlined Bold font.
ARTICLE 11: FREEDOM OF TRANSIT
[1. Goods subject to the provisions on Freedom of Transit of GATT 1994 and of this Agree-
ment include those moved via fixed infrastructure, inter alia pipelines and electricity grids.
1bis For greater certainty, nothing in Article V of the GATT 1994 or this Agreement shall be
construed to require a Member:
(a) to build infrastructure of any kind in its territory, or to permit the building of infra-
structure by others, in order to facilitate the transit of goods;
(b) to provide access to any infrastructure for transit unless such infrastructure is
open to general use by third parties. For the purpose of this Agreement, the term
"general use by third parties" does not include access to infrastructure granted on a
contractual basis.
2. Each Member undertakes that if it establishes or maintains a State enterprise or if an en-
terprise has, formally or in effect, exclusive or special privileges, such enterprise shall, in its
regulations, formalities and charges – including transportation charges –, on or in connection
with traffic in transit, comply with the provisions on traffic in transit of this Agreement.]
1. Any [charges,] regulations or formalities in connection with traffic in transit imposed by a
Member [in accordance with Article V of GATT 1994] shall not:
[a. be more restrictive on traffic in transit than necessary [to fulfil a legitimate objective.]
a. be maintained if the circumstances or objectives giving rise to their adoption no longer ex-
ist or if the changed circumstances or objectives can be addressed in a reasonably
available less trade restrictive manner,
b. be applied in a manner that would constitute a disguised restriction on traffic in transit.
[Except as otherwise provided in Article V of GATT 1994, no Member shall impose charges
for reasons of any kind, including for allowing transit through its territory. Any charge im-
posed by a Member consistently with Article V of GATT 1994, shall:
(a) Only be imposed for the administrative procedures entailed or transit services
provided in connection with the transit movement in question;
(b) Not exceed the approximate administrative expenses entailed or cost of the

34
transit service rendered; and
(c) Not be calculated on ad valorem basis.
Each Member shall periodically review its charges on traffic in transit with a view to reducing
them, where practicable.
3bis Each Member shall notify the Committee on the objective and duration of all charges,
regulations or formalities in connection with traffic in transit on a regular basis.
Members may draw the Committee's attention to examine any measure that under their
judgement should have been notified by another Member.]
2. Traffic in transit shall not be conditioned upon collection of any fees or charges im-
posed in respect of transit, except the charges for transportation or those commensu-
rate with administrative expenses entailed by transit or with the cost of services ren-
dered.
3. Members shall not seek, take or maintain any voluntary restraints or any other similar
measures on traffic in transit. This is without prejudice to existing and future national
regulations, bilateral or multilateral arrangements related to regulating transport con-
sistent with WTO rules.
[4. Members shall not apply discriminatory measures to goods in transit, or to vessels or oth-
er means of transport of other Members, for reasons of any kind. This does not exclude the
right to resort to the exceptions already laid down in WTO Agreements, for valid reasons and
provided that the measure concerned does not constitute a disguised restriction on interna-
tional trade.
5. With respect to all regulations and formalities imposed on or in connection with traffic in
transit, including charges for transportation, traffic regulations, safety regulations and envi-
ronmental regulations, Members shall accord to traffic in transit treatment no less favourable
than that accorded to export or import traffic/domestic traffic/traffic which is not in transit. This
principle refers to like products being transported on the same route under like conditions.]
4. Each Member shall accord to products which will be in transit through the territory of any
other Member treatment no less favourable than that which would be accorded to such prod-
ucts if they were being transported from their place of origin to their destination without going
through the territory of such other Member.
5. Members are encouraged to make available, where practicable, physically separate infra-
structure (such as lanes, berths and similar) for traffic in transit.
6. Formalities, documentation requirements and customs controls, in connection with traffic
in transit, shall not be more burdensome than necessary to:
a. identify the goods; and
b. ensure fulfillment of transit requirements.

35
7. Once goods have been put under a transit procedure and have been authorized to pro-
ceed from the point of origination in a Member's territory, they will not be subject to any cus-
toms charges [, formalities or customs inspections] nor unnecessary delays or restrictions
until they conclude their transit at the point of destination within the Member's territory.
8. Members shall not apply technical regulations and conformity assessment procedures
within the meaning of the Agreement on Technical Barriers to Trade on goods in transit.
9. Members shall allow and provide for advance filing and processing of transit documenta-
tion and data prior to the arrival of goods.
10. Once traffic in transit has reached the customs office where it exits the territory of the
Member, that office shall promptly terminate the transit operation if transit requirements have
been met.
11.1. Where a Member requires a guarantee in the form of a surety, deposit or other appro-
priate monetary or non-monetary13 instrument for traffic in transit, such guarantee shall be
[reasonable and shall not be applied in a manner that would constitute a disguised restriction
on traffic in transit] limited to ensuring that requirements arising from such traffic in
transit are fulfilled.
11.2 Once the Member has determined that its transit requirements have been satisfied, the
guarantee shall be discharged without delay.
11.3 Each Member shall, [where practicable] in a manner consistent with its laws and
regulations, allow comprehensive guarantees which include multiple transactions for
same operators or renewal of guarantees without discharge for subsequent consignments
[once a previous one is proved to have concluded its transit at the point of exit or destination
within the Member's territory.].
11.4 Each Member shall make available to the public the relevant information it uses to
set the guarantee, including single transaction and, where applicable, multiple trans-
action guarantee.
11.5 Each Member may require the use of customs convoys or customs escorts for traffic in
transit only in circumstances presenting high risks or when compliance with customs laws
and regulations cannot be ensured through the use of guarantees. General rules appli-
cable to customs convoys or customs escorts shall be published in accordance with Article 1.
12. Members shall endeavour to cooperate and coordinate with one another with a view to
enhance freedom of transit. Such cooperation and coordination may include, but is not lim-
ited to an understanding on:
i. charges;
ii. formalities and legal requirements; and
13 Nothing in this provision shall preclude a Member from maintaining existing procedures whereby the
mean of transport can be used as a guarantee for traffic in transit.

36
iii. the practical operation of transit regimes.
13. Each Member shall endeavour to appoint a national transit coordinator to which all en-
quiries and proposals by other Members relating to the good functioning of transit operations
can be addressed.

37
TID Working Paper Series
is available at
http://www.unescap.org/tid/publication/publicat.asp
United Nations
Economic and Social Commission for Asia and the Pacific
Trade and Investment Division
United Nations Building
Rajadamnern Nok Avenue
Bangkok 10200, Thailand
Tel: +66 (0)2-288-2251
Fax: +66(0)2-288-1027
Email: escap-tid@un.org
Website: http://www.unescap.org/tid/