Import Licensing - Explained

What is Import Licensing?

Updated at June 26th, 2021

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What is Import licensing?What is GATT Article VIII? What is GATT Article X?What is The Tokyo Round Code To the Uruguay Round Agreement?Academic Research on Import licensing

What is Import licensing?

Import licensing is the submission of all needed documents by an organization to the right authority for approval of the importation of specific types of goods.

The requirements for import licensing are influenced primarily by the General Agreement on Tariffs and Trade.

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What is GATT Article VIII?

Article VIII of GATT, discuss extensively all the procedures involved in acquiring an importation license

- Paragraph 1(c) establishes a common ground for members to minimize the complexity of import and export formalities by decreasing and simplifying all the documents required.

- Paragraph 2. This compels each member to review the rules and regulations as regards the provisions of this article when requested by another member.

- Paragraph 3. Stops members from forcing a specific type of penalties for slight breach of the customs regulations requirements.

What is GATT Article X?

Article X requires that each member of the group must publish the rules, regulations, judicial judgments, and the administrative rulings of general applications, inclusive of requirements of importation and exportation promptly. Also, to deliver all of these in a uniform, reasonable, and impartial manner.

What is The Tokyo Round Code To the Uruguay Round Agreement?

The Tokyo round import licensing code was primary agreement conduct guiding the non-tariff measures concluded during the multilateral trade negotiations held in 1973 and 1979. It was enforced on 1st January 1980 with the aim of preventing import licensing procurement from suffering from unnecessary delays that affect international trade. As a stand-alone agreement, it only obliged with countries that had signed and ratified it.

During the Uruguay Round Agreement, it was revised to build a solid ground on notifications and transparency. The amended agreement entered into force on 1st January 1995. It is binding on all WTO members.

Main Objectives The number one priority of this agreement is to simplify and bring transparency to import licensing procedures and also to ensure that the application is fair and equitable, to prevent restricted or distorted effects on importation.

General provisions Members are obliged to apply for import licensing procedures on neutral ground and also to administer them in a fair and equitable way. Applications with little errors of omissions or spellings are not to be refused, applications without intent to defraud or gross negligence are not to be neglected as well. Import licensing procedures are not to be rejected or ignored for minor variations.

Publications of rules and procedures All the information and guidelines concerning the submission of applications, which includes the eligibility of applicants, a list of products should be clearly stated, the right administrative channel to contact. The applications are processed within 21 working days.

Simple forms and procedures Application forms and all renewal forms are meant to be simple for smooth and swift processing. There is a grace period for the submission of license application maximum number of administrative bodies an applicant can contact is three.

Other principles Import license should be assigned on the same basis as for good not requiring import licenses. There are provisions for security exception of article XXI of GATT 1994 Members are not allowed to disclose confidential information contrary to the public interest or which may influence the legitimate commercial interests of a particular industry.

Academic Research on Import licensing

Evaluating the TRQ import licensing mechanisms in the Canadian chicken industry, Gervais, J. P., & Surprenant, D. (2003). Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, 51(2), 217-240. Tariff rate quotas (TRQs) were introduced at the latter end of the Uruguay Round to support the access to the market, following the tariffication of non-tariff barriers to trade in agriculture. The allocation of the importation license under the TRQ regime in the Canadian chicken industry is currently designed with total discretion. The welfare properties of this importation licensing schemes are evaluated in comparison with less discretion considering the allocation method of first come first serve (FCFS) using a numerical order. Lastly, the difference between the welfare of two license administration schemes is of no substantial value compared to the access to the importation market.
Phasing out of import licensing: impact on small-scale industries, Krishna, S. (2001). Economic and Political Weekly, 2545-2550. The consequence of the removal of quantitative restrictions( QRs) on imports has been suggested to be the cause of a marginal increase in import demand. But the challenge needs to be analyzed using a selective approach because specific industries are likely to be affected because of their peculiar situation. Plans to redress the case has been set in motion using a particular method.
Import licensing and import liberalization in Pakistan, Thomas, P. S. (1966). The Pakistan Development Review, 6(4), 500-544. The Pakistan Institute of Development Economics started the Pakistan development review(PDR) in 1958 as an Economic Digest. This article discussed elaborately the numbers of reports that have been published since 1961, though there was a short pause in 1971-72. The PDR has been restructured and redesigned twice in the last two decades, with the contents laying emphasis on the theoretical and empirical contributions on how to strengthen all areas of the economy.
Import licensing in Pakistan, Naqvi, S. N. H. (1964). The Pakistan Development Review, 4(1), 51-68. This article investigates the Pakistan Development Review (PDR). This article further discussed theoretically and empirically the impact of PDR on strengthening the economy, and also its effect on socio-economic problems in Pakistan.
An economic investigation of the import licensing methods and TRQs in agriculture, Gervais, J. P., & Surprenant, D. (2000). Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, 48(4), 397-410. Tariff Rate Quotas (TRQs) were introduced at the end of the Uruguay Round to support market access following the tariffication of non-tariff barriers to trade in agriculture. TRQs initiated an administrative mess in which governments often allocate importation license to public and private firms. A lot of articles describe the criteria used in assigning license in different countries; the results distorted trading patterns in most countries. A hypothesis was carried out using different samples, to determine the impact of different administrative methods on welfare. As a result of the significant spreads between domestic and world prices, the importation license can be significant in imperfect competition.
Import Licensing: A Stimulus to Foreign Investment, Deane, E. S. (1969). Economic Record, 45(4), 526-543.
Import licensing in Nigeria, Fajana, O. (1977). Development and Change, 8(4), 509-522.
The Impact of Phasing Out of Import Licensing on Small Scale Industries, Krishna, S. R. I. D. H. A. R. (2000). New Delhi, ICRIER Working Paper, 60. Industry policy in Australia has been subject to a major transformation over the last 30 years. Barrier protection to manufacturing industries, mainly via tariffs, has been reduced from 35 per cent to five per cent in 2000-01, thus moving Australia a long way towards the Asia-Pacific Economic Cooperation (APEC) goal of free trade access to developed countries by 2010. At first glance, the protection debate appears to have been largely won by trade liberation supporters and to be on the brink of becoming a non-issue.
THE AUSTRALIAN IMPORT LICENSING SYSTEM: 19521960, MOFFATT, G. (1962). Australian Economic Papers, 1(1), 119-138. This article examines how the Industry Policy in Australia has affected developments in Australia since 1996. This policy identifies many uncertainties in the industry and leading to a continuous debate about the fate of the industrial policy.
The Agreement on Import Licensing Procedures, Macrory, P. F. (2005). In The World Trade Organization: Legal, Economic and Political Analysis (pp. 591-599). Springer, Boston, MA. The agreement on importation licensing procedures ( AILP) was written and well detailed in a batch of 8 articles and six pages. The concession on importation licensing procedures ( AILP) stands as one of the shortest and least controversial of all legal Uruguay Round Agreements . with only one WTO panel to interpret the agreement, leaving the AILP out in case of any dispute. The AILP is slightly different from the identically named Tokyo Round Agreements( Mostly referred to as the Import Licensing Code), with a little change in its modus operandi used in accessing import licensing programs. The AILP, Uruguay Round Agreement is multilateral, that strongly binds all members of the WTO.
Investigating Canadian Chicken Importers' Preferences Towards TRQ Import Licensing Mechanisms, Surprenant, D., & Gervais, J. P. (2002).CAFRI: Current Agriculture, Food and Resource Issues, (03).
WTO Agreement on Import-Licensing Procedures, Koul, A. K. (2018). WTO In Guide to the WTO and GATT (pp. 497-503). Springer, Singapore.
Observations on Import Licensing Schemes for Exporters, Staelin, C. P. (1983). Foreign Trade Review, 17(4), 349-361.

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