Licensing procedures (export and import)

What is licensing in international trade?

Licensing is a restrictive measure that consists of the need to obtain permission from the competent authority to import or export goods. Under the GATT 1994, the application of such measures is allowed only in exceptional cases (as supporting measures for developing countries, to prevent or relieve critical shortages of foodstuffs, on any agricultural or fisheries products, etc.).

What is the import licensing procedure?

According to the WTO Agreement on Import Licensing Procedures (Article 1), the term 'Import licensing procedure' refers to an administrative procedure, used for the operation of import licensing regimes, requiring the submission of an application or other documentation other than what is generally required for customs clearance purposes to the relevant administrative body as a prior condition for importation into the territory of the WTO Member State.

The main requirements for licensing are transparency, fairness, and predictability of the procedures. It practically means that countries have to publish sufficient information for traders to know the basis on which licenses are granted.

What is the export licensing procedure?

The term 'Export licensing procedure' means an administrative procedure, whether or not referred to as licensing, used for the operation of export licensing regimes, requiring the submission of an application or other documentation, other than that generally required for customs clearance purposes, to the relevant administrative body as a prior condition for exportation from the customs territory. This definition can be found in free trade agreements.

What is a practical example of licensing?

For example, on 3^rd February 2022, the European Commission informed that it formally ended its investigation under the EU’s Trade Barriers Regulation (TBR) concerning measures taken by Mexico relating to its exportation of 'Tequila', following the successful resolution of the issue. The complaint had been brought by Brewers of Europe, who had argued that Mexico’s refusal to issue export certificates for 'Tequila' was WTO incompatible, causing significant economic damage to an EU company relying on 'Tequila' as an input. In the course of its investigation, the Commission raised concerns with the Mexican authorities about the WTO compatibility of the measure. The measure was also challenged by the affected exporter before domestic courts in Mexico.