October 2015 | N° 78 | WCO News

October 2015 | n° 78 | www.wcoomd.org WCO news

E-commerce Council 2015 Tobacco control ...and lots more

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Content

04 Flash info 10 Dossier 70 32 Focus 66 Singapore’s ‘whole-of- 54 Panorama Illegal wildlife trade: an government’ approach outline of the problems to coordinated border 76 Book review facing Peru management

79 Point of view

83 Events

76 74 Tobacco control, Sri Lanka Customs’ international trade, and response to a natural public health disaster

DOSSIER: COUNCIL 2015 FOCUS: E-COMMERCE POINT OF VIEW

12 The Secretary General of the 32 Facilitating e-commerce 79 10 years of promoting the WCO shares his thoughts on academic standing of the what the WCO has done, what it 38 E-commerce and revenue Customs profession will be doing, and what will impact collection on its work in the coming months 80 Prospects for Africa’s Tripartite 44 Country perspective: Korea Free Trade Agreement in the 14 Latest developments in WCO light of lessons learned from the 48 Country perspective: Australia areas of work: compliance; East African Community facilitation; capacity building; and 50 Private sector perspective: tariff and trade affairs Global Express Association

Editor-in-Chief Advertising Editorial note Copyright © World Customs Organization Grant Busby WCO News is distributed free of charge in English All rights reserved. Requests and enquiries concerning and in French to Customs administrations, international translation, reproduction and adaptation rights should be Writer / Editor organizations, non-governmental organizations, the addressed to [email protected]. Laure Tempier Bernard Bessis business community and other interested readers. Opinions [email protected] expressed in WCO News are those of the contributors and do Acknowledgements: The Editorial Team wishes to express its Editorial Assistant not necessarily reflect the official views of the World Customs sincere thanks to all who contributed to this publication. Sylvie Degryse Publisher Organization. Contributions in English or French are World Customs Organization welcome but should be submitted no later than 15 December Illustrations: Our thanks also extend to all who provided Head, Research and Communications Rue du Marché, 30 2015 for consideration. The WCO reserves the right to photos, logos and drawings to illustrate this issue. Robert Ireland B-1210 Brussels publish, not to publish, or to edit articles to ensure their Belgium conformity with the magazine’s editorial policy and style. Photo cover: © Guido Alberto Rossi / TIPS Photononstop Online subscriptions The WCO Communications Service is available to answer http://www.wcoomd.org/en/media/wco- Tel.: +32 (0)2 209 94 41 all requests for subscriptions, submission of contributions, Design: www.inextremis.be - mp5222 news-magazine/subscriptions.aspx Fax: +32 (0)2 209 92 62 and any other enquiries relating to WCO News. Please email [email protected] [email protected]. www.wcoomd.org

3 FLASH INFO

New book provides insight into the economic benefits of implementing a single window system

By Dr Dennis Ndonga, MURDOCH UNIVERSITY, AUSTRALIA is that the implementation costs of SWs far outweigh the presumed benefits, and THE ADOPTION OF the Trade Facilitation many developing countries will be keen Agreement (TFA) in December 2013 at to discover whether the contentious pro- the World Trade Organization’s (WTO’s) vision will contribute to the agreement’s Ministerial Conference held in Bali, projected benefits. Indonesia, was a landmark achievement for the global trade community. The so- This book explores the economic benefits called ‘Bali Package’ marked an end to of SWs and further analyses some of the trade negotiations that had dragged on key challenges facing SW implementa- for over a decade. In a broader context tion in developing countries, with a view the agreement breathed new life into the to offering direction to countries that are WTO’s style of multilateralism, which preparing to implement Article 10 (4) of many had started to doubt due to the per- the TFA. sistent deadlocks in trade negotiations experienced in previous years. It also explores the concept of SWs and trade facilitation, providing Customs prac- One of the driving forces behind the TFA titioners and scholars with comprehensive is its promise to deliver economic gains. insight into the range of economic benefits The WTO has stressed that the simplifi- that SWs can generate for their host econo- cation and harmonization of internatio- mies. In presenting these issues, the book nal trade procedures through the mea- provides answers to several key questions: sures proposed under the TFA has the How would single windows interlink capacity to generate some 400 billion to 1 What is trade facilitation? with national e-government initiatives? trillion US dollars to the world economy The book offers a detailed analysis of The book analyses the interrelationship by reducing trade costs by around 10% the concept of trade facilitation, with between SWs and national e-government to 15%, increasing trade flows and reve- an emphasis on how the WTO delibera- initiatives and how emerging econo- nue collection, creating a stable business tions on trade facilitation have developed mies can streamline their SW projects environment, and attracting foreign direct from the first Ministerial Conference in to achieve total e-service delivery by investment (FDI) [WTO, Day 3, 4 and 5: Singapore up to the adoption of the TFA government, thereby realising some of the Round-the-clock Consultations produce at the 9th Ministerial Conference in Bali. main economic benefits associated with ‘Bali Package,’ 5-7 December 2013]. The e-government diffusion. realization of these benefits would be fun- What are the various trade facilitation damental to determining the TFA’s signifi- tools and programmes in operation? How do single windows promote inte- cance to the global trade community, and The book explores some of the global trade grity in Customs administrations? more broadly reaffirm the WTO’s capacity facilitation measures aimed at streamli- The book examines the challenges of com- to deliver on global prosperity. ning Customs and other border operations bating corruption in Customs, which has that have been proposed by various mul- an adverse effect on economic growth. It With this in mind, I wrote a book, entitled tilateral organizations such as the WTO, presents detailed arguments supported by ‘Single Windows and Trade Facilitation – the World Customs Organisation (WCO), case studies on how the implementation of A Tool for Development’, to investigate the the United Nations Conference on Trade SWs can promote integrity in Customs and economic value of single window systems and Development (UNCTAD), and the boost economic growth. recommended under Article 10 (4) of the United Nations Economic Commission TFA. Single windows (SWs) have been one for Europe (UNECE). How do single windows increase deve- of the most controversial trade facilitation loping countries’ competitiveness in tools, owing to their high implementation How do single windows facilitate trade? attracting FDI? costs. A number of developing countries The book examines the concept of SWs The book analyses how SWs have the have been lethargic about undertaking highlighting the diversity of SW models capacity to determine certain investment SW implementation, expressing scepti- adopted in various jurisdictions, and the outcomes that are primarily linked to cism about the ability of such systems to broad operational and revenue benefits that Customs efficiency, and thereby stimulate boost their global competitiveness. These Customs and other international trade ope- a country’s capacity to attract export- sentiments were voiced in the negotiations rators stand to gain from such systems. oriented investors. It further explores the leading up to the TFA. The common view

4 WCO news N° 78 October 2015

Tribute to Professor Hironori Asakura

economic benefits attached to export- 2 JULY 2015 marked a sad day on the oriented FDI. WCO calendar when the international Customs community learned of How can Customs overcome the the passing of Professor Hironori major barriers to single window Asakura, one of the founding implementation? fathers of the WCO’s Harmonized The book discusses some of the major bar- System (HS), at the age of 87. riers to SW implementation in developing countries. It analyses the technological His relationship with the WCO dates and fiscal challenges affecting the imple- back to 1968. Professor Asakura mentation and operation of a SW in deve- held several positions within what loping countries, and proposes practical was then the Nomenclature Directorate, which became the solutions. It also explores the legal issues Nomenclature and Classification Directorate in 1984: he was a surrounding electronic authentication of Technical Officer from 1968 to 1972, a Deputy Director from international trade documents processed 1975 to 1980, and finally the Director for almost 10 years, through SWs and recommends an appro- from 1984 to 1993, during the formative years of the world- priate legal framework to deal with these wide implementation of the HS. technicalities. After he left the WCO in 1993, Hironori Asakura was appoin- In summary, the book serves to inform ted Professor at Tokyo International University’s School of practitioners on the role of SWs in facilita- Economics, a post he held until March 2002. In 2003, he ting trade, and how the implementation of published a book entitled ‘World History of the Customs and these systems can be appreciated as being Tariffs” in cooperation with the WCO; a publication which is more than a Customs modernization exer- still regarded as the definitive reference on this topic. cise, but also a development tool that can be integrated into a national development Professor Asakura was always very fair-minded and will be strategy. remembered for his many outstanding contributions, in particular the compilation of working procedures and methods Dr Dennis Ndonga is a lecturer at Murdoch for the HS Committee and the HS Review Sub-Committee, University, in Australia. He has carried out and his tireless efforts to ensure the worldwide application extensive research on single windows and of the HS. trade facilitation. His findings have been published in a number of premier journals Holm Kappler, who worked under Mr. Asakura, and who and presented at several WCO PICARD went on to become the Director of the Nomenclature and Conferences. Classification Directorate’s successor, the wider Directorate of Tariff and Trade Affairs, said:Professor “ Asakura did a More information masterful job in his role as nursemaid to the Harmonized www.wklawbusiness.com System when it was still an infant system. His passion for the HS and tariffs in general was made abundantly clear with the publication of his masterpiece ‘World History of the Customs and Tariffs’...”

Although gone, Hironori Asakura will not be forgotten. May he rest in peace with the knowledge that the HS Convention is the WCO’s most successful international instrument, with 153 Contracting Parties to date.

5 FLASH INFO

On 5 May 2014, nearly 750kg of pangolin scales, a CITES-protected species, were discovered by Customs officers in the Democratic Republic of the Congo during a routine check. This seizure illustrates the extent of the trafficking of pangolins: at a rate of 0.12kg of scales per average individual, the batch represented nearly 6,400 animals.

Project INAMA: enhancing Sub-Saharan Customs’ capacity to fight illegal wildlife trade

IN OCTOBER 2014, the WCO launched a new particular, on the illegal trade in great apes effectively carry out much-needed enforce- project aimed at enhancing Customs’ – chimpanzees, gorillas, and bonobos – ment activities. Customs administrations capacity to counter wildlife trafficking and the enhancement of Customs integrity with the necessary will to fight the illegal by ensuring that all trade in wild plants in the area of CITES enforcement. Project trade in wildlife would need to: and animals, and any products derived INAMA follows on from GAPIN, but from them, is legal in terms of the imple- benefits from a wider funding framework, • ensure that a robust legal framework menting provisions of the Convention on and focuses on enhancing the metho- to combat the illegal wildlife trade is International Trade in Endangered Species dology and techniques used to enforce in place, including the legal capacity to of Wild Fauna and Flora (CITES), as well wildlife trade regulations in general. conduct investigations, and, if needed, as under any relevant national legislation. launch advocacy campaigns; The project was boosted by the ‘WCO Named INAMA, a word which means Declaration on the Illegal Wildlife Trade’ • have the necessary institutional and orga- ‘wild animals’ in the language of the which was adopted by the WCO Council nizational framework in place to enforce Zambian Bemba tribe, the project is not in June 2014, reinforcing the commitment CITES regulations, such as an Intelligence the first wildlife-focused initiative under- of the global Customs community to Unit dedicated to CITES enforcement, taken by the WCO. In fact, the WCO has fighting this type of crime, and listing the and embed CITES enforcement in their long been involved in efforts to combat the steps that will contribute to a stronger and organizational priorities and within their illegal wildlife trade by raising awareness more coordinated enforcement response. human resource structure, etc.; among frontline Customs officers, organizing training to improve their targeting Infrastructure, legal capacity and • improve their risk assessment practices and identification capabilities, leading know-how by increasing exchange of information, international enforcement operations, and Evidence suggests that many Customs and the use of intelligence; developing practical training guidance. administrations, especially in African range states, suffer from a lack of well- • enhance their capacity to conduct or A previous project, named Project GAPIN, functioning Customs structures, legal support investigations, and implement which ran from 2010 to 2013, focused, in capacity, and the know-how required to investigation techniques;

6 WCO news N° 78 October 2015

• improve inter-agency cooperation at INAMA at a glance the national level between Customs and other relevant agencies, such as the police, wildlife services, and judi- Objective cial authorities; To address the illegal trade in endangered species by improving Customs officers’ capacity to enforce CITES regulations. • enhance cooperation with other Customs administrations, and with Duration other international players concerned 5 years. at the international level; Expected Results • have at their disposal modern equip- • Customs administrations: ment, including the required hardware - increased capacity to conduct an analysis of their enforcement needs, and to measure and software, to facilitate enforcement. their performance in terms of enforcing CITES regulations; - implement new tools, enabling their officers to better enforce CITES regulations. Project components The project’s capacity building activities • Customs officials: are organized into three components: - enhanced awareness and knowledge of CITES regulations, and how to enforce them, in particular when it comes to conducting operations and controls; Institutional assessment component - increased capacity to collect, process and disseminate intelligence. The project’s approach is to address the needs of Customs and their enforcement 25 Participating Countries* function, while providing specific infor- Angola, Benin, Botswana, Burkina Faso, Burundi, Central African Republic, Cameroon, mation and tools that are directly related Congo (Republic of the), Côte d’Ivoire, Democratic Republic of the Congo, Ethiopia, to ensuring compliance with the CITES Ghana, Kenya, Malawi, Madagascar, Mozambique, Namibia, Nigeria, Rwanda, South Convention. Africa, Tanzania, Togo, Uganda, Zambia, and Zimbabwe.

Although some common needs were *Countries in Asia will participate in specific activities of the project, and additional identified in the project’s planning countries in Africa are expected to join the project. phase, Customs services in Africa do not present a homogenous grouping, with Funding Partners their needs as diverse as the countries Sweden, the United States Department of State, the German Federal Enterprise for themselves. As a result, it was agreed International Cooperation (GIZ), and the Secretariat of the Convention on International that participants should assess their own Trade in Endangered Species of Wild Fauna and Flora (CITES). capacity building needs at the national level.

To enable them to do so, the WCO has gather feedback from participants on the and advanced training on intelligence developed an Institutional Assessment tool, and to revise it if necessary. have been designed, and experts will tool. It is based on the Diagnostic periodically be made available to sup- Framework, developed by the WCO, On their return to their home Customs port enforcement teams. and is in line with the provisions of administrations, participants will have the Wildlife and Forest Crime Analytic a few weeks to complete the assessment Enforcement component Toolkit developed by the United Nations and send it to the WCO Secretariat, This component, which is at the heart of Office on Drugs and Crime (UNODC), which will use their responses to plan the project, aims to enhance the capacity with the support of the International future training activities. of Customs administrations in conduc- Consortium on Combating Wildlife ting enforcement operations through the Crime (ICCWC), comprising the CITES Intelligence component use of a wide range of techniques, such Secretariat, INTERPOL, the UNODC, Building on the common needs iden- as the conducting of controlled delive- the WCO, and the World Bank. tified during the planning phase, the ries. To do so, practical training will be project team decided to move ahead delivered, and field manuals supporting The tool will be presented to the project’s on certain capacity building activi- the daily work of frontline officers will participants during two regional work ties related to risk management and be developed. shops, in Malawi and in the Republic of intelligence analysis. The object is to the Congo, under the guidance of experts. improve Customs’ capacities in all Activities implemented to date Participants will be asked to start eva- the relevant phases of the intelligence luating their countries’ situation, and to cycle, namely the collection, evalua- Under the first component self-assess their capacity building needs. tion, collation, analysis, dissemina- A draft version of the Institutional This exercise will also enable the WCO to tion and re-evaluation of data. Basic Assessment tool is now available, and

7 FLASH INFO

Latest accessions to WCO instruments has already been trialled at a regional and African countries in attendance. workshop that took place in Malawi in About 30 Customs officials and partici- September 2015. pants from other relevant institutions – Revised Kyoto Convention for example, the police, and wildlife and Under the second component environmental authorities – with the com- Thailand A one-week Basic Intelligence Analysis petency to conduct controlled deliveries, Date of accession: 12 June 2015 training session was held in Mozambique or likely to be called upon to provide sup- 100th Contracting Party in April 2015, and in Kenya in July 2015. port during such operations, shared their Participants, including Customs officers experiences and practices, and how they Sierra Leone working in the field of risk management overcame any obstacles. Date of accession: 12 June 2015 and intelligence analysis, were taught 101st Contracting Party about the basic concepts of intelligence The workshop also enabled participants to analysis, and were involved in case stu- develop ties with each other, and to discuss Argentina dies and practical exercises, while conti- closer cooperation and mutual assistance Date of accession: 19 June 2015 nuously being asked to provide feedback possibilities in the future, especially in the 102nd Contracting Party on the learning process. framework of two wildlife enforcement operations, namely Operation COBRA Iceland Under the third component III and Operation FLYAWAY, which took Date of accession: 8 October 2015 A workshop on ‘Controlled Deliveries of place in May and June 2015 respectively. 103rd Contracting Party Illegally Traded Wildlife Products’ was held in Bangkok, Thailand, in January More information Harmonized System Convention 2015, with participants from eight Asian [email protected] Sierra Leone Date of accession: 12 June 2015 nd Overview of Russia’s Training 152 Contracting Party Djibouti Centre for NII System experts Date of accession: 12 June 2015 153rd Contracting Party

By Alexei Moiseev, The Centre is staffed with certified specia- More information VICE-RECTOR FOR INTERNATIONAL RELATIONS, lists, including WCO accredited experts, [email protected] RUSSIAN CUSTOMS ACADEMY having practical lecturing experience and THE RUSSIAN CUSTOMS Academy is the first fluent in the English language. They have all institution ever created in Russia for trai- completed training delivered by one of the ning specialists with higher Customs edu- largest NII manufacturer’s, and annually cation, and has, since 2002, been a reco- undergo additional training with manufac- gnized WCO Regional Training Centre. In turers to keep up with the speed of techno- 2007, following the suggestion of the WCO logy advances and changes. Secretariat, it was decided to create, within the Academy, a Training Centre for Non- Customs administrations from all over Intrusive Inspection (NII) Systems. the world are invited to send their NII personnel to the training sessions offe- The Centre is located in the St. Petersburg red by the Centre. The Danish, Finnish, branch of the Academy, and its activities are Indian and United States Customs autho- mainly focused on training officers in charge rities have already done so, and countries of operating NII systems. Training partici- such as Azerbaijan, Belarus, Kazakhstan, fotolia.com pants benefit from the Customs Academy’s Kirgizstan, Moldova and Ukraine have modern facilities, advanced technologies, been sending Customs officers periodically

and innovative learning tools. over the last five years. © chingraph -

Since 2007, 1,772 officers, including 168 The Centre’s resource capabilities allow 35 of Russia. After consideration, the date of foreign specialists, have been trained thus to 40 groups to be trained per year, with the training session and the number of far on how to operate fixed and mobile NII groups usually comprising about 10 to trainees will be specified, and a commu- equipment. In addition, more than 10,000 12 officers. All training programmes are nication sent to the requesting adminis- officers have been trained on how to operate designed around a one-week course, with trations accordingly. X-ray inspection machines specifically, and a total duration of 40 hours. The registra- more than 2,000 specialists on how to apply tion procedure involves sending a request More information risk management. to the Head of the Federal Customs Service http://rta.customs.ru/nrta

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10 WCO news N° 78 October 2015

Council 2015

Directors General of Customs gathered at WCO Headquarters from 11 to 13 June 2015 to endorse the work done by the Organization covering the period July 2014 to June 2015, and to chart the way forward in the months ahead.

This dossier touches on the WCO’s main areas of work – compliance, facilitation, tariff and trade affairs, and capacity building – and present progress made and initiatives taken during the 12 months period in each of these areas. It also reports interesting events that occurred during the Council.

11 DOSSIER

WCO Members confer and act on trade facilitation, e-commerce, and security at the June 2015 WCO Council sessions

By Kunio Mikuriya, growth, particularly in providing an easily SECRETARY GENERAL, WORLD CUSTOMS ORGANIZATION accessible wider platform to Micro, Small th th and Medium-Sized Enterprises (MSMEs) During the 125 /126 Sessions of the WCO Council, engaged in cross-border trade.

which took place in June of this year, Heads of Customs This channel of trade is opening up opportunities for individuals to bypass administrations representing the 180 Members of the more traditional ways of doing business, potentially eliminating intermediaries, WCO conferred on many issues, including but not such as wholesalers or local retailers. It is, therefore, necessary for Customs and limited to, trade facilitation technical assistance and tax authorities to understand fully how the new environment will develop, both capacity building under the WCO Mercator Programme, technically and organizationally.

e-commerce, and security, especially the adoption of a Taxation systems currently structured around traditional business models will third pillar to the WCO SAFE Framework of Standards need changes to adapt the existing systems and procedures in order to effectively pre- to Secure and Facilitate Global Trade (SAFE Framework) vent loss of revenue and, at the same time, th to ensure that there is no discrimination on its 10 anniversary. In this article, I take up each of between businesses using the new technology as opposed to those continuing to these topics in turn. trade conventionally.

WCO Mercator Programme Trade and other Ministries to participate Many WCO Members have seen a signi- THE WCO MERCATOR Programme, which and dialogue with Customs, and recognize ficant and rapid growth in the volume assists WCO Members in implementing the important role of Customs in imple- of low-value imports of physical goods the World Trade Organization’s (WTO) menting the TFA. The remaining three on which duties and taxes are not col- Trade Facilitation Agreement (TFA) WCO regional workshops are scheduled lected. Additionally, this growing com- in a harmonized way by using WCO for the second half of this year. merce mechanism is posing challenges to tools, continues to make steady pro- Customs enforcement, such as the sale of gress. Mercator consists of two tracks: (i) The tailor-made assistance track delivers drugs, counterfeit and pirated goods, the awareness-raising and promotion of WCO needs assessment, technical assistance, illicit trade in wildlife, weapons and explo- tools through regional and national work capacity building, training, and moni- sives, and the smuggling of restricted and/ shops; and (ii) tailor-made assistance. toring. The WCO has already delivered or prohibited goods, including high-value more than 70 national and regional mis- excisable items. Three WCO regional workshops were sions under the Mercator Programme. In organized in the first half of this year to this respect, I am particularly grateful to Noting Customs administrations’ raise awareness of WCO tools that support the countries that have provided donor concern on revenue leakage from low- trade facilitation: in Jakarta, Indonesia support as well as Customs experts for value consignments, including ship- for the Asia/Pacific region; in Budapest, Mercator missions. ments below an exempted threshold, Hungary for the Europe region; and in which also had a distortionary impact on Manama, Bahrain for the North of Africa, E-commerce domestic manufacturers and retailers, Near and Middle East (MENA) region. The Internet is witnessing a rapid expan- the WCO has been analysing various sion in the sale of goods and services due working experiences and models, inclu- It is noteworthy that two of the three to faster transmission speeds and more ding the challenges and potential solu- workshops were co-sponsored by regio- secure means of payment. E-commerce is tions, relating to the efficient collection nal development banks, namely the expected to continue to grow exponentially of revenue on imports of low-value Asian Development Bank and the Islamic in the future with double-digit growth, e-commerce, such as de minimis and Development Bank, enabling Ministries of and will be a key driver of economic vendor collection regimes.

12 WCO news N° 78 October 2015

Standards for each of these areas of cooperation have been developed to promote a multi-tiered approach. In this regard, the WCO has already developed a number of tools that support this new pillar, notably the Compendiums on Coordinated Border Management and the Single Window, which are ‘living’ documents being conti- nually updated. In addition, standards for ‘Pre-loading Advance Cargo Information’ in respect of air cargo have been incorporated, enabling a first layer of security risk analysis to be carried out together with civil aviation authorities.

Due to heightened global security concerns and the adoption of the United Nations’ global Arms Trade Treaty (ATT), the WCO launched the Small Arms and Light-Weapons (SALW) Project to address the challenges faced by Customs in dealing with weapons of this nature. In addition, the relevance of the use of Advance Passenger Information (API) and Passenger Name Record (PNR) information to target both contraband and high- risk individuals were specifically under- lined by the WCO Council as needing further emphasis.

Conclusion The WCO will continue to confer and act on the top emerging issues facing the global Customs community, of which I The WCO and its Members are thus joins the other two, namely Pillar 1 have highlighted only a few in this article. taking its work on e-commerce forward, (Customs-to-Customs) and Pillar 2 Additional WCO activities are summa- including advancing work with other (Customs-to-Business). rized in the articles which follow, under relevant international organizations, the name of each WCO Directorate, such as the Organisation for Economic Recognizing the importance of coopera- including other interesting highlights Co-operation and Development (OECD) tion between Customs and other govern- from the 2015 WCO Council sessions. In and the Universal Postal Union (UPU). ment agencies involved in the interna- fact, I can quite admirably state that this tional trade supply chain, Pillar 3 aims year’s Council sessions were dynamic and Security to foster closer cooperation between positive, charting a clear path forward Customs plays a vital security role, and among them, ensuring an efficient for WCO Members and the international including countering terrorism and and effective government response to Customs fraternity as a whole. violent extremism. In June, on the 10th the challenges of supply chain security, anniversary of the SAFE Framework, whilst facilitating legitimate trade. Pillar the WCO adopted a third pillar on 3 foresees cooperation at three levels: Customs-to-Other Government cooperation within the government; and Inter-Government Agencies for cooperation between and among govern- its SAFE Framework. This pillar ments; and multinational cooperation.

13 DOSSIER Tariff and Trade Affairs

New publications Moreover, the WCO facilitated a WCO The revised Draft Consolidated Text NEW TOOLS HAVE recently been developed as Revenue Package workshop for the Asia [WTO document G/RO/W/111/Rev.6] of part of the WCO Revenue Package, which Pacific Region to develop a group of faci- the WTO Agreement on Rules of Origin collates all material relevant to improving litators who would be equipped to conduct contains both the texts already agreed by fair and efficient revenue collection and diagnostic missions on the topics of valua- the WTO Committee on Rules of Origin compliance levels. Most of these tools tion, classification and origin. (CRO) and elements which have not been are, however, only available to WCO endorsed by the CRO or which represent a Members. The WCO also promoted the instru- compromise proposal by the Chairperson ments developed under the Revenue of the Committee. Transposition of this Cross-cutting activities Package to participants from Afghanistan, Text into recent versions of the WCO Regarding post-clearance audit (PCA), Kazakhstan, Kyrgyzstan and Tajikistan Harmonized System (HS) Nomenclature beside the issue of the new WCO publica- attending the Customs working group has been finalized by the WTO. tion ‘Diagnostic Tool on Post-Clearance meeting and workshop organized by the Audit (PCA) and Infrastructure,’ a PCA US Department of Commerce as part of WCO Action Plan on Preferential Origin e-learning module has been developed and the United States-Central Asia Trade and Through the initiatives contained in the finalized, and has been made available on Investment Framework Agreement. Action Plan, the WCO hopes to prepare the WCO CLiKC! platform. its Members to face the challenges arising Rules of origin from the growing importance of preferen- In addition, the WCO conducted two trai- tial trade by providing them with all the ning seminars to strengthen the institutio- Harmonization of non-preferential rules necessary tools and modern techniques nal capacity of the Papua New Guinea and of origin to ensure that rules of origin (RoO) are the Maldives Customs services in the areas The technical work related to the nego- clearly understood and implemented. of Customs valuation, PCA and risk mana- tiations on the harmonization of non- gement, as well as two regional workshops preferential rules of origin at the World Capacity building activities relating for countries of the North of Africa, Near Trade Organization (WTO) is continuing, to rules of origin have included regio- and Middle East (MENA) WCO region however without any major breakthrough nal workshops for the MENA and the and for Russian-speaking countries. on ‘open’ issues. Americas/Caribbean WCO regions,

New publications

Guidelines on Certification of Origin

July 2014

14 WCO news N° 78 October 2015

and national workshops in Kenya and Malaysia. The WCO also organized a RoO expert accreditation workshop for countries in the MENA region.

WCO experts participated in four international conferences on Customs compliance that included economic operators, as well as in the fourth meeting of the Organisation of Islamic Cooperation (OIC) COMCEC Trade Working Group, and in an Executive Training on Negotiating and Drafting Rules of Origin session organized by the United Nations Conference on Trade and Development (UNCTAD).

Valuation

Examination of Customs valuation questions One technical question posed by a WCO Member has been finalized. It concerned royalties and licence fees under Article 8.1 (c) of the WTO Valuation Agreement (the Agreement), and is the subject of a new WCO Technical Committee on Customs Valuation (TCCV) instrument, namely Advisory Opinion 4.16.

The TCCV continued examining questions concerning:

• related party transactions as they per- tain to the Agreement and transfer pricing;

• the treatment of fees for unlocking a function of imported goods after importation (the application of Articles 1, 8.1 (c) and 8.1 (d) of the Agreement);

• the treatment of goods in a global value Moldova and Thailand, as well as in the WCO Asia/Pacific, Americas/Caribbean chain (goods imported after a series of Comoros and Saint Lucia in collaboration and Europe regions. purchases of goods and/or services for with the WTO. transformation, processing or repair). The WCO also participated in two pri- Valuation-related diagnostic missions were vate sector conferences on transfer pri- The TCCV also examined a new question carried out in the DRC and the Maldives, cing issues that were held in London and relating to the treatment of advertising and a train-the-trainer workshop on in Singapore, in order to promote the and promotion costs in a situation where Customs valuation and development of Organization’s work on transfer pricing the seller decides to carry out advertising valuation infrastructure was organized in and Customs valuation within the tax and promotion activities in the country Tanzania. business community. of importation and requires the buyer to contract and pay for the goods. Three regional workshops on Customs Nomenclature and classification valuation and transfer pricing, jointly Technical assistance organized by the WCO and the Status on the implementation of HS 2012 National workshops on valuation issues Organisation for Economic Co-operation The fifth edition of the HS, or HS 2012, took place in Bosnia and Herzegovina, the and Development (OECD), were held for entered into force on 1 January 2012 and, Democratic Republic of the Congo (DRC), Customs and tax administrations in the at present, 117 out of 153 Contracting

15 DOSSIER

Parties have notified the WCO that they • the United Nations Statistics Division an agreement between the International have implemented the amendments to the (UNSD) Expert Group Meeting on Technical Association for Tropical Timber HS Nomenclature that became effective International Statistical Classifications, (ATIBT), the FAO and the International from 1 January 2012. Five WCO Members where it presented the HS 2017 Tropical Timber Organization (ITTO) which are not Contracting Parties to the amendments; to produce a joint ATIBT-FAO-ITTO HS Convention have also implemented the General Nomenclature of Tropical Wood HS 2012 amendments. • the WTO seminar on the use of the HS in 2015. for controlling the trade in eco-friendly Technical assistance products; Based on the expertise of these three Sixteen national seminars focused on organizations, this is considered the most the HS and related matters, including • the Organisation for the Prohibition of comprehensive and up-to-date universal Customs laboratory infrastructure and Chemical Weapons (OPCW) Associate nomenclature of tropical woods ever pro- analysis methodology, were conducted Programme 2015. duced, providing information on pilot, in Albania, Cambodia, Cameroon, the scientific and local names of tropical wood Republic of the Congo, the Dominican Classification decisions and amendments species that are used and traded interna- Republic, Ecuador, Guinea-Bissau, to HS publications tionally today. Montenegro, Saudi Arabia, Serbia, At its 54th and 55th Sessions, the WCO Tanzania, The Former Yugoslav Republic HS Committee took 215 classification HS 2017 of Macedonia, Tonga, Uzbekistan, decisions, of which 159 related to INN Following last year’s WCO Vanuatu and Zimbabwe. pharmaceutical products linked to the Recommendation of 27 June 2014 implementation of the WTO Agreement concerning the 2017 amendments of the A national workshop was organized for on Trade in Pharmaceutical Products. It HS Nomenclature, some corrigendum the Ghana Revenue Authority’s Customs also adopted 11 sets of amendments to amendments and certain further amend- Division on the setting up of an HS Unit to the HS Explanatory Notes, and 41 new ments were adopted in terms of the WCO facilitate the taking over, and future mana- Classification Opinions. Recommendation of 11 June 2015. gement, of HS-related matters from the current contracted inspection company. The HS classification decisions (with the These amendments will not be legally bin- exception of those decisions for which ding on the HS Contracting Parties until Regional experts accreditation workshops reservations have been entered), the 1 January 2018 in terms of the procedure on the HS were held for the countries of amendments to the HS Explanatory Notes, established under Article 16 of the HS the Americas/Caribbean, the East and and the amendments to the Compendium Convention. Nevertheless, the Contracting Southern Africa and the West and Central of Classification Opinions are available on Parties are encouraged to apply these Africa WCO regions. the WCO website. recommended amendments as from 1 January 2017, consequential to the WCO The WCO also participated in the Successive amendments of headings or Recommendation of 27 June 2014. Regional Seminar on Capacity Building subheadings of the HS made it necessary to on Customs Chemical Analysis held at revise the classification of many INN pro- The 2017 edition of the HS Nomenclature the newly-established Regional Customs ducts. The HS Committee therefore reclas- and the HS 2017 Amendments Brochure Laboratory in Japan, a national tariff semi- sified 592 INN products which had been will become available in early 2016. The nar organized by Norwegian Customs, classified in the past in previous editions Correlation Tables between the 2012 and and a workshop on HS classification and of the HS on the basis of requests by the 2017 editions of the HS – an essential tool, advance rulings in China organized by WHO. The reclassifications will be effec- notably for the preparation of new national the European Commission’s Directorate- tive from 1 January 2017, consequential to Customs tariffs – has been published. General for Taxation and Customs Union the implementation of HS 2017. (DG TAXUD). More information Tropical wood species [email protected] In addition, the WCO also attended mee- At its 55th Session, the HS Committee, in [email protected] tings organized by certain international response to a request from the Food and [email protected] organizations, such as: Agriculture Organization of the United Nations (FAO), approved an amendment • the World Health Organization (WHO) of the Annex to the Explanatory Notes to Expert Committee on International Chapter 44 concerning the list of tropical Nonproprietary Names (INNs); wood species. This list was the result of

16 WCO news N° 78 October 2015 Procedures and Facilitation

pool of experts and organizing its first TFA accreditation workshops. New publications • Providing guidance and assistance in setting up National Committees on Trade Facilitation (NCTF), more particularly on stakeholder mapping, how to chair meetings, prepare agendas, and WCO Coordinated ensure the necessary follow-up. The Border Management WCO also sent out a questionnaire in Compendium order to collect its Members’ national situations and experiences related to the establishment of NCTFs. The results were published under the TFA section on the WCO website which also contains Members’ case studies on NCTFs.

• Holding the second and third meetings of the WCO Working Group on the TFA (TFAWG) which were attended by representatives of Customs administrations and other concerned authorities (Finance, Trade and Foreign Affairs Ministries, etc.), as well as representatives from the WTO, other international organizations, donor institutions, the private sector and academia.

• Organizing three regional workshops Capacity building delivery Republic respectively. The TFA will take in Asia/Pacific (Jakarta, Indonesia), THIRTY NATIONAL OR regional events have effect once the Protocol has been accep- Europe (Budapest, Hungary) and the been organized to support WCO Members ted by two-thirds of the Members of the North of Africa, Near and Middle East in implementing the Organization’s WTO, i.e. 108 Members in total, as per (Manama, Bahrain) in the first half of existing instruments and tools cove- the WTO’s current membership figures. this year. The workshops were attended ring various important Customs-related by Customs officials and representatives areas, such as risk management, the Single The latest measures carried out by the of interested Ministries, and the discus- Window (SW) and transit, as well as the WCO in the area of trade facilitation and sions focused on trade facilitation issues, use of the Time Release Study (TRS). With TFA Implementation under the WCO the TFA measures, and relevant WCO respect to the Revised Kyoto Convention Mercator Programme include: instruments and tools. (RKC), the WCO has held 15 national and regional workshops. • Adding new tools and best practices, • Participating in high-level meetings which have emerged from WCO with key parties and individuals to WTO Trade Facilitation Agreement Members relating to the implementa- emphasize the key role of Customs and Since the adoption in November 2014 tion of the relevant trade facilitation the WCO in the implementation of the of the Protocol of Amendment to insert measures, to the Guidance for the TFA TFA. the Trade Facilitation Agreement (TFA) developed by the WCO. The Guidance into the main World Trade Organization aims to support an understanding of Data quality and data security (WTO) Agreement, eighteen WTO the linkages between the TFA and All Customs tasks and responsibilities are Members have ratified the TFA to WCO instruments and tools, such as performed, at least in part, on the basis of date: Hong Kong China, Singapore, the RKC. data received from businesses engaged the United States, Mauritius, Malaysia, in trade – for example, data for purposes Japan, Australia, Botswana, Trinidad • Delivering more than 90 national and of revenue collection, risk management, and Tobago, the Republic of Korea, regional missions for technical assis- admissibility checks, resource allocation Nicaragua, Niger, Belize, Switzerland, tance/capacity building under the and cooperation with other agencies, as Chinese Taipei, China, Liechtenstein Mercator Programme. In this regard, well as the collection of statistical data for and the Lao People’s Democratic the WCO is continuing to develop its macroeconomic decisions.

17 DOSSIER

Air cargo security An AEO/RA guidance document and a joint AEO/RA security programme tem- Pre-loading advance cargo information plate have also been developed. These The WCO-ICAO [International Civil documents include all appropriate ICAO Aviation Organization] Joint Working and WCO references, as well as a structure Group on Advance Cargo Information that allows a comprehensive comparison of (JWGACI) was set up in 2014 to discuss the two security regimes. and recommend modalities for sharing and using advance cargo information Other WCO/ICAO areas of cooperation (ACI) in carrying out security risk ana- The two Organizations have developed lysis by Customs and civil aviation autho- a joint training module to assist both rities in order to mutually support each Customs and aviation security officials other and strengthen air cargo security. to better understand the international air The Group comprises eight Members and cargo supply chain, each other’s roles, and one additional Member to co-chair, from the roles of other important actors. Based each side, as well as six relevant stakehol- on this module, the first joint pilot work der representatives. shop for the WCO Asia/Pacific region has been held, and the possibility of organizing The JWGACI is following a two-phased further similar joint workshops is being approach. On completion of Phase I, a explored. report on the concept of ‘Pre-loading Advance Cargo Information’ (PLACI), Advance Passenger Information and its benefits and the cost of implementa- Passenger Name Record tion, as well as the challenges and poten- The Recommendation of the Customs tial way forward was produced, and later Co-operation Council concerning the Use endorsed by the WCO Technical Expert of Advance Passenger Information (API) Group on Air Cargo Security (TEGACS) and Passenger Name Record (PNR) for at its February 2015 meeting, and by the Efficient and Effective Customs Control ICAO Aviation Security Panel (AVSECP) has been amended. in April 2015. In order to make more explicit the poten- The JWGACI has now moved to Phase II tial use of advance information received of its work, i.e. dealing with issues concer- on passengers in enforcing United Nations ning practical and technical implemen- (UN) travel bans, the Recommendation tation. To this end, the Third Meeting of now includes – in the list of actions that the JWGACI was held from 18 to 20 May Members of the WCO, Customs and 2015 in Washington D.C., where it was Economic Unions should take – phrasing The work undertaken by the WCO Expert decided to continue further work, inclu- that reads: “effectively support the imple- Group on Data Quality resulted in: ding developing details of the ‘Concept mentation of UN travel bans against sanc- of Operations’ – a document describing tioned individuals.” • the issue of a Recommendation of the what a system does, and which will be Customs Co-operation Council on the used to get stakeholders in the system Customs information management Guiding Principles for Data Quality; to agree on a common understanding, thereby providing clarity of purpose to WCO Data Model • the issue of a non-exhaustive list of a project. Version 3.6 of the Data Model (DM) is acceptable and non-acceptable terms being developed, and will be released in to describe goods in declarations, Harmonization of Customs and aviation December 2015. Among other things, the such as pre-arrival or pre-departure industry security programmes new version will cover: declarations; Work on the harmonization of Authorized Economic Operator (AEO) and Regulated • an ASYCUDA Derived Information • the creation of a Virtual Working Group Agent/Known Consignor (RA/KC) pro- Package; on Data Quality whose work will include grammes is progressing well, and the input from interested WCO Members ICAO and WCO Secretariats, together • a European Union (EU) Customs Data and individual members of the WCO with other stakeholders, are currently Model Derived Information Package. Private Sector Consultative Group, working on conducting a joint AEO/ and which will report to the WCO RA pilot in Vietnam, as agreed by their Around 43 countries have active projects Permanent Technical Committee (PTC) Customs and aviation security authorities, underway which involve the implemen- where strategic issues and possible solu- and have already developed draft Terms of tation of the DM. In this regard, a WCO tions would be tabled for discussion. Reference for the joint pilot. Member-wide tabulation status report of

18 WCO news N° 78 October 2015

adoption, and indicating the increasing Management and the Single Window, work through face-to-face dialogue, inclu- use of the DM, is available on the WCO which are ‘living’ documents that are ding the promotion of electronic exchange website. continuously being updated. of information, the sharing of information on security-related developments, and the Single Window Another important aspect of the new edi- sharing of countries’ working experiences The WCO ‘Compendium on How to Build tion is the incorporation of standards for and best practices. a Single Window Environment’ has been PLACI in respect of air cargo, for carrying updated. WCO experts also supported out a first layer of security risk analysis Additionally, the WCO is closely wor- activities relating to the implementation together with civil aviation authorities. king with the UPU on a number of issues of SW solutions, and promoted the use The SAFE 2015 also includes definitions of mutual concern, which, in particular, of WCO standards and tools in doing so. of a ‘container’ and ‘risk management.’ include advance electronic exchange of Evidence of this support is demonstra- data; postal supply chain security, and ted by the variety of work undertaken by Furthermore, the instruments and tools e-commerce. WCO experts in which they: related to risk management mentioned in the technical specifications of Standards 4 The future of Customs • organized a 4-day SW workshop in and 7 of Pillar 1 and other relevant places A Virtual Working Group on the Future of Albania, as the country plans to build in the SAFE text have been updated in Customs (VWG FC), consisting of repre- a national SW environment; view of the development of Volumes 1 sentatives from Customs, international and 2 of the WCO Risk Management organizations, the private sector and aca- • conducted a 5-day SW workshop in the Compendium. demia, has been established, following Maldives, to help the country build a discussions which took place on this topic national SW; Additionally, new tools have been at the 207th/208th Sessions of the PTC in added to the SAFE Package, such as the March 2015. As a starting point for discus- • participated in the VII Meeting of the Toolkit for the implementation of Pillar sions, the VWG FC will use the ‘Customs Inter-American Network of SWs; 1 (Customs-to-Customs), Customs- in the 21st Century’ strategic document. Business Partnership Guidance, and • took part in a UN/CEFACT workshop the WCO Recommendation concerning Members of the WCO are encouraged on SW interoperability; Customs Formalities in Connection with to initiate in-depth research on future- the Temporary Admission of Container orientated topics. Some of the topics which • participated in a SW regional workshop Security Devices (CSDs), adopted in June are already being discussed within the for countries in the WCO Asia/Pacific 2013. VWG FC include border models, infor- region, in the context of the TFA; mation management, exchange of infor- Existing publications have also been mation, cooperation between Customs and • attended the High-Level Seminar on updated, namely the Guidelines for tax authorities, 3D printing, natural disas- Electronic Customs in the EU, with a the Procurement and Deployment ter relief, e-commerce, and others. The focus on the SW; of Scanning/NII Equipment (inclu- discussions on the future of Customs will ding the Guidance Material on Threats continue at the upcoming sessions of the • supported a 5-day national work and Technology Solutions), and the PTC and the WCO Policy Commission. shop in Brazil on the SW and data WCO Compendium of Authorized harmonization; Economic Operator Programmes (AEO E-commerce Compendium). The impact of the increase in e-commerce • participated in a seminar on the deve- and issues emanating therefrom has been lopment of a regional SW in the Eurasian Postal traffic widely discussed during the past year. The Economic Union (EEU). In line with the objectives of the Focus section of the WCO News magazine Memorandum of Understanding (MoU) offers some insights, including the way SAFE review between the WCO and the Universal forward, into this topic, both from a trade The review of the SAFE Framework of Postal Union (UPU), a joint WCO-UPU facilitation and revenue collection point Standards (SAFE) has been comple- Customs-Post Workshop was held in of view. ted. The 2015 edition of the SAFE now China for the WCO Asia/Pacific region includes a Pillar 3 on Customs-to-Other with the theme: ‘Fostering greater coo- More information Government Agencies which foresees cooperation between Customs and Posts [email protected] peration at three levels: cooperation within and promoting the development of cross- the government; cooperation between and border e-commerce.’ among governments; and multinational cooperation. The workshop was attended by over 100 participants representing Customs and The WCO has already developed a num- designated postal operators from 33 ber of tools that support this Pillar, notably countries. It sought to broaden the under the Compendiums on Coordinated Border standing of postal-Customs clearance

19 DOSSIER Capacity Building

Four areas of activity THE WCO CONTINUES to provide capacity building (CB) assistance to WCO Members around the world. Highlighted below is a sample of the initiatives taken for each of the specific areas of activity outlined in the WCO Organizational Development Package: Strategic Advisory Support and Delivery; Human Resource Development; Integrity; and Stakeholder Engagement.

Strategic Advisory Support and Delivery This activity derives from the WCO’s 2003 Capacity Building Strategy. The Strategy entails needs-assessments through diagnostic missions, the development of a comprehensive strategic plan, the implementation of WCO standards, and the regular monitoring of performance indicators. Key WCO CB tools to support these actions include the Diagnostic Framework and the Capacity Building Development Compendium.

During the reporting period, over 300 WCO Member support missions were delivered, including a number of specific strategic planning missions, and five evaluation monitoring missions under the auspices of Phase 3 of the WCO Columbus Programme.

CB delivery during such missions is based on a two-pronged approach, namely ‘ownership’ and ‘results-based management’ (RBM). RBM ensures that strategic planning and implementation management are guided by focusing on the desired results. This requires effective performance measurement (PM) in order to effectively demonstrate the impact that activities have on organizational performance.

The WCO also provides technical assistance on the use of PM contracts between Directors General of Customs and frontline Customs officers. In collaboration with the United Nations Conference on Trade and Development (UNCTAD), the WCO has developed an effective PM

20 WCO news N° 78 October 2015

module based on data extracted from the modernization of their training pro- CLiKC! People Development Interactive ASYCUDA automated Customs clea- grammes in cooperation with the Map – which provide guidance on five rance system. East African Community (EAC), topics: while Cameroon, Mauritania and the As the WCO continues to refine the CB Seychelles have benefited from activi- • Strategic human resources Development Compendium, changes ties to develop new blended training management; have been made to enhance Chapter strategies. 5 of the Compendium, which deals • Strategic organizational design/job with ‘Project Management and Action Leadership and Management profiling; Planning,’ two essential tools for the Development Programme (LMDP) effective management of Customs The LMDP is intended to improve the • Recruitment processes; reform and modernization programmes. capability of Customs’ leaders and managers, in order to drive reform and • National training centre guidelines; The new draft chapter sets out a practi- modernization. Twenty-three LMD cal approach to the management of pro- workshops have been conducted in the • Customs career paths. jects based on experience and feedback reporting period, and two e-learning from WCO Members. Further updates modules – to be completed by nominated The Map provides a live overview of the to Chapter 5 are planned, which will participants ahead of an LMD workshop Customs community’s initiatives and cover guidance in establishing a ‘Project – have also been developed. solutions that have been implemented Office,’ and include additional case worldwide, in order to efficiently manage studies. The e-learning modules introduce competency-based human resource (HR) concepts around leadership and mana- processes. The WCO has updated dif- Human Resource Development gement, and contain an introduction to, ferent chapters of the FPPCP, incorpo- WCO activities focusing on human and the context of, an LMD workshop. rating the latest best practices. It has also resource development include the A special focus on modern Customs started to deliver assistance to a num- enhancement of the e-learning cata- organizations and integrity has been ber of WCO Members in implementing logue, the delivery of support relating incorporated into the modules. During elements of the Framework, which was to the Leadership and Management an LMD workshop these concepts are used as a basis for WCO HR manage- Development Programme (LMDP), further explored, taking into account ment workshops in Montenegro, Qatar, the development of material to sup- an administration’s actual situation. To Serbia and Sudan. port the Framework of Principles and enable the WCO to measure the impact Practices on Customs Professionalism of LMD workshops on Customs organi- The People Development Diagnostic (FPPCP), the development of the People zations and individual participants; a Tool (PDDT) Development Diagnostic Tool (PDDT), ‘monitoring and evaluation’ concept is The PDDT is intended to serve as a prac- and organizing the first session of the now being developed. tical guide for administrations, which Virtual Customs Orientation Academy will enable them to gauge where they (VCOA). The ninth and tenth National Policy stand in the context of Customs inter- Dialogues, which bring together senior national standards and best practices. E-learning catalogue representatives from government and It has been recently trialled in Namibia, Twenty-two new or updated modules business in the WCO East and Southern and will also be used during HR mana- are now available on the WCO CLiKC! Africa region, were held in Mozambique gement diagnostic missions by WCO Platform. New e-learning courses cover and Rwanda respectively. In addition, facilitators. post-clearance audit (PCA), risk mana- two successful pilots were undertaken gement (RM), coordinated border mana- to test the concept of a ‘Top Executive Virtual Customs Orientation Academy gement (CBM), and the RKC. These new Retreat.’ Participation in the retreat will (VCOA) online courses represent more than 35 be offered to executive teams from natio- From 4 August to 24 October 2014, 33 days of training. nal administrations, as a way to further Customs officers from 22 administra- strengthen their capacity in implemen- tions participated in the first session The WCO has continued to support ting change and in achieving organiza- of the VCOA, a WCO initiative aimed national roll-outs of the WCO e-learning tional results. at providing newly recruited Customs courses by its Members. Assistance has officials, having less than two years’ ser- been provided to Sub-Saharan Customs Framework of Principles and Practices vice in Customs, with basic knowledge administrations to review their national on Customs Professionalism (FPPCP) and skills in international Customs training strategies, and to integrate the To assist WCO Members in understan- standards. WCO e-learning catalogue into their ding and implementing policies relating training curricula. to professional qualifications and career Tutorship and technical expertise was paths in Customs administrations, the provided by the WCO, as well as by Burundi, Kenya, Rwanda, Tanzania FPPCP was developed and linked to experts from WCO Member Customs and Uganda have been assisted in the an online repository of practices – the administrations. Fourteen tutors from

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five WCO Members took part in the other administrations that form part of In addition to the above listed support session, giving lessons, conducting live the West African region. activities, assistance has been provi- chats and hosting short webinars, as well ded virtually to WCO Members in 10 as enlivening the course and various Integrity cases, comprising support in areas such assignments – individual or collabora- Capacity building and integrity are clo- as providing comments on integrity tive – and evaluating the students. sely related, and it is impossible to run documents, checking codes of conduct, an administration and carry out reforms obtaining information from other admi- Participants had to follow four modules without a strong emphasis on inte- nistrations, etc. of tutored virtual online training and grity. During the reporting period, 11 complete all assignments and exercises, integrity-related missions were conduc- With the help of a number of Members, requiring an investment of around six to ted, and work was carried out on the fol- two new WCO tools have been produced: ten hours per week of their time. Upon lowing projects, among others: a ‘Guide to Corruption Risk Mapping,’ completion of the activities, and after and a ‘Guide to Prevent Procurement being evaluated, 29 successful Customs • a pilot project initiated in Rwanda to Corruption in Customs.’ WCO Members officers were awarded certificates. develop a communication strategy to are invited to submit additional informa- enhance communication with the pri- tion and examples to further supplement WACAM Project vate sector; these two guides, which will remain The West African Customs ‘living’ documents. Administrations Modernization • a communication campaign launched (WACAM) Project, funded by the in Namibia with the aim of bringing In addition, the tenth and eleventh Swedish Government, was designed to together Customs’ partners to work issues of the WCO Integrity Newsletter, support modernization in West African collectively against corruption; containing articles on Members’ best Customs administrations till the end of practices, have been published. Included 2014 in the fields of HR management, • the implementation of a Memoranda are articles on reforms undertaken in stakeholder relations, and resource of Understanding (MoU) with 11 pri- Ecuador and the Philippines, as well as mobilization. The support took the form vate sector associations in Uruguay; articles on the policies and strategies of regional workshops for discussion of applied in France, Italy, Jamaica, Korea, best practices related to these areas, and • the implementation of a project in Malawi and Paraguay. included national support missions. Bolivia, similar to the Uruguayan model; Stakeholder Engagement The project is now entering a second This engagement entails cooperation phase. This phase will focus on assessing • the implementation of PM and PM and coordination with many actors, the results achieved, identifying lessons contracts in Haiti, based on data including governmental policy makers, learned and challenges met, as well as extracted from the ASYCUDA auto- development partners, and donors. To developing a pool of regional HR experts mated Customs clearance system; guide WCO Members, a 10th chapter on capable of undertaking diagnostic mis- the subject of ‘Donor Engagement’ was sions and piloting HR modernization • the delivery of an integrity diagnostic incorporated into the CB Development projects in their administration or in in Colombia. Compendium.

22 WCO news N° 78 October 2015

This chapter has been revised, and to ensure momentum in the area of This year, a new Annex provides additional guidance on the Customs reform and modernization. preparation of a business case, how to on the World Trade organize regional and national donor WCO CB efforts continue to enjoy sup- organization’s Trade conferences, and how to prepare pro- port from established donors contribu- ject proposals according to a donor’s ting to the Customs Cooperation Fund, Facilitation Agreement expectations. It also includes additio- such as the Governments of China, has been added to the nal guidance on the monitoring and Germany, Japan and Korea as well as: evaluation of projects. Orientation Package. • the Eurocustoms Fund; The Annex will hopefully To assist WCO Members in their inte- • the Inter-American Development ractions with policymakers and the need Bank (IADB); provide Directors General for continuous investment in Customs, • the Asian Development Bank (ADB); of Customs with the the WCO developed an ‘Orientation • the Swedish International Package for Decision Makers,’ which Development Cooperation Agency necessary intellectual provides a clear picture of a modern (SIDA); ammunition that will Customs service and the vital part it can • the Swedish Ministry for Foreign play in achieving national objectives. It Affairs; support their role in the is aimed at assisting Customs adminis- • the German Federal Enterprise for implementation of the TFA. trations to secure support for reform and International Cooperation (GIZ); modernization. • the Secretariat of the Convention on International Trade in Endangered This year, a new Annex on the World Species of Wild Fauna and Flora Trade organization’s (WTO) Trade (CITES); Facilitation Agreement (TFA) has been • the United States Department of State; added to the Orientation Package. The • the Norwegian Agency for Annex will hopefully provide Directors Development Cooperation (NORAD); General of Customs with the necessary • the Finnish Ministry of Foreign intellectual ammunition that will sup- Affairs; port their role in the implementation of • the United Kingdom Department for the TFA. International Development (DFID); • Her Majesty’s Revenue and Customs Significant progress continues to be (HMRC) in the United Kingdom. made by the WCO in securing funding for CB, and in fostering dialogue with More information international and regional develop- [email protected] ment banks, donor agencies, and other development partners, critical activities

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Security Programme

Programme Global Shield (PGS) Compliance ACTIVITIES UNDER PGS, an initiative launched in 2010 to monitor the trade in 14 chemicals in order to identify those that could be diverted for the illegal manufacture of improvized explosive devices (IEDs), and include training, intelligence support, and awareness-raising directed at key partners and private stakeholders. PGS participating countries currently number 94.

Enforcement Since July 2014, three 5-day intermediate training events and five 10-day train-the- trainer events have been conducted, mat- ching the national language and culture of the trainers to the trainees in order to ensure that all the training material is fully understood. Moreover, PGS training curricula have been integrated into the programmes of six National Training Academies – Abu Dhabi, Afghanistan, India, Kyrgyzstan, Tajikistan and Sri Lanka – that have undertaken to deliver training on the initiative to new recruits and senior personnel.

The PGS team also participated in training events and workshops organized by partner organizations:

• Twenty-three law enforcement officers from Indonesia, Malaysia and the Philippines following a Crime Scene Investigation Course – delivered as part of INTERPOL’s Chemical Anti- Smuggling Enforcement (CHASE) Programme – received a presentation on the PGS initiative and the dual-use chemicals targeted by the INTERPOL programme;

• Twenty-five participants, from the National Police and Ministry of Defence of Brazil, Chile, Colombia, El Salvador, Guatemala, Honduras, Mexico and Peru attending a Counter-IED Workshop – organized by the Organization of American States’ (OAS) Inter-American Committee against Terrorism – received a presentation on Customs’ role in mini- mizing the illegal cross-border diversion of explosive precursor chemicals and PGS’s contribution to the global fight against terrorism, as well as a demons- tration on the chemical detection test

24 WCO news N° 78 October 2015

The WCO is currently exploring the possibility of setting up a medium to long- kit, that included a hands-on exercise Almost 100,000 import and export ship- in chemical identification. ments were targeted by participating term technical assistance and WCO Members, and around 55,000 of capacity building programme PGS members have been requested to these shipments were subjected to further carry-out national and regional enfor- scrutiny. Over 8,000 physical inspections on the enforcement of cement operations on a routine basis. In were carried out during the interdiction strategic trade controls – the this regard, in September 2014, a regional phase, resulting in 82 seizures. Out of operational coordination effort was piloted the 82 seizures, 44 cases led to a criminal WCO STCE Programme. by WCO Members and the Police located investigation. Most of the cases are still It would focus on training, in Central Asian countries, together with being pursued by the participants. participants from Afghanistan, India and international cooperation, Pakistan. Core working groups will iden- Besides detecting and preventing illicit industry outreach, and the tify best practices and challenges on a trafficking of strategic goods in interna- quarterly basis, in order to strengthen such tional supply chains, the operation revea- facilitation of the collection operations. Additionally, in October 2014, led critical information on the Customs and sharing of information a Global Seminar will be held in Brussels community’s capacity to enforce interna- to further engage all WCO Members in tional strategic goods-related resolutions, and intelligence. operational activities. such as the United Nations (UN) Security Council Resolution 1540 in relation to Development of the PGS field test kits for weapons of mass destruction. Forty-three • Passenger controls/foreign terrorist figh- frontline officers has been finalized, -ena Operation COSMO participants retur- ters (FTFs) – The dossier will focus on the bling these officers to quickly determine if ned a national self-assessment on their utilization of API and PNR information a chemical being examined is one of the 13 standard operating procedures and work in the passenger risk assessment process identified PGS chemicals. The kits will be practices in this area, which will allow to assist WCO Members in deploying made available to countries undertaking the WCO Secretariat to tailor its future measures to implement, among other enforcement operations, together with capacity building and technical assistance things, the UN counter-terrorism reso- an electronic chemical detection device activities to address the outlined gaps. lution on passenger controls and terro- which aims to quickly and accurately iden- rist financing (UNSCR 2178). A virtual tify more than 11,000 chemicals, including The WCO is currently exploring the working group within the context of chemicals sealed in translucent containers. possibility of setting up a medium to the current WCO API/PNR Contact long-term technical assistance and capa- Group has been established, enabling PGS continues to work with its public and city building programme on the enfor- the Members to exchange experiences private stakeholders, and has been able to cement of strategic trade controls – the and lessons learned in relation to the use increase awareness on the dual-use capabi- WCO STCE Programme. It would focus of the aforementioned information. The lity of precursor chemicals manufactured, on training, international cooperation, WCO is also examining the possibility distributed or retailed, as well as provide industry outreach, and the facilitation of of organizing regional workshops in assistance on the development of reporting the collection and sharing of information order to raise awareness on the use of mechanisms for suspicious activities. The and intelligence. API/PNR information. project team participated in the Chemical Sector Security Summit in July 2014, and New work streams • Terrorist financing – Efforts in this in the International Fertilizer Industry The WCO has identified some areas which regard will focus on the smuggling of Association Global Safety Summit in fall outside existing WCO initiatives but financial instruments by extremist orga- March 2015. which need to be covered. These relate to nizations, as well as preventing other small arms and light weapons, passenger types of illicit trafficking that can be Strategic Trade Controls Enforcement controls (the utilization of advance passen- traced to links with terrorist financing. (STCE) Project ger information (API) and passenger name The WCO is currently conducting an After having focused on awareness-raising, record (PNR) information), and the pre- analysis of potential future activities, including a curriculum and modules for vention of terrorist financing: and will present an implementation plan training purposes, activities undertaken to the WCO Enforcement Committee at under the STCE Project shifted to organi- • Small Arms and Light Weapons its next session in early 2016. zing a global law enforcement operation. (SALW) Project – Initiated in March The operation, code-named COSMO, 2015 through the adoption of a specific WCO Border Security Initiative brought together 89 WCO Member WCO SALW Strategy and Action Plan, The Border Security Initiative (BSI) is a Customs administrations. The opera- activities will be implemented from 2015 cross-cutting technical assistance pro- tional interdiction phase commenced in to 2018 in accordance with guidance gramme, whose primary objective is to October 2014, and was followed by a fol- received from the WCO Enforcement assist Customs administrations in buil- low-up and investigation phase lasting Committee. ding or enhancing their border security from 1 November 2014 to 31 March 2015. capacity. WCO Members, following a

25 DOSSIER

specific WCO or UN border security- related assessment mission, can request technical assistance from the BSI to facilitate the deployment of Customs-related instruments and tools.

Based on received requests, the WCO will work with requesting countries and the donor community to develop tangible plans to support the implementation of agreed measures. As part of this work, the WCO would, subject to its available resources and funding, make its security- related and other tools – the WCO Cargo Targeting System (CTS), nCEN, etc. – available to the requesting countries.

Revenue Programme Given the wish by an overwhelming num- among those teams in order to meet confi- Post-Clearance Audit (PCA) ber of participating countries to continue dentiality concerns or to deal with sensi- Following the revision in 2012 of the WCO carrying out this type of operational acti- tive cases. Guidelines for Post-Clearance Audit, the vity, the WCO, in close cooperation with WCO has received a significant number the WCO Regional Intelligence Liaison Operation WESTERLIES 3 of training requests. To give effect to these Offices (RILO) Network, has decided The 10-day global operation targeting the requests, the WCO has taken several steps to repeat the experience by launching illicit trafficking in methamphetamine by accordingly, which include: Operation GRYPHON II in the near air passengers was carried out in March future. 2015 with 105 participating countries. • publishing a PCA Diagnostic Tool on Coordinated by the WCO in close coope- PCA and the infrastructure; Drug Enforcement Programme ration with Japan Customs, the operation covered over 170 airports, resulting in • developing a comprehensive PCA Project AIRCOP seizures in excess of 3.6 metric tonnes of e-learning module, and a fully-fledged Launched in 2010 to build drug enforce- narcotics, and the arrest of 88 suspected curriculum based on its Guidelines; ment capacities at international airports, traffickers. Project AIRCOP now counts 10 Joint • accrediting experts from WCO Member Airport Interdiction Task Forces (JAITFs) UNODC-WCO Container Control Customs administrations for the deli- set up in Benin, Cape Verde, Côte d’Ivoire, Programme (CCP) very of training, and organizing natio- Gambia, Ghana, Mali, Nigeria, Senegal, Port Control Units (PCUs) established nal and regional training sessions; Togo and the Dominican Republic. under the CCP are, at present, fully opera- Panama and Cameroun are expected to tional in 28 countries, and funding for the • organizing the first meeting of the join the project soon. integration of another 25 WCO Members Experts Group on Post-Clearance Audit, into the CCP is now available. with participants being tasked to plan Since 2013, 12 European countries are and develop new tools in the area of now associated with the project. The The ContainerComm port communica- PCA. enforcement teams working at major tion platform is accessible on request to international airports have been given all officers working in a port, even though Operation Gryphon and future tobacco- access to the communication tool – a cus- their countries may not be CCP partici- related operational activities tomized version of the WCO CENcomm pants. Currently, more than 90 countries In October 2013, Operation GRYPHON application – developed specifically for can share information on containerized – the first global Customs-centric ope- the JAITFs. It enables information to sea cargo through this WCO communi- ration designed to tackle the illicit trade be exchanged easily and securely. New cation platform. in tobacco – was launched, running for enforcement teams located in Kenya, a period of six months and involving 93 Morocco and South Africa will join the Given the success of the CCP, the launch WCO Member administrations. Beyond project soon. of a separate joint programme on air the remarkable seizures resulting from cargo control and the establishment of the operation, more than 100 criminals The CENcomm application, developed specialized units to target suspicious were arrested, and 35 investigations were specifically for the JAITFs and the asso- shipments in this transport segment is launched in a vital effort to disrupt crimi- ciated airport teams, has been significantly in development, with a pilot scheduled nals and dismantle the networks behind improved to enable restricted communica- to be conducted in late 2015 in Karachi, this trade. tion between two teams or specific officers Pakistan.

26 WCO news N° 78 October 2015

Third Global Canine Forum • The complete redesign of both its mobile Three environment-focused enforcement The Third Global Canine Forum was orga- and web application translated into a operations were supported and coordina- nized by the WCO from 24 to 26 June more ergonomic and attractive interface, ted by the WCO: COBRA III in May 2015, 2015 in Buenos Aires with the support with new features and functionalities; which targeted wildlife crime, involved 37 of Argentina’s Federal Administration of countries; SESHA in March 2015, targeting Public Revenue (AFIP). Over 90 experts • The mobile version enables officers to red sanders and other endangered plant from 28 countries participated and obtain information from the IPM sys- species, involved 11 countries in the WCO exchanged knowledge on detector dog and tem simply by scanning bar codes. The Asia Pacific region; and FLYAWAY in June handler training programmes. new mobile version is now available to 2015, which targeted wildlife smuggling all IPM users; originating in South America, involved IPR, Health and Safety Programme 14 countries in the WCO Americas and • The addition of new security solu- Europe regions. Actions tion providers to the list of companies Extensive capacity building activities in who have joined the IPM Connected The WCO organized a Joint Risk this area have been conducted, such as network. This service enables Customs Management Workshop with the UN regional or national seminars and dia- officers to scan security features pro- Environment Programme (UNEP) on gnostics, as well as large-scale operations vided by these companies, such as QR countering the illegal trade in environ- coordinated by the WCO. Operation codes, to verify the authenticity of pro- mentally regulated goods in Malaysia, CHANNEL GATE took place in East tected products. from 6 to 10 April 2015. It was attended by Africa in December 2014, focusing on 42 participants from 26 WCO Members, pharmaceutical products, and Operation Environment Programme as well as by representatives from UNEP, BALKAN GATE took place in the Balkan the Secretariat of the Convention on region in March 2015, focusing on all Activities International Trade in Endangered goods that pose a threat to health and The WCO is continuing to support efforts Species of Wild fauna and Flora (CITES), safety. to combat environmental crime by raising TRAFFIC, and the RILO and Regional awareness of the issue among frontline Office for capacity Building (ROCB) in Interface Public-Members (IPM) Customs officers, organizing training to the WCO Asia/Pacific region. IPM is the WCO online database that improve their targeting and identification enables rights holders to provide Customs capabilities, leading international enfor- In January 2015, the WCO and TRAFFIC officers in the field with real-time data cement operations focused on smuggling, – a wildlife trade monitoring network – and information on their products. Latest and developing practical guidance in the organized a consultative workshop in developments related to the tool consist of form of various training resources. Thailand. It was attended by representa- the following: tives from across the transportation and logistics sector, together with Customs officials, supply chain experts and wildlife professionals, in order to find actionable solutions to deter wildlife smuggling activities while strengthening supply chains and corporate policies.

INAMA Project This WCO project, undertaken in conjunction with the WCO Secretariat’s Capacity Building Directorate, was launched as a follow-up to Project GAPIN. It aims to strengthen the enforcement capacity of targeted Customs

The mobile version of IPM enables officers to obtain information from the IPM system simply by scanning bar codes. The new mobile version is now available to all IPM users.

27 DOSSIER

The nCEN application was successfully implemented in Angola, Botswana, administrations in Sub-Saharan Africa, WCO tools Georgia, Malawi, the while focusing on the illegal trade in Maldives, Mali, Mauritius, wildlife, particularly endangered species The CEN suite listed in the CITES Convention. Project The Customs Enforcement Network Namibia, the Seychelles, INAMA is expected to run for a five-year (CEN) application was developed as a Swaziland, Tanzania, period as a multi-donor funded project. central global depository for enforcement-related information, enabling the Uganda and Zimbabwe, In the framework of this project, the fol- Customs community to produce valuable bringing the total number of lowing events have been conducted: analyses and intelligence on the basis of the available data. Compared to 2013, countries where it has been • A Workshop on Controlled Deliveries of the number of cases reported by WCO deployed thus far to 13. Illegally Traded Wildlife Products, fun- Members to the CEN decreased in 2014. ded by the CITES Secretariat, was held The WCO therefore calls on those of its in Thailand in January 2015, attended Members not reporting data to the CEN by 30 delegates from Customs adminis- to do so as soon as possible and on a regu- trations and other relevant authorities, lar basis. It also urges its Members to do such as wildlife authorities, the police, their utmost to ensure that every seizure etc., representing 8 Asian and African related to illicit trade is inputted into the countries; CEN, keeping in mind that the quality of WCO Cargo Targeting System (CTS) the provided information is crucial for The CTS enables user countries to capture • A 5-day training course on Basic identifying pertinent trends, preparing advance electronic cargo manifest infor- Intelligence Analysis on CITES was risk indicators, and formulating appro- mation, and to perform risk assessment, held in Mozambique in May 2015 for priate strategies. profiling and targeting. To date, the CTS Member States of the Southern African has been deployed in five countries, namely Development Community (SADC). The CEN communication platform the Bahamas, Jamaica, the Maldives, (CENcomm), an operational tool ena- Panama and Sri Lanka. Further deploy- Discussions have also been held with bling the exchange and diffusion of infor- ments are planned in the coming months. TRAFFIC and the UN Environment mation in a secure environment, remains In addition, preparations for the develop- Programme’s World Conservation the most popular application in the CEN ment of the CTS’ air cargo capabilities are Monitoring Centre (UNEP-WCMC) to suite. In 2014, CENcomm was used in 71 well underway. explore possible synergies and areas of operations and projects, constituting an cooperation. increase of 20% from the previous year. In Work related to cooperation with inter- the first two quarters of 2015, this number national shipping lines to ensure and Electronic crime had already reached 68, indicating a conti- increase the availability of pre-arrival During its last meeting, the WCO nuing upward trend. cargo information for WCO Members’ Electronic Crime Expert Group (ECEG) risk assessment activities through the examined the DarkNet (an overlay The nCEN application gives Customs use of the CTS, although not exclusively, network that can only be accessed with administrations the ability to collect, continues. As a result of this dialogue, an specific software, configurations, or store, analyse, and disseminate law increased number of shipping lines are authorization, often using non-standard enforcement data effectively at the providing pre-arrival cargo information communications protocols and ports), national level, with the additional pos- to WCO Members, particularly, but not virtual currencies/bitcoins, mobile sibility to exchange this information at limited to, those implementing the CTS. phone surveillance technology, new the regional and/or international level. technology for data-mining and visua- In the course of 2014, nCEN was success- Air Conveyances’ Risk Indicators and lization, and software and hardware for fully implemented in Angola, Botswana, Manual (ACRIM) computer forensics. Georgia, Malawi, the Maldives, Mali, The WCO Customs Risk Management Mauritius, Namibia, the Seychelles, Compendium was released in 2011. The new ECEG work plan will intensify Swaziland, Tanzania, Uganda and Since it is considered a ‘living’ docu- the Group’s activities on DarkNet inves- Zimbabwe, bringing the total number ment, in addition to previously deve- tigations and virtual payment systems/ of countries where it has been deployed loped documents, a two part document, Bitcrime, in addition to providing advice thus far to 13. In addition, two works- called ACRIM, has been incorporated on training for undercover online inves- hops for nCEN project leaders and nCEN into Volume 2 of the WCO Customs tigations. Meeting reports and presenta- IT experts, aimed at promoting regio- Risk Management Compendium. tions on the activities of ECEG may be nal cooperation and cohesion amongst Annex I covers risk indicators for air perused by WCO Members on the WCO countries that are using the nCEN appli- conveyances, while annex II – the website. cation, were conducted in 2015. Manual – covers general information on

28 WCO news N° 78 October 2015

air conveyances and the meaning of each As a first step, two experts devised courses bringing together the COPES team led to risk indicator, including explanations on to be tested at two seminars, in Sri Lanka the delivery of the new COPES training the application of risk indicators, as well and Albania respectively. In keeping with modules. The training covers the following as examples to illustrate indicators that the project’s objectives, and in partnership topics: consigning, storage and deposition caused a movement/shipment to appear with the UN Office on Drugs and Crime of seized goods; sharing of information suspicious. (UNODC), these seminars aimed to pro- and use of/access to intelligence sources; vide information and raise awareness on coordination with other agencies; recor- Compendium of Customs Operational the assessment/analysis of risks, and of ding and documentation of information; Practices for Enforcement and Seizures good seizure practices and procedures, in definition and types of evidence; forensic (COPES) line with relevant national legislation. The integrity and chain of evidence; inter- The COPES Compendium was published two seminars essentially led to the modi- viewing techniques; and the role of the in 2012. In 2014, the WCO secured fun- fication of some modules by simplifying Prosecutor. Over the next few months, the ding for training on the important content their content, and making adjustments in modules will be delivered through regio- of the Compendium, and subsequently the event of interpreters being used. nal seminars. recruited a Project Manager in March 2015 for the implementation of these training As a second step, and to achieve the deli- More information activities. very of the courses, a one-week workshop [email protected]

Election highs

SEVERAL ELECTIONS TOOK place during the Sessions with the following results:

• Mr. Zouhair Chorfi of Morocco was re- elected as Chairperson of the Council.

• Ms. Ana Hinojosa of the United States was elected as Director of Compliance and Facilitation.

• Mr. Ernani Checcucci of Brazil was elected as Director of Capacity Building.

• Mr. Ping Liu of China was elected as Director of Tariff and Trade Affairs.

The new Directors will take office on 1 January 2016.

From top to bottom and left to right: Ana Hinojosa, Ernani Checcucci, Ping Liu and Zouhair Chorfi.

29 DOSSIER

2015 WCO Photo Competition

“BORDER AHEAD” IS the caption of this year’s winning entry from Sudan Customs. The photo was taken at the the Askeit border post and shows goods trucks ready to cross the border with Egypt. Since April 2015, this border post is the first and only border crossing point in Sudan benefiting from a Single Window environment, with all relevant authorities gathered under one roof. The volume of trade exchange between Sudan and Egypt through this post amounts to about 185 million US dollars per year, a figure which is expected to increase twofold, or even threefold, over the next few years.

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AZ_Mutation_WCO_News_210x144,5_AK2_engl.indd 1 15.04.13 14:08 WCO news N° 78 October 2015

Signing ceremonies

THE WCO AND Jordan signed a Memorandum of Understanding on the creation of a Regional Training Centre in Amman. A Cooperation Agreement was also signed between the WCO and the World Organisation for Animal Health (OIE) to strengthen cooperation between the two Organizations, and to boost collaboration between Customs and veterinary services on the ground around the world.

31 FOCUS Facilitating e-commerce

WITH THE DIFFUSION of user-friendly tech- traders’ needs. The topic was also high a country can benefit from the increase in nologies and increasing penetration of the on the agenda of the 2015 WCO Council cross-border trade caused by the growth Internet globally, e-commerce is witnes- and Policy Commission sessions, and will in e-commerce. sing exponential growth: the global online continue to be further discussed in the retail market now topping 1 trillion US coming months. The overall challenge for Customs is to dollars a year, and is set to double within be able to operate in a modern e-enabled four years. Members of the World Trade Organization environment and, in doing so, to operate (WTO) attending the December 2013 more effectively and efficiently. In parti- Some of these online transactions are Ministerial Conference in Bali also noted cular, Customs needs to make available a cross-border related, with many compa- the importance of e-commerce in the range of electronic services which allow nies, especially small and medium-sized WTO’s future work programme. The WTO e-enabled traders to deal with Customs enterprises (SMEs), seizing the opportu- Ministerial Decision – WT/MN(13)/W/3 authorities entirely electronically, using nities offered to enhance their participa- – stated that “It shall take forward the simple, easily accessible services. tion in global value chains, and increase issues emerging in the discussions and their market access and outreach in order the evolving application of e-commerce This article examines some key measures to develop their exports. An eBay report to enhance economic development, with that Customs administrations may like to on SMEs based in member countries of special consideration of the situation in take to support cross-border e-commerce, the Asia-Pacific Economic Cooperation developing countries, particularly in least as well as to address the challenges and forum, for example, showed that the ave- developed country members and least- opportunities that e-commerce represent. rage commercial seller on eBay exported connected countries. It shall continue to to 36 countries. examine opportunities and challenges for Borderless marketplace access to electronic commerce by micro, Besides the traditional global players, In a declaration on e-commerce adop- small and medium-sized enterprises, the Internet provides those market par- ted by the WCO Council in June 2001, including small producers and suppliers.” ticipants who were formerly conducting Members of the Organization recognized their business on a local or regional level the potential impact of e-commerce on the Customs, transport and logistics services with easy access to global markets. New economic and social wellbeing of nations, are critical elements in the global supply applications, platforms and services are as well as the need for Customs to develop chain, and as such, the effectiveness and making e-commerce more accessible and an appropriate response to reconciling efficiency of a Customs administration has easier to navigate, thereby lowering the facilitation and control in order to meet a significant impact on the extent to which entry barriers into this type of business

Parallel model for trade

Manufacturer Distributor Export Container Import Distributor Wholesaler Retailer Consumer Handler ship Handler

Manufacturer/Internet Enabled Retailer Intermediary Marketer + Shipper Consumer Source: eBay

32 WCO news N° 78 October 2015

model. Among these are mobile apps and remotely delivered WCO Instruments services – for example, microwork which enables e-commerce sites to manage small tasks, such as translating text, tagging an image and modifying content. & Tools

The tasks involved in the global supply chain in physically delivering goods across borders remain the same, namely order, ship facilitating e-commerce and pay. However, e-commerce has been changing the trading landscape by creating a system which requires very few, and sometime new, intermediaries in the supply chain. Under the Revised Kyoto Convention traditional ‘brick and mortar’ trading system, goods are impor- • Standards 3.18, 3.21, 6.9 and 7.1 of General Annex ted in bulk by an intermediary, as part of a single operation, and (GA): application of ICT for Customs operations. any increase will not produce particular control difficulties. With • Standard 7.4 of the GA: establishment of new or cross-border e-commerce however, private/individual purchasers revised legislation for e-commerce methods and right order goods for their own use via computer networks directly, of Customs to use and exchange of information with thereby bypassing intermediaries – a phenomenon which leads to others. the fragmentation of traffic with large number of small shipments, • Transitional Standard 4.13 of the GA (De Minimis): and places additional pressures on Customs resources. specify a minimum value and/or a minimum amount of duties and taxes below which no duties and taxes E-Customs will be collected. In the e-commerce environment, when the supply chain and its various actors are e-enabled, there is a growing need for moving Baku Declaration on e-commerce (2001) towards e-Customs, which would support and facilitate the clea- • for acceptance and implementation of the RKC for a rance of ever increasing shipments, thereby ensuring effective simplified e-Customs environment. control and efficient collection of revenue. Immediate Release Guidelines (2014) The WCO Revised Kyoto Convention – ICT Guidelines, provide • expeditious clearance of small or negligible value details on how Customs can use information and communication shipments. technologies to enhance program delivery and move towards a more electronic environment. The Moreover, the WCO recently RKC – ICT Guidelines (2014) developed the ‘IT Guidance for Executives’ and is currently enga- • Use of ICT to enhance programme delivery and ged in mapping its IT related tools and instruments to provide improvements in services. further support to ‘Digital Customs’. Recommendation on Dematerialization of supporting The most obvious applications which some Customs administra- documents (2012) tions are already implementing include: • identify and examine the need for supporting documents for Customs clearance with a view to elimina- E-processing – a paperless environment ting them and where necessary accepting electronic Since the beginning of the 21st century, Customs services have form, if already available. undergone rapid transition, with traditional paper-based procedures being eliminated in favour of electronic forms of delivery, SAFE Framework of Standards 2015 which are also capable of incorporating security elements and • Pillar 3 (Cooperation between Customs and other trade facilitation measures for trustworthy economic operators. Governmental Agencies). • Preloading Advance Cargo Information for air cargo. Moreover, WCO Members are encouraged to identify supporting documents that are normally required to accompany cargo and IT Guidance for Executives goods declarations, and to examine their necessity with a view to eliminating them, at the same time creating a single window Single Window Compendium environment for ‘one filing, one processing and one release’. WCO Data Model 24/7 automated Customs processing and adapted working hours E-commerce has no time and space limitations. Orders for goods Coordinated Border Management Compendium can be placed, accepted and delivered, cutting across various time zones. As a result, there is a potential need for Customs to allow Customs-Business Partnership Guidance 24/7 clearance facilities. This may require automated processing with a robust risk management system, along with the redeploy- ment of staff at border points.

33 FOCUS

Electronic processing, 24/7 automated Customs simplification and processing and adapted working dematerialization of document hours

E-duty calculator Electronic version of the CN 22 and CN 23 Mobile-enabled services E-Customs Customs Declaration System E-refund – returned goods

Pre-loading advance cargo E-payment of duty and taxes information

De minimis-related measures and threshold for simplified clearance Inspection at operator facility procedures

Some WCO Members have already intro- and the Single Window Compendium, E-refund and returned goods duced this facility for specified categories to help its Members establish automation In the e-commerce environment, a cus- of shipments at designated places of entry systems for electronic payment methods. tomer should be confident that they will and exit. In order to make a 24/7 clearance be able to return ordered goods if they do facility effectively operational, the com- E-duty calculator not meet their needs and requirements or mitment and active involvement of other A web-based interactive duty calcula- fall short of their specifications, including government agencies and stakeholders is tor provides sellers and buyers with full quality requirements. Growing volumes in essential. information on duty and tax rates in a small packets and parcels calls for consi- transparent and easily accessible manner. deration of streamlined functions like E-Payment of duties and taxes This helps sellers and buyers to know, in simplified and efficient returns in bona E-payment is advantageous to both tax- advance, the leviable duties and taxes fide cases, and duty cancellation/refunds payers and governments. For taxpayers, it while negotiating their orders, and to on such items to reduce administrative affords them the facility of making pay- make provision for such payments. Such burdens and costs. ments from anywhere on a 24/7 basis, and a facility may also provide information for governments, it ensures immediate about prohibitions, restrictions and licen- Inspection at operator’s facility, transfers collection of taxes and discrepancy-free sing requirements, so that sellers and and other agency inspections efficient reconciliation. Besides expe- buyers are fully aware of all requirements Customs could explore the possibility of diting the process of paying duties and when placing orders. inspection and of release goods at the ope- taxes and clearing imported goods, the rator’s facility or require their transfer to e-payment facility also results in reduced Mobile-enabled services another facility, and also coordinate joint transaction costs for traders and Customs, In line with the ‘any time anywhere’ inspections with other agencies, if requi- while supporting e-commerce. Many concept of e-commerce, Customs has red, in order to avoid delays in releasing Customs administrations have taken ini- also started providing several mobile- shipments. tiatives in this regard, even to the extent of enabled services, such as notifying clients making e-payment mandatory in certain of the status of their declaration, as well Pre-loading advance cargo information situations. as providing Customs exchange rates To further strengthen the security of the and duties payable. Some systems even air cargo supply chain, Customs is moving Article 7.2 of the WTO Trade Facilitation enable requests to be filed and notify from ‘pre-arrival’ to ‘pre-loading’ advance Agreement (TFA) also provides that “each clients directly on the processing status cargo information (PLACI). Some ongoing member shall, to the extent practicable, of their requests, as well as the time nee- PLACI pilots for security risk analysis adopt or maintain procedures allowing ded to deliver the requested services. In are also engaging postal operators. In the option of electronic payment for addition, several Customs services have this context, standards for submission of duties, taxes, fees and charges collected introduced mobile-enabled duty payment PLACI by various entities in the air cargo by Customs incurred upon importation services (MPay), providing significant supply chain, including postal operators, and exportation.” The WCO has deve- time and cost savings. have been included in the updated WCO loped tools, such as the ICT Guidelines SAFE Framework of Standards, which was

34 WCO news N° 78 October 2015

endorsed by the WCO Council in June The WCO Immediate Release Guidelines Customs could also endeavour to move 2015. support e-commerce by providing gui- beyond the electronic processing of decla- dance to both Customs and trade, expe- rations, collections of duties and taxes, Electronic version of the CN 22 and CN 23 diting the clearance of goods across bor- and risk-based controls, to embrace a The WCO and the Universal Postal Union ders that are primarily being carried by more digital environment – one that uses (UPU) have collaborated to jointly deve- express cargo and/or express mail service technology and trends to help increase lop electronic messages which enable Posts providers. The Guidelines also provide efficiencies. to exchange data contained in CN 22 and for simplified clearance procedure for CN 23 forms, the Customs declarations for consignments for which no duties and Predictive analytics capabilities and international mail, via EDI. taxes are to be collected or low dutiable Customs-to-Customs international coo- consignments. peration networks, together with part Customs Declaration System nerships with private stakeholders, may The UPU’s Postal Technology Centre Opportunities and challenges enable Customs to move from controls on has developed an electronic Customs E-commerce may been seen as an oppor- non-compliance to, possibly, the timely Declaration System (CDS) on the basis of tunity. An opportunity for Customs prevention of illicit trade whilst providing the Joint WCO/UPU Customs-Post EDI to constantly reassess and accordingly enhanced facilitation to legitimate trade. message. Two sets of electronic messages realign and adapt their processes with are involved in the CDS process. The first simple, consistent, transparent, non- Besides a sound legal framework, some message replaces the paperwork normally discriminatory and enforceable trade rules of the key challenges relate to mutual used for Customs declarations. A second and procedures, providing more reliable, agreements between various actors in message, sent in response by Customs, predictable and speedy clearance, while the supply chain to accept and transmit contains information about whether or not ensuring compliance with various regu- documents/information electronically, an item should be presented to Customs. latory requirements. data quality, and a robust information and This message may also contain additional technology (IT) infrastructure, including data, including the value of any duties or The Internet of Things (IoT) provides a its inter-operability and data privacy and taxes the sender may need to pay. The pre- great opportunity for Customs in terms protection. sence of this data could vary depending on of access to more information, enabling the specific agreement between a national goods to be controlled and regulations to Exchange of information postal service and Customs authority. be enforced. E-commerce is indeed a data- Exchange of information touches on two rich environment that demands equally key areas: De minimis related measures and thres- strong data capabilities. Customs would hold for simplified clearance procedures need to create an operating model that • Between Customs and e-commerce The WCO has made express provision for captures big data from across the industry intermediaries (marketplaces, transpor- de minimis regimes in its Revised Kyoto ecosystem. ters/carriers, freight forwarders, express Convention (RKC) which focuses on operators, postal operators and financial the simplification and harmonization of intermediaries). Customs procedures. Among other things, the RKC states that “National legislation shall specify a minimum value and/or a minimum amount of duties and taxes below which no duties and taxes will be collected” (see RKC Transitional Standard 4.13).

In the context of Customs clearance, the de minimis threshold is used in two ways: firstly, as a ‘value’ threshold below which duties and taxes are not collected and no Customs declaration is required; and secondly, as a ‘reporting’ threshold for goods in respect of which a full Customs declaration must be submitted. In other words many Customs administrations adopt two levels of de minimis. Goods whose value falls between the two thresholds are usually the subject of a simplified Customs declaration. © Australia Department of Immigration and Border Protection

35 FOCUS © US Customs and Border Protection

-- There are already some develop- • Engagement/partnership with as well as suitable data privacy ments where relevant Customs vendors/e-tailers focused on enhanced safeguards. information are no longer being facilitation in lieu of compliance. held by companies within the juris- Data quality diction of a particular Customs -- As part of the selling and delivery Data quality – the accuracy and complete- administration. The Internet process, vendors collect key data ness of data – is another key issue for risk enables businesses to establish a sets, including details of the product management, security controls, admissibi- seamless and borderless commer- that is being sold to the purchaser; lity checks and other decisions to be taken cial system, resulting in Customs the price paid for the goods; the place by border control authorities. Many clients and other relevant regulatory of delivery, the person to whom the sending international items are occasional information being centrally stored goods are being consigned, the price shippers, and are often not fully conver- in one global location. paid for the transport, the payment sant with the requirements of data quality. details, the delivery mode and trac- Missing, illegible, incomplete or otherwise -- In the context of advanced coopera- king data (including tracking num- incorrect information in a declaration tion with the trade, Customs should ber and carrier/postal operator), and may affect the risk analysis, and the effi- be able to have improved access to possibly the amount of taxes due on cient processing, clearance and release of commercial information directly importation and associated adminis- goods by Customs leading to delays and or indirectly related to an inter- trative costs when the price made to additional costs. national trade transaction, for risk the purchaser includes these costs. management and Customs control The nature of the purchaser (busi- IT infrastructure purposes. ness or final consumer) may also be Different levels of development in terms of known, depending on the contractual IT infrastructure and Internet usage will -- Cooperation between Customs arrangements and circumstances. require an increased effort from all parties, and postal/express cargo ser- and will, in particular, call for more effec- vice providers is of particular -- Close cooperation and engagement tive coordination among donor countries importance. For instance, besides with vendors and e-tailers could be and institutions to bridge the so-called seamless exchange of informa- quite beneficial to Customs in getting digital divide. tion, postal/express service staf- the most reliable data, however, such fare usually well placed to bring a partnership will need reciprocal More information suspicious postal articles to the arrangements in terms of Customs [email protected] attention of Customs. providing enhanced facilitation,

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E-commerce and revenue collection

low-value relief regimes is high on the Many countries have seen a significant and rapid growth agenda of many countries.

in the volume of low-value imports of physical goods With Customs in most countries being responsible for the collection of all duties on which duties and taxes are not collected. There are and taxes on low-value goods, the WCO has been collaborating with the OECD and growing concerns about matters related to potential the Universal Postal Union (UPU), among others, to develop a harmonized approach revenue loss, fraud, and the disadvantages experienced towards more efficient collection of duties and taxes on such imports. It having been by domestic retailers. Therefore, it is appropriate to noted that there is no ideal solution, a com- binations of options are being discussed provide an overview of the traditional collection model, for governments to consider, depending on their domestic situation and their expo- current developments aimed at improving it, and new, sure to imports of low-value goods.

alternate models for collecting duties and taxes on these This article highlights the work undertaken by the WCO and the UPU to consignments. streamline Customs clearance processes for postal items, as well as the work being WITH THE PROLIFERATION in the use of need changes to adapt existing sys- done by the OECD, with support from the Internet, particularly in relation to tems and procedures, in order to enable the WCO, on exploring various alternate increasing transmission speeds, and the more effective prevention of revenue models of revenue collection for cross- development of secure means of payment, losses while at the same time ensu- border e-commerce. international trade is witnessing a rapid ring that there is no discrimination expansion in sales of goods and services between businesses using the new tech- Traditional clearance process via this medium. A large part of this trade nology and those continuing to trade The WCO Immediate Release Guidelines, consists of ‘low-value’ consignments deli- conventionally. which provide guidance to both Customs vered by the Post or by express courier and the trade on expediting clearance services. Given the rise in e-commerce, the early across borders of items that are primarily establishment of effective revenue col- being carried by express cargo or express Collecting all duties and domestic taxes lection procedures for international mail service providers, divides such items – known variously as value-added tax e-commerce comprising small, low-value into four categories: (VAT), general sales tax (GST), goods and consignments, especially those with a services tax (GST), purchase tax, etc. – value below the Customs duty threshold • Correspondence and documents – no on cross-border imports requires simple, but beyond the tax threshold, is increa- Customs declaration is required; inexpensive ways to identify a transaction, singly seen as a matter of vital concern obtain a description of the goods, value among some tax authorities. • Low-value consignments for which no them, ascertain the shipper and buyer duties and taxes are collected under the details, and collect any amounts that may A survey on the VAT/GST treatment de minimis value rule – no Customs be payable. of imported goods conducted by the declaration is required, and immediate Organisation for Economic Co-operation release may be granted on the basis of a Taxation systems currently structured and Development (OECD) in September consolidated declaration that can be a around traditional business models 2014 indicated that potential reform of manifest, waybill, cargo declaration or

38 WCO news N° 78 October 2015 © Deutsche Post DHL Group

an inventory of the items, or following other government departments for which standardized forms, namely the CN22 – the presentation of a simplified goods Customs is broadly responsible. packages under 2 kg in weight or valued declaration; at less than 300 special drawing rights Reporting obligations differ between cou- (SDR), and the CN23 – packages valued • Low-value dutiable consignments – riers and postal operators: in excess of 300 SDR. These forms pro- packages valued above the de minimis vide brief details of the origin, classifi- value and up to a threshold limit can be • Express airfreight (couriers): such cation and Customs value of the goods, cleared using a simplified goods decla- companies usually complete all border the main difference between them ration or by providing information ena- formalities on behalf of consumers. In being that the CN23 also requires the bling the amount of the duties and taxes many countries, they transmit the requi- name and address of the sender and the payable to be calculated; red goods declaration data to Customs importer. prior to the arrival of the goods, using • High-value consignments – goods electronic data interchange (EDI) mes- Items falling below the de minimis value requiring a standard import goods sages. This allows Customs sufficient and not infringing any laws are released declaration. time to process the data against risk immediately. The rationale behind thede selection criteria, and to notify the cou- minimis regime is that revenue collection Besides revenue collection, Customs rier computer system as to which parcels on low-value shipments should be com- is equally concerned with preventing have been selected for inspection – the mensurate with their processing costs. contraband and other prohibited items parcels are identified via a scanning pro- Packages declared to be of a value excee- from entering a country. In the interna- cess upon arrival; ding the de minimis threshold for payment tional mail and express environment, all of duties and/or taxes are withheld from packages, regardless of their value, are • International parcel post (postal ope- delivery until the duties and taxes payable subjected to risk assessment and, where rators): usually no advance electronic have been charged and collected. appropriate, screened by Customs as part information is provided about parcels of its wider border risk management pro- sent through the post, and Customs Depending on the country, the postal cess. A Customs administration typically is required to screen mail manually operator may determine the duty to be determines which items are subject to for revenue collection and other risk collected, with Customs validating the control, taking into consideration natio- management purposes. This process is Post’s process and helping it to determine nal Customs regulations, and those of facilitated by the use of internationally the precise tariff applicable to an item. The

39 FOCUS

The UPU’s Postal Technology Centre has Post could also act as a Customs clearing developed an electronic information systems as part of the condi- agent, directly or indirectly representing tions allowing these companies to operate the declarant, typically the addressee. In Customs Declaration simplified import procedures. such a scenario, the Post would pay duties System (CDS) on the and taxes to Customs, and in turn receive The situation is rather different where payment from the addressee. As for cou- basis of the Joint WCO/ postal operators are concerned. The rier services, they usually pay the duty UPU Customs-Post CN22/CN23, being paper-based, is not and tax to Customs, and in turn receive sufficient to enable Customs to evaluate payment from the addressee. EDI message. It allows risks in advance, or even after the goods customers to enter data have been presented, due to increasing Several countries operate some form volumes, and the emphasis on speedy of a ‘user pays’ system. For example, in about an item online, and clearance of such parcels. Canada and the United Kingdom (UK), enables Posts to give consumers are charged a processing fee To remedy the situation, the WCO and representing the costs incurred by, respec- Customs advance data the UPU have collaborated to jointly tively, Canada Post and the Royal Mail. In about a postal item. It develop electronic messages to permit the Australia and New Zealand, consumers pre-advice and possible pre-clearance of are required to pay a Customs handling also enables Customs postal items. In addition, the UPU has fee. These fees are charged on the grounds administrations to inform recently created a legal basis for the provi- that Customs, couriers and postal authori- sion of advance electronic data, by amen- ties incur additional costs in the identifi- Posts about the action to ding Article 9 of the UPU Convention. cation and processing of consignments on be taken with respect to any This amendment came into effect on 1 which duties and taxes are owed. January 2014, and implementing provi- given item. sions are being finalized. Fraud risks The de minimis threshold and its method Moreover, the UPU’s Postal Technology of calculation are a matter of national value of an individual shipment below the Centre has developed an electronic competence. Some administrations have specified threshold. Customs Declaration System (CDS) on different thresholds for Customs duties the basis of the Joint WCO/UPU Customs- and domestic taxes, while some even have While governments should obviously aim Post EDI message. It allows customers different thresholds for personal gifts, to encourage market competition among to enter data about an item online, and which are normally higher than for other emerging businesses based on innovations enables Posts to give Customs advance goods. There are also several exceptions in operations and business models, they data about a postal item. It also enables to the application of the de minimis rule, may equally look for strategies on de mini- Customs administrations to inform Posts such as on books, tobacco and alcohol pro- mis rules, in order to avoid potential reve- about the action to be taken with res- ducts. As a result, there is a wide range of nue leakages as well as providing a level pect to any given item. The CDS is cur- models and thresholds for the de minimis playing field for industry. rently being used/piloted by some postal rule around the world. operators in conjunction with Customs Improving the traditional collection administrations. With the rapid increase in low-value consi- model gnments, the postal and express industries Given the enormous volumes passing However, a lot needs to be done to improve often argue that higher de minimis levels through the international mail centres, the interface between Posts and Customs would promote cross-border e-commerce, it is inevitable that even packages excee- in implementing advance electronic data increase trade, and stimulate economic ding the de minimis threshold routinely exchange. There is also a need for sound growth and employment. Moreover the pass through the border undetected. legal and technological safeguards for data costs, both to governments and businesses, Improving the clearance process should privacy and security, in order to make the of processing low-value consignments, enable Customs to better assess the reve- exchange of information process efficient could possibly be greater than the overall nue risk posed by low-value items, as well and sustainable. revenue collected on these consignments. as enhancing the capacity of Customs to detect consignments containing illicit In this connection, a Virtual Working From a Customs perspective, the increase products. Group of interested WCO and UPU in imports of low-value consignments Members has been set up under the below the de minimis level can have an The global fast parcel industry is domi- auspices of the WCO-UPU Contact adverse impact on revenue collection. nated by four large express carriers that Committee, to examine the existing inter- Some Customs administrations are wit- already have sophisticated systems in faces and forms of information exchange nessing the growing misuse of the de place which allow effective controls to between Customs and Posts (including minimis facility, by way of vendors split- be applied. Her Majesty’s Revenue and experiences of using the UPU CDS), and ting and/or under-valuing consignments Customs (HMRC) in the UK, for ins- develop a set of recommendations, guide- for tax avoidance purposes, to keep the tance, has direct access to express carriers’ lines, and best practices in this domain.

40 WCO news N° 78 October 2015 © New Zealand Customs Service

Alternate revenue collection models Intermediary collection model of the vendor and the liability to Thus, the traditional collection model is Under this model, vendors rely on an account for the tax – the latter may improving and becoming more efficient, intermediary to remit duties and taxes on be much more problematic. given the current development of elec- their behalf. Collection could be handled tronic Customs and postal procedures; by: • E-commerce platforms or marketplaces at the same time, discussions are ongoing that provide a trading framework for to explore alternate new schemes which • Postal operators, express service provi- businesses (eBay, Amazon, Facebook, would allow all duties and taxes to be col- ders or transporters (FedEx, DHL, etc.). etc.). lected efficiently as soon as goods exceed the de minimis threshold. Consideration -- However, as postal operators have -- Some of the biggest marketplaces is also being given to adjusting the de limited information about the iden- offer, for a fee, the services of interna- minimis threshold, where appropriate. tity and nature of the sender, the tional shipping experts who manage The WCO is currently working with the content of the packages and the the shipping and Customs process, OECD to explore the alternate models dis- nature of the addressee, their par- and send the item to the buyer. There cussed below. ticipation in the collection of taxes are usually restrictions in terms of would require a significant adjust- the nature, size, price and destination Vendor collection model ment of their data collection and of the item. Under this model, non-resident vendors transmission procedures. Another would be required to register in the impor- difficulty lies in the fact that there is • Financial intermediaries such as online ting country, and remit duties and taxes to often very little commercial agree- payment providers (Visa, MasterCard, that country. Here, the greatest issue lies in ment with the sender. This combines American Express, PayPal, etc.). creating a system which provides sufficient with the legal obligation to deliver incentives for firms to voluntarily collect the package to the addressee. -- Whilst the idea of involving finan- and remit taxes on behalf of a myriad of cial intermediaries is conceptually countries. Compliance would be facilita- -- Freight carriers could play a role attractive, it does not appear to be ted and encouraged by simplifying proce- in the vendor and intermediary feasible at present. Information held dures, and providing additional incentives collection approaches, since they by traditional financial institutions, to compliant vendors, such as fast-track are already collecting information such as retail banks and credit card processing of imported goods. and remitting taxes and duties to companies, will generally be limited Customs authorities. However, they to the details needed to validate a point out the difference between the card’s authenticity and/or confirm mere remittance of taxes on behalf that sufficient funds are available in

41 FOCUS

the purchaser’s account to pay for the tax collection vis-à-vis the value of the the Channel Islands, Hong Kong China, purchase. items sold. It is, therefore, essential to Singapore, and New Zealand. develop procedures which are as simple, -- As for payment operators, even if they cost-effective, and consistent as possible. Overseas traders wanting to use this collect information about the vendor, procedure must be authorized to do so the consumer and the amounts paid, Customs administrations should fully by their authorities. Once authorized, they are lacking some of the infor- comprehend the impact of the develop- foreign businesses are issued with a unique mation needed to assess the tax due, ments and opportunities generated by the authorization number, which they must such as the nature of the item and the growth in low-value cross-border consign- show on the Customs declaration or pac- applicable rates. ments and, where appropriate, adapt them- kaging along with the statement ‘Import selves to the emerging trading landscape. VAT Prepaid’. Where these arrangements Impact on the notion of de minimis To this end, among others, discussions are used, importers will not be charged a With the introduction into traditional are also ongoing at the WCO on the inter- Royal Mail handling fee when they receive Customs and postal procedures of various pretation of Transitional Standard 4.13 in their package. information and communication techno- the General Annex of the WCO Revised logy (ICT) solutions and risk management Kyoto Convention (RKC) on the simpli- Intermediary collection model schemes tools based on advance electronic informa- fication and harmonization of Customs also exist to some extent. Some of the tion, the processing of low-value shipments procedures, which provides for Customs biggest marketplaces are already provi- – in terms of the clearance and collection to specify a minimum value and/or a mini- ding tax compliance services to their ven- of duties and taxes – should become far mum amount of duty and tax below which dors. One such example is eBay’s Global more simple and cost-effective; this could no duties and taxes will be collected. Shipping Programme, whereby eBay col- potentially lead to a reduction in the de lects the price of the item from the pur- minimis value where appropriate. Way forward chaser and remits it to the vendor, and Regarding the use of electronic messages collects the international postage costs and By reducing the costs associated with col- between postal operators and Customs, any import duties and taxes, and remits lection efforts, the adoption of new taxa- Belarus, Canada and Slovakia are cur- them to the international postage provider tion models could also potentially support rently exchanging ITeM ATT pre-advice – who presumably remits the duties and a case for moving to address revenue lea- messages, with the origin and destination taxes to the importing country. kage concerns and create a level playing Posts providing information on an item field for domestic retailers. (including details of the sender, addressee It goes without saying that any solu- and item content) which is required by tions would have to be tested against the Some tax authorities are already conside- Customs for security screening, and practicalities of compliance, control and ring the option of reducing or elimina- other risk assessment purposes. Moreover, enforcement. The impact of the vendor ting de minimis for VAT/GST. Australia Paraguay is capturing data for outward collection and intermediary approaches recently decided that with effect from 1 mail being sent to some 10 UPU countries, should be carefully considered, in parti- July 2017, the existing threshold for GST and India is receiving data from Bhutan. cular regarding: liability on cross-border imports of goods – currently 1000 Australian dollars – will As for the UPU electronic Customs • the compliance burden on small and be reduced to zero, in line with GST col- Declaration System (CDS), it is already in medium-sized entreprises (SMEs) – the lections for other products and services. use in Canada and the United States (US), intermediary collection model would Non-residents (overseas vendors) will need and implementation pilots are currently help SMEs to comply; to charge, collect, and remit the GST for underway or planned in Brazil, Chile, digital and physical products, as broadly Costa Rica and the UK. • the administrative costs for govern- described under the ‘vendor collection ments – data collection and transmission model.’ HMRC has set up a system of prepayment processes would need important adjust- of import VAT on goods purchased over ments to allow postal operators, freight However, one must keep in mind that the the Internet or by mail order. Under the carriers and financial intermediaries to removal of the tax exemption may trigger arrangement, the designated postal ope- play a role in the collection and remit- significant additional costs for vendors and rator of the country will collect and remit tance of taxes. Therefore, harmonized consumers. Freight forwarders, the express the import VAT due on an agreed perio- global solutions would greatly facilitate industry and postal operators argue that dical basis for goods purchased by mail compliance, since the current diversity the removal or lowering of the exemption order that would normally be chargeable of requirements across countries gene- thresholds would imply an increase in the at the time the goods are imported. The rates costs and uncertainties; delivery costs for packages, due to both overseas customs country is responsible the tax itself and the cost of management for auditing the business and monitoring • the practical issues, such as delivery and and remittance. They also stressed the compliance. These arrangements operate contractual arrangements between the huge variation in collection costs between under Memoranda of Understanding vendor and the consumer, and the pos- countries. As for e-commerce sellers, they (MoU) signed with certain overseas sible invoicing requirements; are expressing concern about the cost of Customs and postal authorities, namely

42 WCO news N° 78 October 2015

• the Customs procedures, in particular how a distinction could be made between packages for which tax has already been accounted for by the vendor or an intermediary for faster clearance, and those subject to a traditional Customs procedure, notwithstanding that security and other risk profiling will continue to be done by Customs even in respect of pre-paid shipments;

• the need to provide appropriate flexibility for businesses, depending on their respective business models;

• tax compliance and enforcement issues, such as ensuring that duties and taxes are correctly assessed (administrations would need to create free databases, available in a variety of formats, detailing their duty/tax rates and exemptions) and that the assessed duties and taxes are actually remitted to the country concerned;

• the remaining risks of undervaluation and misdeclaration of supplies by vendors, and the risk of fraud connected to refund procedures. There is a need to enhance existing working rela-

tionships between Customs and Tax administrations, as well 0201410150123456700001121 as cooperation between and among Customs/tax administrations at the international level in order to ensure that revenue collection for low-value cross-border e-commerce is conducted in an optimum manner.

No mechanism should be seen as stand-alone. A best practice 0201410160123456700001134 may involve a combination of the models described earlier in this article, in order to increase the effectiveness of the collection of duties and taxes on low-value imports, depending on national policy imperatives and specific circumstances. jetStamp graphic 970 Also, in order to improve revenue collection under these alternate models, it would be useful to promote the automatic exchange Handheld printing of automatic of information between Customs authorities and e-commerce intermediaries, i.e., marketplaces, transporters, and financial numbering barcode! intermediaries. Such information would allow Customs to identify and control the flows of goods and stakeholders. jetStamp graphic 970 by REINER is a handheld inkjet printer that marks documents, packaging As explained in the opening article of this Focus on e-Commerce, or product with number, date, time and text. such solutions will need to be supported by strengthened international administrative cooperation and exchange of informa- This handy device can generate numbering tion between importing and exporting countries. The WCO has and dating barcodes and prints them even a number of instruments and tools that support the exchange of information, such as the Nairobi Convention and the Model on nonporous substrates such as metal and Bilateral Agreement. These existing WCO instruments and wor- plastic. king arrangements, with suitable adjustments wherever required, could potentially be leveraged to facilitate the exchange of information for e-commerce purposes, leading to an efficient revenue collection approach.

More information [email protected]

Ernst Reiner GmbH & Co. KG | Baumannstr. 16 78120 Furtwangen / Germany | Tel. +49 7723 657-0 | [email protected] FOCUS

Supporting e-commerce: Korea Customs Service’s strategy

By Tae-kon Sung, DIRECTOR GENERAL OF THE CLEARANCE FACILITATION BUREAU, declaration must be submitted: for and Yeon-Soo Choi, express cargo, a ‘list clearance’ proce- DIRECTOR OF THE MULTILATERAL COOPERATION DIVISION, KOREA CUSTOMS SERVICE dure allows a trader to receive goods and, providing their value is below the Cross-border e-commerce is increasing sharply in Korea. de minimis threshold, clear them by sub- mitting 26 pieces of information, such as This is not surprising given that the country ranked trader’s name and address, consignee’s name and address, and type and price No.1 in the world in terms of Internet connection speed of the goods; as for goods entering via the international mail channel, they are at the beginning of 2015, and that the Korean economy cleared on-the-spot.

is extremely dependent on foreign trade. However, the About 96% of e-commerce transactions benefit from the tax exemption system. increase poses a number of challenges to the Korea Only 0.3% of transactions consist of high- value goods that exceed 1,000 USD, but Customs Service (KCS) which has, since 2014, been these imports are growing at a high rate, with an eight-fold increase from 2010 to taking various e-commerce measures accordingly. This 2014 indicating that the number of Korean consumers buying high-end goods online article gives an overview of the scale of e-commerce in and paying duties is on the rise.

Korea, its impact on tax revenue, and how the KCS is Impact on tax revenue As most e-commerce products are being promoting e-commerce and managing the risks around imported under the tax exemption system, the current increase in such transactions this growing form of trade. results in lower tax revenue. In 2014 for example, 15 million goods worth 1.2 bil- The volume of imports resulting from provider, as well as the value of the goods lion USD were imported, representing a e-commerce has been growing conti- being traded (see Tables 1 and 2). Korea loss in terms of tax collection of 230 mil- nuously in Korea over the past few years. has a tax-exemption system and simplified lion USD. Although this amount is impor- Statistics show that there were 7,941,000 Customs procedures in place for low-value tant, it represents only 0.4% of Korea’s total transactions in 2012, 11,155,000 in 2013 goods. tax revenue. and 15,530,000 in 2014, indicating an approximate annual increase of 40%. There are severalde minimis thresholds, In the view of the KCS, the importation of Korea’s largest e-commerce partner is the which are used in different ways: e-commerce goods under the tax exemp- United States (US), accounting for more tion system enables consumers to buy pro- than 70% of overall imports for the last • as a ‘value’ threshold below which ducts at a more ‘reasonable’ price, as the three years – 79% in 2012, 75% in 2013 and duties and taxes are not collected and system eliminates price bubbles, such as 73% in 2014. However, origin countries no Customs declaration is required: for ‘rent-seeking’ behaviour, caused by mono- are diversifying, with 19 countries listed postal operators the threshold is 125 US polies on imported or domestic goods. In in 2010 and 38 in 2014, and the number of dollars (USD) using the CIF price; and this regard, the KCS has been making e-commerce transactions originating from for couriers the threshold is 100 USD various efforts to facilitate e-commerce these countries is constantly increasing. using the FOB price, or 200 USD for activities. goods originating in the US, under the Tax-exemption system terms of the Free Trade Agreement sig- Promoting e-commerce Most e-commerce goods are delivered by ned between Korea and the US; Measures have been taken by the KCS to either express cargo service or express mail streamline the import and export process service (EMS), under procedures which • as a ‘reporting’ threshold for goods for goods bought online. differ according to the status of the service in respect of which a full Customs

44 © Korea Customs Service

Table 1: Types of import clearance for express cargo List clearance Simplified declaration General declaration Reporting requirements A form listing 26 information fields Import declaration composed of Import declaration composed of (name, address, goods, price, 57 information fields. 69 information fields. etc.). Goods concerned Goods for personal use or com- All items. All items. mercial samples. FOB price: 100-2000 USD, or FOB price: above 2000 USD. FOB price: under 100 USD, or 200-2000 USD (for the US). 200 USD (for the US). Tax exemption All taxes exempted. If total tax is under 10,000 KRW If total tax is under 10,000 KRW (about 8 USD), taxes are not (about 8 USD), taxes are not levied. levied.

Table 2 - Types of import clearance for express mail Exemption on the spot Simplified clearance or taxation General declaration on the spot Reporting requirements Standardized forms, namely the Import declaration composed of Import declaration composed of CN22 and the CN23, which 57 information fields or issuance 69 information fields. provide brief details of the goods’ of a duty-imposition notice. origin, classification and Customs Import declaration composed of value, as well as the name and 69 information fields. address of the sender and the importer on the CN23. Goods concerned Goods for personal use and All items under 1,000 USD All items over 1,000 USD goods with a CIF price under 125 USD (about 150,000 KRW). Commercial samples and goods with a CIF price under 250 USD Tax exemption All taxes exempted. If total tax is under 10,000 KRW If total tax is under 10,000 KRW (about 8 USD), taxes are not (about 8 USD), taxes are not levied. levied.

45 FOCUS

Express Cargo Logistics Center

2nd floor

Storage warehouse (Tax unpaid)

(Products for inspection) Customs Automatic inspection X-Ray sorter area (Inspection finished)

1st floor

Cargo release (goods are sorted out Cargo entry by couriers) Access restriction

Import clearance the large numbers of sales, the KCS will E-commerce and security To facilitate the utilization of the conve- be setting up an e-commerce export plat- Trade facilitation and trade security are nient ‘list clearance’ procedure, the KCS form, which will be able to convert details closely linked. Amid the continuous has extended the types of goods covered by of orders and sales of online retailers into increase in e-commerce transactions, the this procedure from six categories (clothes, export declarations automatically. This KCS is enhancing its monitoring and risk shoes, etc.) to all goods, excluding food platform will be connected to UNIPASS, management capacity in order to prevent and medicines related to public health the Korean e-clearance system. illegal goods from entering the country. and safety. To make things more convenient for At present, X-ray inspections of expedited In addition to the tax exemption, the KCS exporters who are not familiar with inter- cargo and international mail are conduc- is also providing a swift clearance pro- national trade and the associated proce- ted by the KCS on a 100% basis. Postal cess for e-commerce goods. For example, dures, the KCS now offers a Harmonized operators and couriers are obliged to according to data extracted from the auto- System (HS) Navigation Service. Users can send information requested for clearance mated e-clearance system (UNIPASS), on find the correct HS code which has to be electronically, in order to permit the pre- average it takes only 4 hours to complete used in export declarations by searching advice and possible pre-clearance of items. the Customs clearance of expedited cargo for the actual name of the goods. To do so, postal operators use the electro- under the list clearance procedure. nic version of the CN 22 and CN 23 forms The KCS has also begun to keep official developed by the WCO and the Universal Export clearance records of e-commerce exports conduc- Postal Union (UPU). All information on Given the characteristics of e-commerce ted via the international mail channel, the packages selected for inspection, such goods, which are wide in variety and low and to issue ‘certificates of exportation’ in as the X-ray image and the data contained in value per transaction, the KCS crea- order to enable exporters to enjoy certain in the form used for clearance, is loaded on ted a Simplified Export Declaration for benefits, such as a trade finance facility the computer screen of the Customs officer e-Commerce, significantly reducing the and VAT refunds. For those not familiar handling the inspection. information items on the export declara- with the term, the ‘trade finance facility’ tion from 57 to 37. is a loan offered by banking institutions The KCS has enhanced its monitoring to exporters or importers who are able to of express delivery service providers. Moreover, to address the difficulties expe- prove that they handle a certain volume Penalties are imposed on those who sub- rienced by exporters, who must fill out of transactions. mit false declarations. In 2014, the KCS many export declarations as a result of also implemented a measure that obliges

46 WCO news N° 78 October 2015

delivery service providers to report the Lastly, for small and medium courier To address the actual destination of express cargo to companies which do not have modern difficulties experienced the KCS once delivery is complete. The facilities, the KCS is building an ‘Express objective is to prevent the misuse of the Cargo Logistics Center’ with a total by exporters, who de minimis facility by way of vendors split- floor area of 36,000 square metres, at the must fill out many ting consignments in order to wilfully take Incheon International Airport cargo ter- advantage of the tax exemption system and minal. Its construction will be comple- export declarations as the simplified procedures for low-value ted in the first half of 2016. This Center a results of the large goods. will be equipped with the latest facilities, including automatic sorting machines, an numbers of sales, the Since 2014, about 20 delivery companies integrated X-ray reading room, etc. It is KCS will be setting up have been fined for failing to provide expected that the Center will assist with information on the actual destination of the risk management of express cargo, as an e-commerce export cargo, and nine cases of ‘separated entry well as facilitating clearance procedures. platform, which will be of cargo’ have been uncovered, most of which were combined with identity theft More information able to convert details and changes to cargo destination. The KCS [email protected] of orders and sales is of the opinion that accumulated data on [email protected] actual destinations could be more widely of online retailers into utilized for risk management purposes, export declarations particularly during Customs audits and investigations. automatically.

A Master’s Programme for Also Strategic Managers in Customs available online The MCA in Customs, Taxation and International Trade Law is a well-established course for customs practitioners in the public and private sectors of all countries. It is held in English and takes place in Germany.

The MCA was founded in 2005 to prepare students for roles as strategic managers in the field of customs. It is offered by the University of Münster and the AWA Foreign Trade Academy.

The course is part-time and lasts 18 months. The monthly lectures can also be attended online. The MCA is ECTS-accredited and recognised by the WCO. Graduates are awarded the degree “Master of Customs Administration” (MCA) by the University of Münster.

Start: September 2016 Location: Münster, Germany Duration: 18 months Contents: Lectures, project work and master’s thesis Contact: University of Münster Phone +49 (0)251 83 27591 E-Mail [email protected]

Applications: Further information is available on our website: www.uni-muenster-mca.de/admission www.uni-muenster-mca.de 47

Anzeige-MCA-WCO-Sep-15.indd 1 16.09.2015 12:27:15 FOCUS

Australia’s tax reforms and e-commerce: a country perspective

By the Australian Department globally, and a growing presence of the industry that results from the application of Immigration and Border ‘DarkNet’ illicit trade environment. of its compliance continuum. Protection

THE RAPID GROWTH in e-commerce has faci- • New routings – to remain competitive, Risk assessment litated Australia’s increasing domestic Australian and overseas postal provi- To date, the absence of electronic item appetite for Internet-based trading and ders are modifying their routings and level information in the mail environment, online shopping. Although recent online increasing their complexity as they try combined with the changing nature of growth has been more subdued than the to tranship mail through cheaper and the mail supply chain, has meant that the 20-30% annual growth rates recorded in more convenient routes; application of a sophisticated, pre-border earlier years, it is expected that growth will risk assessment model for mail has not continue and volumes will remain high in • New actors – the growth in e-commerce been possible. the coming months and years. has facilitated the concept of privately- owned mail forwarding and consolida- This means the DIBP’s ability to identify Industry expectations for rapid clearance, tion companies, forming new pathways and intervene in mail that poses a potential and ‘light-touch’ law enforcement inter- of delivery for their customers; risk relies on manual intervention of these vention means Australian border agencies items in real-time at the border. Current have to work harder and more effectively • New operating models – suppliers are risk assessment processes for mail remain to facilitate legitimate e-commerce tran- increasingly ‘drop shippers,’ i.e. they highly manual, resource-intensive, and are sactions while at the same time ensuring can be based anywhere, including in performed in real-time at the border. This that regulatory, revenue collection, and Australia, and never physically be in approach is becoming increasingly unsus- community safety requirements are met. possession of the goods, as they use a tainable, given increasing mail volumes warehouse service that has the goods and a tight fiscal environment. Several challenges lie ahead for border and which will ship them to the third enforcement due to the specificities of the party purchaser; As a result of commercial responses to the processing of cross-border e-commerce growth in e-commerce, such as postal ope- transactions, as well as the nature of the • Poor information – major courier rator moves to offer enhanced e-tracking actors involved: companies, utilized in connection options, electronic item-level information with e-commerce, typically have their for certain mail items is now becoming • Potential fraud – the rapid proliferation contract with the supplier, not the available for the first time for certain types of online retailers offering Australian importer, and often do not make contact of mail, particularly express mail service consumers competitively priced pro- with the imports before seeking to clear (EMS) items – EMS is the international ducts is likely to further facilitate the goods. Also, goods descriptions pro- express postal service offered by member deliberate non-compliant activities by vided by suppliers are often poor, and do postal administrations of the Universal opportunistic offenders, particularly if not facilitate easy assessment to identify Postal Union), and parcels. these retailers encourage activities like risky consignments. misdeclaration and undervaluation of Due to the possibilities for criminal enti- goods; Partnerships ties to exploit vulnerabilities in the inter- To address some of these issues, Australia’s national mail environment, and the fact • Increased occurrence of illicit tran- Department of Immigration and Border that the current system is becoming bur- sactions – as e-commerce volumes are Protection (DIBP) has undertaken a num- dened with growing mail volumes, the increasing, there has been a significant ber of actions, including working ahead of DIBP is in the early stages of exploring rise in prohibited and restricted goods the border and the supply chain, in order the application of electronic reporting of coming through the air cargo and inter- to prevent import of prohibited goods into mail items. national mail stream in particular, and the country. there are an increasing number of online Australia would welcome any initiative forums about the importation of a very This approach has included having com- that provides access to electronic data broad range of goods, including contra- panies prevent the purchase of certain for mail, as the current lack of any tran- band goods. In particular, the volume of products if there is an Australian delivery sactional data for international mail and drugs being seized is up, a phenomenon address for the purchaser. In one case, this the lack of data integrity for air and sea which can be explained by the combina- practice enabled the avoidance of about cargo significantly constrain its ability tion of a significant increase in precur- 900 seizures per month. Simply put, the to target key border risks at, or ahead of sors and methamphetamine production DIBP has used the cost/benefit model to the border.

48 WCO news N° 78 October 2015

The combined measures should provide a sound framework to ensure Australian consumers benefit from the reduced costs, wider choice, and faster delivery times associated with e-commerce, while at the same time ensuring government objectives are met in terms of economic growth, national security, and community safety.

De minimis threshold Australia currently has a low-value thres-

© Australia Department of Immigration and Border Protection hold (LVT) in place which exempts most imported goods valued at 1,000 Australian dollars (AUD) or less from both goods and Some of the foundation work that has been Electronic item level reporting services tax (GST) and Customs duty. undertaken includes: In recognition of the growing availability of commercial electronic information in the The Australian Government has recently • a joint environmental scan with international mail stream, under the DIBP’s announced a number of changes as part industry, to understand developments reform agenda, a team was established in of its tax reform. It is drafting legisla- internationally; November 2013 to explore the potential tion to ensure greater consistency in the • development of a future risk assessment border intervention opportunities that application of GST to also include digital strategy for international mail; electronic information may provide. The products and services. GST collection will • mapping current processes within inter- focus of the team during its period of ope- also be broadened to cover overseas online national mail gateways; ration was to undertake a work programme transactions (physical goods) under 1,000 • how to better focus intervention to position the DIBP to be able to leverage AUD. resources on high-risk goods, and more electronic item-level information as it efficiently facilitate legitimate mail becomes available, and to strengthen the It is proposed to implement a ‘vendor items. intelligence-led approach to mail. registration model’ as a method of collecting GST for the Australian states and Clearance modernization plan The team explored operations in the territories. As goods would not be stopped An international cargo clearance moder- context of a future international mail envi- at the border, administering such a model nization plan is part of the DIBP Reform ronment that considered electronic repor- would have a relatively low cost. Programme. The plan aligns the inter- ting in the mail stream, more efficient and national mail environment with the effective risk assessment for both electro- Non-residents (overseas suppliers) will be intelligence-led and risk-based Cargo nically and manually reported mail, tech- the ones who charge, collect, and remit Intervention Strategy. The key features of nologies that support the ability to track GST for digital and physical products. the plan include: goods and enable the DIBP to link indivi- Only vendors with an Australian turno- dual items to electronic information, and ver of 75,000 AUD will need to register • electronic item-level reporting; improvements to existing border processes and charge GST. The Commonwealth • leveraging electronic reporting of EMS at the mail gateways. of Australia will draft legislation for the items, and sea and air parcels, to signifi- application of the new arrangements from cantly reduce the volumes of mail requi- In mid-2014, the Australian National 1 July 2017. ring real-time assessment; Audit Office (ANAO) released an audit • a nationally-consistent framework for report Screening of International Mail, More information risk assessment and prioritization for which identified a number of findings rela- www.border.gov.au both electronically and manually reporting to the DIBP’s interactions in the mail ted mail; stream. This includes the updating and • a robust sampling programme to moni- refinement of a number of Instructions tor and assess leakage; and Guidelines associated with risk mana- • review of Australia’s ‘low-value thres- gement, as well as the introduction of a hold’ (the de minimis threshold). revised sampling programme anticipated to take effect in mid to late 2015.

49 FOCUS © Pardesi © Gregg Sloan

Let cross-border e-commerce be an engine for growth

By the Global Express Governments around the world have reco- World Trade Organization’s (WTO) Association gnized e-commerce as an engine of future Trade Facilitation Agreement (TFA), and Opportunities economic growth, and they need to adopt the WCO’s Revised Kyoto Convention E-commerce – broadly defined as the use policies that will stimulate the growth on the simplification and harmonization of the Internet as a platform for sales, of e-commerce in their economies while of Customs procedures (RKC), have tre- sourcing, and the exchange of market ensuring compliance with relevant laws mendous potential to help achieve these information – will play an increasingly and regulations. The policy implications results. But governments need to adopt important role in supporting global eco- of e-commerce are no doubt complex, but them – and implement them. nomic growth. According to the McKinsey policy-makers have a unique opportunity Global Institute, e-commerce’s share of to embrace a different way of doing busi- Complicated border clearance proce- total goods trade grew from 3% in 2005 ness, and develop regulatory and revenue dures are a problem for all international to 12.1% in 2012 [Global flows in a digital collection policies to grow e-commerce in trade, but they can be an even greater age: How trade, finance, people, and data a sustainable manner for their respective obstacle for small and medium-sized connect the world economy, McKinsey economies. enterprises (SMEs). The high cost of Global Institute, April 2014]. determining import requirements and Challenges completing excessive paperwork hampers The global e-commerce market is expected The physical flow of goods across borders e-commerce. The reputations of retailers to reach 1.5 trillion US dollars (USD), up resulting from e-commerce trade is facing – and in the case of SMEs, often their very by 20.2% from 2013. The average growth increasing challenges in terms of the cost survival – are placed at risk by Customs rate between 2012 and 2017 is estimated at and time of border formalities. The main holds, late deliveries or inefficient return 17.4%, and global sales in 2017 are expec- problems at the border are regulatory – procedures ─ all of which are common in ted to exceed 2.3 trillion USD [eMarketer, laws, policies, processes and procedures many regions. Retailers in particular are Jan 2014, www.emarketer.com]. The eco- that slow down the movement of goods. concerned about the quality of fulfilling nomic changes brought by e-commerce The World Economic Forum’s ‘Enabling an order – the most important part of their have already had a large impact on the Trade Report 2013’ estimates that lowe- interaction with their customers. changing role of regions in the global ring supply chain barriers could increase economy, for example, with e-commerce e-commerce cross-border trade by as For e-commerce to be successful, the markets in the Asia-Pacific region surpas- much as 60%-80%. cost associated with fulfilling the order sing those in North America in 2014, for must be ‘worth it’ in the eyes of the cus- the first time. The tools are readily available. tomer. The Organisation for Economic International agreements, such as the Co-operation and Development (OECD)

50 WCO news N° 78 October 2015 © GDeutsche Post DHL Group © TNT Corporate Communications

Let cross-border e-commerce be an engine for growth

has estimated that Customs barriers can trade. E-commerce presents new chal- used at present, towards an account- add up to a 24% premium onto the price lenges and concerns for Customs and reve- based collection model – after all, such of goods sold [Evdokia Moïse and Florian nue agencies. Among the consequences of models are already in use for domestic Le Bris (2013), Trade Costs: What have we the growth in e-commerce are an increa- transactions. learned? A Synthesis Report, OECD Trade sing number of small shipments, and the Policy Paper No. 150]. Striving to simplify, emergence of new participants in the glo- An account-based collection model will standardize and harmonize Customs pro- bal economy. not only secure and protect revenue cedures across the world would greatly streams, it will also help to maintain simplify trade, and have a direct positive However, new barriers against e-commerce, control of growing numbers of small ship- impact on costs. such as reducing or even eliminating de ments while facilitating legitimate trade. minimis procedures, increasing inspection Now is the time for collaboration between Governments and multinational com- rates, and requiring additional documenta- shippers, carriers, and border agencies to panies are the main actors involved in tion (for example, identification or passport assess the risks and opportunities pre traditional cross-border exchanges, but data), which many countries are considering sented by e-commerce, and to design today, digital technologies enable even or even erecting, will have adverse effects. smart and effective policies that both the smallest company or individual entre- They will only impede the growth of legi- secure and facilitate the growth of this preneur to be a ‘micromultinational’ that timate e-commerce business, while having incredibly important economic activity. sells and sources products, services, and very little impact on illicit shipments. ideas across borders. Traditional busi- What ‘express delivery’ can bring to the ness models are being complemented by Instead, governments should use intelli- table micro-scale activities ranging from micro- gence-led and risk-based selectivity and The four express delivery companies repre- work to micropayments and microship- targeting. And they should seek to coo- sented by the Global Express Association ments [Global flows in a digital age: How perate with legitimate traders to improve (GEA), namely DHL Express, FedEx trade, finance, people, and data connect the identification and targeting of high- Express, TNT and UPS, are committed to the world economy, McKinsey Global risk shipments. In addition, governments cooperating with Customs and revenue Institute, April 2014]. should consider using a duty/tax collec- authorities to address e-commerce chal- tion model, such as the ‘vendor collection lenges as trustworthy partners. They are Governments have a legitimate interest in model’ currently being discussed by the assisting governments as follows: controlling their borders to prevent fraud, OECD. They should move away from the revenue leakage, intellectual property cumbersome model of collecting duties • Advance electronic shipment infor- rights (IPR) violations, and other illicit and taxes for each individual transaction mation – express delivery companies

51 FOCUS

Allowing consumers to make their own choices about where to shop not only improves citizens’ lives, it will also lower costs and drive efficiency throughout the economy.

transmit electronic information in one, they are not originators of informa- 2. Use risk management to address reve- advance of the arrival of shipments, so tion about shipments, and there are clearly nue, safety and security concerns, and that Customs can perform risk assess- limits on the quantity of information that seek cooperation with express carriers ment and target shipments for further can be obtained from customers. Nor are to improve targeting; examination; express delivery companies law enforcement agencies, as they are subject to 3. Provide equal and fair border treat- • Risk assessment – express delivery national data protection and commercial ment to public and private delivery companies conduct risk assessment information confidentiality rules. Customs service providers; and validation of the data provided is the competent authority to enforce laws, by the shipper based on plausibility conduct risk assessments, collect duties 4. Enable periodic filing and payment checks, including unacceptable goods and taxes, and seize illegal items. and by electronic means, preferably descriptions such as those published by through a Single Window; Customs; Recommendations for border agencies/ governments 5. Simplify exporter/importer regis- • Track and Trace systems – they allow The express delivery industry believes tration and power of attorney packages identified by Customs as sus- that regulators should work together with requirements; picious to be removed from traffic flows responsible suppliers to lower the impe- and provided to Customs officers for diments to business-to-consumer (B2C) 6. Implement a simplified process for further examination; e-commerce. Fair competition among returned shipments; public and private delivery service pro- • Facilities – express delivery companies viders will reduce transportation costs, 7. Apply pre-arrival processing, and ® provide Customs officers at express increase quality of service, and promote separate release from clearance; SGS D-TECT delivery hubs with adequate facilities the growth of e-commerce. TRANSFORMING YOUR SCANNER OPERATIONS and equipment for them to identify and 8. Adopt simplified rules of origin pro- examine suspect shipments efficiently; Allowing consumers to make their own cedures, including self-certification of The first universal and all inclusive scan analysis solution that will provide you with: choices about where to shop not only the country of origin; • Access to your scanner images anytime, anywhere • Information on shippers and consi- improves citizens’ lives, it will also lower gnees – express delivery companies costs and drive efficiency throughout the 9. Adopt time-definite release • Compatibility with several brands and models of scanning equipment provide Customs administrations with economy. And in that spirit the express commitments; • Possibility to use all your transactional data with the associated images available relevant information that may delivery industry would like to make the • Option to remotely inspect shipment prior to departure legally be disclosed on the shippers and following recommendations on how best 10. Provide for 24/7 border clearance, consignees of shipments identified as to address e-commerce, so that it can deve- where possible and when required by • Live monitoring of all your scanning operation from any place containing offending goods; lop its full potential: business. • And plenty more...

• Closing the accounts of customers 1. Implement the WCO Immediate E-commerce can be a tremendous engine publicly identified by Customs as repeat Release Guidelines, including com- for economic growth. Let’s unleash its full For more information, please contact [email protected] offenders mercially meaningful de minimis potential – together! thresholds for all Customs duties and However, there are practical limits to what taxes; More information SGS IS THE WORLD’S LEADING INSPECTION, VERIFICATION, TESTING AND CERTIFICATION COMPANY express delivery companies can do. For [email protected]

52 SGS D-TECT® TRANSFORMING YOUR SCANNER OPERATIONS

The first universal and all inclusive scan analysis solution that will provide you with: • Access to your scanner images anytime, anywhere • Compatibility with several brands and models of scanning equipment • Possibility to use all your transactional data with the associated images • Option to remotely inspect shipment prior to departure • Live monitoring of all your scanning operation from any place • And plenty more...

For more information, please contact [email protected]

SGS IS THE WORLD’S LEADING INSPECTION, VERIFICATION, TESTING AND CERTIFICATION COMPANY PANORAMA

Carriers Arrives Unloading warehousing CTO warehouse Cargo agent (CH) Submit CTO to CH declarations at CTO location with guarantee

Truck leaves CTO Location Inspection, sealing & exit stamp Load cleared cargo Truck reaches at CH location on declarations by CTO

CH warehouse

Seal verification and entry Deconsolidation Cargo delivery stamp on declarations by CH

CH submits guarantee release request to Customs Dubai’s Virtual Freight & Logistics Corridor streamlines cargo movement

By Ahmed Mahboob Musabih, DUBAI HAS ESTABLISHED itself as one of the communication on one side; and whole- DIRECTOR, DUBAI CUSTOMS world’s major multimodal hubs over the sale/retail trade and repair services on the years, due to its strategic location and other. An initiative by Dubai excellent infrastructure. The concept of a hub involves the deconsolidation of dif- Together, these economic activities Customs facilitating the ferent consignments of air or maritime account for over 40% of Dubai’s gross transhipment cargo destined for different domestic product (GDP) and over 30% speedy and hassle-free countries, arriving on board an incoming of total employment. Industries in these cargo ship or flight. Within very tight sectors are involved in logistics operations, movement of transferred timeframes, this cargo has to be sorted and provide storage facilities for cargo that at the port or airport, and then placed on is in transit or under a local importation and transhipped goods board connecting flights, vessels or trucks procedure. according to its respective end destination. augurs well for the supply Before the implementation of the VFLC, In order to facilitate such operations, consolidated cargo, which can include chain and logistics Dubai Customs announced the intro- cargo for local consumption or cargo for duction of a Virtual Freight & Logistics transit/transhipment, had to be deconso- industry in Dubai and Corridor (VFLC) in early May 2015. The lidated at the port of landing in separate Corridor aims to eliminate remaining bar- Customs-approved facilities for handling the United Arab Emirates riers to these operations in order to ensure these kinds of operations. the speedy and hassle-free movement of (UAE). goods being transferred or transhipped. Agents who did not have warehouses at the port or airport but in the free zone had Before implementation to hire or build separate facilities for their Dubai’s multimodal transportation and deconsolidation operations, resulting in logistics cluster comprise two main eco- most companies having facilities in more nomic sectors: transport, storage and than one zone.

54 WCO news N° 78 October 2015

between facilitation and control demands. Moreover, Customs reserves the right to inspect cargo at its departure and/or on its arrival by using X-ray equipment.

Benefits and results The 15 companies who partnered with Dubai Customs in the execution of the pilot provided positive feedback, explai-

© Dubai Customs ning that the VFLC helped them to improve their business performance and The practice was to move the cargo using purposes. It also reduces expenditure on operational efficiency. They were selected manual documentation to a Customs- storage charges, and improves delivery for the volume of their operations, their controlled deconsolidation area attached standards by cutting the total time taken compliance level, and, of course, the fact to the same cargo channel. In the case of to deliver cargo. that they had to move cargo from one loca- sea/air shipping, which consists of moving tion to another. cargo part of the way by ship, and then by How does the system work? air, it was not permitted to move air cargo The VFLC connects the logistics hubs – For these companies and their clients, the into a deconsolidation facility located at a airports, seaports and free zones – to a major factor is time. Utilizing the VFLC seaport or vice versa. single platform. Access to the Corridor allowed them to transfer cargo from the is granted to freight forwarders, cargo airport terminal or the seaport terminal to The movement of goods between Dubai handlers, consolidators and deconsoli- their facility, and to deconsolidate it with Customs centres located at various ports, dators with warehouses in a Customs- a minimal amount of information to be border points and free zones could take up controlled area. Both the company and the uploaded online and with instant appro- to several days, requiring the submission warehousing facility have to be registered, val, thereby enabling them to save time of paperwork, the payment of fees, and and both operations are cost-free. and money, and satisfy their clients’ needs. the provision of a cash bond or a bank guarantee. Registered operators benefit from a virtual More than 12,000 transfers of cargo, wei- guarantee system. Unlike other financial ghing over 64,000 tons, were processed in After implementation credit facilities, this virtual guarantee does the six months from November 2014 to With the implementation of the VFLC, any not require the payment of a bond or back- April 2015. Subsequently, deposit-related registered company can now move cargo up by any third party guarantee provider, financial burdens have, during this time, by filling in and sending Customs a Cargo such as a bank. The amount is estimated been considerably minimized by some 120 Transfer declaration online. Consolidated according to the volume of an operator’s million UAE dirhams (about 33 million US cargo moving from the port of landing to transactions, and is credited to the opera- dollar). another location where the client main- tor’s account. tains warehouses for deconsolidation can More companies are expected to begin be moved in under a few hours, without While processing the Transfer Declaration using the VFLC platform, marking strong the need for the client to submit a cash online, a client can use this account to involvement from the business community bond or a bank guarantee, both of which settle any Customs duty liability virtually. in joint initiatives and innovative work have been replaced by a virtual guarantee. Upon successful completion of the transfer mechanisms that facilitate trade and boost of the goods from one Customs-controlled economic activity. The earlier barriers of moving cargo location to another, the Customs duty between air and sea locations are elimina- amount will be reversed to the virtual As Dubai will host the World Expo in ted, and those companies having warehou- guarantee account. The account balance 2020, with hundreds of pavilions and exhi- sing facilities in the free zone can now use is then available for further transactions. bits, the virtual corridor, and the key role such facilities for consolidation or decon- it plays in ensuring the efficient movement solidation operations without having to Customs inspectors seal the truck upon of cargo, could not have been implemented hire or build separate facilities. departure and track its movement until it at a better time ahead of this global event. reaches the Customs centre of its decla- This results in substantial cost reduction, red destination. Since the movement of More information as a company no longer needs to own and cargo between two Customs-controlled www.dubaicustoms.gov.ae manage separate warehouses for multiple centres is tracked, there is a fair balance [email protected]

55 PANORAMA

Educating the next generation of Customs professionals

By Frank Heijmann and Martin Lutterop A typical regulatory response to such a FROM THE NETHERLANDS CUSTOMS ADMINISTRATION, situation would be to impose stricter regu- Yao-Hua Tan, Bas Giesbers and Rob Zuidwijk FROM THE ROTTERDAM SCHOOL OF MANAGEMENT, lation and tighter controls. The downside and Joris Hulstijn is that this increases the administrative FROM THE DELFT UNIVERSITY OF TECHNOLOGY burden for businesses and the regulatory costs for governments, already under pressure due to budget cuts. Customs is, Are there ways to improve compliance, safety, security, therefore, required to improve its overall performance; inspecting more effectively operational efficiency and information quality in while at the same time reducing interfe- rence in logistics processes. As a result, international trade? Reduce the administrative burden Customs is now on a quest to find a new, optimum balance between trade facilita- for business and government? Foster the uniform tion and enforcement, as well as innovative solutions to achieve this balance. application of Customs legislation? Encourage mutual Almost a decade ago, the WCO identified understanding between the public and private sector, the need for this change and developed a visionary model, the SAFE Framework of and even share responsibilities in the fight against Standards to Secure and Facilitate Global Trade. Subsequently, research was ini- smuggling, terrorism and criminal organizations? tiated by several parties into innovative solutions for trade facilitation and impro- We believe there are, but to do so there is a need for ved compliance, one of which led to the development of the ‘Data Pipeline’ concept people who are knowledgeable in various disciplines. to improve data visibility. The important underlying idea, known as piggy-backing, The Master Degree in Customs and Supply Chain is to re-use reliable commercial data for regulatory control, where possible. Compliance developed by the Rotterdam School of Other important issues include the various Management offers this type of education by integrating forms of coordinated border management (CBM) – for example, the ‘one-stop-shop’ three disciplines: Customs regulations; supply chain that integrates Customs inspections with other border controls such as food and pro- management and logistics; and information technology duct safety inspections – and the development of an electronic Single Window (i.e., and auditing. In this article, we discuss the objectives the re-use of reporting data for different administrative agencies). These kinds of of the degree and the educational philosophy of the solutions make use of the information technology (IT) deployed by a network programme, and reveal some of the lessons learned in of public and private partners. Therefore, they can only be developed by Customs in setting it up. close collaboration with businesses and service providers across the entire supply chain, and with other regulators such as THE WORK OF a Customs professional is to ensure transparency and monitor the tax offices or food and health inspection changing, and is filled with new challenges. flow of goods has not kept pace with these agencies. Trade networks have grown in complexity, changes, leading to risks for the general and transport and logistics services have public, in terms of safety and security, Where enforcement strategies are concer- been redistributed and optimized, with and most probably also in terms of lost ned, the focus is increasingly being placed benefits depending on enhanced reliability Customs duties and a decrease in quality on ‘trusted trader’ programmes, ideally and cost reduction. However, the capacity of service. enabling resources to be freed up and

56 WCO news N° 78 October 2015

and trade facilitation, as well as to business representatives. As the programme is aimed at working people who are only able to study on a part-time basis, the courses © Alan Levine are spread over two and a half years, with better supervision of non-trusted traders. existing Customs personnel to further employers generally paying the tuition This change in enforcement policy has develop themselves in order to cope with fees. also triggered the adoption of new forms these new challenges. And clearly, these of auditing and inspection, such as system- part-time programmes are of a higher aca- The programme is built on the competency based auditing. Here, authorities increa- demic level than was traditionally required framework for the Customs profession singly rely on a company’s own system in the Customs profession, for the reasons developed by the European Commission of internal controls for monitoring and stated above. (EC). Courses are taught in English and reporting compliance. In this case, autho- are open to professionals from around rities must supervise the effectiveness of On the other hand, business professionals the world. Entrants who are not univer- the control system, at a meta-level. In the dealing with Customs issues need, in order sity graduates need to follow a pre-Master Customs domain, a well-known example to be compliant, in-depth knowledge of the preparatory course. In terms of recogni- of the use of system-based auditing is the legislation in force, the risks involved and tion, the programme gives entitlement certification process for an Authorized the control measures to be implemented, to 60 European Credit Transfer and Economic Operator (AEO). including those touching on the compa- Accumulation System (ECTS) points, ny’s information systems. Developments which is equivalent to a total of 1,680 hours Customs officers used to be primarily have put Customs-related issues ‘in the of study. The pre-Master course gives ano- focused on the physical inspection of boardroom’ and these professionals need ther 12 ECTS points. goods, and were trained in practical ins- to work at a strategic level, with detailed pection that included legal knowledge, knowledge of the impact of Customs regu- The curriculum has been developed in while the business professionals in charge lations on processes. close cooperation with the Customs of Customs issues were trained to classify Administration of The Netherlands and goods and fill in declarations. But today, Both categories of professionals need to trade associations, and is one of the many the increasing complexity of regulatory acquire a broader knowledge of the envi- offspring of the close collaboration in demands, the reliance on IT and the ronment in which they execute their work. innovation and research projects esta- adoption of new supervision models with In addition, both need to be able to look blished between Dutch Customs, univer- integrated risk management and control, beyond the boundaries of their own dis- sities and representatives of the business all require Customs professionals with cipline, in order to take advantage of new community. specific skills. opportunities and transform them into feasible solutions. Communities of learning, online educa- Specific educational needs tion and blended learning Traditionally, Customs professionals have A new educational programme A unique feature of the current programme taken the ‘long route’ when it comes to To respond to this educational need, the is the ‘learn with and from each other’ education. They are trained on-the-job Rotterdam School of Management deve- educational philosophy: an equal number and also follow various training/vocatio- loped the Master Degree in Customs of students from Customs administrations nal courses and internal educational pro- and Supply Chain Compliance, in close and the private sector are selected to create grammes in a wide variety of disciplines. collaboration with Delft University what are called ‘communities of learning,’ This approach is no longer sufficient to of Technology, Erasmus University’s which can be defined as ‘groups of people satisfy the demand for Customs experts, Rotterdam Law Department and who share a concern, set of problems or as knowledge and expertise requirements Eindhoven University of Technology. The passion about a topic and who deepen their have become much more demanding. programme integrates three disciplines knowledge and expertise in this area by or ‘pillars’: (1) Customs Regulations; (2) interacting on an ongoing basis’ [Wenger, In the past, Customs inspection was to a Supply Chain Management and Logistics; McDermott, & Snyder, 2002, p4]. large extent a physical activity, whereas and (3) Information Technology and nowadays it also includes the carrying out Auditing. Working in such a heterogeneous envi- of audit-related activities which require ronment helps students to obtain a much knowledge of business processes and tra- It is open to representatives of Customs deeper understanding of the study mate- ders’ commercial drivers. This new role administrations and other government rial, and enables them to better unders- requires education programmes that help agencies dealing with trade, inspections tand each other’s concerns and contribute

57 PANORAMA

to more effective collaboration between a week once every six to eight weeks, In the six-week preparation phase, Customs administrations and Trade. rather than for one day every week. students read the textbooks, articles and case descriptions, and watch video lectures Part of the programme is being delive- The challenge of educating a student produced by the teachers. Furthermore, red in e-learning mode, for the following population with heterogeneous back- the teachers organize regular video confe- reasons: grounds and expertise while at the same rences with all the students to answer time allowing for flexibility regarding questions about the study material that • It is very demanding for students not study location and study time, led to the the students have not been able to solve residing in the Netherlands to come to design of a special blended learning pro- by themselves. The residential phase is a Rotterdam to attend classes; gramme in which online education is four-day session of classroom meetings combined with a week of full-time, phy- that are primarily focused on a very inte- • It enables students to plan their study sical classroom training at the Rotterdam ractive learning mode where teachers and workload more flexibly during the week, School of Management. Hence, every participants jointly apply the knowledge to which explains why even students living course module in the programme starts a wide variety of cases; this includes lec- in the Netherlands have a strong prefe- with a six-week online preparation phase, tures from teachers and practicing guest rence for e-learning; followed by an intensive, one-week resi- lecturers, workshops, student presenta- dential phase, and then a final, three-week tions, discussion sessions and collabora- • It is preferred by employers, who would phase during which students complete tive team work on case-studies. rather have their employees absent for their final assessment.

Master’s Degree in Customs and Supply Chain Compliance

Curriculum • Divided between three pillars, plus courses on cross-cutting topics. • Includes lectures, case assignments, simulation exercises, visits and ‘serious games.’ • Courses on research methods and report writing are also part of the programme. • Study requires on average 15 hours a week to be dedicated to reading, working on essays, and preparations for assignments and exams.

Pillar I - Customs Regulations Pillar II - Supply Chain Pillar III - Information Cross-cutting topics Management and Logistics Technology and Compliance • The objective is to give • The objective is to enable • The objective is to teach • These include risk participants a robust Customs professionals to students how information management, sourcing and background in the legal understand international technology innovations can its effect on corporate social and regulatory aspects of supply chains, the hierarchy be used to exchange accurate responsibility, and ways of Customs, and in the changes in companies concerning the information in the supply chain, dealing with the European that will take place with the supply chain management, and thus improve compliance Union (EU) legacy systems for implementation of the new logistics management and and enable Customs to regulatory supervision. European Customs legislation transportation departments, facilitate the movement of in the coming decade: the and the way businesses goods. • During these courses, Union Customs Code (UCC). deal with compliance and participants are asked to control requirements in an • The course will also highlight analyse problems in their • This last point will require international, networked that the degree of compliance specific domain, and to thorough knowledge and environment. relies increasingly on the set-up come up with a well-founded, understanding of the of business processes and on integrated solution. international background to the information systems which Customs procedures, the legal support them. fundamentals established by the UCC, and the areas of legislation it interacts with. • The legal framework underlying topics such as trusted trader status (AEO), risk management and the Customs control framework will also be discussed. Course schedule • Each period consists of 9 weeks. March 2015 – September 2015 November 2015 – September 2017

Research methodology Customs fundamentals I Global supply chain management Quantitative methods and logistics and transport SPSS research methods and methodology Basics of Customs regulations Customs fundamentals II Developing information chains Master thesis and auditing Basics of logistics and Trade regulation and the supply System-based auditing information technology chain Integration project

58 WCO news N° 78 October 2015

Future developments Talented people who choose to work in, and specialize in the Customs field must be given access to good education. This stresses the need for more Bachelor and Master-level education programmes in the field of international trade, border management and supply chain management, which should be open not only to experienced Customs professionals, but also to other students.

Therefore, the next steps include:

• the setting up, in the coming years, of an additional full-time Bachelor and Master degree programme for young students entering directly from secondary school;

• the incorporation of the current pre-Master preparatory course – which is compulsory for non-graduate entrants – into the Bachelor degree, building on the existing collaboration with some Dutch universities for applied sciences in the setting up of a Bachelor degree programme for professionals who are not Customs officials, but are working for the government or the private sector in the area of cross-border management of goods.

Conclusion To face the challenges of the future, educational programmes in the Customs domain should evolve. In par- years OF EVOLUTION ticular, education should try to make use of the insights offered by scientific research into Customs issues, thereby further stimulating the academic study of Customs- related issues around the globe.

Education should no longer be focusing on the legal aspects of Customs regulation alone, but should instead integrate this knowledge into studies that include supply chain management, information technology and auditing.

Moreover, education should foster a multidisciplinary attitude that encourages collaboration between government and businesses, and across the various disciplines, while strengthening the ability to spot new developments, identify opportunities and translate them into practice.

Last but not least, educational efforts should lead to a recognized degree. We believe that by establishing this new Master Degree in Customs and Supply Chain Compliance, including the upcoming Bachelor degree, we are heading in the right direction.

More information www.rsm.nl/master/executive-masters/executive-master- Customs-and-supply-chain-compliance

59 PANORAMA

EU launches a new Customs Data Model based on WCO standards

By Frank Janssens, HEAD OF UNIT, and Jean-Luc Delcourt, HEAD OF SECTOR, CUSTOMS PROCESSES, DATA AND PROJECT MANAGEMENT UNIT, EUROPEAN COMMISSION DIRECTORATE-GENERAL FOR TAXATION AND CUSTOMS UNION Between 2016 and 2020, many new electronic Customs systems will be developed within the European Union (EU). The new systems will have new data requirements based on a new WCO compatible data model, called the EU Customs Data Model (EU CDM). The EU CDM will enable further harmonization of electronic data requirements within the EU, and build a three- tier interoperable structure from the global level to the regional and national levels. Among the expected results are enhanced regional integration, better interconnection between Customs and other administrations active at the border, as well as between Customs and economic operators.

IN 2018 THE EU will celebrate the 50 year public authorities, such as the setting-up integration, this comes with specific sets jubilee of its Customs Union. During its of a Single Window environment and the of common legislation and administrative half century in existence, this Customs implementation of new developments in practices, which include commonly agreed Union has not only extended its geogra- the field of supply chain security. data requirements and structures. phic coverage, but gradually harmonized and integrated its procedures too. Three-layer approach The EU integrated approach, insofar as Successfully tackling the above chal- data management for Customs is concer- The next important step consists of the lenges requires an organized and well- ned, has found its concrete form in the EU implementation of the Union Customs documented approach that provides CDM, which constitutes a second layer of Code (UCC), adopted on 9 October 2013 standardization where needed, but which development, meant to be entirely compa- as EU Regulation No 952/2013 of the leaves enough freedom for managing tible with the first one, i.e. the WCO DM. European Parliament and of the Council, information exchanges where regional and which provides for further EU-wide com- national contexts so require. Whilst the EU Customs Union has achie- mon procedures and for many new elec- ved remarkable integration, some Customs tronic Customs systems with new data As a first layer, and as a seminal basis for and border formalities remain nationally requirements. any further developments, the WCO Data defined. The EU CDM, built upon the Model (WCO DM) provides the required WCO DM, enables the establishment of The initiative meets the need for Customs global approach and offers the needed national Customs data models as a third to adapt its ways to the current trade envi- harmonization to make cooperative work layer of completion and detail, themselves ronment and to respond to the opportu- possible with other public services active compliant with the two others. This layer is nity to improve data exchange efficiency, as at the border. especially useful where automated natio- well as the quality of information supplied nal Customs systems, which need to be by economic operators. The WCO DM approach not only has compatible with other EU instruments, indubitable global trade facilitation advan- are developed. Optimizing data exchange is indeed cri- tages, but also offers opportunities to fur- tical to the efficient functioning of trade ther expand regional integration. Where a The EU CDM facilitation related projects which require group of countries wish to enjoy the eco- From a formal point of view, the infor- seamless cooperation between involved nomic and political advantages of regional mation collected by Customs is published

60 WCO news N° 78 October 2015 fotolia.com

The WCO DM approach © agsandrew - in the Official not only has indubitable the WCO DM or an EU Customs Information Package, Journal of the that they needed that reflects the requirements of all EU EU as annexes global trade facilitation to be adapted. As Member States, is being produced. to the UCC advantages, but also offers a result, regional Implementing EU data is being EU Member States can reuse the EU Acts (IA) and opportunities to further added to the WCO Customs Information Package to cover Delegated Acts expand regional integration. DM to reflect the national needs beyond the EU CDM. These (DA), currently content of the EU needs can be administrative, technical under adoption. Where a group of countries CDM. or be linked to other data sources – for They establish wish to enjoy the economic example, transport or veterinary authori- the required legal The tool enables ties. In the same fashion as is done at the basis for data and political advantages the automatic EU level, Member States can also generate requirements that of regional integration, this generation of the their extended XML schemas, and if they need to be provi- data annexes to follow the same schema, both levels will ded by economic comes with specific sets the UCC IA and be interoperable. operators, and also of common legislation and DA for publica- enable all concer- tion in the Official In terms of information dissemination, ned to access, in administrative practices, Journal of the EU. this methodology allows the EU CDM all the EU’s offi- which include commonly This functionality information to be made available to cial languages, the ensures a single Member States’ administrations and their legal details which agreed data requirements source of infor- information technology teams, facilita- form the basis of and structures. mation for legal ting the development or updating of their the EU CDM. and technical ins- systems. truments, thereby From a practical eliminating risks It also allows other users, such as other point of view, the EU Commission has for errors when translating the legal pro- administrations or economic operators, decided to use a specific tool to develop visions into a technical form, usable in the to inherit the EU CDM and customize it and maintain the EU CDM – the tool that modelling world. in accordance with their specific require- was already chosen by the WCO to distri- ments, to the extent authorized by EU law. bute its Data Model. This tool offers many In that respect, beside the auto-generation The publication can be done in the native practical advantages, not only providing of documents and structures for publica- tool format or in other formats which are a source of information for international tion, the tool can also produce XML sche- more widely available. standards used, but also the environment mas – a tool for software designers, used where data requirements are managed. to express the structure and constraints of The ‘Views’ options an XML document – following the WCO Whilst developing the EU CDM, the The tool comes pre-loaded with the WCO XML schema design rules or, should the Commission noted that all procedures DM and other agreed international stan- need arise, following other appropriate related to the UCC could not be mapped to dards. As such, it offered an ideal star- formats. the WCO DM according to the same printing environment for mapping EU data ciples. This stems from the fact that certain requirements against the WCO DM. The WCO DM includes Information economic operators’ submissions derive Whilst doing so, it was found that some Packages which are templates for informa- from the transportation world and others EU requirements were not available in tion exchange. As part of these Packages, from the import/export environment.

61 PANORAMA

As their respective ways of perceiving the Information Management Sub- administrations active at the border, in information differs to a point that they Committee (IMSC). order to establish and operate a Customs cannot be reconciled within a single map- Single Window environment; ping structure, they have to be approached From a technical perspective, the EU according to two different perspectives CDM and the tool used to manage it will • implementing national adaptations in that imply the definition of two different enable the auto-generation of national combination with the above customi- ‘views’, namely the ‘shipment’ view and the document structure publications for both zations, whilst ensuring compatibility ‘consignment’ view, both equally accep- single documents and their supersets, with the WCO DM and the EU CDM, table within the overall data model. and the auto-generation of nationally the objective being to allow admi- used XML schemas – exchange inter- nistrations to adapt the EU CDM to The EU CDM attaches great importance to faces of all Member States which follow include their own national specificities ensure that both the shipment and consi- the same XML design will be technically which are not provided for in EU law, gnment views are available in the WCO interoperable. and therefore not included in the EU DM to fully reflect all trading practices, CDM – an obvious example being the thereby enabling the adequate mapping of Both the publication of a national docu- national fiscal, notably excise, idiosyn- all data submissions received by Customs. ment structure and XML schemas consti- crasies that can be different in each Expressed in a simple way, one could say tute intermediate technical documents, Member State; that: which take the legal requirements and translate them into a readable format for IT • including additional border agen- • the ‘EU CDM Shipment view’ mainly developers, enabling software developers to cies’ requirements via the submis- contains traditional Customs declara- perform their tasks. They include message sion of DMRs to the WCO DMPT tion information, such as import, export structures, rules and conditions, as well and IMSC. and transit declarations, both in a stan- as specifications, applying to the national dard and simplified format; document structure and XML schemas. In parallel, exploring additional opportunities for cooperation with economic • the ‘EU CDM Consignment view’ is The EU Member States and economic operators is envisaged in relation to more geared towards safety and security operators will, beside the legal texts to be the use of the EU CDM for streamli- information, such as the entry summary published in the EU Official Journal, also ning and automation projects, which declaration and arrival and presentation be able to obtain the EU CDM in an edi- should further facilitate and harmonize notifications. table format, such as in pdf, MS Excel and/ the exchange of information between or MS Word, as well as in a read/print only Customs and economic operators. Whilst the perspectives are different, both format directly derived from the tool in views are structured in a very similar way a separate ‘publishing’ environment. For Such initiatives include the data mining with a clear tree structure and an indica- those who decide to choose the tool used tool for the ‘Surveillance 2+’ system tion of each data element within its own by the WCO, the European Commission which ensures the collection of data specific place, within the overall structure plans to make available the EU CDM in its within the framework of import/export of the data model. native editable format as produced within monitoring, and the Binding Tariff the tool. Any completion, modification, Information (BTI) system which includes Using the EU CDM etc., will need to be performed by the user a database of all BTI applications, as well The EU CDM is not only available to EU using a tool of his/her own choice. as the Central System/Reference Data Member States’ Customs administrations (CS-RD2 system) which provides the as a source of information on EU legisla- Coordinated border management bedrock for the use of common codes in tion and as an instrument to manage data The EU CDM is an excellent basis and the EU’s multilingual environment. in Customs procedures and automated tool for integrating the needs and requi- systems, but also offers a number of addi- rements of other administrations active at In this way, Customs will considerably tional opportunities at the national level: the border. Special mention should also be improve its role, both in relation to trade made on the establishment of an EU Single facilitation and control. Moreover, the • The reuse and customization at the Window environment. The EU Council, improved interoperability, induced by national level of the WCO DM and the in its conclusions on this subject, recom- better data integration throughout the EU CDM Information Package; mended to «accelerate the harmonization supply chain and enhanced data quality of required data by different authorities that will result from the EU CDM, will • It provides the basis to cover EU Member at the EU and national level, building on contribute to a more efficient risk mana- States’ national requirements by exten- existing international standards, and pro- gement approach. ding the EU CDM Information Package, ceeding with the digitalization agenda ». itself based on the wider WCO DM This implies: More information enriched by data maintenance requests [email protected] (DMRs) discussed within the WCO’s • reusing and customizing the WCO [email protected] Data Model Project Team (DMPT) and DM, in line with the needs of associated [email protected]

Violent extremism, borders and action by Customs teams

By Franck Lacroix, thoughts on training Customs teams in specialist services in the fight against DIRECTORATE-GENERAL FOR CUSTOMS AND INDIRECT TAXES [DIRECTION GÉNÉRALE DES detection, the specific missions which may terrorism; DOUANES ET DROITS INDIRECTS], FRANCE be entrusted to them, the support they can receive, and cooperation with other spe- • the roll-out of customized communica- PEOPLE, GOODS AND capital involved in cialist services. tion and protection equipment to pro- preparing and perpetrating terrorist tect Customs teams and safeguard the acts generally, cross borders and transit Training, equipment and instruments conditions in which they intervene, such between different countries. The border needed for detection as service weapons, encrypted commu- is therefore the ideal place for thwarting Faced with the escalating risks of violent nication media, radios, and intermediate the preparation of violent acts in advance, extremism, it is essential to build up the means of defence, particularly at sensi- and for intercepting individuals linked to operational capacities for intervention by tive borders. a terrorist organization. Customs teams in countries potentially facing this threat. This capacity building I would like to underline the first point, Thanks to its privileged positioning at should focus, as a priority, on specific and and stress that the management and effec- different points of entry, its expertise, practical objectives in terms of training tiveness of programmes and instruments and its work managing cross-border and equipment: to promote the security of flows of goods flows, Customs is a strategic partner in and people depends on the appropriate establishing any policy targeting these • training Customs teams responsible training of the Customs teams which use objectives. for security missions relating to the them. detection of sensitive flows, i.e. in I would like, in this article, to give some the use of instruments for mana- In line with WCO recommendations, useful guidance on counteracting the ging and safeguarding flows, and in Customs administrations are the dri- transport of goods and the movement information and management sys- vers, at national level, of programmes to of people posing a risk, and to share my tems employed in cooperation with safeguard international trade in goods,

63 PANORAMA

particularly those goods carried by air These Customs authorities are also asso- Securing and building up intervention and sea. The instruments used to this end ciated with specific initiatives when it capacities constitute relevant tools which help both comes to counter-proliferation. While Customs administrations are clearly prevent and counter potential attacks on identified as key stakeholders in the fight international flows of goods, while also The modus operandi used in terrorist against terrorism, it is necessary to secure helping to detect goods or people poten- attacks or attempted attacks in France, and build up their intervention capacities, tially linked to a terrorist activity, or particularly those in Paris on 7 January particularly through concrete and specific allowing the financing thereof. 2015, and in the Thalys train connecting measures. Amsterdam and Paris on 21 August 2015, Among the programmes and tools used attest to the need to strengthen the role Regular training and raising awareness by French Customs are the Authorized of Customs administrations in combating about threat assessment Economic Operator (AEO) programme, illegal flows of arms and ammunition, in Raising awareness and regular exposure its linkage with the approvals and audits particular those generated by individuals. of Customs officials to threat assessment carried out on companies in charge of air and to detection when checking elements freight security, or the Import Control At national level, Customs may also be likely to be of interest in the fight against System (ICS) – a European Union (EU) charged directly with preventing terrorist terrorism are essential. Given their strate- programme which helps prevent terrorist acts through specific security missions gic positioning on external borders in par- attacks against means of transport, par- on certain means ticular, Customs ticularly aeroplanes, by contaminating of transport, or During targeted control t e a m s m a y , commercial shipments. controls on people during controls, be at borders – secu- operations, or in random confronted at any The Advance Passenger Information rity checks on checks, Customs officials time with people, (API)/Passenger Name Record (PNR) sensitive means goods or docu- Programme, which provides for the collec- of transport or may find themselves in ments linked to a tion and processing of data on air passen- communication, direct contact with goods, terrorist organi- gers to combat the phenomenon of foreign security of air zation. It is impe- combatants inter alia, also falls within this freight, etc. Such documents, capital or rative that they approach. action may also be people linked to violent have the reflexes carried out within and processes nee- The functionalities of these tools must be a framework of extremism. Managing ded to intervene used to their full potential, in particular supervision or this type of situation appropriately in those which target security, with automa- audit. On certain such situations. ted reports helping to select consignments means of trans- requires an appropriate and individuals likely to be of interest in port, Customs response, in terms of Measures to raise the fight against terrorism. The proces- may also be assi- awareness of the sing of useful, actionable information, gned to carry out security, confidentiality and modus operandi particularly on the exchanges made by security checks protection of information, of terrorist orga- individuals, is key to combating violent on the means of nizations, sensitive extremism. transport, and on the definition of follow-up origins, financing the goods, people measures and action to methods, beha- However, the effectiveness of these instru- and baggage being vioural analysis, ments depends on the level of training, and carried. be taken, and finally stress etc. can guide the the competences of the Customs teams in management and behaviour action of Customs charge of monitoring them. Emphasis Fighting against services, and faci- should be placed on training in the use illegal financial management. litate the detection of such tools, and on ensuring Customs transfers, money of elements linked teams embrace their use. laundering and to violent extre- the financing of terrorism must be a top mism. These elements can be extremely Specific missions priority for Customs administrations. The tenuous at the start of a Customs check – Specific missions are allocated to all checks carried out assist in the intercep- hotel bills or parking receipts in a sensitive Customs services involved in fighting ter- tion of financial flows from, or destined area, specific responses to questions, the rorism and dedicated to promoting the to help, terrorist networks. These actions behaviour by the person which draws the security of flows of goods, and securing regularly uncover structured networks and attention of the Customs official, etc. the movement of people. These adminis- their financing methods. Strengthening trations traditionally exercise controls on legislation to authorize asset freezing, Training and situational exercises the movement of, and on trade in, arms, in particular, should be encouraged, so During targeted control operations, or in explosives, and ammunition. Their exper- as to immobilize goods and people, and random checks, Customs officials may find tise is recognized and regularly allows the ultimately prevent the financing of terror themselves in direct contact with goods, interception of illegal or suspect flows. organizations. documents, capital or people linked to

64 WCO news N° 78 October 2015

violent extremism. Managing this type of interfacing with specialist services may situation requires an appropriate response, be an option. This dedicated level can help in terms of security, confidentiality and ensure the secure transmission of strong protection of information, the definition or weak signals, and useful and trusted of follow-up measures and action to be information. It may constitute a reference taken, and finally stress management and support point both internally and for spe- behaviour management – management of cialist services. a finding by a Customs service in connection with violent extremism requires equa- It is also important to share, by ensuring nimity and responsiveness. These elements the sharing of experience about detection should be integrated into training courses and selection, as well as ways of managing for Customs officials. controls. The expertise of Customs teams engaged in security missions and their To allow officials to develop the reflexes knowledge of threat assessment may use- and processes needed to manage this type fully be harnessed by other teams control- of event, regular programming of situa- ling external borders. tional exercises for the detection of arms, explosives and sensitive goods, and even The action of Customs services should the questioning of people suspected of therefore be geared towards a coordina- having links to violent extremism, must ted approach to handling the instruments be encouraged. The repetition of this type they have for managing and controlling of exercise, with consistent scenarios, will cross-border flows. These instruments are allow Customs teams to manage such complementary, and may allow the cross- events if they occur. The participation checking of potentially useful information of specialist services in the fight against in the fight against terrorism. Regular terrorism, such as intelligence services, coordination between the services char- mine disposal teams, and services res- ged with steering these tools may also ponsible for dealing with nuclear, radio- allow targeting and selection criteria for logical, biological and chemical threats, is the purposes of consistent control to be recommended. defined.

These exercises may usefully be accompa- In cross-border action to fight terrorism, nied by instructions and good practices any measure or act should also be accom- designed to preserve the confidentiality of panied by cooperation mechanisms, and instructions, protect the documents and mechanisms allowing exchanges of infor- tools used, and improve the protection mation with specialist services in neigh- of premises harbouring sensitive infor- bouring countries. By way of example, mation and documents. An additional French Customs participates directly consideration may also include protective in such actions through the police and measures for the information systems used Customs cooperation centres set up in by Customs services. border regions with Belgium, Germany, Italy, Spain and Switzerland. Cooperation with other specialist services These centres bring together, at the borders, Action by Customs administrations in officials from the police, the Gendarmerie the fight against violent extremism must and French Customs, as well as their be carried out as part of a complemen- counterparts in a neighbouring country. tary approach with dedicated specialist The border cooperation centres primarily services. Thanks to the instruments at allow the collection, analysis and exchange their disposal and the control missions of useful information in terms of police they perform, Customs services regularly and Customs cooperation. They can also receive useful information about violent help coordinate cross-border monitoring extremism. Processing exchanges of infor- and control missions, particularly in the mation depends on both the establishment event of a terrorist attack. of specific circuits and processes for the management of information. More information www.douane.gouv.fr The establishment within Customs administrations of an operational service

65 PANORAMA

Illegal wildlife trade: an outline of the problems facing Peru

By the Intelligence and Tactical Operations Team, Peru Customs The land of Peru can be divided into three natural areas: the coastal region; the mountains; and the forests. All these areas have different species of fauna and flora, making it a country with a rich and varied biodiversity, and the home of species sought by collectors throughout the world. With illicit trafficking being one of the biggest threats facing Peru’s wildlife resources, exports of wildlife and wildlife products has become a focus of attention for Peru Customs (SUNAT). This article introduces the Customs administration’s efforts to counter the illegal wildlife trade.

Regulation of trade in wild fauna and flora ARTICLE 68 OF the Peruvian Constitution stipulates that the State is obligated to promote the conservation of biological diversity and protected natural areas, while Article 364 (f) of the ‘law on the regulation of forestry and wild fauna’ states that the hunting, capture, collection, possession, transportation, marketing or export of specimens of wild fauna without the corresponding authorization constitutes an infringement of the respective legislation.

The internal transportation, trading and/or export of specimens of wild fauna, therefore, requires appropriate documentation, whether a licence to transport wild fauna or, for species protected by the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES), a CITES permit or certificate.

CITES permits are granted by Peru’s two it might contribute, among other factors, The US authorities did not allow the transit CITES management authorities: to the survival of a species. of the shipment as the species was protected under the US Migration Bird Act, and • National Forest and Wildlife Service Traffickers overexploit authorized species sent the shipment back to Peru. As the (SERFOR), which reports to the or focus on endangered and rare species, export operation was done in compliance Ministry of Agriculture and Irrigation which directly threatens the country’s with Peru’s national standards, Peru (MINAGRI), manages wildlife that biodiversity. The Government of Peru esti- Customs did not proceed to seize the birds. reproduces on land, including all types mates that 400 species of fauna and flora of amphibians. Although SERFOR is in are in danger of extinction. In addition, At the national level, Peru Customs took charge of the forests, the Supervisory illegal trade generates unfair competition, up contact with the Public Prosecution Body for Forest Resources and Wildlife to the detriment of legal traders who com- Service Specialized in the Environment (OSINFOR) manages the issuing of ply with the rules. (FEMA), the National Police Force’s forestry licences; (PNP) environmental division, OSINFOR, Operation FLYAWAY PRODUCE, and SERFOR to generate • Ministry of Production and Foreign During the 12th Meeting of the National intelligence in order to build a database of Trade (PRODUCE) manages aquatic Contact Points of the WCO Regional indicators that would allow risky destina- flora, marine, and continental hydrobio- Intelligence Liaison Office (RILO) for tions, recipients and forwarders of wildlife logical species included in appendices South America, the United States (US) shipments to be monitored. I, II and III of the CITES Convention. proposed the setting up of an international enforcement operation targeting illegal The participation of OSINFOR, PRODUCE Traffickers trading wildlife illegally use wildlife trade, and encouraged Members and SERFOR was essential to ensure that third-party and/or fraudulent permits to from South and North America, as well controlled products were covered by a title trade controlled species. This involves a as Europe, to participate. document that had been verified or chec- variety of players in a system that begins ked, and found to be in conformity with with communities close to wildlife, and The proposal was fully supported and national legislation. In coordination with extends right through to intermediaries the operation, code-named FLYAWAY, these government agencies, Peru Customs and collectors. was run from February to July 2015 with carried out operations in primary areas, 14 Customs administrations participa- such as airports, land terminals and border Illegal wildlife trade ting, i.e. Brazil, Chile, Colombia, Peru, control posts, and in secondary areas, such The trafficking of wildlife, which includes Mexico, Uruguay, Venezuela and the US, as highways and at specific establishments. live or dead animals, plants, and readily as well as Germany, the Netherlands, recognizable parts or derivatives of them, Portugal, Spain, Switzerland and the These interventions led to 35 documented is a lucrative business. Transport costs United Kingdom. It was divided into three findings of wildlife at the national level, are low, and there are no concerns over stages: pre-operative; operative; and post- 32 of which resulted from the intensifica- decent wages or these potentially dama- operative, with national controls being tion of controls at various national control ging environmental practices. According intensified in the operative stage, which points (primary areas), while three finds to SERFOR, it is the third most important ran from 17 to 26 June. took place thanks to joint operations with business in the world after the illicit trade different state bodies such as SERFOR, in drugs and weapons. Countries exchanged information on sei- the PNP and FEMA (secondary areas). In zures made, as well as on risk indicators. addition, various national joint operations It is also a heinous and potentially lethal They also alerted each other when a sus- were carried out that did not record any trade. Experts from the WWF, the nature picious shipment had left the country of positive finds. conservation group, have calculated that origin without being controlled – Peru, for between 60% and 80% of all live animals example, alerted US Customs and Border Types of fraud targeted by smugglers die during their Protection officers that a shipment of 170 Operation FLYAWAY revealed or confir- capture, transportation or subsequent tra- birds destined for Kuwait, and potentially med the use of certain types of fraudulent ding. Moreover, the fact that an animal is in breach of wildlife laws or treaties, was practices: seized does not guarantee that it will sur- coming their way. In this regard, they sug- vive. Using appropriate handling methods gested that a wildlife specialist be present • Declaration of animals as being dead, during seizures – the period of time from while the species was being checked in the when they were actually alive; the seizure to the transfer of an animal to US against the accompanying documents. an authorized establishment – is critical, as

67 PANORAMA

Operation FLYAWAY brought together national participants from Customs, police and wildlife authorities to target the illegal trade and transport of protected specimens.

• Incorrect classification, leading to diver- strong communication mechanisms with exchange of ideas, and also hindering the sion from a tariff heading for which a other institutions. It also highlighted a cri- unification and standardization of policy. permit is required; tical issue related to the DAM: the declara- • Exports of unauthorized specimens tion does not require the exporter to indi- Such an inter-institutional agreement among authorized specimens; cate the scientific name of the species to be already exists between SUNAT and • Exports of quantities greater than those exported, making it harder for an officer MINAGRI. Both bodies help to improve authorized; to determine whether the species repor- efficiency in the fulfilment of their inter- • Exports to consignees other than those ted in the document is protected under the institutional objectives by carrying out indicated on the permits; CITES or not. operations, exchanging information, and • Exports to destinations other than those carrying out joint operations, including indicated on the permits; Operation FLYAWAY also addressed training. With SERFOR falling under • Unauthorized use of permits issued in an issue that applies to the internatio- MINAGRI, one would think that there the name of another person, although nal wildlife trade as a whole. In many is no need for an additional cooperation permits are transferable; countries, a ‘stamp’ on an official docu- agreement. However, Customs believes • Change of permit number; ment is not a sufficient guarantee of that it would help to boost collaboration in • Declaration of an entity code different genuine legality. In such an environment, the domain of training and the exchange from the administrative authority or the the challenge facing Customs controls of information. omission of such information from the can be met only if all government moni- Peruvian Customs declaration (DAM). toring and control bodies cooperate with Last but not least, the weaknesses identi- each other. Without this cooperation, the fied in Peruvian national legislation must Challenges and prospects sustainability of threatened species, a pro- also be assessed in detail. Any new national On the subject of Operation FLYAWAY, duct of indiscriminate trading, cannot be legislative framework must, in particular, the WCO Secretary General, Kunio guaranteed. establish enhanced control measures, and Mikuriya, declared that “operations such must ensure that the import and/or export as FLYAWAY are excellent for ensuring Peruvian Customs, for its part, intends declaration includes the scientific name of that organizations move from words to to reinforce its links with SERFOR and the species being traded, something that deeds, …and for acquiring and sharing PRODUCE. An inter-institutional agree- is not adequately covered by the current experience.” ment is recommended, as are training legislative framework. courses and a mechanism for officials to In Peru, the operation revealed Customs exchange information on CITES protec- More information clearance officers’ lack of awareness of the ted species of fauna and flora. Too often, [email protected] technical identification characteristics especially in the case of enhancing and [email protected] of species protected by the CITES, and reinforcing skills, activities are carried out confirmed the necessity of establishing unilaterally, preventing feedback and the

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Singapore’s ‘whole-of-government’ approach to coordinated border management: maintaining its edge amidst new challenges

By Singapore Customs and the Increasing public expectations add a TradeNet: building consensus through Immigration & Checkpoints new dimension to the already daun- stakeholder engagement Authority of Singapore ting challenges faced by Singapore Singapore’s early experience in develo- A dynamic and challenging operating Customs. Improved levels of education, ping its National Single Window (NSW), environment greater exposure, and more familiarity known as TradeNet, provided it with the AS A GLOBALLY-ORIENTED and open eco- with international trade and regulatory insight that coordinated border manage- nomy, trade is of paramount impor- practices mean that traders increasin- ment (CBM) is fundamental to develo- tance to Singapore. The importance of gly expect a high level of transparency, ping and sustaining a SW environment. trade to the country is reflected in the predictability, and effectiveness from Both the NSW and the CBM mind-set are fact that the value of Singapore’s exter- government agencies. The public also complementary elements of Singapore’s nal trade has consistently been three expects government agencies to protect ‘whole-of-government’ (WOG) approach times that of its gross domestic pro- society from the effects of harmful and to providing efficient services to the tra- duct (GDP). In 2014, Singapore’s ports illegal goods. ding community. handled 33.55 million Twenty-foot Equivalent Units (TEUs) of containers. The emergence of new industries Using TradeNet, the trading community is and business models also increases able to submit permit applications electro- The expansion of trade volumes in the need for regulatory authorities nically for processing, via a single point of an increasingly globalized world has to introduce new schemes and custo- entry to government agencies. All national brought about increased prosperity, mized service offerings to meet their competent authorities involved in regula- but also increased risks. Errant traders, needs. Singapore Customs consciously ting trade flows, including the Agri-food organized crime groups, and terrorists seeks to keep up with the rapid pace of and Veterinary Authority of Singapore have become more sophisticated in the changes, and to pre-empt the needs (AVA) for food and plants, the Health exploiting supply chain vulnerabilities of traders by engaging them actively, Sciences Authority (HSA) for medicines, to move goods illegally across borders. in order to add value to their opera- and the Infocomm Development Authority tions, and ensure that legitimate trade of Singapore (IDA) for telecommunication thrives. equipment, are part of TradeNet. Once

70 WCO news N° 78 October 2015

provided a strong foundation for the then system is not merely the job of one Customs and Excise Department, and agency, but affects the entire country as partner government agencies involved in a whole. trade regulatory issues. This foundation was followed by further consolidation, With this in mind, Singapore Customs continual improvements, and increased works closely with the ICA, using a risk- coordination over the years. based approach, in order to identify shipments posing security risks, and One of the most noteworthy developments take steps to mitigate such risks through in recent times took place in 2003, when actions on the ground. The two agen- the government recognized the need for cies cooperate on joint risk profiling and greater synergy, and for a reorganization targeting efforts, rendering operational of the trade and border authorities in assistance to each other when suspi- Singapore. This resulted in the formation of cious shipments are detected. Singapore the Immigration & Checkpoints Authority Customs and the ICA would consult of Singapore (ICA) as the single command each other on decisions to inspect or for checkpoints and border control func- interdict shipments when necessary. tions, while Singapore Customs was established as the single contact point for all An example of this coordination was Customs, revenue, and trade matters. demonstrated in January 2014, when Singapore Customs and ICA officers

© Singapore Customs Whereas the former Customs and Excise jointly supervised the scanning of a Department was mainly focused on reve- 40-foot container which had been tar- nue matters, the new Singapore Customs geted by both services. The scanning is vested with responsibility for both reve- results revealed inconsistencies in nue and trade facilitation matters. This the radiographic image. As a result, working arrangement allows the ICA and a controlled delivery was carried out Singapore Customs to share the responsi- by Singapore Customs, leading to the bility of securing Singapore’s borders, and successful dismantling of a cigarette yet be effective in facilitating legitimate smuggling ring – 14,999 cartons of duty- trade. unpaid cigarettes were seized, and four suspects were arrested and successfully Improved sense-making and detection prosecuted. TradeNet receives the declaration submit- through collaboration ted by the trader or their appointed agent, Data is essential in the modern border Such cooperation efforts to secure it will automatically route the declaration regulatory environment. Effective risk Singapore’s borders are not limited to to the relevant competent authorities for management is heavily dependent on the Singapore Customs and the ICA alone. processing. availability of data, as well as the ability to Singapore Customs and the ICA also integrate the available data so as to inform collaborate with other competent autho- The major realignments needed to sup- selectivity and tactical decision-making. rities to ensure that illicit goods under port Singapore’s NSW implementation their respective jurisdictions are not were achieved through extensive discus- Through TradeNet, all agencies with bor- unlawfully imported into Singapore. sions and consensus building with govern- der regulatory functions are able to pro- ment agencies, companies, organizations cess their respective regulatory require- In May 2015, Singapore Customs and the and industry associations. This focus on ments through an integrated interface. In ICA worked with the AVA – the com- achieving a ‘win-win’ outcome enabled this way, agencies are able to focus on their petent authority for species protected all parties involved to overcome the ini- respective control areas, while the system under the Convention on International tial difficulties, as they saw the potential provides the functionalities to route decla- Trade in Endangered Species of Wild savings and benefits from reducing the rations to the relevant agencies, and pro- Fauna and Flora (CITES) – to identify burden associated with handling trade vide approval responses to trade. and subsequently seize a shipment of documentation. about 3.7 tonnes of ivory tusks, rhinoce- However, the challenges of the modern ros horns, and teeth believed to be from Towards a ‘whole-of-government’ trading environment require a higher endangered feline species. The shipment approach level of sophistication. Agencies must had been declared as tea leaves, and had The journey to achieve a WOG approach not only focus on their respective control been concealed among bags of tea dust. for trade regulatory issues did not areas, but also recognize cross-cutting The haul was estimated at 8 million start overnight. The business process risks, and ensure coordination between Singapore dollars (about 5.6 million US re- engineering undertaken as part of different government stakeholders. The dollars), and was preceded by another Singapore’s NSW environment in 1989 security and integrity of the trading significant seizure in 2014.

71 PANORAMA

Immigration & Checkpoints Authority of Singapore (ICA)

As a department under the Ministry of Home Affairs, the ICA ensures that the movement of people, goods, and conveyances through Singapore’s 1,783 pieces of raw ivory tusk, four pieces of rhinoceros horn and 22 pieces of canine teeth, checkpoints is legitimate and lawful. believed to be from African big cats, concealed among bags of tea dust Aside from its border security functions, the ICA also performs immigration and registration functions, such as the issuing of travel documents and identity cards to Singapore citizens, as well as the issuing of residence passes and work permits to foreigners living and working in Singapore. The ICA also conducts inland enforcement operations against immigration offenders. In 2014, the ICA cleared about © Singapore Customs Exhibits seized in January 2014 200 million travellers, and detected 93,380 contraband cases at the These seizures were the result of sustained agencies so that their specific knowledge checkpoints. collaboration between Singapore Customs of their domain can be brought to bear, for and the AVA to curb the trafficking of ille- maximum success rates in detection and gal wildlife products through joint targe- enforcement. ting efforts. Over the years, this collaboration has led to a number of successful In this way, relatively larger agencies, such Singapore Customs seizures involving goods protected under as Singapore Customs and the ICA, which the CITES. have stronger enforcement competencies As a department under the Ministry and experience of cross-border regulatory of Finance, Singapore Customs is Coordinated border management offences, are able to provide support to the single implementing agency for CBM is a necessity for Singapore, given its other agencies for undertaking seizures and Customs laws and trade laws, and need to be a secure and business-friendly carrying out enforcement on suspicious possesses regulatory oversight over global trade hub. This national impera- shipments detected. Consequently, all agen- the entire trade process. This enables tive is recognized by all border regulatory cies work together to achieve the synergies traders to deal with only one agency agencies as a shared responsibility. While necessary to meet their respective regulatory for regulatory procedures involving organizational boundaries may exist, mandates, and contribute to the prosperity the import and export of goods, and maximum efforts are exerted to seek out and security of the country. puts Singapore Customs in a strong positive synergies to improve border pro- position to facilitate Singapore’s 900 cesses, and assure the integrity of the tra- More information billion Singapore dollars’ (about 630 ding system. www.customs.gov.sg billion US dollars) worth of annual [email protected] trade. Singapore’s small physical size and man- www.ica.gov.sg power constraints also mean that no single agency is able to discharge all of its regulatory responsibilities in a self-contained way. Agencies, by virtue of their speciali- zations, will best know the risks that affect the commodities under their control. Even though Singapore Customs and the ICA may have broad powers under the law to act on behalf of partner government agencies, Duty-unpaid cigarettes both Singapore Customs and the ICA reco- concealed in specially constructed hollow gnize that such authority needs to be exer- spaces beneath stacks

72 WCO news N° 78 October 2015

Vanuatu Customs’ response strategy to Cyclone Pam

By John Sala, and Oxfam International, as well as with cargo manifests to clear goods. However, DEPUTY DIRECTOR OF CUSTOMS, VANUATU CUSTOMS AND INLAND REVENUE DEPARTMENT shipping and airline companies, such as if goods were found to have been diverted DHL and South Seas Shipping. for any non-humanitarian aid purpose, LATE ON 13 March 2015, tropical Cyclone Customs could demand that the impor- Pam hit Vanuatu, packing wind gusts of However, a number of challenges had to ter follow normal clearance procedures up to 320 kilometres (200 miles) an hour, be overcome: two Customs vehicles were and pay any Customs duties owed to the and causing widespread damage in the damaged, causing a set-back to opera- government. archipelago nation located in the South tions; debris of trees and buildings were Pacific Ocean. It was the most devasta- all over the streets, causing flat tyres to All releases of relief supplies were reporting tropical cyclone that the southern the few vehicles at hand; and fuel shor- ted back to the NDMO to assist the distri- hemisphere has ever experienced, and tages across the country limited the use bution plans and the monitoring of relief the worst natural disaster in the history of the vehicle fleet in general. Moreover, supplies. Import regulations in these cir- of Vanuatu. Eleven people were reported Customs and other authorities were hin- cumstances authorized the Director of the dead, and many others injured. More than dered in their response due to a commu- NDMO to keep records on importations of 200 houses were permanently destroyed, nication blackout, resulting in Customs such relief supplies. and up to 10 thousand people were made having to revert to manual procedures to homeless. allow for the smooth clearance of goods. Given Vanuatu’s experience, it is recom- All records were kept in paper files until mended that a formal MoU should be sig- Using its strategic and tactical risk mana- the systems were back online, two weeks ned between Customs, as the lead agency gement plans, the Vanuatu Customs and after the cyclone had hit. at the border, and other relevant insti- Inland Revenue Department (DCIR) res- tutions, such as the NDMO, to allow for ponded immediately in the aftermath of Over 1,000 tonnes of relief supplies landed more preparedness in order to mitigate the this catastrophic cyclone. The DCIR was in Vanuatu during and after the state of challenges of similar catastrophic natural part of the National Emergency Operations emergency period. These supplies included disasters in the future. Centre (NEOC) set up in 2012 in the capi- tarpaulins, tents, chain saws, building tal city of Port Vila within the facilities of material, seeds for agricultural purposes, Such a MoU would clarify the responsibi- the National Disaster Management Office planting tools and material, food sup- lities of each agency, define each agency’s (NDMO) – the national coordinating plies, health and hygiene kits, water, water specific roles and assignments, set out who agency for responses to emergencies lea- tanks, and many other types of supplies. reports to who, and contain any other rele- ding to disasters. Before the cyclone hit, a Despite the absence of a Memorandum vant measures. More work also needs to be series of meetings were organized by the of Understanding (MoU), good working done to ensure that cooperation mecha- NEOC to coordinate the preparedness relationships were established informally nisms are in place, and that the staff of and responses of Customs and other key between Customs and key stakeholders, the different agencies work as a team to border agencies involved in the logistics such as the NDMO. effectively coordinate operations, thereby supply chain. ensuring the timeous distribution of relief According to import duty regulations, the supplies to those affected within a mini- Immediately after the cyclone hit, Customs Director of Customs delegated powers to mum number of days. was again present at the Council of the Director of the NDMO to allow for Ministers’ meeting, advising on key stra- speedy approval of disaster relief supplies. More information tegies and options. A state of emergency Customs accepted landing orders and https://customsinlandrevenue.gov.vu had been declared, following the cyclone, by the Head of State and the Minister for Climate Change, calling for fast release of disaster relief supplies coming into Vanuatu. After receiving the state of emergency declaration, Customs was again present at the Bauerfield International Airport to facilitate the arrival of C-17 military aircraft and expedite the release of goods. Customs also participated in multiple logistics cluster meetings with local and international aid agencies, such as the Red Cross, World Vision, Save the Children

Sri Lanka Customs’ response to a natural disaster: challenges faced and lessons learned

By JP. Chandraratne, DIRECTOR OF CUSTOMS, SRI LANKA CUSTOMS duties and/or tax exemptions and releasing the established coordinated mechanism goods, in order to expedite the process. among relevant agencies. ON 26 DECEMBER 2004 almost two-thirds of the Sri Lankan coast was severely affected The urgency that prevailed during the tsu- Consequent to the tsunami, the govern- by the Indian Ocean tsunami, which left nami prompted Sri Lanka Customs to for- ment of Sri Lanka made significant thousands of people displaced, injured or mulate new regulations and mechanisms changes to its disaster management sys- dead in its wake, highlighting the country’s through the issue of a Departmental Order tems. A National Emergency Operation vulnerability to a natural disaster. which provided for the following: Plan (NEOP) was established by the Ministry of Disaster Management Besides low-frequency but high impact • The implementation of new Customs with the support of the United Nations events, such as the 2004 tsunami, Sri Lanka procedures, such as a simplified goods Development Programme (UNDP). The is regularly affected by weather and water- declaration for the clearance of relief NEOP put in place a comprehensive sys- related hazards due to monsoonal rain and consignments, and the relaxation of tem for emergency operations by articu- the development of low pressure in the Bay mandatory requirements – for example, lating communication mechanisms at the of Bengal. As a small island state, with a relief goods no longer needed to be clas- national and sub-national level, as well as high population density, whose economic sified under a specific HS code, instead a among relevant organizations. activities are mainly concentrated in flood- mere description of the imported items prone and coastal areas, such events have sufficed; Sri Lanka Customs is one of the govern- disastrous human and economic effects. ment organizations directly concerned by • The creation of a Relief Facilitation Unit the NEOP, as it is involved in every emer- In the immediate aftermath of the (RFU) led by a Director from Customs, gency response phase: tsunami, a number of sympathizers, and staffed with officers from Customs volunteers and organizations involved in and other relevant agencies who were • the early warning phase; the distribution of humanitarian relief assigned to each and every entry/exit • the emergency phase; goods arrived in Sri Lanka via air and sea point in the country. They were tasked • the post-emergency phase. routes to provide assistance in an effort to with assisting consignees in completing save lives and property, as well as to ensure goods declarations, and offering round When a potential natural disaster is pre- the physical and psychological health of the clock guidance, seven days a week, dicted, Sri Lanka Customs will receive survivors. This flow of goods and persons including during weekends and public an ‘early warning’ from the Disaster created bottlenecks at main entry points, holidays. Although they could still exa- Management Centre (DMC), requiring such as Colombo harbour and the airport. mine cargo which represented a risk, the Director General of Customs to imme- limited space made such examinations diately inform all relevant authorities, and Sri Lanka Customs was ill-prepared to difficult; request that they activate the NEOP. The react effectively, unable to ensure the swift Plan also provides for Customs officials to release of relief cargo, and the quick pro- • The issuing of several circulars by the have regular contact with the DMC, the cessing of relief workers and media per- General Treasury in consultation with Ministry of Finance, other related minis- sonnel, with their working instruments relevant agencies, including Sri Lanka tries, and all other stakeholders, enabling and belongings. Although there were pro- Customs, containing instructions on the successful implementation of the visions in the Customs Code to regulate how relief cargo should be cleared. NEOP. the handling of relief cargo, lack of preparedness, insufficient staff numbers, and With new procedures and mechanisms Sri Lanka Customs is confident that it is poor physical and IT infrastructure led to in place, Sri Lanka Customs successfully now in a position to face any emergency inefficiencies in the management of this managed to clear a considerable amount situation that may arise. It can now count enormous volume of people and goods. of consignments over a short period of on proper IT infrastructure, which enables time, and Customs staff remember this the automation of Customs declarations Moreover, there was poor coordination with great pride. When the tsunami hit and clearing procedures, and on more with stakeholders, and between govern- Sri Lanka, the northern and eastern part well-trained officers who benefited from ment agencies. There was, in particular, no of the country were heavily affected by a specific training developed by the Human Single Window environment to coordinate civil war and ethnic tensions, and there Resources Directorate of Sri Lanka the clearance of goods among regulatory were many restrictions on items that could Customs in conjunction with internatio- authorities, and no system, such as a ‘one- be sent to these regions. Despite these nally competent organizations, such as the stop shop’ (OSS), gathering all government constraints, essential relief items were UNDP. agencies with roles to play in processing sent to the affected communities through

74 WCO news N° 78 October 2015

Customs officers also participated in workshops to evaluate their capabilities from a disaster relief perspective, particularly in the areas of handling passengers and relief cargo arriving during a disaster. In addition, a Get Airports Ready for Disaster (GARD) training course, developed by Deutsche Post DHL and the UNDP, held in 2014, enabled authorities to identify potential issues and develop suitable solutions. Guidelines for Customs officials are also currently being prepared in consultation with other relevant agencies also involved in emergency relief operations.

Physical infrastructure has also been improved, and a ‘one-stop shop’ (OSS) has been created at the Customs Head Quarters in Colombo, which is located close to the port and not far from the airport. It brings together the main government agencies involved in processing goods under one roof, enabling commercial operators to obtain licences required for some imports, such as medicines and medical equipment, without having to go to the Health Ministry or the Import Control Department. This OSS is also linked to the Registrar of Motor Vehicles and the Quarantine Department, and is only a few metres away from the Telecoms Ministry for those who need approvals for media or telecoms equipment.

Another OSS is the Export Facilitation Centre, which was established recently © Direct Relief within the Colombo port limits. Most of the approvals required for export can be obtained from this office, which processes Customs declarations for maritime and air cargo consignments. Last but not least, officials from the Quarantine Department Ministry subject to the approval of the also holding discussions on the possibi- and the Food and Health Agency are avai- Director General of Customs (DGC),” to lity of signing, with the United Nations lable 24 hours a day at the airport. be exempted from Customs duties. (UN), the ‘Customs Model Agreement’ for the importation of relief consign- As for the adoption of international In addition, Sri Lanka Customs facilitates ments and possessions of relief personnel standards, although Sri Lanka Customs the declaration process by accepting the in the event of disasters and emergencies, did not ratify Specific Annex J of the submission of a ‘Provisional Entry’ and developed jointly by the UN Office for the revised International Convention on a ‘Removal Application’ by importers, Coordination of Humanitarian Affairs the Simplification and Harmonization instead of the simplified declaration, to (UN-OCHA) and the WCO. of Customs Procedures (RKC), which clear their goods, subject to the comple- includes a specific chapter on relief consi- tion of the declarations within a reaso- More information gnments, the National Import Tariff Guide nable period. www.customs.gov.lk of Sri Lanka provides for “goods being gifts from persons or organizations overseas for Moreover, a committee has been appointed relief disaster caused by natural or other to work on the adoption of international disasters, imported on the recommenda- standards, and to ratify Specific Annexes tion of the Secretary to the respective line of the RKC. The Customs Department is

75 BOOK REVIEW

Tobacco Control, International Trade, and Public Health: a review of Holly Jarman’s book ‘The Politics of Trade and Tobacco Control’

By Robert Ireland, WCO HEAD OF RESEARCH AND COMMUNICATIONS people died in 2014 from smoking-rela- rights, and should be protected under the ted diseases; one billion people, mostly in rubric of intellectual property rights and Introduction developing countries, are projected to die ownership in general. INTERNATIONAL TRADE IS subject to conflicts from smoking-related diseases over the that can arise from, among other things, course of the 21st Century. The Politics of Trade and Tobacco the inherent tension between business Control profits and governmental protection In addition to their inherent carcinogenic The 2015 book ‘The Politics of Trade and of health, safety and the environment. toxicity, cigarettes have the added health Tobacco Control’ by Dr. Holly Jarman, Topics such as plain (standardized) packa- detriment - albeit a business advantage to a political scientist at the University of ging of cigarettes; asbestos (the European the tobacco industry - of being a highly Michigan in the United States, examines Communities – Measures affecting addictive product which makes cessation the intersection of public health, tobacco asbestos and asbestos-containing pro- a tall obstacle to overcome. On the busi- control and international trade. In addi- ducts case); and carbon tariffs (border ness side, the tobacco industry grosses tion, the book describes how lawsuits are tax adjustments) in the context of global enormous amounts of money and employs being used to challenge public health laws, warming have faced many workers. An both in national courts and also in inter- such debate and ongoing societal national trade tribunals. conflict. choice is thus whether to prioritize the Legal actions against plain packaging The World Trade interests of those laws Organization’s who profit from Plain packaging and similar tobacco (WTO) core prin- tobacco sales or glo- control laws have been subjected to legal ciple for resol- bal public health. actions in three different types of legal ving these clashes forums: (1) national courts; (2) ad hoc tri- is in the General National tobacco bunals established using provisions from Agreement on control regulations trade or investment agreements; and (3) Tariffs and Trade’s seek to protect WTO dispute proceedings. (GAT T) Ar ticle human health by 20 (General restricting all ciga- National courts Exceptions), which rette brands, not After the Australian plain packaging provides that WTO just a few chosen legislation was adopted, but before it Members can “pro- ones. In addition entered into effect, tobacco companies tect human, ani- to higher tobacco filed a lawsuit in 2011 at the High Court of mal, or plant life taxes (collected Australia. The plaintiffs contended, among or health” if “such by Customs and other things, that the plain packaging law measures are not other revenue should be overturned because it entailed applied in a man- agencies), adver- “acquisition of property” – in essence a ner which would tising restrictions purported violation of property rights. The constitute a means and smoking bans Australian High Court upheld the plain of arbitrary or unjustifiable discrimination in public places, limiting the advertising packaging law in 2012 in a 6-1 ruling. between countries where the same condi- on cigarette packs with plain packaging tions prevail, or a disguised restriction on is currently at the frontline of tobacco- Following the adoption of plain packa- international trade.” related public health policymaking. Four ging laws in England and Ireland in 2015, countries – Australia, France, Ireland and tobacco companies filed lawsuits in British The trade in tobacco is a classic public the United Kingdom – have thus far adop- and Irish courts. These cases are ongoing; policy example of this dynamic. With ted plain packaging. the British and Irish governments have respect to public health, cigarettes are indicated that they will defend the cases unique in that they are the only product Tobacco companies are litigating against vigorously. that currently can be sold and bought plain packaging and are doing so not based legally but harms the user if consumed on the WTO Article 20 principles but by Uruguay has also instituted a number of as intended. According to the World contending that cigarette pack advertising robust tobacco control measures, inclu- Health Organization (WHO), six million and logos are trademarks and property ding large graphic health warnings on

76 WCO news N° 78 October 2015

Legal milestones concerning tobacco public health laws* Date Legal event 2009 Abal Hermanos (a PMI affiliate) files suit at the Uruguayan Supreme Court against Uruguay’s tobacco control laws. February 2010 Tobacco companies FTR Holding S.A., Philip Morris Products, and Abal Hermanos file a legal action against Uruguay’s tobacco control law using a BIT between Uruguay and Switzerland. November 2010 The Supreme Court of Uruguay unanimously rejects Abal cigarette packs, bans on misleading words Hermanos’s case. like ‘low-tar’ and ‘light,’ and the limit November 2011 A PMI subsidiary files a legal action against Australia’s plain packa- of one line for the brand name. These ging law using a BIT between Australia and Hong Kong. measures are part of Uruguay’s efforts December 2011 Several tobacco companies file a lawsuit against Australia’s plain packaging law at the Australian High Court. to implement the WHO’s Framework Convention on Tobacco Control (FCTC), March 2012 Ukraine initiates a dispute against Australia for its plain packaging law at the WTO. which it ratified in 2004. April 2012 Honduras initiates a dispute against Australia for its plain packaging law at the WTO. Beginning in 2008, Abal Hermanos – the July 2012 The Dominican Republic initiates a dispute against Australia for its Uruguayan affiliate of tobacco giant Phillip plain packaging law at the WTO. Morris International (PMI) – and several August 2012 The Australian High Court rules in favour of the Australian plain other tobacco companies, filed lawsuits packaging law. against Uruguay’s tobacco regulations. May 2012 Cuba initiates a dispute against Australia for its plain packaging law In 2009, Abal Hermanos filed a lawsuit at at the WTO. the Supreme Court of Uruguay, alleging, September 2013 Indonesia initiates a dispute against Australia for its plain packaging among other things, that its brands had law at the WTO. been expropriated. Uruguay prevailed in May 2015 Ukraine withdraws its WTO dispute against Australia. the national cases. *adapted from Jarman (2015) and the websites of the Australian Government and the WTO. BIT Tribunals The so-called Bilateral Investment Treaty (BIT) and Investor-State Dispute Investment Disputes (ICSID). The BIT action against Australia’s plain packaging Settlement (ISDS) mechanisms are gai- was ratified 13 years before Uruguay rati- law in 2011. PMI alleged that the plain ning attention in policy circles. Jarman fied the FCTC and 19 years before the packaging legislation contravened the writes that BITs “allow foreign investors PMI BIT-based action. PMI and its affi- Australia-Hong Kong BIT “in that they to initiate investment disputes against liates alleged, among other things, that expropriate the investments, are unfair governments that they believe have viola- the Uruguayan “80 per cent health war- and inequitable, unreasonably impair ted their rights.” The cases are then heard ning coverage requirement unfairly limits the use of the investments, amount to a at a legal forum created for the individual Abal’s right to use its legally protected tra- failure to afford full protection and secu- investment dispute. The tribunal arbitra- demarks . . .” and caused “a deprivation rity for the investments, and contravene tors are typically lawyers, one picked by of PMP’s [Phillip Morris Products] and obligations Australia has entered into with the plaintiff, one picked by the defendant, Abal’s “intellectual property rights.” regard to investments of investors, speci- and one picked by the arbitrators appoin- fically international trade obligations.” ted by the parties. The PMI v. Uruguay BIT case is not PMI also contended that plain packaging moving quickly. PMI appointed its arbitra- is a “technical regulation that is not neces- BITs and ISDSs are unusual in that they tor and Uruguay appointed its arbitrator. sary to fulfill the objective of protection give private companies the ability to sue They were unable to agree, however, on the of public health.” Three arbitrators have governments using bilateral or multilateral third arbitrator, who had to be appointed been appointed – one by PMI, one by governmental treaties, and to do so in a by the ICSID Secretary General. In 2013, Australia and one by the Permanent Court newly established legal forum with several the ICSID agreed that it had jurisdiction of Arbitration. The case is ongoing. options for a venue. According to leaked to hear the case. The case is expensive for a text, the draft Trans-Pacific Partnership country of 3.4 million people with a gross WTO dispute proceedings Agreement (TPP), a regional trade agree- domestic product (GDP) of only 57 bil- Several countries have launched dispute ment currently being negotiated, includes lion US dollars; Uruguay has apparently proceedings against Australia for its plain ISDS provisions. received financial support from various packaging law at the WTO. The case is sources to defend the case, including from expensive both for the complainants and Uruguay faces a BIT-based case. PMI American billionaire and former New Australia. Jarman cites research indicating used a 1988 BIT (ratified in 1991) between York City Mayor Michael Bloomberg. that the tobacco industry provided legal Uruguay and Switzerland to request and financial support to the countries that an arbitration tribunal hearing at the Similarly, using a 1993 Australia-Hong lodged the dispute proceedings against International Centre for Settlement of Kong BIT, a PMI subsidiary launched an Australia.

77 BOOK REVIEW

Ukraine, the first complainant in the WTO shopping’ and ‘bulk buying.’ She describes reducing tobacco consumption with no ill proceeding, alleged that the Australian forum shopping – or ‘venue shopping’ – as effects. plain packaging law is inconsistent with, “the practice of selecting the venue, such among other things, various provisions of as an agency, committee, court, or arbitra- The Australian Border Force (formerly the the Agreement on Trade-Related Aspects tion body, most likely to provide you with Australian Customs and Border Protection of Intellectual Property Rights (TRIPS a favourable result.” She describes ‘bulk Service), a WCO Member, has been repor- Agreement). Several other countries later buying’ as “using multiple forums at once ting diminishment in the number of illicit joined the WTO dispute and a panel was to mediate conflicts over tobacco policy.” tobacco seizures, one proxy for estimating convened. the illicit trade in tobacco, while taxes have The multiple legal actions against Australia been increasing and plain packaging nears The action did not make contentions regar- and Uruguay have injected significant its three year anniversary. ding human health and possible discrimi- complexities and expenses into the nation, but placed its hope in contending adoption of public health regulations. There have been few, if any, examples of that stylish advertising on a cigarette pack Most likely, the actions have deterred or counterfeiting of Australian plain packs. is intellectual property and should be pro- delayed other countries, especially under- One might conclude that the Australian tected. In May 2015, Ukraine requested resourced ones, from adopting similar plain packaging law is a technical regula- that the convened WTO panel suspend public health laws. tion that is necessary to fulfill the objective its proceedings “with a view to finding a of protecting public health and that there is mutually agreed solution.” In June 2015, Conclusion credible evidence that it is reducing smo- the panel granted Ukraine’s request and In Australia, data shows that smoking king prevalence. suspended its work. rates have declined and illicit trade has not increased in the period since December More information Forum shopping and bulk buying 2012 when plain packaging entered into www.palgrave.com/ Jarman writes that the aforementioned effect. The evidence reflects that plain tobacco industry strategy is called ‘forum packaging is working as intended – it is

Centre for Customs & Excise Studies

Advance your career with a degree from the world’s leading provider of training and education in the highly specialised area of customs, border management and international revenue administration.

We deliver courses in: Border Management | Customs Administration International Revenue Administration www.customscentre.com78 | [email protected] Knowledge Beyond Borders POINT OF VIEW WCO news N° 78 October 2015

10 years of promoting the academic standing of the Customs profession

By Professor David Widdowson, PRESIDENT OF THE INTERNATIONAL NETWORK OF endorsement of such programmes repre- Each pursues its charter to the satisfac- CUSTOMS UNIVERSITIES sented a significant step forward, it was tion of its Members, and each is given the international acknowledgement that was opportunity to further the achievement of From its humble beginnings in 2005, required before Customs studies could be its objectives by actively participating in the International Network of Customs recognized as a true academic discipline. the activities of the other. Universities (INCU) has come a long way. The primary motive for establishing the To this end, the INCU has been working This is recognized by the fact that both network was to closely with the organizations feel compelled to collaborate promote the aca- WCO to further with other organizations in areas which demic standing this cause, and touch on their particular sphere of activity. of the Customs together we have From an INCU perspective this includes profession – developed formal some 20 international organizations. For something that standards for the the WCO it involves many more, as it reco- was clearly nee- Customs pro- gnizes the important role that many inter- ded at the time, fession, globally national organizations play in developing and which, I am recognized acade- and facilitating international trade and pleased to say, mic programmes, travel, including the associated Customs has been well and an academic jour- and border management policies. truly achieved in nal that is about to the intervening enter its tenth year In progressing its charter, the INCU has ten years. As the of publication, and recently introduced global conferences that INCU celebrates a series of inter- are designed to complement the WCO’s its 10th anniver- national confe- PICARD Programme by establishing a sary, it is worth rences that focus forum that provides its Members with a Centre for Customs & Excise Studies recalling at least on academically- greater opportunity to present the findings part of that jour- recognized research of their research activities in the field of ney, and contem- and development. Customs and international trade, and plating what allows younger researchers and students Advance your career with a degree might lie ahead. Notably, neither to present their research proposals to the the WCO nor the broader research community. from the world’s leading provider of I recall the day INCU could have I first proposed the development of a achieved this outcome independently of The Inaugural INCU Global Conference training and education in the highly Master’s degree with a Customs speciali- one another. While international policy- was held in Baku, Azerbaijan in May zation. One of my professorial colleagues making is beyond the jurisdiction of the 2014, with the theme ‘Trade Facilitation specialised area of customs, border asked why one would need a Master’s INCU, it can significantly support such Post Bali: Putting Policy into Practice.’ management and international programme to teach people how to search decision-making through its extensive The conference brought together delegates bags. Those of you who are involved in research initiatives. Similarly, the WCO from over 70 countries, including repre- revenue administration. trade and Customs matters, and who cannot award academic degrees, but can sentatives of Customs administrations, 20 understand the breadth and complexity of influence the development of programmes international organizations, the private the subject, would have shaken your head that lead to such qualifications by formally sector, and academia. The conference was as I did. There is far more to the Customs recognizing those which meet the profes- also the first of its kind to provide simulta- BAChEloR dEgREES | poStgRAduAtE dEgREES | doCtoRAtES | RESEARCh profession than baggage search! But that sional requirements of its Members. neous telecast via YouTube – clearly a sign IntERnAtIonAl pARtnERShIpS | voCAtIonAl tRAInIng was the perception some 15 years ago, and of the times! Study onlInE | Study on-CAMpuS In AuStRAlIA | ColoMBo CAMpuS opEnIng In 2016 it was that perception which prompted the The experience to date has served to establishment of the INCU. highlight the natural synergies which exist Proceedings included a welcoming address between the two organizations. Like many by the Director General of the World Trade Recognizing the academic significance partnerships, the whole has proved to be Organization (WTO), Roberto Azevêdo, We deliver courses in: of Customs and border management, a much greater than the sum of its parts. keynote addresses by three eminent Nobel small number of universities had already The key to such a synergistic relationship Laureates, the Assistant Secretary for developed Customs-specific qualifica- lies in the fact that competition does not International Affairs of the United States Border Management | Customs Administration tions and research streams in the 1990s, and cannot exist. While common areas of (US) Department of Homeland Security, notably Münster in Germany, and interest are shared, each organization has and a number of other highly respected International Revenue Administration Canberra in Australia. And while national its own agenda and its own imperatives. speakers. Among them was the Chairman www.customscentre.com | [email protected] Knowledge Beyond Borders 79 POINT OF VIEW

of the State Customs Committee of Azerbaijan, Professor Aydin Aliyev, who was admitted as an Prospects for Africa’s Honorary Fellow of the INCU in recognition of his significant contribution to the objectives of the organization. Tripartite Free Trade

A key outcome of the conference was the Baku Agreement in the light Resolution, which recognized and built upon the significant achievement of the WTO in rea- ching its Trade Facilitation Agreement (TFA). of lessons learned Among other things, it was resolved to formally engage with a broader cross-section of the from the East African international community, and identify further ways of providing opportunities for academics, students and less experienced researchers to Community present and publish their research. By Creck Buyonge Mirito Another important resolution was to develop a definition of the term ‘Customs profession’ which includes both public and private sector THE AFRICAN UNION (AU) recognizes eight regional economic com- members of the international trading commu- munities (RECs) as the building blocks for the African Economic nity, identify the requisite knowledge, skills and Community (AEC), namely the Arab Maghreb Union (AMU), the competencies of those engaged in the Customs Community of Sahel-Saharan States (CEN-SAD), the Common profession, and develop guidelines for accre- Market for Eastern and Southern Africa (COMESA), the East diting education and training programmes African Community (EAC), the Economic Community of Central that meet the identified knowledge, skill and African States (ECCAS), the Economic Community of West competency requirements. This further builds African States (ECOWAS), the Inter-Governmental Authority on upon the excellent work undertaken to date in Development (IGAD), and the Southern African Development collaboration with the WCO. Community (SADC).

To further support the development of accredited qualifications, it was also resolved to encourage mutual recognition of INCU Member education and training programmes through credit allocation, cross-institution arrangements, and other means. This is already occurring, with formal arrangements having already been established across a number of educational institutions in Australia, China, Germany, the Maldives, Qatar, Sri Lanka, Tanzania, and the US.

Continuing collaboration with the WCO, other international organizations, and member institutions will certainly provide the basis for future activities, as will focused research designed to inform strategic policy making. It is in this context that the INCU looks forward to its next ten years of working closely with the WCO as we collectively progress our endeavours in Customs academic research and development in order to further raise the academic standing of the Customs profession.

More information www.incu.org

In June this year, at a summit in Cairo, The EAC has seen a lot of progress in The paragraphs above provide enough Heads of State and Government from terms of investment in new trade-related background information for us to pose three of these RECs – EAC, COMESA infrastructure – such as the development and try to find an answer to the following and SADC – launched the Tripartite Free and operation of standard gauge railways question: what has been the challenge Trade Area (TFTA) bringing together 26 and oil pipelines, the removal of persistent of regional integration in the EAC and countries with a combined population non-tariff barriers, improved freedom of what does this tell us about the possible of 632 million people or 57% of Africa’s movement within Partner States, and a challenges that may face the TFTA? On population, and a gross domestic product reduction of telecommunication charges. the positive side, we have already seen (GDP) of 1.3 trillion US dollars (2014 All EAC Partner States have also notified that, since “nothing succeeds like suc- figures). The launch of the TFTA was the their ‘Category A’ commitments to the cess,” neighbouring states are quickly culmination of a process that started in World Trade Organization (WTO), with adopting the positive aspects of regional 2008 with the first tripartite summit held Rwanda demonstrating greater ambition integration such as the SCT. While the in Kampala, Uganda. However, it is not than its regional neighbours in terms of DRC – a member of ECCAS and SADC time to celebrate yet. The Agreement the number of measures notified. – has started implementing the SCT with requires ratification by 14 Members before Tanzania, South Sudan is working towards it can enter into force. After its entry into Of relevance to Customs is the fact that all full accession to the EAC Treaty. Yet, chal- force, the Agreement shall remain open five EAC Partner States are now operating lenges remain. for accession by other Member States of as a Single Customs Territory (SCT) and the AU. have brought in the Democratic Republic In early August 2015, Kenya’s President, H. of the Congo (DRC), which is not an EAC E. Uhuru Muigai Kenyatta, met with his Since ratification is a national process, it Partner State. In July 2015, Tanzania and Ugandan counterpart, H. E. Yoweri Kaguta may take a while before this magic num- the DRC started clearing goods using SCT Museveni, to discuss a number of issues ber is achieved. Even then, the coming procedures, where assessment and collec- including the improvement of trade ties into force of the TFTA may not lead to tion of revenue is done at the first point of between the two countries. Uganda com- immediate trade facilitation gains. As entry. Operation of the SCT has included plained that Kenya’s Agriculture, Fisheries Robert Ndege and Frank Nyambweke the posting of staff from the Customs and Food Authority (AFFA) was delaying (2014) note, although the EAC is Africa’s administrations of Burundi, the DRC, issuance of permits for the importation of most ambitious regional integration drive Rwanda and Uganda to the Tanzanian sugar into Kenya from Uganda. with political integration as its ultimate port of Dar es Salaam and the Kenyan port aim, “progress has been slow with an ever of Mombasa. These developments are lau- Since the EAC is a ‘common market,’ sugar dynamic political environment and strong dable, as they have led to the creation of a originating from Uganda should enter nationalist sentiments posing the greatest climate of trust between the collaborating Kenya without barriers, but suspicions challenge to seamless integration” [Africa government agencies and their officials. by Kenya that Uganda may be trying to Practice, August 2014]. dump cheap sugar from third countries

81 POINT OF VIEW

has made it difficult for this to happen. On Herein lies the first its part, Uganda has been restricting entry challenge of regional of Kenyan milk into the country. During their meeting, the two Presidents agreed integration in the EAC. to remove these obstacles, but immediately Despite sensitization thereafter, the Kenyan political opposition started beating the drum against the ‘deal.’ efforts by Ministries In actual fact, there were no agreements, responsible for just a commitment between the two leaders to uphold the principles of the EAC the EAC on the Treaty and its Protocols. requirements and Herein lies the first challenge of regional benefits of integration, integration in the EAC. Despite sensitiza- key constituencies, tion efforts by Ministries responsible for the EAC on the requirements and benefits such as the political of integration, key constituencies, such as class, remain sceptical the political class, remain sceptical and

uninformed about the provisions. Instead © TradeMark East Africa and uninformed about of supporting what is indeed a legitimate the provisions. process, they create obstacles by nega- tively influencing public opinion with conspiracy theories. Customs and trade The third challenge is terrorism. Burundi, phenomenon may draw inspiration from officials who are expected to implement Kenya, Rwanda, and Uganda have contri- developments in other regions of the and monitor trade policies may also not buted troops to the AU Mission in Somalia world, such as the Transatlantic Trade and take a keen interest. While the EAC has (AMISOM) to stabilize the Government of Investment Partnership (TTIP) between five Partner States, trying to ensure that Somalia, and check the threat of Al Shabab the European Union (EU) and the United the 26 countries expected in the TFTA are terrorists. Kenya has borne the brunt of States, and the proposed Trans-Pacific reading from the same script is a tall order terrorist attacks in recent times, including Partnership Agreement between countries – but it can and must be done. one at a major Nairobi shopping mall in in the Pacific Rim. Finally, the 10th WTO September 2013, and another at Garissa Ministerial Conference is scheduled to The second challenge is political. Burundi University College in April 2015. The lat- take place in Nairobi, Kenya in December carried out contentious elections on 15 July ter attack left 147 victims, mostly students, 2015. This is the first time the Conference 2015, which were boycotted by the political dead. Countering the terrorist threat will be held in Africa. The confluence of opposition. The incumbent President, H. requires cooperation between govern- all these factors portends deeper and fas- E. Pierre Nkurunziza, won easily under ments at the bilateral, regional and global ter regional integration in Africa, and the the circumstances. There was an attempted level. Such cooperation includes exchan- potential for gains in trade facilitation. coup and instability prior to the elections, ging intelligence, common training, and and the period after has been marked capacity building. More information by even greater instability, violence, and [email protected] threats of violence leading to an exodus Unfortunately, governmental cooperation of refugees to the DRC, Tanzania, and sometimes leads to suspicions within the Uganda. In South Sudan, civil war has citizenry – and a real danger – that human been raging since December 2013 between rights, including the right to privacy, may troops loyal to President Salvar Kiir and be violated. The TFTA has an Annex The author is Principal Consultant his erstwhile Vice President, Riek Machar. on Cooperation on Trade and Customs and CEO of Customs & International As a result, some Customs and trade Matters, but none on security issues. There Trade Associates (CITA) Limited, a capacity building projects have been sus- is a strong link between security and trade Customs, border management and pended or delayed in these two countries, so, in the future, TFTA Members may need international trade training, research and the impact has been felt across the to negotiate a Protocol on Security whose and consulting company based in region. Within the 26-member TFTA, implementation will be challenging consi- Nairobi, Kenya. A holder of a Master’s there are countries experiencing signifi- dering the large membership. degree in international Customs law cant conflicts or under threat of conflict, & administration from the University such as the DRC, Egypt, and Libya. Other In spite of the challenges, we remain of Canberra, Creck Buyonge Mirito TFTA countries are preparing for politi- optimistic that not only will the EAC is currently registered for a PhD in cal transitions, such as Tanzania (2015), continue integrating further, leading higher education (research, evalua- Rwanda (2016), and Kenya (2017). Peaceful to gains in trade facilitation, but that tion and enhancement) at Lancaster elections and political transition are good the TFTA may lead to other RECs in University (2015-2019). for regional integration. Africa crafting such mega-RECs. This

82 WCO news N° 78 October 2015

Calendar of Events

November 16 - 20 Harmonized System Review Sub-Committee, 49th Session 30 Nov - 2 Dec Working Group on Revenue Compliance and Fraud

December 7 - 9 Policy Commission, 74th Session, Punta Cana (Dominican Republic)

January 12 - 15 Scientific Sub-Committee, 31st Session 18 - 22 Data Model Project Team 25 - 26 Global RILO Meeting, 19th Meeting 26 International Customs Day 27 - 28 CEN Management Team (CENMat) Meeting,15th Meeting

February 2 - 3 Technical Committee on Rules of Origin, 34th Session 16 - 17 Audit Committee, 10th Meeting 22 - 23 Private Sector Consultative Group 23 SAFE Members Only Meeting 24 - 26 SAFE Working Group, 15th Meeting 25 Administrative Committee for the Customs Convention on Containers, 1972, 16th Meeting 29 Feb - 1 March Agreement on Trade Facilitation Working Group, 5th Meeting 29 Feb - 3 March Enforcement Committee, 35th Session

March 2 - 3 Permanent Technical Committee 211th/212th Sessions 4 Permanent Technical Committee / Enforcement Committee Joint Session 7 - 8 Harmonized System Committee, Working Party 9 - 18 Harmonized System Committee, 57th Session 21 - 22 Technical Experts Group on Air Cargo Security, 10th Meeting

It should be noted that WCO meetings are mentioned for information purposes and are not all open to the public. Unless otherwise indicated, all meetings are held in Brussels. Please note that these dates are indicative only and may be subject to change. The WCO meetings schedule is regularly updated on the WCO website.