30 Member administrations from the Europe and Asia/Pacific regions, representatives of the Eurasian Economic Union and key stakeholders came together for intensive discussions on Customs procedures and controls in Special Customs Zones/Free Zones (SCZs) at the Inter-Regional Forum on SCZs, held from 15 to 17 May 2019 in Nur Sultan, Kazakhstan.  This event was co-organized by the WCO and the State Revenue Committee of the Ministry of Finance of Kazakhstan, with the financial support of CCF Japan.

“This workshop, as a side event of the Astana Economic Forum, shows a strong interest in the SCZs topic at global economic level”, said Kazakhstan’s Vice-Minister of Finance Mr. Kanat Bayedilov in his opening address.  Mr. Omirzak Beispekov, Deputy Chairman of the State Revenue Committee of Kazakhstan’s Ministry of Finance, highlighted in his speech that “exchanging experiences and best practices among Customs administrations inter-regionally will build a solid foundation for the development of international standards in Chapter 2 (free zone) of Specific Annex D to the Revised Kyoto Convention (RKC), to be applied to SCZs.”

“SCZs are valuable and beneficial to foster national economic and trade activities, but it is important to make sure that these SCZs will not have the reputation of harboring illegal activities”, said Ms. Ana Hinojosa, the WCO’s Director of Compliance and Facilitation.  “The WCO’s analysis shows that not only IPR-infringing or tax-evading goods, but also other types of illicit trade have been detected inside SCZs, such as drugs and explosives”, she added.

Representatives of Kazakhstan’s Ministry of Industry and Infrastructure Development, as well as some operators of SCZs in Kazakhstan, shared information on institutional set-ups, benefits of, and business operations in the SCZs.  Additionally, they highlighted some of the advantages of SCZs in terms of promoting the economic development of Kazakhstan, such as land tax decrease, simplified procedure for reporting entry of materials, Customs duty exemption on importation of foreign equipment, e-declaration based on the ASYCUDA system, and one-stop shop between government and the business sector.

Member administrations presented their SCZ-related Customs procedures/controls, and the key findings can be summarized as follows:

• a few Member administrations are able to access the companies’ data reporting/accounting systems, but others do not have such access which makes Customs control difficult;
• several Members have definitions of SCZs which state that they are “outside of the Customs territory” but some, in particular in the Europe region, define SCZs as being inside the Customs territory;
• several Members reported that Customs procedures/controls differ, based on the location of the SCZ (e.g., inland SCZ or port SCZ);
• one Member sets a time limit on the duration of cargo storage inside SCZs, and has restricted the frequency of transfers inside SCZs as a result of cases of illicit trade; and
• several Members pointed out that SCZs are used for various illegal activities, including disguising the origin of goods by reducing the documentation on cargo transportation flows.

The highlight of this Forum was a discussion among Customs administrations, divided into three small groups as a breakout session, as summarized below:

• definition of SCZs: possible deletion of the “out of Customs territory” reference in the current RKC definition, to ensure the application of Customs controls;
• Customs involvement: the need to enhance Customs involvement in the SCZ establishment process (construction, layout), and in the registration of companies in SCZs;
• Customs procedures: appropriate electronic data submission, in particular data submission for entry to/exit from SCZs and storage of goods in SCZs;
• Customs control: necessity of Customs control in SCZs, including for transit/transshipment operations, and potential use of modern technologies such as “e-seal”, ”e-lock” or “GPS” systems; and
• cooperation: the need to strengthen communication with companies in SCZs, with the possibility of applying the AEO programme.

“The perspective of Customs administrations is essential, since special Customs regimes/procedures are applied to the movement of goods in SCZs”, stated Mr. Marat Sultangaziyev, Chairman of the State Revenue Committee of the Ministry of Finance of Kazakhstan, in his closing speech. “I hope that as a result of these intensive discussions on appropriate Customs procedures, national legislations as well as WCO international standards can be improved as actions of the global Customs community”, he concluded.