“A Pivotal Partner In Economic Growth And Society Protection”
In the 21st century, Customs is an integral part of the global trade framework and an important driver of economic and trade policy. Trade is the engine that drives the global economy. The global supply chain consists of the traders, transport companies, insurance firms, banks, forwarders, agents, and others that participate in international trade. Customs administrations are key government agencies established to apply international, regional and national policies and laws to goods crossing borders.
- INTRODUCTION : GLOBALIZATION, THE INTERNATIONAL TRADE LANDSCAPE AND CUSTOMS
1.1 Globalization is resulting in an increasingly complex world. The world is interconnected as reflected by expanded flows of goods, people, capital, information and technology. It is becoming easier to conduct business internationally. This provides countries with the opportunity to fast-track economic growth and development through increased international trade. This is not only beneficial to legitimate trade; it benefits illegal trade too and criminals are making use of more integrated markets and freer movement of people to illicitly move goods, people and money across borders.
1.2 The new global trade landscape therefore brings a new set of challenges. It has also resulted in the growth of the range and complexity of risks that have to be managed at the border. The lack of effective controls presents risks to any economy and society and can undermine gains that have been made. Customs administrations are mandated to contribute to socio-economic development by, on the one hand, facilitating legitimate trade and, on the other, protecting national economies and societies against the threats posed by, amongst others, organized criminal syndicates and terrorists.
- MAIN TARGETS AND OBJECTIVES OF THE GOVERNMENT
2.1 As mentioned in the “Customs in the 21st Century” strategy document, recent developments have created new demands and perspectives on the role of the modern state. The strategic drivers and new trans-national and national challenges have increased the demands on and responsibilities of states.
2.2 Governments require agencies of the state, including Customs, to be service-oriented and meet the expectations of societies and businesses.
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This section is aimed at linking the targets and objectives of the Government with the contribution made by Customs in support of such targets and objectives. It is therefore advisable that recent Government policy and strategy papers should be consulted to identify these targets and objectives and to clearly indicate how Customs is supporting or intends to support the achievement of them.
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- ROLE OF CUSTOMS AND ITS ENVIRONMENT
3.1 The role of Customs
3.1.1 The “Customs in the 21st Century” strategy document confirms the role of Customs to :
“... control the movement of goods and thereby secure the state’s interests and safeguard revenue collection. The key aims have been to ensure compliance with state policies and laws applicable to the cross-border movement of goods, to combat smuggling, and to secure borders, whilst ensuring the facilitation of legitimate trade.”
3.1.2 Customs administrations in many countries are experiencing a sharply expanding scope and complexity of work. The responsibilities of Customs in relation to international trade have broadened from the traditional role of collecting duties and taxes on international trade to include the execution of controls and other activities that serve a wider set of Government objectives such as the protection of society and the environment.
3.2 The Customs environment
As a result of the dynamic and rapidly changing environment in which they operate, it is necessary for Customs administrations to identify and understand the key international, regional and national strategic drivers in order to be more responsive. Some of the key strategic drivers that are impacting on Customs administrations include :
New and ongoing economic realities. Following the global financial crisis, there is new pressure on states to protect and create jobs, secure public finances and ensure that revenues due to the state are collected. At the same time, the global community is still grappling to overcome developmental challenges such as poverty, hunger and disease, through the targets in the Millennium Development Goals. This is true for all countries but certainly for developing countries where domestic resource mobilization is a significant priority. Customs administrations play a critical role in assisting states to pursue these goals by ensuring compliance with the laws governing international trade.
Growing international trade volumes. Following the global financial crisis, international trade is continuing to grow globally. This growth means that Customs have to process more transactions and the workload is increasing, usually with the same or less resources, especially in times of fiscal austerity.
New trade rules are emerging. With the establishment of the World Trade Organization (WTO) in 1995, countries committed themselves to new international trade rules. The ongoing efforts to conclude the Doha Round will result in additional trade rules and are also aimed to improve and deepen WTO rules on trade facilitation that Customs administrations will need to implement.
Proliferation of Regional Trade Agreements (RTAs). According to a recent WTO report, some 220 RTAs are estimated to be operational and nearly all WTO Members belong to at least one RTA, with an average of six RTAs per Member. The proliferation of RTAs means that trade is subject to complex preferential rules of origin in addition to rules that are already administered by Customs.
Traditional trade patterns are changing and participants are increasing. The share of developing countries in world merchandise trade is increasing. At the same time, global production specialization has advanced, in particular in manufactured goods. The share of parts and components exports within total merchandise exports has greatly increased. This changing structure impacts on the types of transactions handled by many Customs Administrations.
New logistics and supply chain models. New procedures such as just-in-time distribution, low inventory retention, reverse logistics and multi-modal transport are resulting in innovative methods of moving goods across borders. They impact on freight logistics and put increased pressures on supply chains. The needs of modern international business exert pressure on Customs administrations to process goods effectively and efficiently and to minimize delays. Unnecessary delays increase international trading costs and erode the competitiveness of traders.
Emergence of transnational organized crime and terrorist networks. Transnational organized crime and terrorism facilitate many of the serious threats to international peace and security. According to the UN, corruption and illicit trade contributes to state weakness, impede economic growth and undermine democracy. These activities take the form of smuggling of commercial goods; drugs, counterfeits, dangerous and harmful goods; cross-border money laundering; and commercial fraud such as under-invoicing and misclassification that impedes the collection of state revenue.
Growing concerns regarding public health and the environment. The international community has adopted a number of international instruments aimed at controlling the international movement of harmful and dangerous goods. These international instruments are implemented by Customs administrations at national borders. Growing concerns regarding the environment are also likely to result in new environmental treaties with a subsequent impact on the controls applied by Customs.
- OUTLINE OF REFORM AND MODERNIZATION OF CUSTOMS : CUSTOMS OF THE FUTURE
4.1 In order to be responsive to the challenges facing states and societies through international instruments, it is clear that a strong and effective Customs administration is vital to economic and social development. Competent administration and enforcement also increases confidence in the quality and integrity of government institutions. The common globally accepted mission of Customs is to develop and implement an integrated set of policies and procedures that ensure increased safety and security, as well as effective trade facilitation and revenue collection. This is achieved through efficient and effective use of tools and information in dealing with the international movement of goods, conveyances and people connected with the goods.
4.2 The emphasis is shifting to automation and intelligence-based risk management to facilitate the movement of legitimate goods and to focus resources on high-risk areas. The expanding mandate and workload of Customs requires a sharper ability to identify which goods or travellers should be allowed free passage and which should be stopped and checked. Scarce resources need to be targeted on high-risk, non-compliant traders. Customs administrations are introducing measures to obtain as much information as possible in advance, and prior to the arrival of goods to make timely and effective risk-based decisions. This, in turn, has resulted in the introduction of modern information technology that enables the secure, real-time exchange and receipt of information, risk profiling and processing of declarations. As a result, enhanced Customs-to-Customs cooperation, Customs-to-Business partnerships and coordinated border management arrangements with other government agencies are required. This can only be achieved through a professional and dedicated workforce.
- IMPACT ON STAKEHOLDERS
5.1 A well-performing Customs administration impacts positively on a wide range of stakeholders. At a national level, these include the Government and other state agencies, society and the private sector. At an international level, Customs contributes to key objectives of the international community, especially those related to economic growth and development as well as security.
5.2 Given their close connection to globalization and administering international trade, Customs administrations are well-positioned to support stakeholders as follows :
Customs is a central part of the globalization process and a catalyst for the competitiveness of countries and companies. It is no longer only a collector of state revenues at the border but is responsible for administering international trade and securing the economy and society with respect to the cross-border movement of goods. This includes facilitating of legitimate trade and working in close partnership with the business community.
The role of Customs at the border has expanded. Customs administrations are the key border agency responsible for all international trade transactions and for undertaking functions on behalf of other national administrations. Coordinated border management (CBM) is now recognized by the Customs community as a potential solution to the challenges that the 21st Century presents, especially with respect to border control and administration. A coordinated approach by border management agencies lies at the heart of the CBM concept. The term gives prominence to the general principle of coordination of policies, programmes and delivery among cross-border regulatory agencies rather than favouring any single solution. Customs is well positioned to support a whole-of-government approach to border management.
Customs plays an important role in administering international trade. With the advent of trade liberalization, more trade rules and the proliferation of trade agreements, this is becoming more complex. In addition, countries make use of trade remedies to protect local industry from unfair international competition and these remedies are administered by Customs.
Customs confronts illicit trade and new and emerging threats. Customs is required to protect society against the importation of dangerous and harmful goods.
5.3 Without an efficient and effective national Customs administration, governments will not be able to meet their policy objectives in respect to revenue collection, trade facilitation, trade statistics and protection of society. The private sector will be confronted by increased costs in doing business and society will be exposed to dangerous goods such as narcotics, illicit weapons and unsafe consumer products. A professional and proud Customs service that is able to meet the demands of the modern trading environment is a true asset to states, societies and the business community.
EXPECTED SUPPORT
6.1 The role of the WCO
The strategic drivers are universal and impact on all Customs administrations. The WCO, as the inter-governmental organization representing 177 Customs administrations, has started to grapple with and understand the implications of the changing global trade, security and economic environment. This has enabled the WCO to develop responses that empower Customs administrations, collectively and individually, to respond to the formidable challenges that they are confronted with.
6.2 WCO instruments and programmes
The WCO has also developed a range of other instruments and tools to enable its Members to be more responsive to the challenges of the 21st Century. These include :
The relevance and impact of the WCO’s instruments and tools have been recognized by other international organizations such as the World Bank. By way of illustration, the revised Kyoto Convention has served as a blueprint for the reform and modernization of many administrations around the world. This Convention is the WCO’s Trade Facilitation Convention and it supports Customs to more quickly clear legitimate goods and thus improves economic growth.
Most recently, in response to the global financial crisis, the WCO has developed the Revenue Package. The Revenue Package provides details of all tools and instruments relevant to revenue collection which are available to WCO Member Customs administrations and the private sector. This includes, inter alia, formal instruments and Conventions, guidance notes and training material.
6.3 WCO support with reform and modernization
The WCO, as the global centre of Customs expertise, strives to play a central role in supporting its Members with reform and modernization. The result is a more comprehensive, needs-driven and focused approach. The tools, instruments and programs in support of this include :
- research to understand the change in environment;
- global standards drawn up from best practice around the world;
- guidelines, case studies, training and other tools to implement WCO standards;
- international cooperation in facilitating exchange of information and intelligence and joint operations;
- tools and programs for managers to support Customs reform and modernization, including diagnostic framework, strategic action planning and evaluation; and regional structures for Customs cooperation, in the areas of intelligence, capacity building and training.
The Customs Capacity Building Strategy is aimed at supporting WCO Members to develop or acquire the skills, competencies, tools, processes, and resources needed to improve the capacity of the administration to carry out its allotted functions and achieve its objectives.
Making the commitment to embark on a comprehensive Customs reform and modernization program is not done in isolation from the global Customs community. Together with the political will and the partnership approaches within the country, the WCO is a conduit to years of capacity building experience and access to many experts in many Customs fields around the world.
WCO expertise : This strategy builds on the WCO’s experience in setting and managing the most widely accepted international Customs standards, instruments, conventions, tools and best practice approaches.
WCO Capacity Building Infrastructure : In recognition of the fact that a holistic approach to Customs capacity building has to take all key strategic and political drivers into account and that thus, Customs capacity building is a key priority for Governments in their development agenda, the WCO is committed to assisting its Members with the implementation of international Customs standards and broad modernization. Equally importantly, the WCO today has at its disposal a sizable number of Customs experts from its Member administrations who have been trained to deliver Capacity Building assistance. In all six WCO regions, Regional Offices on Capacity Building as well as Regional Training Centres, actively participate in Capacity Building delivery. Another area of emphasis is coordination with donors to match with Members’ needs and to achieve a consistent approach while avoiding duplication and overlap.
CONCLUSION
It’s no longer business as usual! The challenges of the 21st Century are placing massive demands on Governments and their Customs administrations. Now, more than ever before, there is a need for Customs administrations to be more responsive. An understanding is required of issues such as globalisation, the dynamics of international trade, the technicalities of the trade supply chain, emerging policy directions and the complexities of the global landscape. The new and emerging challenges demand a more pro-active and action-oriented approach and support for the development of modern Customs in partnership with all stakeholders : national Governments, international organizations, donors, business and the academic community.