Brexit and Southern Africa – no trade impact envisaged

Reuters reports that Britain has agreed a deal with six southern African countries including South Africa, the continent’s most developed economy, that will ensure continuity of trade conditions after Brexit, the British High Commission in South Africa said on Wednesday. 

Political turmoil in the United Kingdom has generated uncertainty over how, when and even if the country will withdraw from the European Union. Its current exit date is set for Oct. 31. 

But while the situation has left the future trade relationship between Britain and the EU in doubt, London has been working to minimise the impact of Brexit on other trading partners.

Britain initialled an Economic Partnership Agreement with the Southern African Customs Union (SACU) – comprising South Africa, Botswana, Lesotho, Namibia, and eSwatini (formerly known as Swaziland) – and Mozambique on Tuesday. 

“This trade agreement, once it is signed and takes effect, will allow businesses to keep trading after Brexit without any additional barriers,” Britain’s International Trade Secretary Liz Truss said in a statement. 

The agreement is still subject to final checks. But once signed formally, it will mirror the trade conditions the southern African nations currently enjoy with the EU. 

Trade between Britain and the six countries was worth 9.7 billion pounds ($12 billion) last year, with machinery and motor vehicles topping British exports to the region. The UK meanwhile imported some 547 million pounds worth of edible fruit and nuts. 

Britain has already signed trade continuity agreements with countries accounting for 89 billion pounds of its external trade. 

Prime Minister Boris Johnson says Britain must leave the EU on Oct. 31, but parliament has passed a law compelling him to ask Brussels to delay Brexit until 2020 unless he can strike a divorce deal. Johnson says he will not request an extension.

Source: Reporting by Joe Bavier, edited by Gareth Jones, Reuters Business News, 2019.09.11.

9/11 – 18 years on

WTC 6, home to the US Customs Service, New York until September 2001

As unrecognisable as the building is, the same can be said for the world of Customs today. Few contemplated a ‘Customs’ parallel at the time; but, when the Department of Homeland Security was launched, the emergence of US Customs and Border Protection (USCBP) ushered in a new way of doing business. The world of Customs was literally ‘turned on its head’. Bilateral overtures seeking agreements on ‘container security’, ‘port security’ as well as an industry focussed ‘Customs and Trade Partnership Against Terrorism’ (C-TPAT) forced the World Customs Organisation (WCO) into swift action. After years of deliberation and negotiation several guidelines were released, later to be packaged as the WCO SAFE Framework of Standards. It seemed that the recent Revised Kyoto Convention (RKC) on simplification and harmonisation of Customs procedures was already ‘dated’. Customs as a proud solo entity was gone for ever, as country after country seemed compelled to address border security through wholesale transformation and upheaval of their border frontier policies and structures. Thus was born ‘border security’ and ‘cooperative border management’. In a manner of speaking, 9/11 put Customs onto the global map. Along with WCO developments, the tech industries brought about several innovations for risk management and other streamlined and efficient service offerings. Prior to 9/11, only the wealthy countries could afford non-intrusive inspection capabilities. One key aspect of the SAFE Framework’s was to include a pillar on Capacity Building. Through this, the WCO and business partners are able to offer tailor-made assistance to developing countries, to uplift their Customs and border capabilities. In particular, countries in Africa now are now in a position to consider ‘automated’ capabilities in the area of Customs-2-Customs information exchange as well as establishment of national Preferred Trader and Authorised Economic Operator (AEO) schemes. At the same time a parallel industry of ‘Customs Experts’ is being developed in conjunction with the private sector. The end result is the availability of ‘standards’, ‘policies’ and ‘guidelines’ fit for Customs and Border operations, focussed on eliminating incompatibilities and barriers to trade. Where these exist, they are largely attributed to poor interpretation and application of these principles. With closer cooperation amongst various border authorities still a challenge for many countries, there are no doubt remedies available to address these needs. In gratitude, let us remember the thousands of public servants and civilians who lost their lives that we can benefit today.

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Leading by Example – Varsha Singh

It is not common for a person within a Revenue Authority to work in both the Customs and Tax disciplines. It is even more rare for such a person to excel in both. I am glad and most fortunate to know and have worked for such a person – who under duress and fortitude has scaled great heights in her career.

Just recently she was nominated and included to celebrate the achievements of women of the past and present who have contributed to and shaped the future of women working in international tax across the profession. The Woman of IFA Network (WIN) representatives of the International Fiscal Association (IFA) UK branch called upon the global WIN network to identify and recognise the leading women in their regions and local branches. A profile book and the photo montage, which it supports, was prepared in September 2019 to mark this occasion and to celebrate the contribution of women to international tax discourse and policy development in all fields of the profession. Refer to page 61 for Varsha’s profile.

Varsha Singh

Deputy Head of the Global Relations and Development Division, OECD, South Africa.

Recognised for her contribution to international tax discourse through advocacy and encouragement of developing countries perspectives in the development and implementation of global tax policy.

Varsha Singh is the Deputy Head of the Global Relations and Development Division at the OECD Centre for Tax Policy and Administration. Her primary role is to encourage developing countries perspectives in the development and implementation of OECD standards and guidelines in the tax area, and to provide assistance to developing countries to strengthen their tax systems. Ms Singh also oversees the multilateral Global Relations Programme, which delivers over 50 seminars annually through six Multilateral Tax Centres.

Before joining the OECD, Varsha worked at the South African Revenue Service (SARS) for over 22 years and has extensive experience in a range of Tax, Customs and IT matters. She previously occupied the position of Head of International Relations at SARS. In that capacity, Varsha played a pivotal role in the establishment of the African Tax Administration Forum (ATAF)and as the head of the interim secretariat of ATAF, also worked closely with other Regional and International Organisations, particularly in the area of capacity building. Varsha holds Masters degrees in Business Administration, International Customs Law and Administration and completed the Women in Leadership Programme with Henley Business School.

‘Flying out of Africa’, an essay on China -Africa relations

cina-africa-focac

The following article featured in BusinessLive (eEdition) on 25 July 2019. It is authored by John Grobler. The article was compiled with the financial support of Journalismfund.eu’s Money Trail grant programme. 

Chinese ‘lying money’, or fei qian, is an ancient form of value exchange. But its modern incarnation is blamed for stripping Africa of its resources.

The secret of Chinese commercial success in Africa, as suggested by an 18-month investigation into the drugs-for-abalone and rosewood trade and a major Namibian tax fraud case, is an ancient system that not only allows African countries to be robbed of taxes, but also plays a part in financing the global $270bn-a-year wildlife contraband trade.

Fei qian, or “flying money”, dates back about 1,200 years, to the Tang Dynasty in China. In its simplest modern incarnation, it is a low-cost and trusted method of remitting money, much like the Islamic hawala system. For example, a person who wants to send funds to a recipient in Africa will pay a fei qian broker in China. For a commission, the broker will arrange that a counterpart in Africa pays the recipient, again for a commission. The two fei qian brokers later settle their account through, for example, the transfer of commodities of equivalent value — but also sometimes through less salubrious methods such as transfer mispricing or invoice manipulation.

In practice, the system relies on the systematic underinvoicing of Chinese imports into Africa and a seamless chain of payments system in which accounts are settled through the transfer of high-end — and often illicit — goods such as abalone, rosewood, rhino horn and ivory. In brief: goods are undervalued on their import documentation; they are then sold for cash; and that undeclared cash is subsequently channelled into high-end commodities that are remitted to China to balance the fei qian books.

“The trick behind fei qian is that the money never actually leaves China,” says a former Singaporean finance expert, speaking on condition of anonymity. “It’s just the commodities that get moved around” as part of a longer payment chain among the Chinese diaspora.

Unlike barter trade, fei qian is not a straight swap; it is an exchange in stored value that leaves no paper trail, except in the books of the fei qian operators themselves. What makes the system even more impenetrable, the investigation has found, is that these operators mostly seem to be older, well-established women working in a closed network of mutually trusted contacts.

This nexus, and lack of paper trail, means fei qian is largely invisible. But it occasionally appears as a gaping hole in a country’s balance of payments account with China – as Namibia has discovered in an ongoing import-tax fraud investigation.

Jack Huang, a business associate of President Hage Geingob, and Laurentius Julius, a former Walvis Bay customs official and now a customs clearing agent, are among eight suspects facing 3,215 charges of fraud and money laundering in the Windhoek high court. Continue reading →

Singapore seizes tusks from 300 elephants in ivory haul worth $12.9 million

Authorities in Singapore have stopped a shipment of almost 9 tonnes (9.9 US tons) of ivory, the largest seizure of its kind in the nation’s history. The 8.8-tonne (9.7-US ton) haul was passing through Singapore on its way from the Democratic Republic of Congo to Vietnam, according to a joint statement from the Singapore Customs, Immigration & Checkpoints Authority (ICA) and the National Parks Board released Tuesday.

There were also 11.9 tonnes (13.1 US tons) of pangolin scales among the illicit cargo, the third such shipment to be intercepted in Singapore this year.Three containers said to contain timber were inspected as they passed through Singapore on July 21, revealing the huge illegal cache.

Authorities say the ivory, with tusks from nearly 300 elephants, is worth $12.9 million; the pangolin scales, estimated to have been taken from around 2,000 Giant Ground Pangolins, would fetch around $35.7 million.

Pangolins are solitary animals that have an armor of scales, which are coveted for “cultural and ethno-medicinal purposes,” according to the statement. They are also hunted for their meat.

The seizure takes the total weight of pangolin scales stopped in Singapore to 37.5 tonnes (41.3 US tons) in 2019 alone. Singapore previously seized 177 kilograms (390 pounds) of ivory in April.

In Africa, poachers kill tens of thousands of elephants a year for their tusks. Much of the demand for elephant tusks comes from China, where ivory is still seen by some as a symbol of luxury and wealth. 

“Around 55 African elephants are killed for their ivory a day, their tusks turned into carvings and trinkets,” Tanya Steele, chief executive at World Wildlife Fund, said in a statement.

Source: CNN, Jack Guy, 24 July 2019

Vietnam seizes 125-kilogram haul of trafficked rhino horn encased in plaster

Fifty-five pieces of rhino horn were found hidden inside shipments of plaster at Hanoi International Airport, Vietnam’s state media reported Saturday.

Customs officers broke open plaster molds from 14 shipments to uncover the illegally trafficked horns, which weighed 125 kilograms (275 pounds) in total, according to the Vietnam News Agency.

Vietnam has the world’s largest market for illegal rhino horn, according to the World Wildlife Fund. A single horn can fetch $100,000 in Asian countries such as China and Vietnam, where buyers believe it can cure health problems from hangovers to cancer, and use it as a lifestyle drug. The global market is thought to be worth about $500 million.

The seizure in the Vietnamese capital came after Hanoi police arrested a man accused of running a wildlife trafficking ring on July 23.

That arrest followed the discovery of seven frozen tigers in a car parked in the basement of a Hanoi skyscraper.

Source: CNN, Helen Reagan and Angus Watson, 29 July 2019

USCBP seizes MSC Gayane with 18 tonnes of cocaine aboard

MSC Gayane

US customs officials seized a container ship financed by JPMorgan this week after authorities found nearly 18 tons of cocaine with an estimated street value of $1.3 billion in the vessel.

The drug bust on the Liberian-flagged MSC Gayane is surprising for several reasons. The sheer quantity of cocaine it was carrying, its links to JPMorgan, its presence in the US, and the recent string of West African drug busts are worth noting.

A container ship financed by JPMorgan was seized by US customs officials this week after authorities found nearly 18 tons of cocaine with an estimated street value of $1.3 billion on the vessel. The drug bust on the MSC Gayane is surprising for several reasons, outlined below.

The roughly 39,500 pounds, or 17.9 metric tons, of cocaine – about the same weight as three African bull elephants – found aboard the MSC Gayane outweighed the total amount of cocaine that passed through West Africa in 2013 and all of the cocaine seized across Africa from 2013 to 2016, according to the United Nations Office on Drugs and Crime.

The vast quantity may reflect a supply glut. Global cocaine manufacturing surged by a quarter in 2016 to 1,410 tons, according to the World Drug Report 2018. The production boom is centered in Colombia, where cultivation of the coca plant rose 17% to 171,000 hectares in 2017, according to the UN.

The link between the MSC Gayane and JPMorgan may be the most surprising aspect of the drug bust.

The MSC Gayane is operated by the Switzerland-based Mediterranean Shipping Co., but JPMorgan helped finance MSC’s purchase of the ship. The two reportedly structured the purchase so the ship was owned by client assets in a transportation strategy fund run for JPMorgan’s asset-management arm.

JPMorgan hasn’t yet publicly addressed its association with the vessel, and it has declined to comment to Markets Insider.

The MSC Gayane sailed under the flag of Liberia, a West African country. West Africa is a popular transit route for smugglers between South America and Europe because of its porous borders, weak rule of law, largely unmonitored coastline, and limited infrastructure and resources. The proportion of cocaine seizures in Africa accounted for by West Africa rose to 78% in 2016, “reflecting the rapidly growing importance of West Africa as a transit area,” the UN Office on Drugs and Crime said.

But there appears to be little drug smuggling between West Africa and the US, making the MSC Gayane drug bust highly unusual. Higher street prices and a lower risk of getting caught make Europe a more lucrative and attractive market than the US, the Nigerian drug smuggler Chigbo Umeh told The Guardian in 2015.

While notable, the ship’s flag doesn’t necessarily implicate Liberia.

“A Liberian registered ship is not in itself a link with the West Africa drug economy,” Mark Shaw, the director of the Global Initiative against Transnational Organized Crime, said in an interview with Markets Insider. “Liberia serves as a flag state for much shipping.”

The drug bust on a Liberian-flagged vessel is the latest in a string of major seizures linked to West African countries this year.

In May 2018, Algerian officials seized more than 1,500 pounds of cocaine on a Liberian-registered container ship that was transporting frozen meat from Brazil, according to the BBC. In February of this year, Cape Verde officials found 21,000 pounds of cocaine, with a street value north of $700 million, on a Panamanian-flagged vessel. A month later, authorities in Guinea-Bissau notched their biggest-ever cocaine bust – and the country’s first in a decade – when they discovered more than 1,700 pounds of the drug hidden in a false bottom of a truck loaded with fish.

“There were doubts whether West Africa was still being used as a major transit route, but these seizures seem to suggest that there is a return,” Shaw said in an interview with Bloomberg in March. “It’s a surprise and it’s very significant.”

Source: The article was written by Theron Mohamed, Market Insider, 11 July 2019

Grasping the size of Container Traffic

The following infographic is shared courtesy of Visual Capitalist

Size-of-Shipping

WCO SAFE FoS – 2018 Edition

SAFE FoS 2018 Edition2

The WCO has published a 2018 edition of its Framework of Standards. The 2018 version of the SAFE Framework augments the objectives of the SAFE Framework with respect to strengthening co-operation between and among Customs administrations, for example through the exchange of information, mutual recognition of controls, mutual recognition of AEOs, and mutual administrative assistance.

In addition, it calls for enhanced cooperation with government agencies entrusted with regulatory authorities over certain goods (e.g. weapons, hazardous materials) and passengers, as well as entities responsible for postal issues. The Framework now also includes certain minimum tangible benefits to AEOs, while providing a comprehensive list of AEO benefits.

The updated SAFE Framework offers new opportunities for Customs, relevant government agencies and economic operators to work towards a common goal of enhancing supply chain security and efficiency, based on mutual trust and transparency.

Customs officers and trade practitioners also be on the lookout for then new WCO Academy course on SAFE and AEO. The Framework of Standards to Secure and Facilitate Global Trade is a unique international instrument which usher in a safer world trade regime, and also heralds the beginning of a new approach to working methods and partnership for both Customs and business. This E-Learning course aims to present this tool and the benefits of its implementation.

Counterfeit 35mm Fujifilm

Fujifilm_counterfeit1

The market for 35mm camera film may be shrinking fast, but it still isn’t safe from counterfeiting, according to Fujifilm.

The Japanese company says it has discovered counterfeit copies of its film products fraudulently bearing its logo that aside from being of suspect quality could damage other customers’ film rolls if developed at the same time in the lab by contaminating the developing chemicals.

The counterfeiters appear to have created counterfeit Fujifilm 250D, 64D, 250T, and 500T Colour Negative Film canisters and filled them with movie film, which cannot be developed using the standard colour negative film process. This sounds more like a case of sabotage.

Compilation of Customs Integrity Practices

WCO Compilation of Integrity PracticesThe WCO Secretariat has undertaken a new initiative involving the compilation of good internal control [governance] practices by Customs administrations, and their relationship with external controls. The Secretariat carried out a survey of Members to find out how they implement principle 6 of the Revised Arusha Declaration. The responses indicated that internal control functions can be structured differently and do not operate in the same way.

The survey collected material on the experiences of Members and on their integrity practices, with a view to compiling a good practice guide which Members could use to enhance their integrity strategies, including external oversight. It consisted of 18 questions, and was divided into four sec- tions: (1) Governance of Internal Control; (2) Operational Aspects; (3) Relationship with External Controls; and (4) Sharing Good Practices with Other Members. Responses were received from 58 Member administrations. Download this link.

 

 

Tambo Springs Intermodal Facility gets the Go-ahead

Tambo Springs Rendering

Tambo Springs Rendering – Transnet

The following abridged article was authored by Suren Naidoo, published in MoneyWeb on 6 June 2019.

Ports and logistics parastatal Transnet is moving ahead with plans to develop a new ‘inland port’ [terminal] in Gauteng and on Wednesday announced the winning bidder that will develop and operate the R2.5 billion Tambo Springs Intermodal Terminal in Ekurhuleni.

Transnet’s says the deal represents a major public-private partnership (PPP) that will see Southern Palace Joint Venture Consortium holding a 20-year concession for the new inland terminal, which will complement the container facilities at City Deep.

A wholly black-owned and managed diversified industrial holding company, Southern Palace is the lead concessionaire in the consortium. Its partners in the project include Italian state rail and infrastructure company Ferrovie dello Stato Italiane as technical partner and supply chain and advisory group Makoya as logistics and marketing partner.

The new terminal in Springs will have an initial capacity to handle around 225 000 TEU [20-foot-equivalent unit] containers in its first phase and ultimately grow to handle some 550 000 TEUs. City Deep, located near the Johannesburg CBD, has a capacity of 400 000 TEUs and has already reached almost 80%.

The new Springs terminal will boost efficiencies as a fully-fledged modern intermodal facility, directly connected to the Natal Corridor (Natcor) rail link between Durban and Johannesburg.

The PPP project will improve the rail freight system in the country and boost economic growth. Transnet has experienced challenges on the general freight rail side, which has been in systemic decline over the years.

The decline of general freight rail has contributed to the growth in the number of trucks on national roads, especially the N3 between Durban and Johannesburg. There is therefore some urgency to get general freight working again on rail. With time-sensitive cargo, rail can play a critical role as part of the intermodal mix.

The Springs terminal is expected to break ground by November and is anticipated to open in 2022.

It will be located on a 67-hectare (ha) site within the broader Tambo Springs Logistics Gateway development, which is being master-planned by the Tambo Springs Development Company on 607ha of land near the N3. Transnet has already purchased 35ha of land within the new development node, with another 32ha being negotiated.

The City of Ekurhuleni will provide major bulk services for the development. The terminal will be developed as part of a next-generation logistics gateway combining direct terminal handling facilities as well as back-of-terminal property development and related value-add logistics services and activities.

The existing Natcor dual directional freight rail line runs directly to the site of the [new terminal]. Transnet will therefore not incur significant additional costs for new rail infrastructure to connect to the new terminal, but rather, leverage off the existing infrastructure.

Once the terminal is developed, it is expected to spur surrounding industrial and commercial property development to the tune of around R20 billion from the private sector.

Southern Palace, told Moneyweb that Southern Palace has brought in international rail and container terminal specialist Italferr, which is part of the Ferrovie dello Stato Italiane group. The joint-venture consortium is also supported by Concor and engineering firm AECOM.

Southern Palace has raised around R7 billion to date through its various businesses, so the terminal will be largely “self-funded”.

See the unabridged article here!

WCO News – June 2019

WCO News – October 2018

wco_news_87

Another feature filled WCO News e-publication featuring Blockchain big time!

Food tops EU customs’ counterfeit seizure list in 2017

TAXUDCustoms officers seized 31m counterfeit items at the EU’s borders last year worth more than €580m – with food, toys and cigarettes intercepted most frequently.

The total numbers of seized products has declined since 2016, but there is a worrying trend towards a higher proportion of potentially dangerous items such as food, medicines, electrical goods and toys, which accounted for 43 per cent of all detained goods. That’s up from 26 per cent in 2015 and 34 per cent in 2016.

Almost a quarter (24 per cent) of the seizures were for foodstuffs, followed by toys making up 11 per cent, cigarettes at 9 per cent and clothes at 7 per cent of the total.

“The EU’s customs union is on the front line when it comes to protecting citizens from fake, counterfeit and sometimes highly dangerous goods,” said  Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.

“Stopping imports of counterfeits into the EU also supports jobs and the wider economy as a whole,” he added. Given the increasingly likelihood that the UK will no longer be part of the customs union post-Brexit, it’s worth noting that UK customs seized almost 1.5m goods last year.

Once again, China and Hong Kong were the primary sources for the vast majority of illicit goods, at 73 and 10 per cent, respectively, with China down from 81 per cent in the prior year and Hong Kong up from around 8 per cent. Other countries have emerged as hot spots for particular product categories, however, with Moldova a source of illicit alcohol, the US for other fake beverages and Turkey for counterfeit clothing. India was the top country of origin for fake, and potentially harmful, medicines.

In terms of modes of transport, two thirds (65 per cent) of all detained articles entered the EU via the maritime route, usually in large consignments. This was followed by air traffic which transported 14 per cent, and courier/postal traffic which together accounted for 11 per cent and mainly involved consumer goods ordered online such as shoes, clothing, bags and watches.

The Commission said the downturn in seizures comes after it implemented new measures aimed at protecting intellectual property rights last year, with a particular emphasis on helping smaller companies and startups respond to breaches.

Source: Securingindustry.com, P.Taylor, 2018.09.27