The following article featured in the 1st Issue of the WCO Newsletter 2023. It is authored by Anthony Buckley, Chair of Customs Knowledge Institute. The article argues that a formal plan for building and managing Customs knowledge is necessary for a Customs brokerage to operate effectively. The components of such a plan are discussed, as well as the determinants that may affect the choices made. The discussion refers also to general issues of Customs knowledge acquisition, management and updating. The considerations apply to all Customs practitioners and trading businesses.
The number of possible games of chess is greater than the number of atoms in the observable universe according to Claude Shannon. In Customs, there are many more variables than the 32 pieces on a chessboard. In any transaction, we have the interested parties, the type of transaction, the goods involved, the route being followed, the intended procedure, the non-tariff controls, the rates of duty and the liability for payment, each of them with many possible variations, combinations, and types of supporting evidence. On that basis, it seems that every single movement of goods across a Customs border is unique, at least in some minor way. How does a Customs broker meet the expectation of a client, who expects the broker to be familiar with every possible variation?
As if the challenge of complexity is not enough, the broker is also expected to maintain records of all transactions and retrieve them in various formats as required by customers and Customs administrations.
In practice, of course, we find ways of doing things that are theoretically impossible. Most Customs movements fall into certain categories and are handled accordingly, by operators familiar with one or a few of the categories. High value complex transactions are handled by teams with a mix of expertise, at considerable expense. Low value consignments use simplified procedures and reduced checking. Significantly, evidence[1] suggests that many transactions proceed despite errors, sometimes of significant effect. Thus, when considering “Customs knowledge”, we must distinguish between what is necessary for all, and what is essential only for certain functions.
All economic operators must have a general understanding of what Customs is, how it controls trade, what its legal structure is, what rights, entitlements and obligations attach to the operator and to the Customs authorities, the importance of compliance with legal requirements, and the costs of non-compliance. For many who buy and sell internationally, their knowledge does not proceed far beyond this general understanding, except perhaps for some detail concerning the particular goods they trade.
For a Customs broker, this level of knowledge is only the beginning.
Each year, International Customs Day provides an opportunity for the WCO Secretariat to invite the Organization’s Members to focus on a theme it considers relevant to the Customs community and its partners. In 2023, under the slogan “Nurturing the Next Generation: Promoting a Culture of Knowledge-sharing and Professional Pride in Customs”, the Secretariat is inviting Members to look at how they support newly-recruited officers, facilitate the sharing of knowledge, and heighten the sense of pride in being part of this institution and of the global Customs community.
This is about placing human capital, and especially the new generation, at the heart of the transformation of Customs – an approach the WCO has been advocating for a number of years. Young Customs officers often have particular strengths, but they need to acquire specific, and often tacit, knowledge and know-how. This approach to learning must be rooted in the culture of the administration, holding true throughout the officers’ careers. It requires not only dynamic inter- generational relationships, but also an outward-looking attitude, characterized by exchanges with the actors engaged in the movement of goods and passengers, as well as with service providers and with academia.
However, it has to be recognized that certain Customs organizations do not have the processes and methodologies in place for managing knowledge and ensuring that it is transmitted. In 2023, Customs administrations are therefore being invited to focus on this issue and develop a knowledge management system which fosters the identification and provision of knowledge and know-how in all their forms: reports and other documentation, training courses, whether online or in-person, forums, mentoring programmes, work placements, exchanges between services, magazines and newsletters, among others.
Another interesting approach is to extend collaboration among Customs stakeholders and collect multi-disciplinary views. For this purpose, some administrations collaborate with academia and participate in think tanks. This will ensure that Customs knowledge is acquired through the rigorous analysis of data, and is supported by expert opinion, skills and expertise. Knowledge acquired in this way can be a valuable resource for decision-making.
Customs must avoid the loss of organisational memory, to ensure that mistakes are not repeated and experience is transmitted between departments and to the next generation.
By creating a stimulating work environment and offering learning opportunities to their officers, Customs administrations can not only attract and retain talent, but also enhance their officers’ sense of professional pride. It is often said that the new generation are searching for meaning; working in Customs is a noble mission, whose fulfilment is essential for the wellbeing of nations.
As the reputation of an organization depends largely on its employees, it is important that they take pride in their work, and that the way their work connects with the government’s vision is clearly explained. To achieve this, Customs administrations must increase their visibility, not only among their natural partners but also among those – such as decision-makers and the general public – who may be less familiar with the multi-faceted role of Customs, and less aware of the challenges faced by Customs and the constraints it has to manage.
I have every confidence that Customs administrations will get to grips with this year’s theme and I invite them to present information, during meetings of WCO working bodies which address this theme, during the events we organize throughout the year and in our various publications, about practices and measures they have introduced.
The World Customs Organization (WCO) has joined hands, once again, with partner Annex D+ organizations (GATF, ITC, OECD, UNECE, UNESCAP, WBG and WTO) in supporting the Global Forum 2022 for National Trade Facilitation Committees (NTFCs). The Forum is being held from 1 to 4 February 2022 in a virtual mode and led by the United Nations Conference on Trade and Development (UNCTAD). It has brought together more than 500 participants, around half of which are members of their NTFCs.
In the high-level opening session, the speakers agreed on the need to ensure well-functioning, holistic and dynamic NTFCs, with their critical role in facilitating trade especially during the COVID-19 pandemic, through collaborative arrangements amongst all relevant public and private sector stakeholders. Embracing digital tools, the e-commerce growth and the importance of MSMEs and women traders were also highlighted by the speakers.
In his video address, Dr. Kunio Mikuriya, the Secretary General of the WCO emphasized the importance of trade facilitation during the COVID-19 pandemic recovery phase. Through simplifying and standardizing border procedures and creating transparent and predictable conditions for trade, Customs administrations facilitate legitimate business that, in turn, increases economic growth and job opportunities.
Secretary General Mikuriya mentioned a survey carried out in 2021, where the WCO took stock of the situation in the area of NTFCs, including the challenges and opportunities observed during the COVID-19 pandemic. Many NTFCs have put their work on hold, due to the inability to meet in person. However, in some instances NTFCs played an important role in addressing facilitation priorities during the pandemic, and have benefited from the sense of urgency generated by the crisis.
Dr. Mikuriya emphasized the need to strengthen the partnership among all relevant government authorities for improving border agency cooperation, which is essential in emergency situations. He reiterated the need to foster the dialogue and collaboration with the business community and underscored the private sector contribution to digitization, to conducting the Time Release Studies and in advancing Authorized Economic Operator (AEO) programmes, while taking into consideration the specific challenges of MSMEs.
The importance of increased diversity and inclusion in trade facilitation reforms, including improving the conditions for women traders was also highlighted. The WCO supports this agenda through its Network for Gender Equality and Diversity, amongst others.
The WCO reiterated its commitment to the TFA agenda in developing and least developed country Members through the WCO Mercator Programme.
The NTFC Forum was made possible with the support of the United Kingdom’s Her Majesty Customs & Revenue (HMRC) through the HMRC-WCO-UNCTAD Trade Facilitation Capacity Building Programme, which brings together the WCO and UNCTAD in a partnership for TFA implementation.
The whole address of the Secretary General can be found here.
The WCO dedicates 2022 to the Scaling up Customs Digital Transformation by Embracing a Data Culture and Building a Data Ecosystem
Traditionally, every year, the Customs community comes together on 26 January to mark International Customs Day. This day of celebration is a unique opportunity for WCO Members, the WCO Secretariat and global Customs’ partners to reflect on a particular theme and to act upon it.
Thus, throughout 2022, under the slogan “Scaling up Customs Digital Transformation by Embracing a Data Culture and Building a Data Ecosystem”, the Customs community will be focusing on how to operate in a fully digital environment and create an operating model that captures and exploits data from across the trade ecosystem.
Over the years, digital technology has evolved rapidly and Customs can now tap into data from other government agencies, commercially available databases, and open-source information platforms such as digitized global public records and multilingual news sources.
The extent to which data can be used effectively depends on various factors surrounding data ethics, including privacy, commercial secrecy and legal issues regarding the use of data by Customs and Tax administrations, and the importance assigned to innovation in public administrations.
To build data ecosystems, or consolidate existing ones, the following enabling actions may be considered:
establishing formal data governance to ensure the relevance, accuracy and timeliness of data;
making use of the standards developed by the WCO and other institutions regarding data format and data exchange;
providing appropriate management of data to ensure that the right people have access to the right data, and that data protection regulations are respected; and,
adopting progressive approaches, such as data analytics, to collect and successfully exploit data to drive decision-making.
A robust data culture empowers people to ask questions, challenge ideas and rely on detailed insights, not just intuition or instinct, to make decisions.
In order to nurture a data-driven culture, administrations need to enhance the data-literacy of their staff – in other words, their ability to interpret and analyze data accurately.
Customs administrations should integrate data science into their curriculums for newly recruited officers and participate in the development of distance learning courses to familiarize Customs officers with the collection and analysis of data in order to forge a data-driven culture. Staff also need to understand the bigger picture, namely the impact of Customs on the effective protection of society, trade facilitation and fair revenue collection.
On the other hand, Customs administrations are invited to consider leveraging data in their relationships with other actors along the supply chain, as well as making data available to the public and academia as a means of enhancing transparency, stimulating the production of knowledge and enabling dialogue with civil society.
Sharing data analysis with other government agencies increases the role and visibility of Customs in policy-making and in obtaining necessary resources, including donor funding. Disseminating Customs data and information in society is part of governments’ response to the general demand for open governance.
To support Customs administrations, the WCO Secretariat has placed data-related topics on the agendas of several committees and working groups, organized awareness-raising seminars, developed e-learning modules, drafted a Capacity Building Framework for Data Analytics which was adopted by the WCO Council in December 2020, issued practical publications and published articles in the WCO News Magazine.
Moreover, a community of experts has been established, under the name of BACUDA (BAnd of CUstoms Data Analysts), which brings together Customs and data scientists with the objective of developing data analytics methodologies.
The Secretariat will continue to investigate ways to collect and share data on Customs administrations with a view to enhancing the way it delivers capacity building, and will continue to undertake data-driven assessments and work with international experts to respond to assistance requests.
More measures will be presented in the WCO Data Strategy that the WCO Secretariat is currently working on. The ambition will be to make data a vernacular language among Customs administrations and between the WCO Secretariat and WCO Members. The road ahead is not an easy one, there will inevitably be challenges along the way, but as we have learned during the COVID-19 pandemic, the Customs community is united, stronger and more resilient in the face of adversity.
On 25 May 2021, the WCO Secretary General, Dr. Kunio Mikuriya, welcomed approximately 3,650 registered participants from 160 WCO Member administrations to the 5th WCO Global AEO Conference. The Conference is being hosted by Dubai Customs and the Federal Customs Authority (FCA) of the United Arab Emirates (UAE), with support from the Korea Customs Service.
Under the theme “AEO 2.0: advancing towards new horizons for sustainable and secure trade”,the Conference brings together 80 prominent speakers from Customs administrations, international organizations, academia and the private sector who are engaging virtually to share collaborative input that will help shape the future of Authorized Economic Operator (AEO) programmes. This is the first time that the Global Conference has been organized in the WCO’s North of Africa, Near and Middle East region.
The Conference was opened by His Excellency Sultan Ahmed Bin Sulayem, Chief Executive Officer of DP World and Chairman of the Ports, Customs & Free Zones Corporation, on behalf of His Highness Sheikh Ahmed Bin Saeed-Al Maktoum, President of Dubai Civil Aviation Authority and Chairman and Chief Executive of the Emirates Group. He delivered an inspiring message on the importance of innovation and collaboration among Customs and other government agencies (OGAs) to support resilient recovery for global supply chains. He congratulated the WCO for providing the international community with a discussion platform on topical issues of interest and highlighted the need for renewed trust and commitment to preserving sustainable and secure trade.
In his welcome address, Dr. Mikuriya highlighted that in the 16 years since the SAFE Framework of Standards (FoS) was first adopted, the number of WCO Members implementing AEO programmes had increased substantially, from 45 to 97, while the number of Mutual Recognition Arrangements/Agreements had risen exponentially from 17 to 91. Dr. Mikuriya underlined that this demonstrates not only the success of the SAFE FoS but also the importance of monitoring implementation of AEO programmes.
Secretary General Mikuriya offered food for thought regarding the possible next steps to ensure that AEO programmes more effectively support supply chain recovery as the world moves into a post-COVID-19 pandemic environment. These steps may include ways of inviting more economic operators to take part in AEO programmes, strengthening cooperation between Customs and OGAs, and leveraging disruptive and transformative technologies for the benefit of AEO programmes. Finally, consideration should be given to the role played by training and capacity building in making the AEO concept a key tool at the centre of resilient and sustainable supply chain recovery.
Dr. Mikuriya also commended Dubai Customs and the FCA for their strong commitment and generous support towards making this event an immense success. He further acknowledged the backing provided by regional entities as well as other partners, sponsors and exhibitors, who have all contributed to ensuring that this event will be a remarkable and memorable experience for all.
During his opening remarks, His Excellency Ahmed Mahboob Musabih, Director General of Dubai Customs, said that this Conference provided the UAE with the perfect forum for sharing information on innovative work pushing the boundaries of Customs. He added that it would be an opportunity for everyone to learn more about Dubai’s experience of building up Customs to form one of the pillars of the Emirate’s development and prosperity.
The Conference will continue on 26 and 27 May with discussions on topics including emerging supply chain security threats; the role of technologies in promoting supply chain renewal; risk management; best practices; and partnership and capacity building activities.
More information can be found on the event website
Customs activities for this year are underpinned by the World Customs Organization’s (WCO) 2021 theme “Customs bolstering recovery, resilience and renewal for sustainable global supply chain”. The colossal task that lies ahead as nations look to reconstruct their global supply chain is one of the reasons that the WCO has advocated Authorised Economic Operator (AEO) programmes as a tool to promote reconstruction.
SARS, in collaboration with the Border Management Agency (BMA), is leading the process of creating a Single Government AEO (SGAEO) programme to ensure improved trade facilitation and supply chain security in South Africa, the Southern African region, the African continent and globally. The World Bank (WB) and WCO have agreed to assist SARS to create a SGAEO programme, through the WB Trade Facilitation Programme.
The agreement to conceptualise a SGAEO for South Africa culminated in agreement that SARS and the BMA would jointly host a workshop with all agencies involved in managing trade at the border. The WB and WCO have agreed to participate in the workshop on 2 March 2021. The workshop is intended to contextualise and set the scene for the creation of a SGAEO programme in South Africa and to allow for comparison of the various OGA risk management programmes for cross border trade with the SARS AEO programme.
International drivers for Single Government AEO programmes include the World Trade Organisation’s Trade Facilitation Agreement and the WCO’s SAFE Framework of Standards. South Africa’s scoring on the OECD’s Trade Facilitation Indicator is used as input into the World Bank’s (WB) Ease of Trading across Borders in its annual Doing Business Report.
For Customs Administrations, AEO programmes are vital tools for developing trust-based partnerships with economic operators who have high levels of commitment to compliance and supply chain security. Economic operators, on the other hand, are interested in the tangible benefits offered to participants, particularly, mutual recognition agreements (MRAs) with trading partners.
While several countries have adopted different OGA (Other Government Agencies)AEO models, SARS’ preferred model is a Single Government AEO Programme with one certification process and benefits granted by all agencies.
Source: South African Revenue Service, Rae Vivier, 2 March 2021
A Global On-line Accreditation Workshop for English-speaking experts on E-Commerce was held from 31 August to 7 September 2020 via the CLiKC! platform of the World Customs Organization (WCO).
Due to the increasing needs of WCO Members for Capacity Building support for a harmonized and efficient implementation of the WCO Framework of Standards on Cross-border E-Commerce and other supporting tools, the Secretariat organized this first Accreditation Workshop in the area of E-Commerce as a pilot virtual accreditation initiative.
The event was organized with the objective of setting up a pool of English-speaking Technical and Operational Advisors capable of independently leading, on behalf of the WCO for its Members, Capacity Building missions in the field of Cross-border E-Commerce.
Twelve selected candidates representing five of the WCO regions took part in the Workshop. Mr. Mike Leahy of the Canada Border Services Agency (CBSA), former Customs Co-Chairperson of the WCO Working Group on E-Commerce, joined the workshop as a co-facilitator. Participants from Australia, Belgium, Brazil, Canada, China, Ireland, Japan, Mauritius, the Netherlands, Nigeria, Pakistan and the United Kingdom worked intensively and demonstrated their knowledge and skills to deliver Capacity Building activities in the area of Cross-border E-Commerce. Moreover, the Workshop served as a forum for sharing knowledge and experience, as well as discussing challenges and solutions.
The participants that successfully completed the Accreditation Workshop will be invited to the next stage of the WCO expert accreditation process, an in-field mission with a qualified WCO expert in the area of E-Commerce. Fully accredited experts will be expected to conduct future WCO Capacity Building activities.
A.P. Moller – Maersk will acquire Sweden-based KGH Customs Services for 2.6 billion Swedish crowns ($281 million), the company announced Monday.
KGH specializes in trade and customs management services in Europe across multiple freight modes. The deal adds to Maersk’s service offerings as the carrier looks to expand beyond ocean shipping and position itself as a full-service supply chain solutions provider.
“There are no end-to-end solutions without customs clearance,” Vincent Clerc, CEO of ocean and logistics at A.P. Moller – Maersk, said in a statement. “With KGH, we will not only be able to strengthen our capabilities within customs services and related consultancy, but also reach more of our customers in Europe through a larger geographical footprint and digital solutions that will enhance our ability to meet our customers´ end-to-end supply chain needs.”
Maersk has been open about its ambitions to expand its business into other parts of the supply chain, positing its logistics sector growth as a main business objective.
“Focus remains on developing our end-to-end offering through an even stronger Ocean product while expanding and scaling our logistics and services portfolio,” Maersk wrote in its latest annual report.
Maersk began outlining its end-to-end ambitions in 2016 and has taken multiple steps toward realizing its goal in the form of deals and reorganization. Last year, Maersk closed a deal to acquire the New Jersey-based customs broker Vandegrift. And in 2018, it announced plans to merge its operations with Damco.
Maersk sees its ocean business as the “strong foundation” for the rest of its logistics offerings, and new products will be important in adding to its end-to-end logistics offerings, the company explained in its latest annual report.
“The next phase in the strategy is about growing the business by innovating existing products combined with selling landside logistics products to our existing customers – as well as growth in our Terminals & Towage business,” the annual report reads.
Maersk has specifically said M&A would be one tool it would use to achieve its end-to-end initiative, highlighting landside logistics as one space where deals could happen in its annual report. And when the company brought on a new CFO, Patrick Jany, earlier this year, it specifically highlighted his experience with M&A.
Last year, Maersk became the first ocean carrier to offer digital ocean customs clearance, according to a press release. The offering allows shippers to upload declaration paperwork and the carrier can send a notification when the shipment clears customs, according to a video explaining the offering.
The U.K. risks failing to recruit the 50,000 customs agents the logistics industry says are needed before Britain’s final parting with the European Union, spelling potential chaos at the country’s busiest border.
The coronavirus has hampered efforts to train staff to handle the extra paperwork firms will need to complete after the U.K. exits the EU’s customs union at the year-end, according to industry bodies involved with the process. One lobby group says its offer to help plug the shortage of recruits has met with silence from Whitehall.
Without enough agents, goods traveling to and from the EU, the U.K.’s single biggest trading partner, risk being delayed at ports, disrupting supply chains and heaping more pain on companies reeling from coronavirus. Even if the two sides strike a trade deal by December, agents will still be needed to process an additional 200 million customs declarations, according to estimates by Her Majesty’s Revenue and Customs.
“This is all blown out the water by the virus,” said Robert Keen, director-general of the British International Freight Association, which is helping to train workers to process the new paperwork with funding from a 34 million-pound ($43 million) government program. “Everybody is fighting to keep their businesses going.”
Keen’s industry group has postponed its classroom training until at least June. The number of monthly registrations for its online learning course has dropped by 80% since February.
Asked by lawmakers on April 27 how many agents have been recruited so far, Cabinet Office Minister Michael Gove said he didn’t know.
He told members of Parliament the government had been in talks with the logistics industry about creating a training school. Such an initiative already exists — the U.K. Customs Academy was started in September with the Institute of Export. 876 courses have been initiated or completed since the academy opened, according to KGH Customs, which helps run the program.
“There is a significantly long way to go,” said Marco Forgione, director-general of the Institute for Export. According to him, the 50,000 figure is almost certainly a conservative estimate of how many agents will be needed. He is calling on the government to encourage people who have lost their jobs because of the virus to re-train as customs officials.
‘Full Stop’
In a sign of how the virus has sapped attention away from Brexit in Whitehall, the Freight Transport Association submitted a proposal to the Treasury on March 17 about how to set up a mass education program to train up agents. More than a month later, the lobby group hasn’t received a reply.
“My impression is it has come to a full stop,” said Rod McKenzie, managing director of policy and public affairs at the Road Haulage Association. He expressed surprised he hadn’t seen any job ads for customs agents.
Talks to seal a trade deal between Britain and the EU have been disrupted by the virus. The U.K. is seeking a Canada-style accord which would eliminate tariffs on goods but create new non-tariff barriers like customs declarations and rules-of-origin paperwork. Without a deal, the U.K. would trade with the EU on terms set by the World Trade Organization, meaning steep duties on products from cars to beef.
Need to Prepare
The two sides have until the end of June to extend the standstill period Britain entered after Brexit on Jan. 31 – but the government has repeatedly ruled out seeking a delay. Business groups such as BIFA and the FTA have called for an extension, arguing firms shouldn’t have to face the double whammy of higher trade costs while still recovering from the negative effects of coronavirus.
A government spokesman said thousands of agents, freight forwarders and parcel operators had used the 34 million-pound fund to improve their IT hardware and train staff.
“The U.K. has a well-established industry of customs intermediaries who serve British businesses trading outside the EU,” the spokesman added.
Even if firms are able to divert resources into training later in the year, by when the virus might have abated, companies will still need time to prepare, said Arne Mielken, founder of Customs Manager, an advisory firm for importers and exporters.
“You can’t hammer in customs knowledge overnight,” he said. “We urge companies not to neglect the fact that Brexit is still happening.”
Source: Article by Joe Mayes, Bloomberg, 4 May 2020
Three years since the Trade Facilitation Agreement (TFA) entered into force on 22 February 2017, WTO members have continued to make steady progress in its implementation. Director-General Roberto Azevêdo, on the occasion of the TFA’s third anniversary, welcomed members’ efforts to ensure traders can reap the full benefits of the Agreement.
The TFA, the first multilateral deal concluded in the 25-year history of the WTO, contains members’ commitments to expedite the movement, release and clearance of goods across borders. As of the TFA’s third anniversary, 91% of the membership have already ratified the Agreement. It entered into force three years ago when the WTO obtained the two-thirds acceptance of the Agreement from its 164 members.
The Agreement is unique in that it allows developing countries and least-developed countries (LDCs) to set their own timetables for implementing the TFA depending on their capacities to do so. They can self-designate which provisions they will implement either immediately (Category A), after a transition period (Category B), or upon receiving assistance and support for capacity building (Category C).
As of 22 February 2020, over 90 per cent of developing countries and LDCs have notified which provisions they are able to implement after a transition period, and the ones for which they will need capacity-building support to achieve full implementation of the Agreement. Developed countries committed to immediately implement the Agreement when it entered into force.
Based on members’ notifications of commitments, 65 per cent of TFA provisions are being implemented today compared to the 59 per cent implementation rate recorded on the Agreement’s first anniversary. Broken down, the latest figure equates to a 100 per cent implementation rate for developed members and 64 per cent for developing members. As for least-developed countries, the improvement in the implementation rate is particularly notable at 31 per cent today versus the 2 per cent recorded a year after the Agreement entered into force. The implementation rate for each WTO member can be viewed here.
The Agreement has the potential, upon full implementation, to slash members’ trade costs by an average of 14.3 per cent, with developing countries and LDCs having the most to gain, according to a 2015 study carried out by WTO economists. It is also expected to reduce the time needed to import and export goods by 47 per cent and 91 per cent respectively over the current average.
Under the framework of the Southern African Customs Union (SACU) Customs Modernization Programme, funded by the United Kingdom Foreign and Commonwealth Office, WCO experts were invited to lead an AEO Validation Workshop for the South African Revenue Service (SARS). The Workshop was held from 10 to 14 February 2020 in Pretoria, South Africa. Mrs. Rae Vivier who is the Group Executive responsible for AEO in SARS opened the workshop and welcomed the WCO and SACU representatives with a key note address to all attendees. She gave assurance to the audience that AEO is taken seriously by SARS and is one of the organization’s key deliverables.
During the five day Workshop, the SARS AEO validation team was given an introduction to the WCO SAFE Framework of Standards (FoS), including all its Pillars, core elements, and AEO criteria etc. This was followed by a discussion on the essential elements of the AEO Validation Guidance, the sequential steps of the AEO validation procedures and the skills required by AEO validators.
The participants, comprised of Customs auditors, legal experts and client relationship managers, were given an opportunity to share their views on the similarities and differences between AEO validation and post-clearance audit. The core values of Customs-Business partnerships were highlighted as an important aspect towards achieving AEO programme implementation. Auditors with a Customs compliance mindset were given security validation knowledge and taught how to hold discussions with business on coordinating and enhancing international supply chain security and safety. Another important element underscored during the training was that validation of the applicant is central to accreditation, and that the applicant’s supply chain may not be tested. Accordingly, the applicant is responsible for securing its own supply chain.
The Workshop entailed extensive discussions on the self-assessment questionnaire prepared by SARS for potential AEOs taking part in the country’s AEO pilot. While referring to the WCO self-assessment template, the WCO experts also shared questionnaires by other Customs administrations. The participants and experts discussed how to enhance the questions posed, making it simpler for business to understand and answer them. A number of recommendations were made, including adding explanatory notes to the self-assessment questionnaire to help clients provide accurate information about their security and safety protocols.
A further aim of the Workshop was to include practical sessions, such as the mock validation process held at BMW’s South African plant in Rosslyn. Participants were told how BMW guarantees supply chain safety and security. Equipped with this information, the Workshop participants were given a walk-through of BMW South Africa’s processes for receiving goods. The lessons learned were shared among the Workshop participants and SARS management during the post-validation assessment. During that session, several Mutual Recognition Arrangements/Agreements (MRAs) signed between different Customs administrations were also referenced, so as to enhance learning and information sharing.
SARS embarked on its Preferred Traders Programme (PTP) in May 2017. The initial number of 28 accredited traders (importers/exporters) has grown to reach 119 as of 14 February 2020. Under the SARS Strategic Plan for 2023, the priority will be to focus on improving voluntary compliance and supply chain security through implementation of the standardized WCO SAFE/AEO programme. At the same time, SACU wishes to roll out PTPs for all its Members, while moving towards a full-fledged AEO programme in phases. To this end, the WCO experts discussed and shared views on the PTP compatibility assessment tool aimed at ensuring mutual recognition of Preferred Traders among SACU Members.
To mark International Customs Day 2020 – focusing on the theme of ‘fostering Sustainability for People, Prosperity and the Planet’, the following article from the Spring 2018 edition of World Trade Matters by Jan Hoffmann, the Chief of the Trade Logistics Branch, Division on Technology and Logistics at UNCTAD, is relevant. The article discusses global trade facilitation reforms, the digitalisation of trade and measures towards ensuring long-term sustainability in the maritime industry.
Confronted with growing populism and a surge in protectionist measures recorded by the WTO, policy makers and enterprises are struggling to avoid a backlash in international trade. At UNCTAD’s Trade Logistics Branch, we support these endeavours by helping to make trade work better. Through trade facilitation reforms, the promotion of digitalisation, and ensuring the long-term sustainability of international transport, we aim at ensuring that the international movement of goods is not confronted with unnecessary obstacles and costs.
A multilateral agreement to facilitate international trade
Under the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO), developing countries commit to implement a number of very practical measures that make trade easier and more transparent. Countries are obliged to publish duties and procedures on the web, traders can transmit their declarations prior to the arrival of the goods, payments can be made electronically, and fees and charges must not become hidden taxes to generate income for the government. These are but some of the 37 concrete measures grouped into 12 Articles of the TFA. They are all useful and help make trade more efficient.
However, many of these measures involve an initial investment or reforms that require human and financial resources to start with, which developing countries many not have. The good news is that the TFA also includes a novel mechanism – the so called “Special and Differential Treatment” – that helps developing countries plan and acquire the necessary capacity prior to being fully committed to comply with all 12 Articles. Concretely, the mechanism puts the developing countries in the position – and obligation – to analyse and notify their own implementation capacity. At UNCTAD, we are working closely with the developing countries to enable them to do so. Our main counterpart in this endeavour are the National Trade Facilitation Committees (NTFCs) that each country must set up under the TFA. UNCTAD’s Empowerment Programme for NTFCs includes training and knowledge development for the members of the NTFC, combined with advisory services and the development of a Roadmap of TFA implementation.
By the same token, UNCTAD also supports developing countries in setting up Trade Information Portals. Under the TFA, members of the WTO are obliged to make relevant information on tariffs and trade procedures available on-line. UNCTAD’s Trade Information Portals not only help countries become compliant with this obligation, but in the process of analysing and publishing applicable trade procedures, a Trade Information Portal effectively helps countries identify the potential for the further simplification of procedures. Thanks to these new insights, NTFCs can then develop programmes and reforms that subsequently ensure the further simplification of procedures.
Technological progress will never be as slow as today
My favourite provision of the TFA is Article 10.1., as it provides for a dynamic dimension of the Agreement. According to this article, countries need to minimize “the incidence and complexity of import, export, and transit formalities”, continuously “review” requirements, keep “reducing the time and cost of compliance for traders and operators”, and always choose “the least trade restrictive measure”. As such, even if a country is compliant with all TFA provisions today, countries will need to continue monitoring if existing procedures are still appropriate in view of technological or regulatory developments.
As trade becomes increasingly digitalised, and new technologies which do not yet exist will be developed, it will be important that governments continuously revise and review the applicable rules and regulations.
Digitalisation comes in stages. First, we optimize existing procedures, making use of cargo tracking, the Internet of Things, blockchain et al. Second, new businesses are developed which could not exist without the new technologies; new platforms come into being and we see more “uberisation”. Finally, there is transformation and science fiction; still in our lifetime Artificial Intelligence will overtake human capabilities to manage international trade and its logistics.
But let us take one step at a time. At UNCTAD, we support developing countries through eTrade readiness assessments, the development and upgrade of technological solutions in Customs automation and Single Windows, and by providing a Forum for our members to analyse and discuss the challenges that come with digitalisation. We encourage the development of global standards that allow for interoperability among new systems. The challenge for policy makers it to encourage private sector investments in new technologies and solutions, while ensuring that no new monopolies emerge that might exclude smaller players.
And it has to be sustainable
While we aim at ensuring continued growth in international trade, there is a catch. The transport of this trade encompasses increasing externalities, such as pollution, green-house-gas emissions, and congestion.
Ports need to minimise social and environmental externalities. Many port cities are among the most polluted places to live, as ships burn heavy oil, and delivering trucks produce noise and cause traffic congestions. In addition, ports need to be resilient in the face of disruptions and damages caused by natural disasters and climate change impacts.
International transport, including shipping, needs to play a larger role in addressing global warming and contribute to mitigating the carbon emissions that are causing climate change. Shipping emits less carbon dioxide (CO2) per ton-mile than other modes of transport, but then due to its sheer volume it also produces many ton-miles. Would it be possible that the industry could be charged by its main regulatory body not per ship tonnage (as is currently the case), but per tonne of CO2 emission?
Currently, the International Maritime Organization is funded proportional to the tonnage registered under the members’ flags. Like this, Panama, Marshall Islands and Liberia pay for the largest share of the IMO budget – and in the end, this is passed on to the ship-owner, who in turn passes this on to the shipper, who will charge the consumer. This is a good established mechanism that could be expanded to also internalize the external costs of CO2 emissions.
Being the most globalized of all businesses, maritime transport should consider adopting a global regime that helps further internalize its environmental externalities – to ensure prosperity for all.
It is all about efficiency
Investing in trade facilitation reforms, making intelligent use of the latest technologies, and ensuring that externalities are internalized are all several sides of the same coin. Trade efficiency is necessary to promote an open international trading system. It requires a continuous effort by policy makers to continuously review current procedures, apply the most appropriate technological solutions, and support an efficient allocation of scarce resources.
Source: Jan Hoffman, UNCTAD – originally published in World Trade Matters, Spring Edition, 2018
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.
The WCO has published the 83rd edition of WCO News, the Organization’s flagship magazine aimed at the Customs community, which provides a selection of informative articles that touch the international Customs and trade landscape.
This edition features a special dossier on the use of collective action to fight corruption and how it can apply in the Customs context, and includes both country-specific experiences as well as the views of Customs’ partners.
It also puts a spotlight, in its focus section, on the WCO Mercator Programme, the capacity building programme designed by the WCO to assist governments in implementing the Customs trade facilitation measures outlined in the WTO Agreement on Trade Facilitation.
Other highlights include articles on the implementation of a new standard to ensure that men and women receive equal pay for equal work, enhanced control of light aviation in West Africa, the use of basic mathematics to fight corruption and bad practices, and much more.
The magazine is published and distributed free of charge three times a year, in February, June and October, and is available online or in paper format. Source: WCO
Historically, a customs officer’s “intuition” backed up by his/her knowledge and experience served as the means for effective risk management. In the old days (20 years ago and back) there wasn’t any need for all this ‘Big Data’ mumbo jumbo as the customs officer learnt his/her skill through painful, but real-life experience, often under bad and inhospitable conditions.
Today we are a lot more softer. The age of technology has superseded, rightly or wrongly, the human brain. Nonetheless, governments thrive on their big-spend technology budgets to ensure the safety of their economies and supply chains.
No less, the big multinational corporations whose ‘in-house’ business is no longer confined by national boundaries or continents are responsible for the generation of huge amounts of data which need to extend to the limits of their operations. When the products of such business are required to traverse national boundaries and continents, their logistics and transport intermediaries, financiers, and insurers become themselves tied up in the vicious cycle of data generation and transfer, also spanning national boundaries to ensure those products arrive at their intended destinations – intact, in time and fit for purpose. Hence we have what as become known as the international supply chain.
It does not end there. Besides the Customs authorities, what about the myriad of other government regulatory authorities who themselves have a plethora of forms and information requirements which must be administered and approved prior to departure and upon arrival of goods at their destination.
Inefficiencies along the supply chain culminate in delays with added cost which dictates the viability for sale and use of the product during delivery. These may constitute what is called non-tariff barriers (or NTBs) which negatively impact the suppliers credibility in international trade.
The bulk of this information is nowadays digitised in some for or other. It is obviously not all standardised and structured which makes it difficult to align, compare or assimilate. For Customs it poses a significant opportunity to tap into and utilise for verification or risk management purposes.
The term ‘Big Data’ embraces a broad category of data or datasets that, in order to be fully exploited, require advanced technologies to be used in parallel. Many big data applications have the potential to optimize organizations’ performance, (and here we have it) the optimal allocation of human or financial resources in a manner that maximizes outputs.
The purpose of this paper is to discuss the implications of the aforementioned big data for Customs, particularly in terms of risk management. To ensure that better informed and smarter decisions are taken, some Customs administrations have already embarked on big data initiatives, leveraging the power of analytics, ensuring the quality of data (regarding cargos, shipments and conveyances), and widening the scope of data they could use for analytical purposes. This paper illustrates these initiatives based on the information shared by five Customs administrations: Canada Border Services Agency (CBSA); Customs and Excise Department, Hong Kong, China (‘Hong Kong China Customs); New Zealand Customs Service (‘New Zealand Customs’); Her Majesty’s Revenue and Customs (HMRC), the United Kingdom; and U.S. Customs and Border Protection (USCBP). Source: WCO
What Happened to the Portcullis? 
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