Category / Customs Modernisation

by Mike Poverello

Landmark East and Southern African Customs forum focuses on modernisation

WCO ESA_Snapseed

Participants from all 24 members of the WCO’s Eastern and South African region attended the forum. [SARS]

Customs officials from 24 eastern and southern African countries met in Pretoria this week to share knowledge and experience with regard to the successful modernisation of Customs administrations.

Opening the three-day forum, Erich Kieck, the World Customs Organisation’s Director for Capacity Building hailed it as a record breaking event.

“This is the first forum where all 24 members of the Eastern and Southern African region (ESA) of the WCO were all in attendance,” he noted. Also attending were officials from the WCO, SACU, the African Development Bank, Finland, the East African Community and the UK’s Department for International Development (DFID).

Michael Keen in the 2003 publication “Changing Customs: Challenges and Strategies for the Reform of Customs Administrations” said – “the point of modernisation is to reduce impediments to trade – manifested in the costs of both administration incurred by government and compliance incurred by business – to the minimum consistent with the policy objectives that the customs administration is called on to implement, ensuring that the rules of the trade game are enforced with minimum further disruption”

The three-day event witnessed several case studies on Customs modernisation in the region, interspersed with robust discussion amongst members. The conference also received a keynote addressed by Mr. Xavier Carim, SA Representative to World Trade Organisation (WTO), which provided first hand insight to delegates on recent events at Bali and more specifically the WTO’s Agreement on Trade Facilitation.

The WCO’s Capacity Building Directorate will be publishing a compendium of case studies on Customs Modernisation in the ESA region during the course of 2014.

WCO ESA members – Angola, Botswana, Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Somalia, South Sudan, Swaziland, South Africa, Tanzania, Uganda, Zambia and Zimbabwe.

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Source: SARS

by Mike Poverello

Philippine Customs Launches Transparency Portal

bocBigLogoBureau of Customs (BOC) unveiled a new website called “Customs ng Bayan” (Customs of the Nation) as part of newly-appointed Customs Commissioner John Phillip Sevilla’s initiatives to “uproot” the agency from its long history of institutionalised corruption.  “We are publishing reports of almost every importation into the Philippines in December 2013. Going forward, we intend to publish this list every month,” Sevilla said in an official statement.

Each item in the list represents a specific quantity (measured by weight) of a specific item that was imported by a specific importer on a specific day. The list – 88,006 items in December 2013 alone – is organised by major product groups, using the Harmonised Standard (HS) Code classification system.

“For each item, we include information such as a description of the item imported, its HS code number and standard HS code description, what country the item came from, its value and the amount of duties and taxes collected on that item.”

The Bureau of Customs, for the past years, has been one of the country’s most prominent faces of corruption in the government. According to Sevilla, all of that is about to change as they make drastic shifts in leadership, personnel and processes. In particular, he highlighted the importance of leveraging ICT to support the administration’s reform agenda.

“We need to improve the capacity of our IT systems to comply with needed reforms,” he said, adding that the Bureau is now studying the feasibility of implementing a single IT platform for all transactions, which involves improving the planned Php 442.3 million (US$9.8 million) National Single Window (NSW) project.

The NSW will facilitate trade through efficiencies in the Customs and authorisation processes. It will allow single submission and accelerated processing of applications for licenses, permits and other authorisations required prior to undertaking a trade transaction.Source: www.futuregov.asia

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by Mike Poverello

Mauritius Revenue Authority – Launch of the WCO Multilingual Regional Training Centre

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The SADC region is now equipped with a third World Customs Organization accredited Regional Training Centre in addition to the South African and Zimbabwean Regional Training Centre. The Regional Training Centres are excellent platforms for Customs to advance capacity building and to share information and best practices.

The Mauritius Revenue Authority (MRA) has been selected by the WCO to host the RTC as part of the WCO initiative to optimise resources in the region and in line with government’s objective of making of Mauritius a Knowledge Hub. The RTC represents the 25 of its kind adding to the existing Centres across the world and is the fourth one in the WCO ESA region.

The Centre will enable the WCO achieve its mission of enhancing Customs administrations in the WCO ESA region thereby helping these Customs administrations to make an important contribution to the development of international trade and to the socio-economic well-being of their country.

Under the WCO strategy the RTC has four main objectives namely: development of regionally relevant training; maintenance of specialist trainer pools; provision of specialist training at a regional level; and development and support of the WCO’s blended learning programme. Moreover, it has as task to develop and maintain annual training plans and work in partnership with the private sector to maintain effective relationships between Customs and economic operators as well as assist Member countries in their training needs.

The Mauritius RTC is equipped with English, French and Portuguese language facilities as well as an e-learning platform. The Vice-Prime Minister and Minister of Finance and Economic Development, Mr. Xavier Luc Duval, formally opened the RTC on the 25th November 2013. In his opening address, Secretary General Mikuriya commended the leadership and continued engagement of Mauritius, previously as WCO Vice-Chair for the East and Southern Africa (ESA) Region from 2011 to 2013, and now as host of an RTC. He hoped that this RTC would serve to share knowledge and strengthen the human resource network for Customs cooperation and regional integration.

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by Mike Poverello

UNCTAD – LDCs face challenges in reaping benefits from Cloud Computing

Picture1There is nothing nebulous about the “cloud”, especially as it applies to developing countries, a new UNCTAD report says. For businesses and governments in poorer nations to benefit from cloud computing’s increasingly rapid and more flexible supply of digitized information – the sort of thing that enables online marketers to rapidly scale up their information systems in tune with fluctuations in demand – massive, down-to-earth data processing hardware is required. Also needed is extensive broadband infrastructure, as well as laws and regulations that encourage the investment needed to pay for advanced information and communication technology (ICT) facilities and to protect users of cloud services.

UNCTAD’s Information Economy Report 2013, subtitled The Cloud Economy and Developing Countries, was released on 3 December 2013.

Referring to cloud computing, United Nations Secretary-General Ban Ki-moon states in the preface to the report: “This has considerable potential for economic and social development, in particular for our efforts to achieve the Millennium Development Goals and to define a bold agenda for a prosperous, sustainable and equitable future.”

The report shows that cloud computing offers the potential for enhanced efficiency. For example, cloud provisioning may enable small enterprises to outsource some of the information technology (IT) skills that they would otherwise have to provide internally. Companies can benefit from greater storage and computing capacity, as well as the expertise of cloud service providers in areas such as IT management and security.

But the study notes that options for cloud adoption in low- and middle-income countries look very different from those in more advanced countries. While free cloud services such as webmail and online social networks are already widely used in developing nations, the scope for cloud adoption in low- and middle-income economies is much smaller than it is in more advanced economies. In fact, the gap in availability of cloud-related infrastructure between developed and developing countries keeps widening. Access to affordable broadband Internet is still far from satisfactory in developing nations, especially in the least developed countries (LDCs). In addition, most low-income countries rely on mobile broadband networks that are characterized by low speed and high latency and therefore not ideal for cloud service provision.

The report recommends that governments “welcome the cloud but tread carefully”. Within the limits of their resources, infrastructure such as costly data centres must be constructed; at present, developed economies account for as much as 85 per cent of all data centres offering co-location services.

The cloud’s pros and cons

In simple terms, cloud computing enables users to access a scalable and elastic pool of data storage and computing resources, as and when required. Rather than being an amorphous phenomenon in the sky, cloud computing is anchored on the ground by the combination of the physical hardware, networks, storage, services and interfaces that are needed to deliver computing as a service.

The shift towards the cloud has been enabled by massively enhanced processing power and data storage, and higher transmission speeds. For example, some central processing units today are 4,000 times faster than their equivalents from four decades ago, and consumer broadband packages are almost 36,000 times faster than the dial-up connections used when Internet browsers were introduced in 1993.

The potential advantages of cloud computing include reduced costs for in-house equipment and IT management, enhanced elasticity of storage/processing capacity as required by demand, greater flexibility and mobility of access to data and services, immediate and cost-free upgrading of software, and enhanced reliability and security of data management and services.

But there are also potential costs or risks associated with cloud solutions. The UNCTAD report mentions costs of communications (to telecom operators/Internet service providers) and for migration and integration of new cloud services into companies’ existing business processes, reduced control over data and applications, data security and privacy concerns, risks of services being inaccessible to targeted users, and risks of “lock-in” with providers in uncompetitive cloud markets.

Policymakers should waste no time in exploring how the cloud computing trend may affect their economies and societies, UNCTAD recommends. Countries need to assess carefully how best to reap gains from this latest stage in the evolving information economy. In principle, UNCTAD sees no general case for government policy and regulation to discourage migration towards the cloud. Rather, governments should seek to create an enabling framework for firms and organizations that wish to migrate data and services to the cloud, so that they can do so easily and safely. But government policies should be based on a careful assessment of the pros and cons of cloud solutions, and should recognize the diversity of business models and services available. The report underlines that there are multiple ways of making use of cloud technology, including public, private or hybrid clouds, at national, regional and global levels. Source: UNCTAD

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by Mike Poverello

Experts Caution Against Rush into Trade Facilitation Agreement

Bali 2013A rather lengthy article published by Third World Network, but entirely relevant to trade practitioners and international supply chain operators who may desire a layman’s understanding of the issues and challenges presented by the WTO’s proposed agreement on ‘Trade Facilitation’. I have omitted a fair amount of the legal and technical references, so if you wish to read the full unabridged version please click here! If you are even more interested in the subject, take a look through the publications available via Google Scholar.

A group of eminent trade experts from developing countries has advised developing countries to be very cautious and not be rushed into an agreement on trade facilitation (TF) by the Bali WTO Ministerial Conference, given the current internal imbalance in the proposed agreement as well as the serious implementation challenges it poses.

“While it may be beneficial for a country to improve its trade facilitation, this should be done in a manner that suits each country, rather than through international rules which require binding obligations subject to the dispute settlement mechanism and possible sanctions when the financial and technical assistance as well as capacity-building requirements for implementing new obligations are not adequately addressed.”

This recommendation is in a report by the Geneva-based South Centre. The report, “WTO Negotiations on Trade Facilitation: Development Perspectives”, has been drawn up from discussions at two expert group meetings organised by the Centre.

Noting that an agreement on trade facilitation has been proposed as an outcome from the Bali WTO Ministerial Conference, the South Centre report said that the trade facilitation negotiations have been focused on measures and policies intended for the simplification, harmonization and standardization of border procedures.

“They do not address the priorities for increasing and facilitating trade, particularly exports by developing countries, which would include enhancing infrastructure, building productive and trade capacity, marketing networks, and enhancing inter-regional trade. Nor do they include commitments to strengthen or effectively implement the special and differential treatment (SDT) provisions in the WTO system”.

The negotiations process and content thus far indicate that such a trade facilitation agreement would lead mainly to facilitation of imports by the countries that upgrade their facilities under the proposed agreement. Expansion of exports from countries require a different type of facilitation, one involving improved supply capacity and access to developed countries’ markets.

Some developing countries, especially those with weaker export capability, have thus expressed concerns that the new obligations, especially if they are legally binding, would result in higher imports without corresponding higher exports, which could have an adverse effect on their trade balance, and which would therefore require other measures or decisions (to be taken in the Bali Ministerial) outside of the trade facilitation issue to improve export opportunities in order to be a counter-balance to this effect.

According to the report, another major concern voiced by the developing countries is that the proposed agreement is to be legally binding and subject to the WTO’s dispute settlement system. This makes it even more important that the special and differential treatment provisions for developing countries should be clear, strong and adequate enough. The negotiations have been on two components of the TF: Section I on the obligations and Section II on special and differentiated treatment (SDT), technical and financial assistance and capacity building for developing countries.

Most developing countries, and more so the poorer ones, have priorities in public spending, especially health care, education and poverty eradication. Improving trade facilitation has to compete with these other priorities and may not rank as high on the national agenda. If funds have to be diverted to meet the new trade facilitation obligations, it should not be at the expense of the other development priorities.

“Therefore, it is important that, if an agreement on trade facilitation were adopted, sufficient financing is provided to developing countries to meet their obligations, so as not to be at the expense of social development,” the report stressed.

The report goes on to highlight the main issues of concern for a large number of developing countries on the trade facilitation issue. It said that many developing countries have legitimate concerns that they would have increased net imports, adversely affecting their trade balance. While the trade facilitation agreement is presented as an initiative that reduces trade costs and boosts trade, benefits have been mainly calculated at the aggregate level.

Improvements in clearance of goods at the border will increase the inflow of goods. This increase in imports may benefit users of the imported goods, and increase the export opportunities of those countries that have the export capacity.

However, the report noted, poorer countries that do not have adequate production and export capability may not be able to take advantage of the opportunities afforded by trade facilitation (in their export markets).

“There is concern that countries that are net importers may experience an increase in their imports, without a corresponding increase in their exports, thus resulting in a worsening of their trade balance.”

Many of the articles under negotiations (such as the articles on ‘authorized operators’ and ‘expedited shipments’) are biased towards bigger traders that can present a financial guarantee or proof of control over the security of their supply chains. There is also the possibility that lower import costs could adversely affect those producing for the local markets.

“The draft rules being negotiated, mainly drawn up by major developed countries, do not allow for a balanced outcome of a potential trade facilitation agreement,” the report asserted.

New rules under Section I are mandatory with very limited flexibilities that could allow for Members’ discretion in implementation. The special and differential treatment under section II has been progressively diluted during the course of the negotiations. Furthermore, while the obligations in Section I are legally binding, including for developing countries, developed countries are not accepting binding rules on their obligation to provide technical and financial assistance and capacity building to developing countries.

The trade facilitation agreement would be a binding agreement and subject to WTO dispute settlement. The negotiating text is based on mandatory language in most provisions, which includes limited and uncertain flexibilities in some parts.

Therefore, if a Member fails to fully implement the agreement it might be subject to a dispute case under the WTO DSU (Dispute Settlement Understanding) and to trade sanctions for non-compliance.

“Many of the proposed rules under negotiations are over-prescriptive and could intrude on national policy and undermine the regulatory capacities and space of WTO Member States. The negotiating text in several areas contains undefined and vague legal terminology as well as ‘necessity tests’, beyond what the present GATT articles require.”

Continue reading →

by Mike Poverello

Nigeria Customs Service – Organically Developing The National Single Window

Nigeria Trade Hub 2The WCO Single Window Experts Accreditation Workshop took place on 23rd – 27th September, 2013 at Customs Border Control Training Centre (CBCTC), Seoul, Korea. The objectives of the workshop included:

  • Promoting the work of Single Window
  • Developing expertise meant for executive management
  • Developing different expertise in other technical areas of Single Window.

Developing this expertise brought about the WCO Data Model and SW accreditation Workshop as there are several areas where experts can emerge, including areas of Business processes, Legal, Data Model etc. The past efforts in capacity building served as a guide to developing the program for the workshop. The expectation included shaping assistance and building capacity in the areas of Single Window.

The participants included representatives from Nigeria, Mauritius, Chile, Singapore, Tanzania, Mexico, United Arab Emirates, Russia Federation, Saudi Arabia and Korea. Three out of the ten participants (Nigeria, Singapore, Mauritius) were accredited Co-Facilitator Status for the World Customs Organization at the end of the workshop. This demonstrates that Nigeria is certainly moving in the right direction and aligning to International Standards. Source: Nigeria Trade Hub

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by Mike Poverello

SARS to address Stakeholders on Customs Control proposals

SARS chief officer of legal and policy Kosie Louw (Picture: Robert Botha/Business Day Live)

SARS chief officer of legal and policy Kosie Louw (Picture: Robert Botha/Business Day Live)

The South African Revenue Service (SARS) has committed itself to further engagements with importers of all sizes in a bid to improve its proposals to transform the customs control regime.

Consultations have already taken place with organised business on the proposed Customs Duty Bill and the Customs Control Bill, and the process would now be taken to the level of traders to find out whether the proposals presented them with any problems. Amendments have also been proposed to the Customs and Excise Act to provide for the transition to the new system.

“We want to understand the situation at a micro level. We will sit around the table until we find a solution which will guarantee to us that we get the information we require but which will also facilitate trade.

“We do not want to clog up the ports,” SARS chief officer of legal and policy Kosie Louw said in an informal briefing on the proposals to Parliament’s standing committee on finance on Wednesday.

The customs bills are mainly concerned with improving the information about imported and exported goods so that customs officials can exercise greater control.

Business has expressed concern that the requirement of the Customs Control Bill that they submit a national in-transit declaration of goods at the first port of entry before they are sent to internal terminals, or depots such as City Deep, would cause delays.

The new declaration — of the nature, value, origin and duty payable on the goods — would replace the limited manifest used to declare goods and would include information on the tariff, value and origin of goods.

Business has argued that the manifest allowed goods to move seamlessly from the exporting country to the inland port or depot, and would change the contractual relationships between exporter and importer in terms of when duty is paid.

However, Mr Louw did not believe the provision would cause delays and had obtained legal advice that the contractual relationships and method of payment of duties would not change. The problem with manifests, he said, was that they provided very limited information and did not allow SARS to prevent the inflow of unwanted goods. Nevertheless, he said that SARS would discuss the matter with traders.

Mr Louw said the proposed system would “improve SARS’s ability to perform risk assessment and intervene in respect of potentially high risk, prohibited and restricted consignments at the ports”.

The bills have been in the pipeline for about four years and have been extensively canvassed with the Southern African Customs Union and business. They were needed, Mr Louw said, so that South Africa kept pace with global trends in trade, international conventions and advances in technology.

Anti-avoidance provisions have also been introduced into the bill which sets out the offences and associated penalties for noncompliance and attempts to avoid paying customs duties.

SARS group executive for legislative research and development Franz Tomasek said the Customs Control Bill would introduce a new advance cargo loading notice for containerised cargo to prevent the loading of prohibited or restricted goods on board vessels bound for South Africa. However, to reduce the administrative burden on carriers, information submitted in advance will no longer be required on arrival or prior to departure. Source: Business Day Live

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by Mike Poverello

Border Management in Southern Africa: Lessons with respect to Policy and Institutional Reforms

The folk at Tralac have provided some welcomed insight to the challenges and the pains in regard to ‘regionalisation’. No doubt readers in Member States will be familiar with these issues but powerless within themselves to do anything due to conflict with national imperatives or agendas. Much of this is obvious, especially the ‘buzzwords’ – globally networked customs, one stop border post, single window, cloud computing, and the plethora of WCO standards, guidelines and principles – yet, the devil always lies in the details. While the academics have walked-the-talk, it remains to be seen if the continent’s governments have the commitment to talk-the-walk!

Regional integration is a key element of the African strategy to deal with problems of underdevelopment, small markets, a fragmented continent and the absence of economies of scale. The agreements concluded to anchor such inter-state arrangements cover mainly trade in goods; meaning that trade administration focuses primarily on the physical movement of merchandise across borders. The services aspects of cross-border trade are neglected. And there are specific local needs such as the wide-spread extent of informal trading across borders.

Defragmenting Africa WBThis state of affairs calls for specific governance and policy reforms. Effective border procedures and the identification of non-tariff barriers will bring major cost benefits and unlock huge opportunities for cross-border trade in Africa. The costs of trading remain high, which prevents potential exporters from competing in global and regional markets. The cross-border production networks which are a salient feature of development in especially East Asia have yet to materialise in Africa.

Policy makers have started paying more attention to trade-discouraging non-tariff barriers, but why does the overall picture still show little progress? The 2012 World Bank publication De-Fragmenting Africa – Deepening Regional Trade Integration in Goods and Services shows that one aspect needs to be singled out in particular:  that trade facilitation measures have become a key instrument to create a better trading environment.

The main messages of this WB study are:

  • Effective regional integration is more than simply removing tariffs – it is about addressing on-the-ground constraints that paralyze the daily operations of ordinary producers and traders.
  • This calls for regulatory reform and, equally important, for capacity building among the institutions that are charged with enforcing the regulations.
  • The integration agenda must cover services as well as goods……services are critical, job-creating inputs into the competitive edge of almost all other activities.
  • Simultaneous action is required at both the supra-national and national levels. Regional communities can provide the framework for reform, for example, by bringing together regulators to define harmonised standards or to agree on mutual      recognition of the qualification of professionals……. but responsibility for implementation lies with each member country.

African governments are still reluctant to implement the reforms needed to address these issues. They are sensitive about loss of ‘sovereign policy space’ and are not keen to establish supra-national institutions. They are also opposed to relaxing immigration controls. The result is that border control functions have been exercised along traditional lines and not with sufficient emphasis on trade facilitation benefits. This is changing but specific technical and governance issues remain unresolved, despite the fact that the improved border management entails various technical aspects which are not politically sensitive.

The required reforms involve domestic as well as regional dimensions. Regional integration is a continental priority but implementation is compounded by legal and institutional uncertainties and burdens caused by overlapping membership of Regional Economic Communities (RECs). The monitoring of compliance remains a specific challenge. Continue reading →

by Mike Poverello

South Africa’s New Integrated Customs Border Management Solution

Amidst diverse expectations and feelings of excitement, anxiety and anticipation, the South African Revenue Service (SARS) migrated to its new integrated Customs and Border Management solution over the weekend of 17 August 2013. A new modern electronic solution Interfront can now rightfully claim some success even if it is an unseen component within a multi-layered, multi-technology solution of which South African Customs is now the proud owner. After 9 months of rigorous parallel testing between old and new, and a period of dedicated external testing with Service Providers of the customs business community, the decision to implement was formally agreed with trade a fortnight ago.

Interfront Customs and Border Solution (iCBS) replaces several key legacy systems, one of which has served South Africa for more than 30 years. The vast business and technical competence and skills which faithfully maintained and supported the old systems are to some extent in the wilderness now, but will hopefully find place within the new technology environment. While technology nowadays is particularly agile, and human physical placement at the coal face is under threat, organisations like SARS will always require customs technical business and policy competence to maintain the cutting edge.

There still remains an enormous amount of work to do regarding the alignment of the new clearance system with the specific guidelines, standards and principles of the WCO. With regional integration becoming more prominent on the sub-Saharan African agenda, the matter of ‘facilitation’ and ‘non-tariff barriers’ will inevitably become more prominent discussion points. Other salient features of the SAFE Framework of Standards such as Authorised Economic Operators and IT connectivity have already emerged as key developmental goals of a number of regional customs and border authorities. The timely introduction of Interfront places SARS in a pivotal position to influence and enable the required electronic linkages, crucial for the establishment of bi-lateral and multilateral trade agreements, transport corridors, and, support for ‘seamless’ multi-modal movement of cargo from port of discharged to its place of manifestation with limited intervention, based on the principles of risk management. Enjoy the Interfront video feature.

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by Mike Poverello

Hurdles before trans-border trade facilitation

Port of Lagos, Nigeria

Port of Lagos, Nigeria

The following article, allbeit long, provides a good overview of trade facilitation developments in Nigeria. I doubt that there is a single country on the African continent that cannot draw some parallel experience contained in this article.

Trade across borders is not a new phenomenon. But the World Trade Organization is now championing the concept of trade facilitation among nations, which has been defined as simplication , harmonization, standardization and modernization of trade procedures.

Trade facilitation seeks to reduce trade transaction between businesses and government. This concept is receiving unprecedented attention globally and it is at the heart of numerous initiatives within the customs world.

The United Nations Centre for Trade facilitation and Electronic business (UN/CEFACT) in its recommendation No 4 of 1974, said trade facilitation programme ought to be guided by simplication, harmonization and standardization (of trade procedures) so that transaction becomes easier, quicker and more economical than before.

According to the body, there was need to eliminate duplication in formalities, process and procedures; align all national formalities, procedures operation and documentation with international conventions, standard and practices to develop international agreed format for practices, procedures, documentation and information in international trade.

Proponent of trade facilitation believed that if transaction cost in international trade is reduced, there could be creation of wealth, especially in developing countries where red-tapism and other procedural barriers to trade tend to be pronounced.

The organization for Economic Cooperation and Development (OECD) estimated recently that even one per cent reduction in such “hidden cost” would boost the global economy by $40 billion with most of these benefits going to the developing world. Trade facilitation therefore encourages, or perhaps requires countries to adopt means such as publishing their imports and export procedures, reducing the number of forms that importers and exporters are required to complete, allowing forms to be submitted on-line, and checking corruption at border post.

Nigeria, though a signatory to Kyoto 1974 and other convention on trade facilitation, is far from embracing the ideals of the global concept.

The president of the council of Managing Directors of Customs licensed Agents, Mr. Lucky Amiwero, said that although Nigeria was yet to comply with all the provisions of trade facilitation, it has the tools to facilitate international trade, such as the scanning machines and the e-platform.

“In Nigeria, the real cost of doing business is an impediment to trade facilitation. We have no good procedure for goods on transit to Niger and Chad. That has been taken over now by our neighboring countries. One of the key component of trade facilitation is charges which must be tied to services. We have shortcoming in that area. We are still working at cross purposes when other countries are busy harmonizing their import and export procedures”, he said.

In Nigeria, there is no one stop shop process for goods clearance as we have over 10 agencies superintending goods clearing procedure at the nation’s gateways.

“This is very bad and constitute hindrance to trade. The regulatory process is supposed to have been harmonized with other agencies to have a one stop procedures. Procedures are not published and not in line with WTO article which has to do with publication, regulation and administration of procedures. Our trading regime are expensive, our procedures are cumbersome. When others are simplifying and synchronizing their process of import and exports, our import and export procedures are lengthy. We have not been able to harmonise process and procedures and that is where we have a problem. If you still have to go through 100 per cent examination when we have the scanners, that is an impediment to trade,” Amiwero said; adding that the time spent to conclude business in Nigerian ports and border post is much higher than anywhere in the West African sub-region.

The level of corruption at the port border post is high and making them the most expensive business environment in Africa; as un-receipted charges far outweigh the official charges in the process of good clearing. Importers are still submitting hard documents instead of making use of e-devices, and going through the cumbersome process of clearing and receiving of consignments. Continue reading →

by Mike Poverello

Latest SA Cabinet decisions affecting Customs

Coat_of_arms_of_South_Africa_svgGovernment Communication and Information (GCIS) has published a statement on Cabinet’s recent meeting (26 June 2013) revealing at least three key aspects affecting SARS as well as external stakeholders involved in or impacted by Customs business. An excerpt of the statement follows below.

Cabinet approved the submission of the Southern African Development Community (SADC) Protocol on Trade in Services to Parliament for ratification, in accordance with section 231 of the Constitution. The objectives of the Protocol are to liberalise intra-regional trade in services on the basis of equity, balance and mutual benefit. This Protocol also sets out a framework for the liberalisation of trade in services between SADC member states and serves as a basis for negotiations.

Cabinet approved the implementation steps proposed for the establishment of a Border Management Agency (BMA).  The BMA would manage migration, customs and land border line control services and efficiently coordinate the service of all departments in ports of entry. The Department of Home Affairs will be the lead Department in establishing the BMA.

Finally, and for some a contentious issue, Cabinet also approved the Customs Control Bill (CCB), the Customs Duty Bill, 2013 (CDB) and the Customs and Excise Amendment Act, 2013 (CEAA) for submission to Parliment.  The Bills provide a foundation for the facilitation of international trade and protection of the economy and society, thereby creating a balance between customs control and trade facilitation. Source: GCIS

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by Mike Poverello

Nigerian Customs Develops Trade Facilitation Portal

NigerianCustoms-BadgeAs part of plans to consolidate on its modernisation efforts for eventual take-over from the service providers at the expiration of the extended contract by June 2013, the Nigeria Customs Service (NCS) says it has developed a web-based application to provide information and guidance for international trade business processors in the areas of import, export and transit trade.

The portal is a non-restrictive online medium and an intuitive and interactive platform for classifying goods, a statement from the Customs spokesman, Wale Adeniyi said yesterday. The portal was developed by the service’s technical partners, nominated officers as well as other stakeholders, it said.

Through the platform, trade processors are enabled to find exact Harmonized System Codes (HS Codes) required for related tariffs and duties. It is expected that the platform will enhance compliance by traders and avail them the required information on tariff, prohibited items as well as taxes/levies due for payment upon importation.

Adeniyi explained also that the application has been designed to boost trade facilitation by granting trade processors access to information from all related government agencies. “Guidelines and procedures for obtaining permits, licences and certificates of specified commodity and country of origin that a trade will require for business processing is available on the portal,”he said. He added that the portal further allows traders to convert currencies to exchange rates set by the Central Bank of Nigeria on a monthly basis, make payments and simulate tax. Source: The Daily Trust

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by Mike Poverello

City Deep Inland Terminal [port] to be hit hard by Customs Bill

Trucks at Transnet Freight Rail's City Deep Terminal (Engineering News)

Trucks at Transnet Freight Rail’s City Deep Terminal (Engineering News)

Following up on last year’s meeting (click here!) of the minds, convened by the JCCI, a recent meeting in Johannesburg placed fresh emphasis on the dilemma which impending changes contemplated in Customs Draft Control Bill will have for the import and logistics industry in particular. The following report carried by Engineering News highlights trade’s concerns which are by no means light weight and should be addressed with some consideration before the Bills come into effect. Gauging from the content below, there is a clear disconnect between business and policy makers.

The closure of Johannesburg’s inland port seemed to be a “done deal” as Parliament deliberated the recently tabled Customs Control Bill that would leave the City Deep container depot invalid, Chamber of Commerce and Industry Johannesburg (JCCI) former president Patrick Corbin said on Friday.

The promulgation of the South African Revenue Services’ (Sars’) newly drafted Customs Control Bill, which, in conjunction with the Customs Duty Bill, would replace the current legislation governing customs operations, would have a far-reaching impact on the cost and efficiencies of doing business in South Africa and other fellow Southern African Customs Union (Sacu) countries, he added.

The Bill, which was the product of a three-year development process within the National Economic Development and Labour Council, declared that all imported goods be cleared and released at first port of entry. This was part of efforts by customs officials and government to root out any diversion and smuggling of goods, ensure greater control of goods moving across borders and eliminate risks to national security.

Speaking at the City Deep Forum, held at the JCCI’s offices in Johannesburg, Corbin noted, however, that City Deep had operated as an inland port for the past 35 years, easing the load on the country’s coastal ports, which were already strained to capacity. Despite customs officials assuring the chamber that the operations and facilities in City Deep/Kaserne would retain its licence as a container depot, he believed customs had failed to recognise the critical role City Deep had played in lowering the cost of business, easing the burden on South Africa’s ports and ensuring ease of movement of goods to neighbouring countries. As customs moved full responsibility of container clearances to the ports, port congestion, inefficiencies, shipping delays and costs would rise, and jobs would be lost and import rail volumes decreased, he noted.

Economist Mike Schussler added that the closure of the City Deep inland port operations would add costs, increase unreliability and induce “hassles”, as the Durban port did not have the capacity to handle the extra volumes and its productivity and efficiencies were “questionable” compared with other ports.

“The volume of containers going to overstay or being stopped for examination in City Deep [will] need to be handled by [the coastal] ports. If they can’t cope with the volume at the moment, how are they going to handle increased volumes,” Iprop director Dennis Trotter questioned. He noted that only the containers cleared 72 hours prior to arrival would be allocated to rail transport. Those not cleared three days before arrival would be pushed onto road transport to prevent blocking and delaying rail operations.

This, Schussler said, would also contribute – along with port tariffs and the cost of delays – to higher costs, as road transport was more expensive than rail.

He pointed out that South Africa was deemed third-highest globally in terms of transport pricing. It would also result in less rail capacity returning for export from Johannesburg, further leading to increased volumes moving by road from City Deep to Durban.

Sacu countries, such as Botswana, would also be burdened with higher costs as they relied on City Deep as an inland port. Trotter noted that the region would experience loss of revenue and resultant job losses. Over 50% of South Africa’s economy was located closer to Gauteng than the coastal ports. Johannesburg alone accounted for 34% of the economy, said Schussler, questioning the viability of removing the option of City Deep as a dry port.

However, unfazed by the impending regulations, Transnet continued to inject over R1-billion into expansion and development opportunities at City Deep/Kaserne. Corbin commented that Transnet had accepted the assurances from customs that “nothing would change and the boxes would still be able to move seamlessly once cleared.” The City of Johannesburg’s manager of transport planning Daisy Dwango said the State-owned freight group was ramping up to meet forecast demand of the City Deep/Kaserne depot.

The terminal’s capacity would be increased from the current 280 000 twenty-foot equivalent units (TEUs) a year, to 400 000 TEUs a year by 2016, increasing to 700 000 TEUs a year by 2019. Transnet aimed to eventually move to “overcapacity” of up to 1.2-million TEUs a year. Dwango said projections have indicated that by 2021, the City Deep/Kaserne terminals would handle between 900 000 and one-million TEUs a year. Source: Engineering News

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by Mike Poverello

SARS – Modernisation milestone materialising

Interfront logo2

Its been some time since I’ve penned an article on the South African Customs Modernisation Programme. Aside from it being the SA Revenue Service’s prerogative to communicate and publish notice of its internal developments and plans, some caution always needs to be exercised observing bureaucratic protocol, ensuring that the official message is forthcoming from SARS. Given the widespread interest in the programme as well as the development of the Interfront [formerly Tatis] integrated customs border management solution (iCBMs) as a wholly owned development of South Africa, I think it not out of place to inform the public interest on this matter. Readership of this blog has an extensive global following and a specific interest in Interfront developments.

Unlike ASYCUDA, Sofix, e-Biscus, and a host of other integrated Customs-tailored business solution offerings, Interfront’s solution for SARS will not include a client user frontend. In other words, the Interfront system (iCBMs) will essentially drive declaration backend processing. This comprises a fully integrated declaration validation and processing engine, supported by a sophisticated tariff engine and duty calculator; the latter offering future web-based services for customs users. In order to compliment the SARS corporate and standardised user interface approach, the iCBMs interfaces with SARS’s revenue accounting, trader registration, risk management, and case management workflow systems. Not only does this leverage cost savings and efficiencies, but ensures a unified ‘workspace’ for all of SARS employees.

Much of the Interfront technology is therefore hidden to the customs user, with traders experiencing an identical interface with SARS Customs, as it does today. From the outset of the Customs Modernisation Programme (July 2010), the approach has followed pragmatic migration of customs electronic clearance processing – across its 30 odd legacy systems – towards an integrated clearance process that could mimic the functionality featured on the new iCBMs. The modern technology and scalability of Interfront offers the ability and agility to enhance service levels and efficiencies to another level. At the same time, operational policies and procedures have been modernised with the aim and intent of meeting the requirements contained in Customs new Control and Duty Bills.

Much of the ‘change’ experienced by both customs officers and the trade over the last 2 years has prepared the country for the eventual migration to the new system. These have been significant, and at times painful changes, not without anxiety and apprehension. Over the last 6 months an even more painstaking and taxing effort has been expended by the Customs Modernisation Team, Interfront and other service providers in addressing a seamless harmonisation and switchover of customs business from disparate legacy systems to a new customs technology platform. The “Parallel Run” has witnessed the daily comparison of customs clearance data between the old and new systems, identification and logging of disparities (bugs), modification of the two environments to ensure the same result is achieved. This has not been an easy and simple process, as any country having undergone a system switchover can attest to.

This month, February 2013, service providers to the customs industry are readying their resources to commence user testing. This implies that service providers (computer bureaus) will engage their clients to prepare test cases for submission to customs to test the new Interfront process. Given that Customs legacy systems and Interfront have been synchronised to a high level of compatibility, the process for traders should not reveal much difference to what they have experienced over the period of modernisation over the last 2 years. One area of note will be the structure and content of Customs Response messages. Traders will have to familiarise themselves and test their interpretation of these messages to ensure they perform or respond appropriately to the instructions.

Satya Prasad Sahu - Technical Officer at the WCO provided members of SACU, SADC and the EAC comprehensive guidelines for the development of the GNC Utility Block concept in Africa (February 2012)

Satya Prasad Sahu – Senior Technical Officer at the WCO provided members of SACU, SADC and the EAC comprehensive guidelines for the development of the GNC Utility Block concept in Africa (February 2012)

In terms of compliance and compatibility with international developments, the new iCBMs is engineered on the WCO Data Model. All relevant simplification processes as exemplified in the Revise Kyoto Convention are likewise factored into its design, although not all of these will be immediately available with the initial rollout. Introduction of the new Customs Control and Duty Acts will require these principles to be fully functional and operational, however.

The WCO Data Model is the pivotal design component around which most of the new system’s business and validation rules are centred. This in itself is a major achievement as it bodes well for all future ‘cross border’, customs-2-customs connectivity initiatives. In this regard SARS is well advanced in bilateral and multilateral projects with key trading partners, for example IBSA (cross-global trilateral initiative), and in Africa, we are working with SACU, SADC, COMESA and the EAC to bring about regional customs connectivity. On a bilateral basis, initiatives with Swaziland, Mozambique and Zimbabwe are developing nicely. A significant contributor to cross border/cross global customs connectivity is undoubtedly the excellent work brought about by the dedicated members of the WCO’s Globally Networked Customs adhoc workgroup. In June last year, the WCOs policy Commission unanimously endorsed the GNC architecture and Utility Block approach. African customs connectivity efforts have likewise adopted this model which ensures harmonisation and uniformity in approach, legal dispensation, data exchange, risk management and procedure. The WCO moreover plays a overseeing role in many of these GNC and capacity building initiatives across the globe – this assists greatly in sharing and learning of experiences.

I would think that the above should be sufficient to wet the appetites of customs practitioners, traders, ICT technocrats, and perhaps even legislators and bureaucrats on developments in South Africa. Subsequent to the launch of Interfront SARS will make its ideas and strategy relating to forthcoming initiatives known to trade and the business community. A Year of Innovation? Yes, and hopefully a happy tale that will bode well for the South African trade and supply chain logistics community, and some good fortune for Interfront in its business development in the region and beyond!

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by Mike Poverello

2012 in review

The WordPress.com stats helper monkeys prepared a 2012 annual report for “What Happened to the Portcullis?“. A special thanks to everyone who has browsed regularly, commented or contributed to this blog. I am deeply grateful and appreciative! Mike

Here’s an excerpt:

4,329 films were submitted to the 2012 Cannes Film Festival. This blog had 52,000 views in 2012. If each view were a film, this blog would power 12 Film Festivals

Click here to see the complete report.