Category / Customs

by Mike Poverello

Guidance to Customs and trade practitioners on how to deal with the complex, demanding and risky field of Customs knowledge

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.

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by Mike Poverello

R1.3bn worth of cocaine seized at Durban harbour in dawn raid

Customs officers of the SA Revenue Service and the SA Police Service (SAPS) seized some R1.3 billion worth of cocaine in an early morning raid on a container ship at the Durban harbour, SARS said in a statement on Friday morning. 

The 300kg of cocaine was found in one of the containers aboard the ship. It was detected after a week-long intelligence operation led by the SARS National Targeting Unit. 

“The SARS Marine unit, Durban Operations, South African Police Service (SAPS) Crime Intelligence and National Detective Services boarded the vessel heading from South America to secure several containers that were profiled by SARS,” SARS said. 

The containers were inspected after they were unloaded in the Durban harbour, which revealed zinc metal products and several black bags containing 378 bricks of pure cocaine. 

The illicit cargo and what appeared to be cellular tracking devices were handed over to SAPS for further investigation, SARS added.

SARS commissioner Edward Kieswetter said it there was a commitment to “fight the scourge of narcotics entering the country and destroying the lives of its users, especially the youth.”

“SARS will not tolerate these illegal activities but will rather continue to fulfil its mandate of facilitating legal trade to further economic development of our country,” he added.

Source: New24, Marelise van der Merwe dated 24 February 2023

by Mike Poverello

International Customs Day 2023

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.

I wish you all a happy International Customs Day!

Kunio Mikuriya

WCO Secretary General 26 January 2023

by Mike Poverello

AfCFTA Rules of Origin – Quick Guide for the Private Sector

The World Customs Organization with the support of the European Union under the EU-WCO Rules of Origin Africa Programme has developed a quick guide to the private sector to assist with the practical implementation of the African Continental Free Trade Area (AfCFTA) Agreement Annex 2 on Rules of Origin of the Protocol on Trade and its relevant appendices.

The main objectives of the AfCFTA Agreement are to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of a Customs Union in the future.

The guide is available in English, French, Portuguese and Arabic.

Source: WCO

by Mike Poverello

WCO – 2021 Illicit Trade Report

The World Customs Organization (WCO) issues its 2021 Illicit Trade Report (ITR), an annual publication which offers a comprehensive study of illicit trade flows through an in-depth analysis of seizure data and case studies voluntarily submitted by Member Customs administrations worldwide. The information captured in the ITR provides essential insight into the occurrences of illicit trade, thereby assisting Customs administrations in understanding trends and patterns and making enlightened decisions to secure cross-border trade. 

This year, the analysis provided in this Report is based on data collected from 138 Member administrations. Previously composed of six sections, the Report now covers seven key areas of risk in the context of Customs enforcement: Anti-money laundering and terrorist financing; Cultural heritage; Drugs; Environment; IPR, health and safety; Revenue; and Security.

Overall, this 2021 Report largely focuses on the impact the COVID-19 pandemic has had on the flows of illicit trade worldwide and how criminal organizations have adapted and shifted transport and shipment modes of smuggled goods. One common denominator to the different areas covered in this Report, is the increased use of online marketplaces and social media to accommodate both demand and supply during the health crisis. Consequently, seizures in mail consignments are seeing an important increase.

The analysis contained in this Report is mainly based on the collection of data from the WCO Customs Enforcement Network (CEN) — a database of worldwide Customs seizures and offences. The CEN is a vital resource, allowing all WCO Members to access a critical mass of information for analysis of illicit trafficking in the various areas of Customs’ competence. 

However, the CEN database relies heavily on voluntary submissions by Members hence the quantity and quality of the data submitted to the system has its limitations. To overcome these shortcomings and to complement the CEN dataset, the WCO has undertaken a review of the Illicit Trade Report and its methodology. This is an ongoing process and work is still underway until a final product can be delivered next year. 

However, as part of this new methodology, the data and information sources used to elaborate this Report has been enlarged to include various open sources. These sources include official government media outlets, reports published online by Customs administrations and international organizations, and a survey elaborated by the WCO in order to collect additional data from its Members and from its Regional Intelligence Liaison Offices (RILOs).

“The importance of comprehensive data analysis is indisputably a key component to support effective and efficient Customs enforcement activities”, says Dr. Kunio Mikuriya, WCO Secretary General. “The Illicit Trade Report is a pioneer in terms of data collection and analysis for over twenty years, and as a strong believer in the power of data and Customs digital transformation, I am pleased that we now have the in-house resources and technology to offer such in-depth analysis, further supported by open source information, and the most recent and intelligible data visualizations for this edition of the Report”.

by Mike Poverello

The Subtleties of Red Tape 

Picture – Vincent Branciforti

The following article by Dr Richard Grant, originally featured in BizNews on 19 April 2022.

It might be hard to imagine that ‘red tape’ could be your friend. Although we never actually see the red ribbon or tape that was once used to bind government documents, we do see the ponderous power of its spirit when experienced as in the Britannica Dictionary definition: “A series of actions or complicated tasks that seem unnecessary but that a government or organisation requires you to do in order to get or do something.”

Dr Richard Grant who does not have a suppressed memory of the stress, frustration and wasted time that so often come with the need to deal with a government bureaucracy to obtain a document, or to get something done? Who has not asked, “Can’t we just cut through all this red tape?” I can certainly commiserate. But be careful what you wish for.

Those old red ribbons or tape that bound those documents were merely a physical manifestation of the existence of law. Although the king might have been absolute in his power, he would keep that power only through a set of rules that would constrain the subsidiary power and reach of those who acted in his name. Throughout the ages, each government officer or bureaucrat has had his own personal desires and interests that could be quite different from those of the legitimate government leaders or of the ‘will of the people’. The rules imposed on them by the king or parliament serve not only to ensure that the king’s will would be done by the bureaucrats, but also to protect the king’s subjects from the personal whims of those same bureaucrats.

It is this latter feature that we are most in danger of losing. The protection of citizens from the arbitrary powers of government bureaucrats and their superiors is a key feature of those countries that are not only the most prosperous and free, but also most respectful of their citizens. That is the essential purpose of the rules and conventions that we call red tape. Without such controls, each bureaucrat with whom we deal would have potentially unlimited dictatorial powers. The red tape limits the size of the bureaucrat’s fiefdom and the scope of his powers within that fiefdom, thereby limiting the reach of his power over us.

Our problems with bureaucracy arise, not from the bureaucracy itself, but from the government (elected or otherwise) that creates more programmes and regulations for the bureaucracy to manage and enforce. As governments interfere more in our lives, bureaucracies must necessarily grow and become more powerful. That is what pushes out more red tape to bind ‘we the people’ rather than the bureaucrats and government officials.

When the people demand that the government do more for them, they are in essence asking the government and its officials to take on greater power and to have greater influence over our lives. That is when red tape becomes a visible and pernicious issue in daily life. Increasingly, we find ourselves dependent on some bureaucrat’s permission to conduct even the most basic aspects of our lives. To what extent do we need a bureaucrat to determine what we may buy and sell, what we must pay for petrol, from whom we are allowed to receive medical services, how we may produce and buy food, and how we might educate ourselves and share information? We might even find that we need a bureaucrat’s permission to venture out of our homes, and to do so with our faces uncovered – again.

The highest form of red tape is the national Constitution, whether explicitly written or by evolved convention. It is the Constitution that specifies and thereby limits the powers of the government and its officials. It is the set of rules within which the lesser rules, such as legislation, are made. A true constitution is necessarily far more difficult to change than is mere legislation. Just as giving a referee the power to change the rules in the middle of a rugby match would ruin the game, giving a legislature the power to change the rules that constrain it, would unleash the seekers of plunder and dictatorial rule.

Those who would live in a free and prosperous society must remember that the purpose of a constitution, and the red tape necessary to enforce it, is to constrain the power of the government, not of the citizens. When citizens experience increasing interference in the normal conduct of their lives from government regulators and other officials, the solution is not to cut through the red tape, but to push back on that red tape to bind more tightly the legislators and executives who empowered the bureaucracy.

A free and prosperous people are those who bend red tape away from themselves, instead to encircle their government and its officials, to limit their bureaucratic powers, and to tie it tightly.

Original Article

by Mike Poverello

SARS Head Accreditation and Licensing, elected Vice Chair for WCO SAFE Working Group

Ms Rae Vivier, Head Accreditation and Licensing at the South African Revenue Service, has been elected by the World Customs Organisation (WCO) Member States as a Vice Chair for the WCO SAFE Working Group.   

The role of the WCO’s SAFE Working Group is to advise, as appropriate, the Policy Commission, the Permanent Technical Committee and the Secretary General on the full range of issues concerning the SAFE Framework of Standards. Such issues include matters relating to implementation and amendments concerning the SAFE Framework and further developing and monitoring other World Customs Organization (WCO) initiatives and related Customs matters that impact the operation of the SAFE Framework of Standards.

In accepting her election at the SAFE Working Group Meeting which took place on the 11 – 13 April 2022, Ms Vivier indicated that she was truly humbled by her election to the position and that it is an inordinate privilege to serve all 184 members and the WCO for the next 4 years.

Even though South Africa has been instrumental in the development of key instruments and tools designed by the WCO, it is a first time that the African continent will be holding such a leadership role in this key international platform i.e., SAFE Working Group.  The Vice Chair position will subsequently assume the role of Chair of the SAFE Working Group after two years.

Source: SARS

by Mike Poverello

SARS – Rhino horn found in luggage at OR Tambo International Airport

Customs officers of the South African Revenue Service (SARS), in collaboration with other government departments, intercepted the luggage of a female South African passenger at OR Tambo International Airport which contained twelve (12) pieces of rhino horn weighing  30.7 kilograms.

The interception of the rhino horn came after the SARS Customs and other government officials received a tip-off regarding a passenger travelling to Dubai.

The Customs team reacted swiftly and accompanied the female passenger to the Customs area for further Customs inspection. The two luggage bags and a box were inspected by a baggage scanner that identified irregular images suspected to be rhino horn.

This led to a physical inspection of the luggage and box in which twelve (12) pieces of rhino horn, weighing 30.7kg were found. The passenger together with the rhino horn were handed to the South African Police Service after which a criminal case was opened for further investigation.

Between July 2020 and December 2021, a total of 125 pieces of rhino horn, weighing 452 kilograms, were seized at OR Tambo International Airport.

  • December 2021: Six (6) pieces of rhino horn, weighing 4kg declared as ‘Personal Effects’, bound for China.
  • December 2021: Five (5) pieces of rhino horn, weighing 10kg declared as ‘Scanners’, bound for Malaysia.
  • July 2021; Thirty-Two (32) pieces of rhino horn, weighing 160kg declared as ‘Live Plants, bound for Malaysia.
  • February 2021: eighteen (18) pieces of rhino horn, weighing 63kg declared as ‘HP Cartridges Developers’, bound for Malaysia.
  • December 2020: seventeen (17) pieces of Rhino Horn weighing 72.4kg concealed in a geyser bound for Malaysia.
  • September 2020: six (6) pieces, weighing 4.9kg declared as “Coffee Beans”, bound for Malaysia.
  • July 2020: forty-one (41) pieces, weighing 137kg declared as “Fine Arts”, bound for Malaysia via Doha.

SARS Commissioner Edward Kieswetter expressed his sincere thanks to Customs officers and their counterparts from South African Police Service for working diligently to curb the smuggling of rhino horn and many related crimes.

He said, “We will leave no stone unturned to detect and prosecute these criminal syndicates and individuals who break the law.  SARS and the law enforcement agencies will spare no efforts to ensure they are brought to book.”

For more information, contact SarsMedia@sars.gov.za

by Mike Poverello

SAFE Working Group urges greater harmonization of AEO programmes

Picture – Nazarizal Mohammed

The 26th/27th Meetings of the SAFE Working Group (SWG) were held successfully from 11 to 14 April 2022. The virtual meetings brought together more than 260 delegates representing Customs administrations, the Private Sector Consultative Group (PSCG), other international organizations and academia.

In his opening remarks, Mr. Pranab Kumar Das, WCO Director of Compliance and Facilitation, highlighted that the SWG had reached an important juncture as the new three-year SAFE review cycle 2021-2024 was about to enter into discussions. It was pointed out that 17 years after it was first published, the SAFE Framework of Standards (FoS) had garnered substantial interest from WCO Members. During the meetings, Guyana became the 172nd WCO Member to express its interest in implementing the SAFE FoS. 

With a view to continued enhancement of the AEO criteria and provisions to strengthen the SAFE FoS, WCO Members made several new proposals to revise the Framework. The SWG also received feedback from the private sector on the urgent need to enhance the harmonization of SAFE and AEO implementation. In this context, the SWG heard a presentation by the WCO Anti-Corruption and Integrity Promotion (A-CIP) Programme on maintaining the integrity and transparency of AEO implementation.

On this occasion, the SWG reviewed and adopted the new Work Plan for 2022-2024, which reflected the critical activities the SWG will carry out over the next two years until 2024, in parallel with the SAFE review cycle. The SWG also received an update on the development of new features for the Online AEO Compendium (OAC) and the other extensive work underway in collaboration with other international organizations in the areas of security and facilitation.

Against the backdrop of the WCO’s theme for 2022, the panel discussion on “Scaling up Customs Digital Transformation by Embracing a Data Culture and Building a Data Ecosystem” attracted significant interest from Members and the private sector. The experienced speakers from Member Customs administrations, the private sector and the Secretariat enriched the discussions by sharing their best practices on using data for enhancing risk management and monitoring AEO programmes.

As a way forward, the SWG agreed that efforts will be reserved for a comprehensive review to assess and monitor SAFE implementation for greater harmonization of AEO programmes globally.

Source: World Customs Organisation, 25 April 2022

by Mike Poverello

WCO/WTO – “The role of advanced technologies in cross-border trade: A customs perspective”

The WCO and the World Trade Organization (WTO) held a webinar to launch their joint publication on Customs use of advance technologies.  The event attracted more than 700 attendees and provided insights into how advanced technologies can help Customs administrations facilitate the flow of goods across borders. The publication titled, “The role of advanced technologies in cross-border trade: A customs perspective” provides the current state of play and sheds light on the opportunities and challenges Customs face when deploying these technologies.

The publication outlines the key findings of WCO’s 2021 Annual Consolidated Survey and its results on Customs’ use of advanced technologies such as blockchain, the internet of things, data analytics and artificial intelligence to facilitate trade and enhance safety, security and fair revenue collection. 

The joint publication highlights the benefits that can result from the adoption of these advanced technologies, such as enhanced transparency of procedures, sharing of information amongst all relevant stakeholders in real time, better risk management, and improved data quality, leading to greater efficiency in Customs processes and procedures.

In his remarks, WCO Deputy Secretary General Ricardo Treviño Chapa said, “Technologies will assist implementation of international trade facilitation rules and standards, such as the WCO Revised Kyoto Convention and the WTO Trade Facilitation Agreement. We are therefore delighted to be partnering with the WTO, to ensure that our work in assisting our Members’ digital transformation journeys is complementary, that we bring all relevant partners to the same table, and that we avoid duplication.”

In her opening remarks, WTO Deputy Director-General Anabel González noted, “Advanced technologies offer customs an opportunity to take a big leap forward on trade facilitation. Take blockchain. Its widespread application could help us make trade both more transparent and less paper intensive. That would reduce trade costs, which is good news for everyone, especially small businesses, which are disproportionately affected by red tape at the border.”

The webinar presented the main findings from the WCO/WTO paper and featured presentations by Brazil, Nigeria, Singapore and the Inter-American Development Bank. For a greater uptake of these technologies, the speakers underlined the importance of continuous sensitization of Customs and other stakeholders, the need for interoperability and implementation of international standards, the relevance of engaging in dialogues at international level, as well as having a strategy and space for innovation and testing at national level.

The full publication can be accessed here.

by Mike Poverello

Abu Dhabi Customs joins TradeLens

Abu Dhabi Customs hosted a workshop recently with key Importers and Exporters discussing how TradeLens and digitized transportation documentation has the ability to streamline processes in customs declaration processes.

 “Abu Dhabi Customs is excited to work with a group of importers and exporters to explore the benefits that collaboration using blockchain can offer to all those involved. This joint approach is critical to create time savings in the process and to improve access to international trade to all entities that trade with Abu Dhabi. We really believe TradeLens will be bringing a lot of benefits to our ecosystem here in Abu Dhabi”. – Yanal Qasim Mohammad Alkhasoneh, Division Director – Information Technology, Information Technology Division  

“The collaboration across public and private entities towards a single shared goal was immensely encouraging. The gathering of industry leaders, authorities, and ocean carriers to jointly and openly address international transportation documentation highlights the desire to improve existing processes using innovative digital tools like TradeLens”. – Thomas Sproat, Global Head of Network TradeLens

Source: TradeLens, 9 February 2022

by Mike Poverello

WCO shares good practices for drafting a rules of origin tool with the AfCFTA

At the invitation of the African Continental Free Trade Area (AfCFTA) Secretariat, the World Customs Organization (WCO) gave a presentation on international standards for the drafting of tools and instruments on rules of origin at a virtual workshop on the drafting of the AfCFTA Rules of Origin Handbook held on Monday 21 February 2022. 

In her welcoming address, the Chairperson of the Sub-Committee on Rules of Origin expressed her profound gratitude and thanks to the AfCFTA’s partner organizations, such as the WCO and UNCTAD, as well as to the Regional Economic Communities (COMESA, EAC, ECOWAS and the SADC) which had kindly accepted the invitation to share their experience of drafting rules of origin handbooks.

She reminded those taking part that Article 8.3 of the Agreement establishing the African Continental Free Trade Area laid down that any additional instruments, within the scope of that Agreement, deemed necessary, are to be concluded in furtherance of the objectives of the AfCFTA and will, upon adoption, form an integral part of the Agreement. In accordance with Article 13 of the Protocol on Trade in Goods, discussions among the negotiating bodies had led to the adoption of Annex 2 on Rules of Origin and of close to 88% of the tariff lines constituting Annex IV. She also emphasized that both of those legal documents on rules of origin had to be made operational through the use of the Rules of Origin Handbook.

With a view to the implementation of Annex 2 on Rules of Origin of the AfCFTA Protocol on Trade in Goods, she went on to stress that the 8th Meeting of the Council of Ministers, held on 28 January 2022, had decided that the work on drafting the AfCFTA’s Rules of Origin Handbook had to be given priority.

Accordingly, under Item 3 on the Agenda, the WCO gave a talk on the drafting of rules of origin handbooks, presenting some practical cases that explained the international standards applied in drawing up its tools. There was then a question-and-answer session in which the delegates from Customs administrations, trade and industry were able to have a fuller exchange on the subject of good practices on which the AfCFTA could draw in finalizing the drafting of the Rules of Origin Handbook.

The workshop was attended by more than 150 delegates, for whom it was an opportunity to learn more about good practices in relation to the drafting of operational handbooks on rules of origin, with a view to making proposals for improvements to the AfCFTA handbook, on the basis, too, of the experiences of the WCO, UNCTAD and the African RECs.

The workshop came before the 5th Meeting of the Sub-Committee on Rules of Origin to be held from 22 to 25 February 2022, at which the handbook in question would have to be drawn up in order to facilitate the implementation of AfCFTA rules of origin and thereby boost intra-African trade.

Source: WCOOMD, 24 February 2022

by Mike Poverello

WCO and AfCFTA Secretariats join forces for the implementation of the African Continental Free Trade Area

On 15 February 2022, Dr. Kunio Mikuriya, Secretary General of the World Customs Organization (WCO), and H.E. Mr. Wamkele Mene, Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat, met at WCO Headquarters to sign a Memorandum of Understanding (MoU). This MoU aims at strengthening the organizational capacity, transparency and effectiveness of African Customs administrations in a sustainable manner through cooperation between both Organizations. 

In his remarks on this occasion, Secretary General Mene explained that it had been a long road since the establishment of the AfCFTA Secretariat. Today, 41 of its 54 Member States had duly ratified Rules of Origin for 87.7% of tariff headings agreed upon, to name but one milestone. He recalled the mandate of his Secretariat and stated that Customs’ involvement is essential in order to realise the ambitions laid out in the Agreement establishing the AfCFTA. He also noted that expectations were high and that communities were eager to start trading under the Agreement. The AfCFTA Secretary General then acknowledged the WCO’s expertise and role in delivering capacity building in highly-technical areas which were key for implementing the Agreement.

After congratulating his counterpart for the work done by the AfCFTA Secretariat, Dr. Mikuriya highlighted the areas where the WCO could contribute, including customs technical matters such as the Harmonized System, Valuation and Origin, as well as automation, risk management and trade facilitation which will yield economic benefits to the African continent.

He went on to outline the WCO’s long experience in developing capacity-building materials for Customs administrations and in donor coordination to ensure the efficient delivery of training. He reaffirmed WCO’s commitment to contribute to the regional integration efforts in Africa through customs modernisation.

Source: WCOOMD, 16 February 2022

by Mike Poverello

When will the AfCFTA be customs-ready?

Picture: Grayomm @ Unsplash.com

The negotiations to finalise the tariff schedules and rules of origin (RoO) of the African Continental Free Trade Area (AfCFTA) are taking place during the last two weeks of January 2022. Senior Trade Officials (STOs) and the AfCFTA Council of Ministers (COM) will then meet to confirm the results or to decide the outstanding issues. Once the State Parties have agreed on the content of these important Annexes to the AfCFTA Protocol on Trade in Goods, they must be adopted. This is the responsibility of the African Union (AU) Assembly.[1]

Trade in goods under AfCFTA preferences can then begin among the State Parties presently trading with each other under most-favoured-nation (MFN) rates. (Non-State Parties will first have to accede to the AfCFTA Agreement in terms of Article 23 of the AfCFTA Agreement.)

Those State Parties that are members of Regional Economic Community (REC) Free Trade Areas (FTAs), Customs Unions (CUs) and other trade arrangements will continue to trade under existing preferential arrangements.

Article 19(2) AfCFTA Agreement provides that

“… State Parties that are members of other regional economic communities, regional trading arrangements and custom unions, which have attained among themselves higher levels of regional integration than under this Agreement, shall maintain such higher levels among themselves”.

Article 8(2) of the Protocol on Trade in Goods adds the following:

“… State Parties that are members of other RECs, which have attained among themselves higher levels of elimination of customs duties and trade barriers than those provided for in this Protocol, shall maintain, and where possible improve upon, those higher levels of trade liberalisation among themselves”. 

However, there is also the practical requirement that the AfCFTA regime must be “customs ready”. It means that the tariff books of individual State Parties and of CUs such as the Southern African Customs Union (SACU), and presumably the East African Community (EAC) and the Economic Community of West African States (ECOWAS), need to be updated. AfCFTA columns will have to be added to these tariff books in order to ensure the new preferences will be enjoyed when customs officials and border control agencies clear goods under this new trade arrangement.

The updating of a tariff book normally happens through national legislative procedures such as the promulgation of a Government Gazette. Customs and other border officials can only act in terms of domestic legal instruments granting them the necessary powers. Trade agreements are not self-executing.[2]

The importation and exportation of goods entail detail procedures involving customs clearance. Customs clearance is the procedure of procuring permission, through its customs authority, to either take goods out of its territory (export) or have goods enter its territory (import). Failure to provide the correct paperwork will mean that goods cannot clear customs and enter the market of the country of destination.

The customs authority of a country is the administrative agency responsible for collecting tariffs and for controlling the flow of goods into and out of a country. Depending on local legislation and regulations, the import or export of some goods may be restricted or forbidden, and the customs agency enforces these rules. The customs authority is different from the immigration authority, which monitors persons who leave or enter the country, checking for appropriate documentation, apprehending people wanted by international arrest warrants, and impeding the entry of others deemed dangerous to the country. A customs duty is a tariff or tax on the importation or exportation of goods.

The approach taken by the World Customs Organisation (WCO) is to improve the security of borders, without unduly hindering legitimate international trade. The WCO initiative focusses on the entire international trade supply chain, rather than restricting customs’ interest to that aspect of the international trade transaction, when goods move across a border. The basic principle underpinning its work is to create an international mechanism for Customs Administrations to gain access to relevant information relating to international trade well in advance, for the purposes of risk management and risk assessment.[3]

The AfCFTA is a free trade agreement (FTA). This is an agreement between States that removes tariffs and other restrictions on goods which are traded between the State Parties, according to the applicable RoO. The main difference between a customs union and a free trade agreement is that even where zero (or reduced) tariffs are part of an FTA, extra bureaucracy is needed to take advantage of those tariffs. Exporting under an FTA means companies have to comply with a complex set of rules (known as preferential rules of origin) to prove that goods only come from countries who have signed up to the FTA and that such goods have been produced or manufactured in accordance with the applicable RoO. For a customs union, once the common external tariff has been paid for a product then it is in “free circulation”. Traders only have to prove the common external tariff has been paid on goods or parts they have used. This is easier to demonstrate than proving the origin of imported goods.

Source: Authored by Gerhard Erasmus, TRALAC, 24 Jan 2022

[1] Art 22 AfCFTA Agreement.

[2] Constitutional systems based on monism, may provide otherwise but will have other requirements to ensure that the executive branch of government respects the powers of the legislature.

[3] https://www.osce.org/files/f/documents/a/6/24649.pdf

by Mike Poverello

International Customs Day 2022

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. 

Dr. Kunio Mikuriya

WCO Secretary General

26 January 2022