Archives For Customs

SARS-RCG

Enter SARS RCG Webpage here!

This Friday, 20 April 2018, SARS Customs will implement its new Cargo, Conveyance and Goods Accounting solution – otherwise known as the Cargo Processing System (CPS). In recent years SARS has introduced several e-initiatives to bolster cargo reporting in support  its electronic Customs Clearance Processing System (iCBS), introduced in August 2013.

Followers of SARS’ New Customs Acts Programme (NCAP) will recognise that the CPS forms part of one of the three core pillars of the new legislative programme, better known as Reporting of Conveyances and Goods (RCG). The other two pillars are, Registration, Licensing and Accreditation (RLA) and Declaration Processing (DPR). More about these in future articles.  In order to expedite the implementation of the new Acts, SARS deemed it necessary to introduce elements of the new functionality via a transitional manner under the current Customs and Excise (1964) Act.

Proper revenue accounting and goods statistical reporting, can only be adequately achieved if Customs knows what goods ‘actually’ arrive, transit and exit it’s borders. Many countries, since the era of heightened security (post 9/11), have invested heavily in the re-engineering of policies and systems to address the threat of terrorism. This lead to a re-focus of resources and energies to develop risk management systems based on ‘advanced information’. SARS has invested significantly in automated systems in the last decade. Shortly, SARS it will also introduce a new automated risk engine with enhanced capabilities to include post clearance audit activities.

It should also not come as a surprise to anyone conversant with Customs practice, that international Customs standards such as the WCO’s SAFE Framework of Standards, the RKC and the Data Model are prevalent in the new Customs legal dispensation and its operational business systems.

South Africa will now follow several of its trading partners with the introduction of ‘advance reporting of containerised cargo’ destined for South African sea ports. This reporting requires carriers and forwarders to submit ‘advance loading notices’ to SARS Customs at both master and house bill of lading levels, 24 hours prior to vessel departure.

The implementation of CPS is significant in terms of its scope. It comprises some 30 odd electronic cargo notices and reports across the sea, air, rail and road modalities. These reports form the ‘pipeline’ of information deemed necessary to ensure that the ‘chain of custody’ is visible and secure from point of departure to final destination. For the first time, South Africa will also require cargo reporting in the export domain.

SARS_RCG_ Message_Schema 2018

Download a high resolution map of SARS Cargo Report Messages here!

It is no understatement that the CPS initiative is a challenge in particular to new supply chain entities who have not been required in the past to submit electronic reports. In order to meet these reporting requirements, a significant investment in systems development and training is required on the part of SARS and external trade participants. To this end, SARS intends to focus on ramping up compliance amongst all cargo reporters across all transport modalities. The first modality will be road, which is the most significantly developed and supported modality by trade since the inception of manifest reporting under the Customs Modernisation Programme. The remaining transport modalities will receive attention once road is stabilised. 

 

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E-Commerce Strategic PlanCustoms and Border Protection has developed an e-commerce strategy in a bid to tackle the increase in online shopping and growth of illicit and counterfeit goods shipped as small packages.

The strategy, which notes that CBP must “adapt” to the new e-commerce landscape, seeks to address emerging threats posed by the global change in commerce habits and ensure CBP has the means to enforce violations.

Under the new e-commerce strategy, CBP will, among a number of measures, look to enhance data collection and intelligence, develop and utilise state-of-the-art techniques and technologies, review its existing legal and regulatory authorities, seek to strengthen partnerships with the private sector, facilitate international trade standards for e-commerce, and educate the American public of the risks, both as consumers and as importers, associated with non-compliant products.

The crackdown and new emphasis for the CBP reflects the shift from traditional methods of importing via large, containerised shipments to small, low-value packages as direct-to-consumer business becomes more common. This has presented new inspection and data challenges for CBP, especially as the volume of these small packages has increased.

In addition, transnational criminal organisations are increasingly shipping illicit goods to the US via small packages on the belief there is a lower risk of interdiction and less severe enforcement consequences if caught. CBP said this illicit activity poses a risk to the health and safety of Americans and compromises US economic security.

The new e-commerce strategy also follows a report last month by the Government Accountability Office, which reviewed the enforcement efforts by CBP and US Immigration and Customs Enforcement in light of the increase in online shopping and sale of counterfeit goods. The report found that CBP had conducted a limited evaluation of its efforts, suggesting its activities were not the most efficient or effective, and recommended it evaluate its activities to enhance intellectual property enforcement.

The new strategy has a strong focus on data, which is one of the current limitations around enforcement of small packages. For instance, according to the strategy document, CBP will strengthen partnerships with stakeholders and encourage information sharing, proposing benefits for those parties who share advance electronic data and other information and will penalise those who are not compliant in this area.

The agency will also increase its operational efficiency and effectiveness by using data analytics, data mining, and an array of powerful analytical tools. In addition, CBP will expand its existing advance electronic data pilot in the international mail environment to include additional foreign postal operators.

Potential technology options include mobile applications and an e-commerce resource library, the strategy notes. CBP will also develop a portal that contains a database on importers that CBP has vetted and deemed “trusted”.

Source: USCBP and Securing Industry, online article 2018.03.28

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This edition of WCO News features a special dossier on the theme chosen by the WCO for 2018, namely “A secure business environment for economic development”, with articles presenting initiatives and related projects that contribute to creating such an environment. The articles touch on authorized economic operators, national committees on trade facilitation, coordinated border management, performance measurement, e-commerce, data analysis, and partnerships with the private sector.

For sub-Saharan African readers, look out for the write up of the Customs systems interconnectivity and the challenges and opportunities for Customs administrations in the SACU region.

Other highlights include articles on Customs systems interconnectivity in the Southern African Customs Union, on the experience of a young Nigerian Customs officer who participated in the Strategic Management and Intellectual Property Rights Programme at Tokyo’s Aoyama Gakuin University, on how the WCO West and Central Africa region is using data to monitor Customs modernization in the region, and on the benefits that can be derived by facilitating transit procedures.

Source: WCO, February 2018

ZIMRAaaaaaaaZimbabwe’s Deputy Finance and Economic Planning Minister Terrence Mukupe has estimated that the country has lost an estimated $20 million in revenue receipts since ZIMRA’s automated Customs processing system (ASYCUDA World) collapsed in the wake of server failure on 18 December 2017.

During a site visit of Beit Bridge border post earlier this week, it was revealed that ZIMRA collects an estimated $30million per month in Customs duties at its busy land borders. The Revenue Authority has since instituted manual procedures.  Clearing agents are submitting their customs documents accompanied by an undertaking that they will honour their duties within 48 hours. That is, when the ASYCUDA system is finally resuscitated and this is totally unacceptable.

Furthermore, Zimbabwe lies at the heart of the North-South Corridor which handles a substantial volume of transit traffic. The threat of diversion due to lack of proper Customs control and opportunism will also create both a fiscal and security headache. The deputy minister stated that the government was considering abandoning the Ascyuda World Plus system to enhance efficiency and the ease of doing business. “We need to benchmark it with what our neighbours in the region are using”.

It has also been suggested that the ZIMRA board have been complacent in their oversight of the affair. While it is a simple matter to blame systems failure, the lack of management involvement in taking proactive steps to ensuring redundancy of the country’s most crucial revenue collection system has been found wanting.

This calamity undoubtedly signals a huge concern for several other African countries who are likewise supported by UNCTAD’s ASYCUDA software. Many question post implementation support from UNCTAD, leaving countries with the dilemma of having to secure third party vendor and, in some cases, foreign donor support to maintain these systems. The global donor agencies must themselves consider the continued viability of software systems which they sponsor. Scenarios such is this only serve to plunge developing countries into a bigger mess than that from which they came. This is indeed sad for Zimbabwe which was the pioneer of ASYCUDA in sub-Saharan Africa.

This development must surely be a concern not only for governments, but also the regional supply chain industry as a whole. While governments selfishly focus on lost revenue, little thought is given to the dire consequence of lost business and jobs which result in a more permanent outcome than the mere replacement of two computer servers.

Under such conditions, the WCOs slogan for 2018 “A secure business environment for economic development” will not resonate too well for Zimbabwean and other regional traders tomorrow (International Customs Day) affected by the current circumstances. Nonetheless, let this situation serve as a reminder to other administrations that management oversight and budgetary provisioning are paramount to maintaing automated systems – they underpin the supply chain as well as government’s fiscal policy.

Kaduma Dry Port

On Thursday, 4 January 2018, Nigeria’s President, Muhammadu Buhari, inaugurated the Kaduna Inland Dry Port and warned the Nigeria Customs Service and port officials against frustrating the effective use of the facilities. Inaugurating the facilities in Kaduna, Buhari said the customs and the port officials must make the facilities work and not to frustrate business, commercial and industrial enterprises with unnecessary bureaucracy.

It remains for Customs and Ports officials to make these facilities work and not to frustrate business, commercial and industrial enterprises with unnecessary bureaucracy and inflicting on them delays and hardships, thereby defeating the object of the whole exercise as has happened in the past.

According to him, the hinterland business community has waited for too long for such facility that has tremendous potentials to ease the way of doing international business for the interior based importers and exporters. He said that the development of Inland Dry Ports was an important factor in the nation’s economic development efforts.

As Ports of origin for exports and ports of destination for imports, the Inland Dry Ports will accelerate the implementation of our economic diversification policy. “The concept of Inland Dry Port has gained widespread importance with the changes in international transportation as a result of the container revolution and the introduction of door-to-door delivery of cargo.

It provides importers and exporters located within the nation’s hinterland, especially industrial and commercial outfits, access to shipping and port services without necessarily visiting the seaports. “It also enables them to process clearance of their import cargo and take delivery of their raw materials and machinery close to their places of business.

President Buhari also said that the Dry Ports would provide exporters the much-needed facilities to process, package, consolidate and forward their exports to their customers all over the world without having to physically be at the seaports. According to him, this replicates the port economy in the various centres where the Dry Ports are located inland thereby generating employment and contributing to the ease of doing business.

He said in addition to the Kaduna Inland Dry Port, six other Inland Dry Ports in Ibadan, Aba, Kano, Jos, Funtua and Maiduguri, which had also been gazetted, were at various stages of completion. He congratulated the Kaduna State Government, the Federal Ministry of Transportation, Nigerian Shippers’ Council as well as the hinterland importers and exporters on the inauguration of the facilities.

The president also commended the initiative of Nigerian Shippers’ Council towards promoting the provision of these modern transport infrastructural facilities. He, however, urged the Concessionaires of the other six Dry Ports to emulate the Concessionaires of the Kaduna Dry Port by accelerating work on theirs so as to ensure speedy completion of the projects.

He said that with the full complement of the seven Dry Ports, congestion at the seaport and traffic gridlock in the port complex would be eliminated.

“Consequently, the cost of transportation and cost of doing business will be reduced,’’ he said. He lauded the efforts of the Kaduna state government for facilitating the establishment of Kaduna Inland Dry Port.

According to him, the provision of access roads and other utilities to the Dry Port by Kaduna State Government is worthy of emulation by the other Dry Ports host State Governments.

He urged relevant stakeholders across the public and private sectors, particularly Nigeria Customs Service, Nigerian Ports Authority, Nigerian Railway Corporation, Shipping Companies and Agencies, Seaport Terminal Operators, Clearing and Forwarding Agents, Road Haulers and importers and exporters to utilize the facility optimally. Source: article originally published by Vanguard (Nigeria), 4 January 2018

Customs_&_Central_Excise_DKB

Are toilet seats bought by the kilogram or on a per piece basis? Should tableware or porcelain be measured by weight or as a unit? Likewise with a coffee table — weight or number? The answers may seem obvious but they’re not. Differences in commercial practices and customs guidelines on the measurement of some goods may have wreaked havoc with the country’s trade statistics, not to mention sparking a plethora of disputes and delays in the clearance of consignments.

The Central Board of Excise and Customs (CBEC), India has now begun a review of standard unit quantity codes (UQC) to address the issue and help improve the ease of doing business while reducing the scope for disputes. India has already identified ‘trade across borders’ as one of the areas where it can show substantial improvement in ease of doing business.

India is ranked 119 on this count in the World Bank’s latest rankings.

“There are issues particularly in some tariff lines… We are now looking at how we can bring about uniformity,” said a government official. For instance, UQC for products under Heading 6911— tableware, kitchenware and other household articles, and toilet articles of porcelain or china—is in kilogram.

However, the trade transacts in units or by number of pieces. Moreover, there is no uniformity in UQC declarations by traders. These are not the same for a particular item at different customs locations. The World Customs Organization has prescribed standard UQCs that are used internationally. India implemented mandatory standard UQCs from 2013 as part of export-import declarations.

There are inconsistencies in the way these have been applied. Variance in codes is approved by field officials, which makes the system subject to discretion and interpretation. CBEC has reached out to the industry to arrive at ways in which the matter can be addressed.

“Use of standardised UQC as prescribed in Customs Tariff Act, 1975, is a challenge at times faced by trade due to different market practices,” said Rahul Shukla, executive director, PwC.

“The same has been recognized by the customs authorities and they have supported the trade in resolving it as well on case-to-case basis. Shukla said the proposed move by CBEC to take another look at UQCs prescribed in the Customs Tariff Act and align them with practice was a positive move and in line with the continued commitment to trade facilitation.

“It will help if CBEC can consider allowing multiple UQCs for the same commodity or adopting a particular UQC which is used more frequently by trade,” he said. India jumped 30 places to 100 in World Bank’s overall ease of doing business rankings in the latest listing released in October after undertaking various reforms to improve the environment. Source: By Deepshikha Sikarwar, The Economic Times, India, 8 January 2018.

HS_30_GalleryThe Harmonized System (HS) allows a world of many languages to speak with one. A multipurpose nomenclature for trade, the HS is one of the most successful instruments developed by the World Customs Organization. Its Convention has 156 Contracting Parties and the HS is used by more than 200 countries, territories and Customs or Economic Unions. It forms the basis for Customs tariffs and statistical nomenclatures around the world, and is used for around 98% of world trade. The year 2018 marks the 30thAnniversary of the HS which came into effect on 1stJanuary, 1988.

As an international standard with global application, the HS plays a key role in facilitating world trade. The HS is used as the basis for:

  • Customs tariffs;
  • Trade policies and quota controls;
  • Collection of international trade statistics and data exchange;
  • Rules of origin;
  • Trade negotiations such as the WTO Information Technology Agreement and Free Trade Agreements;
  • Monitoring of controlled goods, for example, chemical weapons precursors, hazardous wastes and persistent organic pollutants, ozone depleting substances and endangered species;
  • Many Customs controls and procedures, including risk assessments and profiling, electronic data input and matching and compliance activities; and Economic research and analysis..

The HS is crucial to the development of global trade. It is also fundamental to achieving fair, efficient, and effective revenue collection, a primary Strategic Goal of the WCO. In addition, as it provides an essential tool for the simplification and harmonization of customs procedures and provides the basis of knowing what trade goods are crossing borders, it contributes to other major strategic goals of Customs administrations and of the WCO.

The HS is a living language. The HS is now in it’s 6th edition and in the process of preparing for the Seventh Edition of the HS (HS 2022). During the life of the HS, there have been 60 meetings of the Harmonized System Committee (HSC) where 4,144 agenda items were discussed, 10 Recommendations were produced concerning the application of the HS Convention, 2280 classification decisions made and 871 Classification Opinions adopted to ensure the harmonization of classification. On 1st of January 2018, Members can be congratulated on having worked through the 60 HSC meetings, 53 meetings of the Review Sub-Committee (RSC) and 32 meetings of the Scientific Sub-Committee (SSC) to maintain and update the HS to keep it responsive and relevant to current needs.

On the occasion of this anniversary, the WCO calls for the international Customs community, in partnership with the international trade community, to continue to be proactive and pursue its efforts to develop and maintain the HS, especially in terms of the application and uniform interpretation of the HS, so as to safeguard and further grow the benefits of this success. Source: WCO, 3 January 2018.

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The WCO Policy Commission (PC) has seized the momentum garnered in the domain of electronic commerce and has unanimously adopted the Luxor Resolution at its meeting held this week from 4 to 6 December 2017 in the Egyptian city which gives its name to the Resolution.

The Resolution, developed in close collaboration with all stakeholders, outlines the guiding principles for cross-border E-Commerce addressing eight critical aspects, notably Advance Electronic Data and Risk Management; Facilitation and Simplification; Safety and Security; Revenue Collection; Measurement and Analysis; Partnerships; Public Awareness, Outreach and Capacity Building; and Legislative Frameworks.

The Resolution is aimed at helping Customs and other government agencies, businesses, and other stakeholders in the cross-border E-Commerce supply chain to understand, coordinate and better respond to the current and emerging challenges.

Additionally, and taking into consideration the relevance of the topic and the need to better position the work of the WCO and coordinate ongoing efforts, the PC has also issued a Communiqué to the Eleventh WTO Ministerial Conference (MC11), the Organization’s highest decision-making body, attended by trade ministers and other senior officials from the WTO’s 164 Members, that will take place in Buenos Aires, Argentina, from 10 to 13 December 2017.

The Communiqué strongly reaffirms the WCO’s leadership in providing policy and operational frameworks for the effective management of cross-border E-Commerce from both a facilitation and a control perspective, and clearly demonstrates its strong commitment to supporting the WTO’s Work Programme on E-Commerce, moving forward. Source: WCO 

  • Access the Resolution on Guiding Principles here!
  • Access the Communique here!
  • Visit the WCO’s Cross-Border E-Commerce webpage here!

Cigarette Smuggling in Logs

September 23, 2017 — 1 Comment

Hamburg Sud_1

Durban-based Hamburg Süd is the first shipping line – and the first South African Revenue Service (Sars) client – to be granted exemption from the requirement to submit paper manifests to local customs branches, thus becoming the first fully electronic cargo reporter.

While the electronic reporting of pre-arrival manifests to Sars has been a requirement since August 2009, shipping lines are, to date, still required to present pre- and post-arrival paper manifests to local customs branches in order to account for cargo. This was also because the data accuracy of electronic submissions varied significantly between different reporters.

Sars’ implementation of the new Manifest Processing (MPR) system in June 2016, provided industry with the mechanism to also report acquittal manifests electronically. Additionally, the system is able to match customs clearances to their corresponding cargo reports (manifests) in order to identify instances of non-reporting.

Three months after MPR was introduced, the facility for full paperless cargo reporting was made available to shipping lines and airlines who submit both pre-arrival and post-arrival manifests to Sars electronically; submit complete sets of manifests without any omissions; achieve a reporting data accuracy rate of 90% or higher in respect of both their pre-arrival and acquittal manifests reported for each of the three months preceding any application for exemption from paper reporting requirements; and can maintain that level consistently.

A significant benefit to carriers reporting electronically is the cost-saving of hundreds of thousands of rands spent per year in the paper and administrative costs associated with submitting paper manifests to Sars offices. The process is now more efficient allowing for improved risk management, security and confidentiality.

“Hamburg Süd’s core business strategy is to deliver a premium service to our customer, and to achieve this, compliance is a core driver. SARS paperless reporting is in line with our compliance and sustainability strategy,” said Jose Jardim, general manager of Hamburg Süd South Africa.

For Customs, the mandatory submission of cargo reports forms a significant part of the new Customs Control Act (CCA) in order to secure and facilitate the international supply chain.

With the impending implementation of Reporting of Conveyances and Goods (RCG) under the CCA – targeted for 2018 – carriers of internal goods in the sea and air modalities are urged to follow Hamburg Süd’s example and ensure that they become compliant in good time so that they can enjoy a smooth transition to the new legal dispensation.

Paperless cargo reporting would bring an end to one of the last remaining paper-based processes in customs while further contributing to the expedited processing of legitimate trade through an enhanced and integrated risk management environment.

According to a Sars spokesman technical stakeholder sessions to implement the reporting requirements introduced by the new Customs Control Act are due to commence soon and carriers and other supply chain cargo reporters are urged to attend in order to ensure they adapt their systems in good time.

Source: adapted from FTW Online, Venter. L, “German shipping line first Sars client to become fully electronic reporter”, September 14, 2017.

Ghana
Deputy Minister of Trade and Industry, Mr. Carlos Ahenkorah, says Ghana a signatory to the WTO Trade Facilitation Agreement is too small a country to have two Single Window operators.

He challenged the pioneer and only single window operator, Ghana Community Network Services Limited (GCNet) to speedily re-double its efforts in actualising the full breadth of Single Window operations in the country.

He recalled GCNet’s drive to automate trade facilitation and port clearance processes in the country and the difference that brought to trade and port operators.

He praised the Ghana Integrated Cargo Clearance Systems (GICCS) deployed by GCNet as efficient and robust enough to deliver on any valuation needs and address any bottlenecks in the overall clearance systems at the ports to deepen trade facilitation and enhance revenue mobilisation.

He noted that GCNet had taken too long in securing the manifest, the seed document in clearance processes at the ports from source, a situation that may have encouraged other operators to exploit the loophole to try to secure that right from the International Air Transport Association.

The Deputy Trade Minister, however, noted that if GCNet had connected Maersk Lines to transmit its manifest into the Ghana Customs Management System (GCMS) over the past three years then there was no way that it could not oblige other carriers to emulate that example and ensure that both air and sea manifest are transmitted expeditiously.

He also urged GRA (Customs Division) as the statutory body to assist GCNet to get all other carriers to do so with dispatch going forward.

Mr. Ahenkorah also charged GCNet to remain committed to their tenets of innovation and service delivery and work harder to expand the scope of its TradeNet Single Window platforms in order to ward off any superfluous and duplicitous competition.

On his part, the Chief Executive Officer of the Ghana Shippers Authority, Dr. Kofi Mbiah, challenged Government to be bold to speedily resolve critical issues militating against the full actualisation of Single Window implementation in the country.

He said Ghana having been acknowledged as a pioneer in Single Window operations by international bodies like the World Bank and a number of countries having undertaking familiarization visits to Ghana to learn about the GCNet experience.

Dr. Mbiah noted that in as much as there was the need for collaboration between GCNet and other operators, it was also extremely important to define the parameters of engagement to create a level playing field for all players in the trade facilitation and revenue mobilisation eco-system.

Welcoming guests earlier to the event, the Executive Chairman of GCNet, Dr. Nortey Omaboe, noted that as a Public Private Partnership (PPP) conceived since its inception, the model over time had proved to be the most effective way of executing such a national mandate to support revenue mobilisation by Government, foster trade facilitation and enhance business competitiveness.

Dr. Omaboe observed that Government’s quest for increased revenue in an environment of reduced taxes to stimulate private sector growth meant greater focus on GCNet to come up with new initiatives to support revenue mobilisation efforts.

He, therefore, outlined a number of initiatives that GCNet had proposed to Government to enhance revenue mobilization.

These include the need to improve upon the valuation of consignments, the need to invoke bonds for transit goods that do not exit the country after 14 days and the review of the paltry charges currently imposed, ensuring that warehoused goods are ex-warehoused within the stipulated time periods.

Also, tighter control of free zone operations and the duty and tax exemptions granted thereon, the assignment of all newly registered taxpayers to relevant GRA Tax Offices and ensuring they file tax returns, etc.

Dr. Omaboe however expressed concerned about non-clarity in the role of some entrants in the trade facilitation and revenue mobilisation space following the cessation of the destination inspection companies and called for urgent steps to address the worrying development; and its inherent duplications and hence unnecessary cost to Government.

He was confident that what he termed ‘unnecessary complication’ would eventually be resolved mindful of the consideration that the interest of the country should remain paramount and be protected.

Dr. Omaboe assured guests that GCNet was poised for further growth and development in the years ahead as it leverages upon its continuous innovations in deploying systems that bring greater value to the Government and people of Ghana. Source: Ghana News Agency, Two Single Window Operators too much for Ghana, April 19, 2017

Customs_&_Central_Excise_DKBThe Indian Customs department (CBEC) has allowed self-sealing procedure as of 1 October for containers to be exported, as it aims to move towards a ‘trust based compliance environment’ and trade facilitation for exporters.

In a circular to all Principal Chief Commissioners, the Central Board of Excise and Customs (CBEC) said exporters who were availing facility of sealing at the factory premises under the supervision of customs authorities will be automatically entitled for self-sealing facility.

It said that permission once granted for self-sealing at an approved premise will remain valid unless withdrawn. However, in case of change in the premise, a fresh approval from Customs department will be required.

“The new self-sealing procedure shall come into effect from October 1, 2017. Till then the existing procedure shall continue,” the CBEC said.

It asked field officers to notify a Superintendent-rank officer to act as the nodal officer for the self-sealing procedure.

The officer will be responsible for coordination of the arrangements for installation of reader-scanners.

Earlier in July, the CBEC had said it will introduce the system of self-sealing by 1 September , as against the practise of sealing of containers under the supervision of revenue officials.

However, the CBEC now said that exporters can self-seal containers using the tamper proof electronic seals from 1 October 2017.

Under the new procedure, the exporter will have to declare the physical serial number of the e-seal at the time of filing the online integrated shipping bill or in the case of manual shipping bill before the container is dispatched for the port.

The exporters will directly procure RFID seals from vendors.

“In case, the RFID seals of the containers are found to be tampered with, then mandatory examination would be carried out by the Customs authorities,” the CBEC said.

From October 1, the exporters will need to furnish e-seal number, date of sealing, time of sealing, destination customs station for export, container number and trailer track number to the customs authorities.

In a circular in July, the CBEC had said it endeavours to create a trust based environment where compliance with laws is ensured by strengthening risk management system and Intelligence setup of the department.

Accordingly, CBEC has decided to lay down a simplified procedure for stuffing and sealing of export goods in containers. Source: The India Times > Economic Times, 5 September 2017.

UK Brexit

Reuters reports that Britain will not rule out the possibility that the EU may retain oversight of customs controls at UK borders after it leaves the bloc, as the country seeks ways to keep unhindered access to EU markets following Brexit.

Last week, the UK published a policy document proposing two possible models for customs arrangements between Britain and the EU after withdrawal from the EU in 2019.

The first model was a “highly streamlined customs arrangement”, which involved the reintroduction of a customs border but which envisaged electronic tracking of shipments, rather than physical checks of goods and documents at the border.

An alternative proposal was the “new customs partnership”, which would remove the need for a customs border between the UK and EU altogether.

Under this model, the UK would operate as if it was still part of the bloc for customs purposes. British goods would be exported tariff-free and Britain would levy EU tariffs on goods coming into the UK for onward passage to the EU directly or as components in UK exports.

Lawyers said there would be a need for a mechanism to oversee the “new customs partnership” to ensure that the UK was correctly monitoring goods coming into the UK and destined for Europe.

The EU’s system of movement of goods across EU borders without checks works on the basis all members closely monitor shipments coming into the bloc from outside, to ensure the correct tariffs are paid and that goods meet EU standards.

The antifraud agency of the EU polices customs agencies across Europe to ensure that they are correctly monitoring imports. Source: Reuters, Bergin T, August 21, 2017

AEO group

The following article appeared on Maritime Executive’s webpage titled ‘Can C-TPAT be fixed?‘ authored by Stephen L. Caldwell (2017-07-18). The assessment reveals that Customs-Trade partnerships require continuous review and enhancement to retain their appeal and relevance – a significant challenge for customs and border authorities primarily focussed on compliance with the law. I have appended hyperlinks to the critic’s articles at the bottom of this post.

As the Customs-Trade Partnership Against Terrorism celebrates its fifteenth anniversary, it faces stagnant membership, software train wrecks, questionable assertions of benefits and a much- needed retooling to stay current.

The Customs-Trade Partnership Against Terrorism (C-TPAT) is a voluntary security program started in the aftermath of 9/11. Member companies sign up and agree to maintain strong supply chain security. U.S. Customs and Border Protection (CBP) staff then validate members’ security practices to ensure they meet minimum criteria. Members are then eligible for benefits such as reduced likelihood that CBP will examine their shipments.

C-TPAT currently has about 11,500 members including importers, consolidators, sea carriers, port terminals and foreign manufacturers. Membership is segregated into three “Tiers” with Tier I representing companies that sign up, Tier II representing validated members, and Tier III representing companies with the highest demonstrated level of security.

The program grew rapidly in the beginning, reaching 1,500 members by 2002, 3,000 by 2003, 7,000 by 2004 and 10,000 by 2012. Given this growth, Congress wanted to make sure it was more than just a “sign- up sheet” and asked its watchdog, the Government Accountability Office (GAO), to monitor the program.

GAO’s July 2003 report found that, after companies signed up but before any validation process was completed, CBP went ahead and provided benefits by reducing their scores in its risk algorithm. By May 2003, for example, there were 3,355 members receiving benefits but only 15 had been validated. It took a couple of years to work down the backlog.

Even then, GAO’s March 2005 report found the validation process was not rigorous enough to ensure that a company’s security practices were reliable, accurate and effective. Its 2008 report found that CBP still faced challenges in verifying that C-TPAT members met minimum security criteria. It also found that CPB’s records management system did not allow managers to determine whether C-TPAT members complied with program requirements.

Midlife Crisis

Michael Laden, head of customs compliance firm Trade Innovations in Eden Prairie, Minnesota, has been helping industry clients with C-TPAT since 2005. Laden has been a licensed customs broker since 1981 and served as Director of Global Trade Services at Target Corporation prior to founding his own firm. He believes that C-TPAT is having a midlife crisis: “The stagnation of membership levels in the 10,000-12,000 range is an indication that industry has lost its appetite for C-TPAT.” He cites a problematic history of revolving short-term leadership as part of the problem.

Laden says the program reached its nadir with the August 2015 release of the much-anticipated Portal 2.0 software, designed to further automate the validation process. “The release was rushed into service with limited capabilities and minimal pre-testing,” he explains. “It was a complete train wreck. The data from the previous version just disappeared. In some cases, not only did the data disappear but the company disappeared too.”

The problems with Portal 2.0 were documented in GAO’s most recent report of February 2017, which found that Portal 2.0 incorrectly altered C-TPAT members’ certifications or security profiles, impairing the ability of C-TPAT specialists to identify and complete required security validations. Portal 2.0 problems also prevented C-TPAT members from accessing their own data and responding to validation reports.

Since C-TPAT was presented as a partnership with CBP benefiting from its knowledge of member companies’ security practices and companies benefiting from reduced scrutiny of their shipments, CBP in 2012 developed a software “Dashboard” to track such benefits. It used the Dashboard in its Program Benefits Reference Guide to assert that entries filed by C-TPAT members were less likely to undergo a security examination than those filed by non-members. Tier III members, for example, were nine times less likely to be examined, and Tier II members 3.5 times less likely.

However, the February 2017 GAO analysis found that C-TPAT members’ shipments did not consistently experience lower examinations, hold rates or processing times compared to non-member shipments. When GAO shared its preliminary analysis with C-TPAT officials, they acknowledged that they had never completed system verification, acceptance-testing, or checks on the data in the Dashboard. GAO’s conclusion was that the data was unreliable going back to the Dashboard’s introduction in 2012, and CBP to this day remains unable to determine the benefits of C-TPAT membership.

Industry Finds Its Own Solutions  

While industry was anxious for definitive information on membership benefits, it decided to find its own solutions to some of the costs. One key cost involves security audits of the supply chain, particularly in foreign countries. Shippers and importers got together and created the Supplier Compliance Audit Network (SCAN) to address costs, “audit fatigue,” inconsistent reporting and varying compliance requirements.

Companies pay a sliding fee to become part of SCAN, where they can commission audits and get access to completed audits, which could obviate the need for a new audit of a particular supplier. In 2016, SCAN completed more than 3,379 audits in 51 countries. Its board of directors represents some of the largest importers in the U.S., and its audits are conducted by proven service providers such as Bureau Veritas and business standards company BSI.

Dan Purtell, Senior Vice President of 30 BSI’s Supply Chain Solutions Group, says, “SCAN members clearly see the benefit of the C-TPAT program. These companies are the ‘who’s who’ of the Tier III C-TPAT community and truly are the supply chain security thought-leaders within the private sector. Member companies compete on the shelf but unite to secure trade, mitigate supply chain risk, and identify and correct security deficiencies.”

Purtell notes that “More than 15,000 such deficiencies have been remedied by SCAN since its inception just two years ago. No other association has done more to address global supply chain exposures.”

Next Steps

Despite problems, there are signs of improvement according to Trade Innovations’ Laden, starting with the decision by the last CBP Commissioner to make the Director of C-TPAT a more permanent position. “This should add continuity to the leadership of the program,” he explains, “allowing it to reach its true potential.” Laden also praises the new Director, Elizabeth Schmelzinger, for her openness to listen to industry.

“We’re retooling the program so that it stays current,” says Schmelzinger. “There are a lot of factors that have changed over the years. We want to make sure the minimum standards are still relevant.” CBP had enlisted its industry-based Commercial Operations Advisory Committee (COAC) to help it validate those minimum standards and develop C-TPAT best practices with the results to be announced at COAC’s March 1 meeting in Washington, DC. However, it was announced at the meeting that the results had been delayed to “make sure they get it right.”

When asked whether the intent of revisiting the minimum standards was to increase membership, Schmelzinger responded: “C-TPAT’s standards remain high. It’s not all about joining the program. We also suspend companies and remove them from the program. So, there is a constant churn in membership.”

She also described the evolving roles of C-TPAT and CBP’s newer Trusted Trader program, noting that “C-TPAT was foundational to any Trusted Trader status.” In other words, the first element of a Trusted Trader program was to ensure security. Then the elements of compliance with rules and regulations would be taken into consideration.

Ultimately, C-TPAT and Trusted Trader would transition into a global safety net whereby low-risk importers and exporters would have their goods expedited through customs processes in both the U.S. and its trading partners.

AEOs and Mutual Recognition

In international parlance, security partnership arrangements like C-TPAT are called Authorized Economic Operator (AEO) programs. The U.N. reported that, as of 2016, some 79 countries had established AEO programs and an additional 16 planned to launch such programs in the near future. The E.U., consisting of 28 countries, has the largest program, and its Union Customs Code of 2013 aims to, among other things, reinforce swifter customs procedures for compliant AEOs.

Many countries with AEO programs, including the U.S. with its C-TPAT, have signed “mutual recognition agreements” whereby two countries’ customs administrations agree to recognize the AEO authorization issued under the other’s program and provide reciprocal benefits to companies. As of May 2016, some 40 bilateral agreements had been concluded with 30 more being negotiated. According to the U.N., these bilateral agreements will form the basis for multilateral agreements. To date, the U.S. has signed 11 agreements with, among others, the E.U., Canada, Mexico, Japan and Korea.

C-TPAT Director Schmelzinger adds that “We are also restructuring the program to include exports so that it is more in line with the structure of other countries’ AEO programs. As part of our agreements with countries that have AEO programs, those countries will honor a commitment to our exporters who are low- risk. This will help U.S. exporters establish a foothold in those markets.”

One Step at a Time

Michael Laden is more skeptical of mutual recognition, calling it a “noble gesture” but adding there will be little enthusiasm from industry. Most of his clients are importers and will not get any benefit from the new export component.

Regarding exporters, he says that “Since CBP so rarely examines exports, the usual benefit offered by C-TPAT membership does not exist for that part of industry.” In Laden’s view, “Let’s fix C-TPAT before we move on to harmonize customs security and compliance throughout the world.”    Source: Maritime-Executive

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Kunio Mikuriya - Hindu Times

The Hindu Times reports that the World Customs Organization (WCO) will soon bring out guidelines on ‘cross-border e-commerce’, which will focus on preventing illegal trade as well as addressing the challenges stemming from the ‘digital divide’, according to the WCO Secretary General Kunio Mikuriya.

In an interview to The Hindu on his recent India trip, Mr. Mikuriya said, “We are developing guidelines on e-commerce to see how best Customs can facilitate legitimate trade through that route.” He added, “We [the WCO] will address issues related to digital divide by looking into what is blocking e-commerce trade, and what kind of enabling environment is needed to support developing countries so that they benefit more from e-commerce.”

Terming e-commerce as a “game changer” in global trade that is benefiting small firms and consumers, he said the new guidelines would, however, include provisions to prevent illegal trade and illicit financial flows. This would be ensured through measures that would help strengthen information exchange between Customs administrations of countries as well as collaboration with other government agencies.

The WCO has a Working Group on e-Commerce and four sub-groups. To develop guidelines on cross-border e-commerce, the work packages identified are: ‘trade facilitation and simplification of procedures’, ‘safety and security’, ‘revenue collection’, and ‘measurement and analysis’. According to the UN body ‘UNCTAD’, the value of online trade jumped from $16 trillion to $22 trillion between 2013 and 2015.

“The continuous increase in online trading has raised questions regarding regulation, consumer protection, revenue collection and national security,” according to the WCO’s ‘Study Report on Cross-Border E-Commerce’ (March 2017). “These questions cannot be dealt with individually, but require a common, broad approach by the international Customs community, together with all relevant stakeholders as a whole.”

The WCO said more sophisticated equipment was needed to combat illicit trading through low-value shipments in the postal, express and cargo streams.

“Pre-arrival information on the consignment and the consignee could be of great importance in detecting and intercepting illicit trade. In addition, the improvement of non-intrusive inspection equipment and an increase in the number of trained staff could help to enhance the detection rate of illicit goods,” it said.

In an article on e-commerce, the WCO’s Director of Compliance and Facilitation Ana Hinojosa pointed out that in many countries, there were de minimisthresholds that allow low-value packages to enter a country with little or no duties or taxes, and with much more simplified procedures.

“This has led to clever manipulations by either the shipper or the consumer to avoid the extra charges by splitting invoices, undervaluing the invoices or mis-declaring the items altogether,” wrote Ms. Hinojosa. Another type of manipulation used was to classify the item as something else or claiming a different country of origin for the product, to take advantage of better duty or tax rates, the WCO official said, adding that these distortions had had an impact on many countries’ revenue collection volumes. Therefore, “some countries… are re-evaluating their established thresholds due to the significant implications that the changes brought about by these growing volumes of low-value small packages are having on their fiscal revenues,” observed Ms. Hinojosa. Source: The Hindu, 2 August 2017.