Archives For SAFE Framework

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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WCO Data Model Workshop, Pretoria, South Africa, Dec. 2015

SARS’ EDI and Customs Business Systems representatives with WCO Data Model facilitators Mr. Giandeo Mungroo (2nd from the left) and Ms. Sue Probert (2nd from the right) [Photo – SARS]

Officials of the South African Revenue Service (SARS) last week attended a WCO workshop on the Data Model facilitated by Ms. Sue Probert and Mr. Giandeo Mungroo. The event, held in Pretoria, South Africa was sponsored by the CCF of China as part of the WCO’s Capacity Building endeavours to promote the adoption and use of customs standards and best practice amongst it’s  member states.

The workshop was requested by SARS ahead of new technical and systems developments and requirements informed by SARS’ new Customs Control and Duty Acts. Moreover, there are also political ambition to institute a Border Management Agency for the Republic of South Africa. All of this requires that SARS Customs has a robust electronic tool to assist the organisation in mapping national data requirements according to specific needs.

Besides the use of a value added Data Model tool – GEFEG, it is imperative for the organisation to develop capacity in the knowledge and understanding of the WCO Data Model. SARS has successfully EDI (Electronic Data Interchange) for the last 15 years with various local supply chain trading partners and government agencies. Over the last few years SARS has been actively pursuing and promoting IT connectivity with regional trading partners with the express purpose to extend the benefits of eCommerce across borders.

GEFEG.FX software is used to model data formats and develop implementation guidelines for data interchange standards such as UN/EDIFACT. It is a software tool that brings together modelling, XML schema development, and editing of classic EDI standards under a unified user interface, and supports the development of multilingual implementation guidelines.

Version 3 of the WCO Data Model brought about a distinct shift towards an ‘all-of-government’ approach at international borders with the introduction of the GOVCBR (Government Cross Border Regulatory) message. The message and underlying data requirements facilitate the exchange of customs and other government regulatory information to support a Single Window environment.

WCO Data Model not only includes data sets for different customs procedures but also information needed by other Cross-border Regulatory Agencies for the cross-border release and clearance at the border. The WCO Data Model supports the implementation of a Single Window as it allows the reporting of information to all government agency through the unique way it organizes regulatory information. This instrument is already 10 years old and is seeing increased use by WCO members.

Amongst the benefits derived from the workshop, SARS staff acquired the following competencies that will not only aid their work but business user support as well –

  • Competence in operating the tool to build a source control collaborative environment to support national and regional harmonization;
  • Competence to build a base to conduct national/ regional data harmonization based on the WCO Data Model to support national Single Window implementation as well as Regional Integration;
  • Competence to build systems/ electronic interfaces between Customs and its partner government agencies including a Border Management Agency; and
  • Provide needed competence to develop, maintain and publish national and regional information packages based on the WCO Data Model.
WTO Agreement on Trade Facilitation

Click on the image to download the Infogram

It is anticipated that most Customs and Border Authorities have at least one common item on their national capacity building agenda’s for 2014 – the Agreement on Trade Facilitation. Many countries, being members of the WCO, would have already acceded to a level of commitment to the Revised Kyoto Convention (RKC). This requires of them to introduce, at an agreed time, the principles of WCO standards and policies according to the level of their sovereign commitment.

The General Annex to the RKC is the bare minimum a country would be expected to implement in order to for it to be considered compliant with the RKC. From a trade perspective, this also indicates the extent to which your country’s leaders have committed itself towards ‘global integration’.

What the recent Trade Facilitation Agreement (ATF) in Bali does is bind member states to a compendium of requirements necessary for the enactment of certain conditions and obligations as set out in the various articles contained in the agreement. Countries should also note that certain of the ATF provisions include items under the Specific Annexes to the RKC. For a quick reference to see how the RKC and other WCO standards and conventions stack up to the ATF, refer to the WTO Trade Facilitation Toolkit by clicking the hyperlink.

In addition to this, the ATF also makes provision for ‘special and differential treatment’ in regard to developing and least developed countries (Refer to Section II to the WTO ATF).

In essence this allows those countries and opportunity of identifying their (capacity building) needs and setting themselves realistic targets for implementation and compliance to the ATF. To this end 3 Categories are identified for national states to consider in the event they are not at present in a position to accede to some or all of the ATF conditions.

The WCO has also prepared various tools which aim at assisting its members in assessing their national position in regard to the ATF. Members are likewise encouraged to regularly visit the WCO website for updates in this regard.

The following working papers are available from the WCO website and, for ease of access, are listed below together with their hyperlink to the WCO site –

Other related Trade Facilitation documentation can be found at the following link – WTO Trade Facilitation Negotiations

Text of the WTO Free Trade Agreement

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

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

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

 

Port of Oakland - VertiTainer's  crane mounted scanner solution employs advanced passive scanning technology and sophisticated identification algorithms to detect and identify gamma and neutron sources in shipping containers as they are loaded or discharged from a container ship.

Port of Oakland – VertiTainer’s crane mounted scanner solution employs advanced passive scanning technology and sophisticated identification algorithms to detect and identify gamma and neutron sources in shipping containers as they are loaded or discharged from a container ship.

While the question of mandatory weighing of containers features high on the International Maritime Organisations’ (IMO) list of priorities, a recent post “Container Weighing – industry solution on the horizon“, reminded me of a solution which has been around for some time now, but for various reasons would appear to have been overlooked by authorities – or so it would appear. Readers and followers of this blog may well already have viewed the feature on VeriTainer’s gantry crane mounted radiation detection and identification system, called the VeriSpreader® – refer to the New generation NII technology page of this Blog.

The spreader is a device used for lifting containers and unitized cargo. The spreader used for containers has a locking mechanism at each corner that attaches the four corners of the container. A spreader can be used on a container crane, a straddle carrier and with any other machinery to lift containers. (Wikipedia)

The recent maritime disaster involving the breaking-in-half, and eventual sinking of the MOL Comfort gave rise to the question of overloaded container boxes. While government and international security-minded organisations have pursued methods to address breaches in the supply chain, it would seem that little ‘innovation’ has been applied to the problem – specifically in regard to minimizing the time and cost of routing containers via purpose-built inspection facilities.

At least three known radiation incidents have hit the headlines in recent times – namely Port of Genoa (2010), Port Elizabeth, New Jersey (Feb, 2013), and the most recent in the Port of Voltri (July, 2013). Each of these incidents warranted an emergency response from authorities with a consequential impact on Port Operations.  Unfortunately, advanced risk management systems and other security safeguards did not alert suspicion, allowing these ‘threats’ into the heart of the port, not to mention the radiation threat to port workers?

It could be argued that since the inception of government-led supply chain security, 2002 onwards, many of the world’s supply chains have built in ‘possible inspection’ into their export lead times. A trip to a purpose-built inspection facility will normally require diverting transport from its predestined journey to a land border crossing or seaport. Moreover, lack of predictability often causes delays with possible loss of business where ‘security’ measures delay the movement of cargo.

Several Customs and Border authorities have instituted ‘export-led’ compliance programmes which seek to create better regulatory awareness and expectation for shippers. While not without merit, these still impose an inherent cost to trade where in some instances, shipper’s are compelled to institute ISO-type security standards which for some require dedicated and skilled experts to entrench and maintain these throughout the organisation. So, while the development of increasing levels of compliance amongst supply chain operators will occur over time, what of government ‘Non-Intrusive’ inspection capability?

Port Technology International‘s Feb 2013 article – Future X-Ray Inspection Equipment to be based on Industry Standards – opined that “future developments in cargo screening are likely to follow a common innovation trajectory that is fostered by market needs and new technology, while being strengthened by existing intellectual property and evolving industry standards. Innovation is often perceived as a circular path beginning with customer needs that are identified by a technology developer. The developer then creates application technology in the form of products to meet those needs”.

Land and rail-based cargo screening technology has improved immensely over the last 10 years with improved safety (shielding), throughput (speed) and portability. Engineers have likewise realized the need to ‘fuse’ imaging and radiation threat detection technologies, all offering a more cost-effective package to the end-user. These are by and large the Customs and Border authorities worldwide who protect our territorial waters and ports. Yet, the approach remains ‘modality driven’ which has ensured a period of predictability for designers and manufacturers, not to mention their revenue streams. Given the container weighing – port radiation threats discussed earlier, perhaps it is time now for transport and enforcement authorities to consider technologies as developed by VeriTainer and Lasstec and define a specification for “100%” needs – could this be uniform? Not unlike Lasstec’s container-weighing solution that allows the weighing of containers during the loading cycle so not to disrupt the work flow, Veritainer’s VeriRAD solution uses a gantry crane ‘spreader’ to house its unique solution with specific emphasis to mitigate the threat of a ‘dirty bomb’.

 

Inefficiency of road freight transport is one of the primary factors that hamper the economy of sub-Saharan Africa. Long delays experienced at border posts are the single biggest contributor towards the slow average movement of freight. Cross-border operations are complicated by the conflicting security objectives of customs and border authorities versus efficiency objectives of transport operators. It furthermore suffers from illegal practices involving truck drivers and border officials. In theory the efficiency of cross-border operations can be improved based on the availability of more accurate and complete information – the latter will be possible if different stakeholders can exchange data between currently isolated systems.

Cross-border trade basically comprises 3 distinct but interlinked layers –

An information layer – in which various trade documentation (purchase order, invoice), cargo and conveyance information (packing list, manifest), customs and government regulatory data (declaration, permits) are exchanged between various supply chain entities and the customs authority. These primarily attest to the legal ownership, contract of carriage, reporting and compliance with customs and other regulatory authority formalities (export and import), and delivery at destination.

A logistics layer – for the collection, consolidation, sealing and conveyance of physical cargo from point of despatch via at least two customs control points (export and import), to deconsolidation and delivery at point of destination.

A financial layer – which refers to the monetary exchange flow from buyer (importer) to seller (exporter) according to the terms and conditions of the sale (INCOTERMS). Hmm… no, this does not include ‘bribe’ money.

All three layers are inter-linked and prone to risk at any point of a given transaction. There is also no silver bullet solution to secure supply chains. Moreover, it is a fallacy that Customs and Border Agencies will ever conquer cross-border crime – simply because there are too many angles to monitor. Furthermore, in order to set up cross—border information exchange and joint enforcement operations it is both legally and politically time-consuming. Criminal elements are not hampered by these ‘institutions’, they simply spot the gaps and forge ahead.

One of the areas requiring customs attention is that of chain of custody. In short this implies the formal adoption of the World Customs Organisation’s SAFE Framework principles. Each party with data that needs to be filed with the government for Customs and security screening purposes has responsibilities. Those responsibilities include –

  • Protecting the physical goods from tampering, theft, and damage.
  • Providing appropriate information to government authorities in a timely and accurate manner for security screening purposes.
  • Protecting the information related to the goods from tampering and unauthorized access. This responsibility applies equally to times before, during and after having custody of the goods.

Tenacent RFID Tag

Tenacent RFID Tag

Security seals are an integral part of the chain of custody. The proper grade and application of the security seal is addressed below. Security seals should be inspected by the receiving party at each change of custody for a cargo-laden container. Inspecting a seal requires visual check for signs of tampering, comparison of the seal’s identification number with the cargo documentation, and noting the inspection in the appropriate documentation. More recently the emergence of certain e-seals and container security devices (CSDs) contribute even further to minimizing the amount of ‘physical’ verification required, as they are able to electronically notify the owner of the goods or government authority in the event of an incidence of tampering.

White Paper - GPS-RFID systems for cross-border management of freight consignments

White Paper – GPS-RFID systems for cross-border management of freight consignments

A group of South African specialist engineers have been working closely with transport authorities, logistics specialists, defense experts and customs authorities across the globe. Their e-seal is patented in no less than 16 high volume countries. It is produced in Singapore, China and Indonesia depending on politics, free-trade agreements and demand. May move some to Brazil and US in time. Proof of concept (POC) initiatives are currently underway in Brazil for rail cargo, US Marine Corps for their p-RFID program and other Department of Defense divisions in the USA, and will shortly be included in one of the GSA agreements making it available to any government department in the US. Further adrift, the e-seal is also currently enjoying interest in Guatemala, Mexico, Canada, Panama, Jordan, Italy, Spain, and Malaysia. Here, in South Africa, a POC was conducted at the 1st autogate at Durban Container Terminal, funded by the North West University, and overseen with successfully achieved objectives by Transnet Port Terminals. For technical details of the RFID seal, click here!

With much anticipated success abroad, how much support will this product attain in the local and sub-Saharan African scene? Government authorities, as well as logistics and supply chain operators are therefore encouraged to study the enclosed ‘white paper’ – Click Here!. It firstly quantifies the size of the problem and estimates the potential economic benefits that will be created by improved cross-border operations. It then proposes a combined GPS/RFID system that can provide the required level of visibility to support improved operational management, resulting in a simultaneous increase in the security and efficiency of cross-border freight operations. A brief cost-benefits analysis is performed to show that the expected benefits from such a system will by far exceed the costs of implementation. Source: Tenacent & iPico

Delegates attending the WCO/SACU IT Connectivity Conference - May 2013

Delegates attending the WCO/SACU IT Connectivity Conference – May 2013

Representatives of the SACU member states recently met in Johannesburg to progress developments concerning IT Connectivity and Customs-to-Customs data exchange in the region. The session served as a follow up to the session held last year in February 2012 in Pretoria. The conference was convened by the SACU secretariat under the sponsorship of the Swedish International Development Agency (SIDA), and was once again pleased to have SP Sahu, senior technical expert from the World Customs Organisation, to facilitate the work session over 3 days. Representatives of UNCTAD ASYCUDA were also in attendance to observe developments. UNCTAD currently supports three (soon to be four) of the five SACU Customs administrations. The session provided an opportunity for delegates to progress this work as well as develop a terms of reference for an independent assessment of the two connectivity pilot projects that are currently being pursued between Botswana-Namibia and South Africa-Swaziland, respectively.

IT Connectivity serves as a catalyst for various customs-to-customs cooperation initiatives seeking to bring about a seamless end-to-end flow of information between point of departure and destination. Some examples include export/transit data exchange, approved economic operator, commercial fraud, eATA and at least 5 other key areas of customs mutual exchange.  The concept is driven out of the newly establish WCO model known as Globally Networked Customs (GNC). GNC was formally adopted by the WCO Council in June 2012 where a capacity building approach based on protocols, standards and guidelines (PSG) using utility blocks was recognised to provide the most realistic means to achieve efficiency gains, and a more effective way to manage the negotiation of international agreements between customs administrations.

There exist several pilot projects across the globe wherein customs agreements are being piloted under the GNC approach. Development of a Utility Block and supporting data clusters for interconnectivity within SACU and the broader Southern Africa sub-region already commenced at last year’s session. The concept gained sufficient traction and was soon adopted by both SACU and SADC  member states as the means to implementing IT connectivity within the respective regions.

A review of the Utility Block and data clusters was conducted to ensure alignment of customs data requirements across the member states. The resulting product now provides a standard ‘data set’ which members agree as the minimum data required to facilitate data exchange and advance risk management needs. It covers export and transit declaration requirements. Two important criteria exist for successful data exchange and data matching. The first being the availability of appropriate legal provision for two countries to exchange data. The second requires the use of an agreed unique identifier. The identifier is important for Customs as well as the trade community.

Delegates were also presented with current and future developments occurring at the WCO, in particular the on-going work being done to formalise standards for the “My Information Package” concept as well as the WCO Data Model, currently at version 3.3. Another interesting on-going development involves a unique Trader ID.  

Member states involved in respective pilot programmes are now preparing themselves for an up-coming evaluation, later this year.

Guilherma Mambo presenting the Mozambique Single Electronic Window at the SADC ICT Conference, in Mauritius, 2012.

Guilherma Mambo presenting the Mozambique Single Electronic Window at the SADC ICT Conference, in Mauritius, 2012.

Guilherme Mambo has just been appointed Director General Mozambique Customs on the 10th May 2013. Until then he was Board Director of MCNet – Mozambique Community Network the PPP responsibly for implementation of Electronic Single Window for customs clearance in Mozambique where he were responsible for implementation and operations. In recent months he has lead Mozambique’s bi-lateral engagement on IT-Connectivity and Data Exchange with his counterparts at the South African Revenue Service (SARS).

For the past 10 years Mambo served as director IT Mozambique Customs and then for Mozambique Revenue Authority. On this role he participated in various modernization projects aimed at improving the business environment in Mozambique through improvement of public services particularly the complete organizational transformation of customs and internal tax areas.

Prior to working with customs and MRA, he worked in aviation industry and a UN lead project in Chechnya, Liberia, Angola were he was exposed multifaceted international experience.

As Director General – Mozambique Customs his responsibility is to manage the General Directorate of Customs (DGA) a paramilitary organization with around 2000 staff, one of the two major collectors of government revenue derived from external trade largely from customs duty, excise duty and the Value Added Tax (IVA).  DGA is also a law enforcement agency that undertakes the control of imports and exports for the protection of revenue to prevent evasion of duties and taxes and assists in the promotion of the community’s well-being to prevent the smuggling of controlled, prohibited and restricted goods (such as illicit narcotic drugs and firearms). The Director General heads the DGA and his assisted by three Deputy Director General each of one have a specific area of responsibility.

The SADC Sub-Committee on Customs Cooperation (SCCC) emphasizes great importance in strengthening cooperation between Customs and the private sector in order to give Customs Administrations in the SADC region an opportunity to offer a more efficient and effective customs service to their clients. The overall purpose of Customs to business partnerships is to ensure a partnership and dialogue structure of key stakeholders in the trading chain that contributes to trade facilitation, improvements in customs operations and higher compliance by the trading community.

The SCCC during its 20th meeting made the recommendation to establish National Customs Business Forums (NCBF) in all SADC Member States. Recently National Customs Business forums were established and launched in Malawi (September 2012), Zambia (April 2013) and Namibia (May 2013).  The NCBFs are meant to facilitate a stronger partnership between Customs and business at national level, promoting a regular and results oriented dialogue, and taking action on existing challenges in the supply chain of goods.

The Zambia Customs to Business Forum (ZCBF) was launched on April 26th, 2013 by the Deputy Minister of Commerce Trade & Industry in the presence of Commissioner General of the Zambia Revenue Authority (ZRA), Commissioner Customs (ZRA) and several public sector and business representative organizations which are important players in the Trading chain. In his keynote address, the Minister said “As a minister responsible for trade, i am profoundly delighted at seeing such initiatives being brought to the fore as this will help in improving the ease of doing business in Zambia. Furthermore, it is important to state that such initiatives are in line with best practices as stipulated under both multilateral organisations namely; the World customs organisation and the World trade organisation”.

The Namibia Customs Business Forum was launched by the Finance Minister Saara Kuugongelwa-Amadhila on the 22nd May 2013 in Windhoek, Namibia. The forum is envisaged to become “a bi-annual dialogue forum that brings together public and private sector [actors] in the trading chain to continually assess and adopt measures that promote effective trade facilitation, as well as enhance customs operations and higher compliance,” a statement from the Finance Ministry says.

In May 2013, the SCCC endorsed a Private Sector involvement strategy which additionally recommends the establishment of a Regional Customs Business Forum (between Customs and its stakeholders) in a bid to facilitate the implementation of the SADC Protocol on Trade. Source: SADC Secretariat.

Director-General of Singapore Customs Fong Yong Kian and Vice Minister of the General Administration of China Customs Sun Yibiao (both seated), signed the China-Singapore MRA at the WCO Council Sessions in June 2012. The signing was witnessed by Chairperson of the WCO Council and Chairman of the Revenue Commissioners of Ireland, Josephine Feehily and WCO Secretary-General   Kunio Mikuriya.

Director-General of Singapore Customs Fong Yong Kian and Vice Minister of the General Administration of China Customs Sun Yibiao (both seated), signed the China-Singapore MRA at the WCO Council Sessions in June 2012. The signing was witnessed by Chairperson of the WCO Council and Chairman of the Revenue Commissioners of Ireland, Josephine Feehily and WCO Secretary-General Kunio Mikuriya.

General Administration of Customs of Singapore has announced that the Mutual Recognition Arrangement (MRA), signed with Customs of the People’s Republic of China went into effect on March 15, 2013.  Following the effective date, both Singapore’s STP-Plus companies and China’s Class AA accredited companies will be recognized as Authorized Economic Operators (AEOs) of the respective countries.

This recognition as AEOs allows Customs from both countries to grant clearance facilitation for accredited AEOs such as lower examination rates, priority inspections, and priority handling of customs clearance documents at each country’s port.  Included in the announcement were specific instructions for how importers in both Singapore and China should fill out customs forms when receiving exported goods from one of their respective AEOs.

For goods exported directly to Singapore from a Chinese Class AA company, the Chinese exporter would need to provide the Singapore importer with the 10-digit Customs Registration Code to place on their import declarations to Singapore along with inputting the “AEO code” into the portal for mutual recognition purposes and benefits of AEO.  The AEO code is comprised of “AEO”, “CN” and the 10-digit Customs Registration Code.

For goods exported to China from a Singapore STP-Plus company, the Chinese importer must fill in the “AEO code” of the Singapore’s exporter in the “remark column” in their import declarations to receive mutual recognition benefits.  The format for the AEO code is as follows:  “AEO (written in English half-width characters and capital letters)” plus “<” plus “SG” plus “12-digit AEO code” plus “>”.  For instance, if the AEO code of one Singapore STP-Plus company is AEOSG123456789012, then the remark column filled in by the Chinese importer would read as “AEO”.

The MRA signed between China and Singapore is but one example of several security programs in different countries making it easier for trusted traders to move goods through the supply chain. Other countries that also participate in MRAs include:

  • US Customs & Trade Partnership Against Terrorism (C-TPAT) which has MRAs in place with Canada’s Partners in Protection (PIP), New Zealand’s Secure Export Scheme Program (SES), Jordan’s Golden List Program (GLP), Japan’s Authorized Economic Operator Program (AEO), Korea’s AEO, and the European Union’s ( EU) AEO
  • European Union (EU) AEO which has MRAs in place with Canada’s PIP, Japan’s AEO, Australia’s AEO, New Zealand’s SES, and US C-TPAT
  • Japan Customs has MRAs in place with New Zealand’s SES, EU’s AEO, Canada’s PIP, Korea’s AEO, and Singapore’s STP-Plus
  • Singapore Customs has signed MRAs in place with Canada’s PIP, Korea’s AEO, Japan’s AEO, and China’s Class AA

Part of participating in any security program is the ability to assess and manage risk across the supply chain.  This includes soliciting and analysing information received from every partner within the supply chain to corrective actions and best practices.  While are security programs are still voluntary in nature, companies that take advantage of them are reaping benefits such as faster customs clearance and less inspections. Source: Integration Point

4209_image002January, 2013 saw the United States and the European Union implemented the mutual recognition arrangement for their respective supply chain security programmes. The US Customs and Border Protection (CBP) administers the Customs-Trade Partnership Against Terrorism (C-TPAT), which is now recognised as equivalent to the European Union’s Authorised Economic Operator (AEO) programme.

Should they elect to allow CBP to share certain information with the European Union, US importers authorised under C-TPAT will be considered secure and their exports will receive a lower-risk score by the customs administrations of EU member states. In practice, certification translates into time and money savings for parties dealing with trusted operators. In that sense, certified operators are successfully marketing their status as a distinguishing competitive advantage.

Both programmes are voluntary, security-based programmes aimed at improving supply chain security. As programme members, importers receive lower risk-assessment scores in customs administrations’ computer targeting software. Therefore, members are subject to fewer security-related inspections and controls. The mutual recognition arrangement between the United States and the European Union allows for members of one programme to receive reciprocal benefits when exporting to the other jurisdiction.

However, not all C-TPAT members qualify for full AEO benefits. Only Tiers 2 and 3 C-TPAT importers (considered as more secure) may receive a lower risk-assessment score, and consequently undergo fewer inspections when exporting to an EU member state. In addition, in order to receive these benefits, C-TPAT members must expressly elect for the United States to share certain information with the European Union and certify that their exports meet all applicable requirements.

The mutual recognition arrangement may also exempt members’ facilities from undergoing validation site visits by both administrations when initially being certified or during revalidation visits. This benefit is available for every tier of C-TPAT membership.

The mutual recognition arrangement applies only to C-TPAT importers which also act as exporters. A C-TPAT manufacturer will benefit from the arrangement only if it also acts as the US exporter. For example, if a US company owns a C-TPAT-certified manufacturer in Mexico that directly ships merchandise to the European Union, those shipments will not benefit from the arrangement.

CBP’s targeting system recognises AEO-certified entities by their manufacturer identification number. Certified manufacturers will receive benefits under the arrangement regardless of whether they are the EU exporter. A certified exporter which is not a manufacturer may obtain a manufacturer identification number to gain from the benefits of mutual recognition. As such, AEO-certified manufacturers and exporters may benefit under the arrangement, but only US exporters are eligible for benefits.

Although the United States and the European Union have recently announced the possibility of a US-EU free trade agreement, this arrangement is a trade facilitation measure that companies may elect to participate in immediately, regardless of the results of potential free trade agreement negotiations.

The United States also has mutual recognition arrangements for supply chain security with Canada, Japan, Jordan, Korea, New Zealand and Taiwan. Source:  Sidley Austin LLP, and The International Law Office

500px-Emblem_of_the_African_Union_svgThe African Union (AU) Technical Working Group on Interconnectivity has developed a ‘draft’ Strategy and Roadmap for Customs-2-Customs IT Connectivity on the continent. This strategy will effectively guide the process of the continental Interconnectivity of Computerized Customs Clearance and Information Systems in Africa. The ‘draft’ Roadmap envisages that the process of interconnectivity will take a period of 11 years with a total of four stages.

Stage 1 – by 2014, National states should have engaged one another (within their respective regions) on the matter of Customs connectivity.

Stage 2 – between 2013 and 2017, the AU has an extremely ambitious expectation that national Customs Administrations would have (at least commenced) if not completed Customs ‘connectivity’ within the various Regional Economic Communities (RECs) in Africa.

Stage 3 – between 2017 and 2020, the suggestion that Customs interconnectivity will be occurring between RECs across the African continent – North Africa: AMU; West Africa: ECOWAS and UEMOA; Central Africa: ECCAS and CEMAC; East Africa: COMESA, EAC, IGAD; and South Africa: SADC and SACU.

Stage 4 – between 2020 and 2025, consolidation of Customs IT-Connectivity across the RECs.

The ‘draft’ Strategy spells out the strategic objectives and activities at the national, regional and continental level that will need to be taken for this to be realized. The strategy also indicates the roles of all the major stake holders in the process.  This comes in the wake of several regional and bi-lateral initiatives to bridge the ‘cross-border divide’ through electronic exchange of structured customs information.

All in all an ambitious plan structured to meet the equally ambitious deadlines of the coming into being of an African Union. The real challenge in all of this lies with the Member States in being able to set aside and commit to regional and continental ambitions, over and above the already pressing and complex national agenda’s of their respective sovereign countries. In context of the African Union, the multiplicity of RECs in themselves add a layer of duplication…..is an “integrated Customs Union” in Africa going to continue to permit the existence of the respective RECs or will they be absorbed into the African Union? Member states need to begin speaking up on this issue otherwise accept being swamped by onerous commitments. No doubt the ‘international donor agencies’ wait eagerly in the wings to capitalise on Africa’s deficiencies.

WEF - Building Resilience in Supply ChainsOn 24 January 2013, the Secretary General of the WCO, Kunio Mikuriya, participated in a press conference dedicated to the launch of the World Economic Forum’s (WEF) Building Resilience in Supply Chains 2013 report. Sander van ‘t Noordende, Accenture’s Group Chief Executive for Management Consulting, introduced the report and its major findings, such as the top supply chain risks that include extreme weather, natural disasters, physical and cyber security threats, along with economic and political volatility. He highlighted that the report argued the need for a coherent and consistent framework to deal with supply chain resilience, partnerships between government, Customs and businesses, and the sharing information flows for risk assessment purposes.

Secretary General Mikuriya pointed out that supply chain resilience is very important for Customs, whose functions include ensuring that legitimate trade continues even in cases of disruption, an issue which has been addressed by a set of standards and instruments developed by the WCO, in particular, the 2011 WCO Resolution on the Role of Customs in Natural Disaster Relief.  He also stressed the importance of public-private partnerships in order to share security responsibility with trusted traders through the implementation of the WCO SAFE Framework of Standards to Secure and Facilitate Global Trade and its integral Authorized Economic Operator (AEO) programme.

Cooperation at intergovernmental level with longstanding partners of the WCO, such as the International Maritime Organization (IMO), the International Civil Aviation Organization (ICAO), the Universal Postal Union (UPU), the International Air Transport Association (IATA), the International Road Transport Union (IRU) and the World Shipping Council (WSC), was also emphasized by the Secretary General as being key to harmonizing standards and creating synergies among different stakeholders. In addition, he pointed out that transparency and trust among stakeholders in supply chains was of the utmost importance, as this led to a global cohesive approach and even stronger partnerships.

The Secretary General of the IMO, Koji Sekimizu, addressed the concerns of the maritime sector, in particular, the sustainability of international transportation within the context of supply chain resilience. He mentioned that along with the WCO, the IMO has built its approach on risk assessment and risk management, resulting in the adoption of the International Ship and Port Facility Security Code (ISPS Code), a comprehensive set of measures to enhance the security of ships and port facilities. He also touched on the issues of port infrastructure, piracy and port security, and underlined the importance of cooperation with other stakeholders, such as the WCO and ICAO. Source: WCO

Interfront logo2

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

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

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

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

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

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

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

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

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

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

2012 in review

December 31, 2012 — Leave a comment

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

Here’s an excerpt:

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

Click here to see the complete report.