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SAD Story – Part 2

February 19, 2012 — Leave a comment

What is clear in regard to modern day business is the fact that ‘harmonisation’ in the international supply chain is essentially built around ‘data’. E-commerce has been around for decades, plagued by incompatibilities in messaging standards, and computer software, network and hardware architecture. However, one of the key inhibitors has been organisations and administrations having to adhere to domestic ‘dated’ legislation and so-called standard operating procedures – seemingly difficult to change, and worst of all suggesting that law has to adapt!

A lot has had to do with the means of information presentation (format) and conveyance (physical versus electronic) rather than the actual information itself. Standards such as the UN Layout key sought to standardise or align international trade and customs documentation with the view to simplifying cross-border trade and regulatory requirements. In other words, each international trade document being a logical ‘copy and augmentation’ of a preceding document.  This argument is still indeed valid. The generally accepted principle of Customs Administrations is to maximise its leverage of latent information in the supply chain and augment this with national (domestic) regulatory requirements – within a structured format.

The Single Administrative Document (SAD) was itself borne out of this need. The layout found acceptance with UNCTAD’s ASYCUDA which used it as a marketing tool (in the 1990’s) in promoting ‘What-You-See-Is-What-You-Get’ (WYSIWYG). It certainly provided a compelling argument for under-developed countries seeking first-time customs automation. Yet, the promise of compatibility with other systems and neighbouring customs administrations has not lived up to this promise.

Simultaneous to document harmonisation, we find development of the Customs data model, initially the work of the Group of 7 (G7) nations at the United Nations. Its mandate was to simplify and standardize Customs procedures Customs procedures. In 2002, the WCO took over this responsibility and after further refinement the G7 version became version 1 of the WCO Customs Data Model. Once more a logical progression lead to the inclusion of security and other government regulatory requirements. This has culminated in the recent release of WCO Data Model 3. Take note the word “Customs” is missing from the title, indicating that Version 3 gives effect to its culminating EDI message standard – Government Cross Border Regulatory (GOVCBR) message – an all inclusive message standard which proposes to accommodate ALL government regulatory reporting requirements.

Big deal! So what does this mean? The WCO’s intent behind GOVCBR is as follows –

  • Promoting safe and secure borders by establishing a common platform for regulatory data exchange enabling early sharing of information.
  • Helping co-operating export and import Customs to offer authorized traders end end-to to- end premium procedures and simple integrated treatment of the total transaction.
  • Contributing to rapid release.
  • Elimination redundant and repetitive data submitted by the carrier and the importer.
  • Reducing the amount of data required to be presented at time of release.
  • Reducing compliance costs.
  • Promoting greater Customs Co-operation.

Undertaking such development is no simple matter, although a decision in this direction is a no brainer! Over a decade’s work in the EDI space in South Africa is certainly not lost. Most of the trade’s electronic goods declaration and cargo reporting requirements remain intact, all be they require re-alignment to meet Data Model 3 standard. Over and above this, the matter of government regulatory requirements (permits, certificates, prohibitions and restrictions, letters of authority, etc.) will require more ‘political will’ to ensure that all authorities administering regulations over the importation and exportation of goods are brought into the ‘electronic space’. Some traction is already evident here largely thanks to ITAC and SA Reserve Bank willingness and capability to collaborate. In time all remaining authorities will be brought on board to ensure a true ‘paperless’ clearance process.

So, I digress somewhat from the discussion on the SAD. However, the bottom line for all customs and border authorities, traders and intermediaries is that ‘harmonisation’ of the supply chain operation follows the principal and secondary data required to administer ALL controls via a process of risk assessment, to facilitate release including any intervention required to ensure the compliance of import and export goods. As such even legislative requirements need to enable ‘harmonisation’ to occur otherwise we end up with a non-tariff barrier, uncertainty in decision-making, and a business community unable to capitalise on regional and international market opportunities. Positively, the draft SA Customs Control Bill makes abundant reference to reporting – of the electronic kind.

In Part 3, I will discuss regional ‘integration’ and the desire for end-to-end transit clearance harmonisation.

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Some 8 years since the initial implementation of the Manifest Acquittal System (MAS), SARS has recently engaged cargo manifest providers with a fresh urgency to prepare themselves for the impending mandatory requirements for the filing of cargo reports to Customs. The legislation has been in place for several years and a fully revamped cargo management system has since been developed by SARS. Cargo Reporters (shipping lines, airlines, ships agents, terminal operators, freight forwarders, consolidation/deconsolidation agents, depot operators, ground handling agents) are now called upon to ensure that their systems are able to meet the cargo reporting requirements of SARS. (The EDI Mapping requirements for CUSCAR is now available on the SARS website).

The first imperative is to ensure the integrity of data reported to SARS. Once this is at a satisfactory level, SARS will commence the matching of cargo and customs clearance information. Not unlike other customs jurisdictions, the availability of ‘clean data’ from both cargo reporters and declarant’s is imperative to facilitate manifest matching, risk assessment and the release of goods.

A further phase will thereafter introduce measures to ensure that South Africa meets its obligations in terms of the WCO SAFE Framework of Standards. This may require some modification to

  • Data reporting requirements via EDI,
  • Some changes to legislation,
  • Introduction of formal licensing of cargo operators, and
  • Introduction of a seal integrity programme as part of the aforementioned licensing arrangement.

SARS has prioritized air and sea modalities (imports only) for initial implementation, with rail and road modes to follow. The priority not only includes cargo reporting (manifest) requirements but also other reports such as vessel call notifications and advices, discharge lists, gate-in and gate out reports, and cargo outturn reports.

SARS cargo management system will be available for test purposes to all cargo reporters as of 1 March 2011. A period of at least 2 months has been contemplated for such testing, with live implementation occurring in May 2011.

The WCO Data Model 3 is a maximum set of carefully combined and harmonized data requirements derived from cross-border regulation. These requirements are mutually supportive and are updated on a regular basis to meet the procedural and legal needs of cross-border regulatory agencies such as customs, controlling export, import and transit transactions. The WCO Data Model 3 is only available online, by the means of an annual subscription which will enable you to – (a) Have access to a database of knowledge through a FAQ module, and (b) Ask any question directly to the WCO Data Model 3’s Project Managers.

Please visit: http://wcoomdpublications.org/data-model-3.html for pricing and conditions.

The Supply Chain is a Scary Place – THIS MONTH’S ISSUE – World Trade.

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November 25, 2010 — Leave a comment

Please visit the new “Downloads” tab for available documents. In the coming weeks, more specific information in support of the Customs Modernisation Programme will be provided. Please feel free to use this content in a respectable manner, i.e. for training and research purposes.

SARS Customs mainstream communication channel with the South African business community has received a major boost, with the installation of a new EDI Gateway. This forms part of SARS’ commitment – relating to increasing demands on its ICT architecture – to meet the rapid increase in B2G (business-to-government) electronic transaction exchanges. Currently for every import, export or cross border declaration transactions, there are a minimum of 2 EDI interchanges per consignment – a Customs declaration message (CUSDEC), and a Customs response message (CUSRES).
Once cargo reports (cargo manifests and cargo notifications) are all being received electronically this average will increase substantially. The future customs clearance process envisages a totally paperless environment. Therefore, any instruction or notification regarding an import or export transaction will need to be handled via electronic messaging between Customs and the Trader. This implies significant more data storage and a reliable network ensuring continuity of business. At present trade declaration (SAD500) volumes are in the region of about 4, 3 million per annum. The need for high-volume / real-time processing is therefore a no-brainer.
The Customs Modernisation Programme (CMP) has undertaken a number of initiatives in regard to maintaining pace with world trends. It is currently reviewing its data models; consolidating import, export and cross border modes; and aligning all its data requirements with the WCO Data Model version 3. Combined with envisaged changes being brought about through the introduction of clearance within Customs Procedures, SARS’s desire is to adequately meet the demands of trade and its accession obligations regarding the WCO Revised Kyoto Convention. In the near future, Customs Response and Cargo Report data requirements will be aligned and consolidated in similar manner. This alignment therefore puts SARS in a position to consider a future migration path – the adoption of the Government Cross Border Regulatory message (GOVCBR).