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

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

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

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

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

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

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

The full publication can be accessed here.

WTO – Trade in Knowledge

The WTO has launched a new book entitled “Trade in Knowledge: Intellectual Property, Trade and Development in a Transformed Global Economy” on 31 March. At the launch event, a wide cross-section of contributors to the publication discussed how their research and analysis had a bearing on current issues lying at the intersection of development, trade, technology and the diffusion of knowledge.

Drawing together insights from a diverse range of leading international scholars and analysts, the publication explores how to build more inclusive, up-to-date and precise ways of measuring knowledge flows, discusses how more nuanced and effective use of these data may guide policymakers and provides insights into the prospects for knowledge-based social and economic development, moving legacy models and adapting to the realities of the contemporary knowledge economy. The book also proposes ideas for updated systems of governance that promote positive sum approaches to the creation and sharing of the benefits of knowledge as a public good, with a view to informing planning for development.

The book’s table of contents is available here.

Source: World Trade Organisation

USA – White House Announces New Initiative to Improve Supply Chain Data Flow

Last year, the ports and the private sector moved a historic amount of goods with record holiday sales and delivery times below pre-pandemic levels. Currently, real retail inventories excluding autos are six percent higher than at the end of 2019 and products at grocery and drug stores are 90 percent in stock, just 1 percentage point below pre-pandemic levels.

The US government is also focused on addressing the longer-term weaknesses in our nation’s supply chains, the result of decades of underinvestment, outsourcing, and offshoring instead of investment in long-term security, sustainability, and resilience. The Bipartisan Infrastructure Law (BIL) is now making a generational investment in our ports, highways, and other parts of our physical infrastructure, which will help speed up the movement of goods and lower costs. But we can further strengthen our goods movement supply chains by making a similarly bold improvement in a digital infrastructure to connect the supply chain.

To take the first step toward addressing this challenge, the US government is announcing the launch of Freight Logistics Optimization Works (FLOW), an information sharing initiative to pilot key freight information exchange between parts of the goods movement supply chain. FLOW includes eighteen initial participants that represent diverse perspectives across the supply chain, including private businesses, warehousing, and logistics companies, ports, and more.  These key stakeholders will work together with the Administration to develop a proof-of-concept information exchange to ease supply chain congestion, speed up the movement of goods, and ultimately cut costs for American consumers. DOT will lead this effort, playing the role of an honest broker and convener to bring supply chain stakeholders together to problem solve and overcome coordination challenges. This initial phase aims to produce a proof-of-concept freight information exchange by the end of the summer.

Recent supply chain disruptions have raised national awareness of the need for improved information exchange. Supply chain stakeholders deserve reliable, predictable, and accurate information about goods movement and FLOW will test the idea that cooperation on foundational freight digital infrastructure is in the interest of both public and private parties. FLOW is designed to support businesses throughout the supply chain and improve accuracy of information from end-to-end for a more resilient supply chain.

Resiliency—the ability to recover from an unexpected shock—requires visibility, agility, and redundancy. The lack of digital infrastructure and transparency makes our supply chains brittle and unable to adapt when faced with a shock. The goods movement chain is almost entirely privately operated and spans shipping lines, ports, terminal operators, truckers, railroads, warehouses, and cargo owners such as retailers. These different actors have made great strides in digitizing their own internal operations, but they do not always exchange information with each other. This lack of information exchange can cause delays as cargo moves from one part of the supply chain to another, driving up costs and increasing goods movement fragility.

View the entire Fact Sheet here!

Source: White House, 15 March 2022

WCO News – First Edition 2022

WCO News features an article by the Secretariat on the WCO Data Model – the common language for border management-related processes which enable information to flow seamlessly across different IT systems. The article focuses on the latest data requirements and processes which have been included in the Model through collaboration with stakeholders in the maritime, food safety, waste management and postal sectors. In addition, it offers some practical guidance to Customs administrations which are considering adopting the Model and calls on economic operators to use it in their commercial processes also, as it covers some of the data elements found in commercial documents such as the invoice, packing list and bill of lading.

This is followed by an article by the Botswana Unified Revenue Service (BURS) introducing various projects dealing with the collection, analysis and sharing of data. The author also emphasizes that a culture of innovation has emerged within BURS, and that the working environment supports creative thinking and the generation of new or improved products, services and processes.

The third article presents the results of, and lessons learned from, the first International Survey on Customs Administration (ISOCA), which was co-managed by the WCO and the IMF with the aim of collecting quantitative and qualitative data on Customs administrations and enabling comparisons to be made between countries that share common features. A higher number of participants is required for the Survey to provide a global view of the roles played by Customs administrations, and of their practices. I hope more administrations will participate in future editions of the Survey, which will be simplified to strike a better balance between the need for accurate data and the burden of data collection.

In the next article, Dominican Republic Customs introduces the tools it has developed to measure the time required to release goods and support the Government’s Release in 24 Hours (D24H) Programme, whose objective is to turn the Dominican Republic into the logistics epicenter “par excellence” of the Caribbean region.

A further article takes us to Niger, where the Customs Administration recently financed a study into the use of satellite imagery to analyze cross-border trade flows. The article presents the information collected and explains how it will be used to reorganize operational services and provide efficient links within the territory.

The final article in this Dossier sheds light on the need for harmonization in the digitization of trade documents. This article by the ICC introduces the ICC’s Digital Standards Initiative (DSI), a collaborative cross-industry effort to advance the digitization of trade globally through the adoption of a set of standards.

Many other articles published in this edition of the WCO News directly or indirectly touch on data and on the role that information technology plays in making us more efficient. And this is true of all the editions of our magazine. You have heard or read it many times: in today’s world, it’s all about data. Data is strategic, and we all stand to gain by sharing experience and expertise on how best to manage it in a holistic way.

Source: WCOOMD, March 2022

Abu Dhabi Customs joins TradeLens

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

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

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

Source: TradeLens, 9 February 2022

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

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

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

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

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

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

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

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

Source: WCOOMD, 24 February 2022

Meta’s social media sites an “empire” for counterfeiters

Meta’s top social media platforms Facebook, Instagram and WhatsApp have become enormously successful e-commerce channels, and the counterfeiters have followed the money, says a new report by Ghostdata.

Fuelled by technological additions like Facebook Pay, the emergence of Messenger as a unified chat and sales tool and WhatsApp’s online catalogues for businesses, the social media juggernaut has become a magnet for illicit traders who make use of this new integrated functionality.

“Meta and its subsidiaries have developed a strategy increasingly aimed at becoming an e-commerce leader, thus attracting a more diversified crowd of ruthless counterfeiters,” says the report.

“In turn this has further exposed Facebook’s inability to keep under control such activities on its platforms. This controversial behaviour led to an increase of counterfeit sellers and eventually to a general user distrust still evident today,” it continues.

Meta makes much of its efforts to protect intellectual property and fight the sale and promotion of counterfeit products, saying it makes ongoing improvements to enforcement measures and reporting tools and is investing in technology to prevent counterfeit activity.

However, the report finds that “despite Meta’s security reports and legal initiatives, the effects of their supposed crackdown on these illicit activities are disappointing and insufficient.”

“At the same time, WhatsApp has become the counterfeiters’ favourite and most used tool. Particularly WhatsApp Business, an option aimed at mom-and-pop companies, is now used by 40% of such Chinese counterfeiters, surpassing even the local and wildly popular WeChat.”

Ghostdata analysts used software including textual searches and visual recognition to try to identify sellers of counterfeits on the sites from online activity, and in just 20 days came up with a total of 26,770 counterfeiters’ accounts that were active on Facebook at the end of October 2021.

“Our study revealed that each counterfeiter profile counts an average of over 1,250 friends,” says the report, adding: “a very conservative estimate indicates that counterfeiters reach about 20 million unique contacts through newsfeed and private messages.”

It will be no surprise that the vast majority of these counterfeiters found by Ghostdata seem to be operating from mainland China, although it found examples of sellers in Russia, Turkey, Indonesia, Ukraine and Brazil.

“We estimate that on Facebook and Instagram combined there are about 6,000-7,000 wholesalers from China, with an annual business turnover ranging between $1.8bn and $2.1bn,” it says, adding: “this is a quite conservative estimate.”

Luxury clothing and accessories brands were most mentioned by counterfeiters, with the list headed by Louis Vuitton – accounting for 58% of activity – followed by Chanel, Fendi, Prada and Gucci.

Source: Securing Industry, Phil Taylor, 23 February 2022

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

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

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

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

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

Source: WCOOMD, 16 February 2022

Cargo Ship Full of Porsches and VWs Is On Fire and Adrift in the Atlantic

The Portugese Navy has confirmed this morning that one of its patrol boats came to the aid of the Felicity Ace, a car carrier transiting the Atlantic Ocean, as reported by the Washington Post. The vessel transmitted a distress signal after fire broke out in one of the cargo decks, with the ship announced as “not under command” shortly afterwards. Thankfully, the 22 crew on board have been reported as successfully evacuated from the ship. 

The Felicity Ace had departed from the port in Emden, Germany on February 10, believed to be carrying vehicles from Porsche and other Volkswagen Auto Group brands, among others. The ship was originally expected to arrive at Davisville, Rhode Island on the morning of February 23.

After transmitting the distress signal on Wednesday morning, the Panama-flagged ship was quickly reached by the Portugese Navy patrol boat as well as four merchant ships in the area. According to Naftika Chronika, the crew of the Felicity Ace left the ship on a lifeboat and were picked up by Resilient Warrior, a tanker operated by Greek company Polembros Shipping Limited. Reportedly, 11 of the crew have so far have been picked up from the Resilient Warrior by a Portugese Navy helicopter. Efforts to bring the situation under control are ongoing according to reports from the scene.

The Felicity Ace was built in 2005, measuring 656 feet long and 104 feet wide, with a carrying capacity of 17,738 tons. Fully loaded, the ship could carry nearly 4,000 vehicles. No details are currently available as to the cause of the fire, other than that it broke out in the ship’s cargo hold. 

In a statement, Porsche stated that “Our immediate thoughts are of the 22 crew of the merchant ship ‘Felicity Ace,’ all of whom we understand are safe and well as a result of their rescue by the Portuguese Navy following reports of a fire on board.” The company advised concerned customers to liaise with their dealers, noting that “We believe a number of our cars are among the cargo on board the ship. No further details of the specific cars affected are available at this time – we are in close contact with the shipping company and will share more information in due course.”

Some Porsche customers may be particularly concerned if their limited-edition cars have been damaged and destroyed in the incident. The company has in the past made efforts to remanufacture limited-edition cars, such as the Porsche 911 GT2 RS, when a number were lost when a cargo ship sank back in 2019.

Volkswagen, meanwhile, stated that “We are aware of an incident today involving a cargo ship transporting Volkswagen Group vehicles across the Atlantic,” adding that “At this time, we are not aware of any injuries. We are working with local authorities and the shipping company to investigate the cause of the incident.”  

With the automotive industry already struggling with supply chain issues, this incident will come as a further blow. Similarly, when a ship’s name is all over the news, it’s rarely for a good reason, as we all learned when the Ever Given blocked the Suez Canal last year. However, the good thing to take away from this story is that nobody has been hurt, and the crew were rescued safely. Some cars may have been lost, which will cause much pain and frustration, but any cars damaged will hopefully be replaced in good time. 

Full Article: The Drive, Lewin Day, 16 February 2021

Future International Trade Alliance Launched

https://unsplash.com/@exdigy

ICC, DCSA, BIMCO, FIATA and SWIFT have launched the Future International Trade Alliance and signed a memorandum of understanding to standardise digitalisation of international trade. Together, the industry associations will collaborate on the development and adoption of relevant standards to facilitate the use of electronic bills of lading.

Established to further digitalisation of container shipping technology standards, Digital Container Shipping Association (DCSA) – a neutral, non-profit group – in conjunction with its nine member carriers, today announced the formation of the Future International Trade (FIT) Alliance with the signing of a memorandum of understanding (MOU) between DCSA, ICC, BIMCO, FIATA and SWIFT in which the organisations commit to collaborating to standardise the digitalisation of international trade.

Through this initiative, the FIT Alliance will work together to generate awareness about the importance of common and interoperable data standards and common legislative conditions across international jurisdictions and platforms. The aim is to facilitate acceptance and adoption of an eBL by regulators, banks and insurers and to unify communication between these organisations and customers, physical and contractual carriers, and all other stakeholders involved in an international trade transaction.

“The digitalisation of documentation for container shipments will add value for international suppliers who rely on shipping across sectors,” said David Loosley, Secretary General and CEO of BIMCO. “Aligning these standards with the electronic bill of lading standard for the dry and liquid bulk sectors, which we are developing with assistance from DCSA, will help accelerate the digitalisation of trade globally.”

“Interoperability between all actors of the trade and transport industry is the key foundation to enable smooth data exchange and to streamline the end-to-end shipping process for our members,” said Dr. Stephane Graber, FIATA Director General. “FIATA, as the owner of the only negotiable multimodal transport document, endorsed by UNCTAD and ICC, is convinced that an industry-wide effort to establish open-source, interoperable, technology-agnostic standards is essential to make digitalization of international trade a reality. FIATA is committed to facilitating adoption of digital processes for freight-forwarders. We took the lead by developing the electronic FIATA Bill of Lading (eFBL) standard, which will further the acceptance of electronic documents by all stakeholders involved in a bill of lading (B/L) transaction. By simplifying their day-to-day business, our members will be able to focus on building truly differentiated offerings for their customers on top of future-proof digital foundations.”

“ICC represents 45 million companies in over 100 countries, and our mission is to make business work for everyone, every day, everywhere,” said John W.H. Denton AO, ICC Secretary General. “Living up to that means finding ways to make international trade far less complex than it currently is. Through the FIT Alliance, we are collaborating with key industry players to create and accelerate the adoption of digital standards for bills of lading that will make international shipping dramatically more simple, secure and seamless. This will drive a sea change in companies’ productivity and business models, the two critical ingredients to help businesses build back better and unleash benefits at an ecosystem level which have never before been achieved.”

David Watson, Chief Strategy Officer at SWIFT, said: “SWIFT is the way the world moves value, connecting 11,500 institutions in more than 200 countries and facilitating over US$2 trillion in global trade every year. We have significantly accelerated cross-border flows in recent years and are innovating at scale to make them instant. To that end, we are delighted to be part of this cross-industry collaboration to tackle friction through standardisation and enable interoperability across the ecosystem to allow rich data to flow freely between multiple platforms.”

“From the beginning, DCSA has understood the importance of cross-industry collaboration to achieve the elusive goal of universal eBL,” said Thomas Bagge, DCSA CEO. “The FIT Alliance is one exciting result of our ongoing effort to drive that collaboration. Container ships carry 90% of the world’s goods. As such, an incredibly diverse set of stakeholders touches the B/L transaction—from government regulators, to insurers, to shippers from every industry. To achieve widespread use of eBL, they must all be on board with adopting digital B/L standards. The agreement between DCSA and these diverse industry associations is an exciting milestone in our journey towards standardising all container shipping documentation through our eDocumentation initiative. We applaud the foresight and leadership of these organisations for joining us in the effort to bring greater transparency, efficiency, reliability and sustainability to the container shipping industry.”

Source: ICC, 15 February 2022

When will the AfCFTA be customs-ready?

Picture: Grayomm @ Unsplash.com

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

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

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

Article 19(2) AfCFTA Agreement provides that

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

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

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

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

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

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

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

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

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

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


[1] Art 22 AfCFTA Agreement.

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

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

Global Supply Chains Making a Huge Bet on Blockchain

System Shock: The $50 Trillion Industry Making a Huge Bet on Blockchain

Blockchain may one day eliminate inefficiencies and lack of transparency in supply chains. While slow in coming, this revolution would benefit not only customers and brands, but the “invisible” workers who power global trade.

In this episode of Bloomberg’s System Shock, we explore how cumbersome, paperwork-bound supply chains—like one stretching from kitchen refrigerators in Europe and the U.S. all the way back to a small farmer in Ecuador—are being transformed by that most modern of technologies.

Source: Bloomberg, System Shock, Gloria Kurnik, 26 January 2022

WCO supports the launch of the Global NTFC Forum 2022

The World Customs Organization (WCO) has joined hands, once again, with partner Annex D+ organizations (GATF, ITC, OECD, UNECE, UNESCAP, WBG and WTO) in supporting the Global Forum 2022 for National Trade Facilitation Committees (NTFCs). The Forum is being held from 1 to 4 February 2022 in a virtual mode and led by the United Nations Conference on Trade and Development (UNCTAD). It has brought together more than 500 participants, around half of which are members of their NTFCs.

In the high-level opening session, the speakers agreed on the need to ensure well-functioning, holistic and dynamic NTFCs, with their critical role in facilitating trade especially during the COVID-19 pandemic, through collaborative arrangements amongst all relevant public and private sector stakeholders. Embracing digital tools, the e-commerce growth and the importance of MSMEs and women traders were also highlighted by the speakers.

In his video address, Dr. Kunio Mikuriya, the Secretary General of the WCO emphasized the importance of trade facilitation during the COVID-19 pandemic recovery phase. Through simplifying and standardizing border procedures and creating transparent and predictable conditions for trade, Customs administrations facilitate legitimate business that, in turn, increases economic growth and job opportunities.

Secretary General Mikuriya mentioned a survey carried out in 2021, where the WCO took stock of the situation in the area of NTFCs, including the challenges and opportunities observed during the COVID-19 pandemic. Many NTFCs have put their work on hold, due to the inability to meet in person. However, in some instances NTFCs played an important role in addressing facilitation priorities during the pandemic, and have benefited from the sense of urgency generated by the crisis.

Dr. Mikuriya emphasized the need to strengthen the partnership among all relevant government authorities for improving border agency cooperation, which is essential in emergency situations. He reiterated the need to foster the dialogue and collaboration with the business community and underscored the private sector contribution to digitization, to conducting the Time Release Studies and in advancing Authorized Economic Operator (AEO) programmes, while taking into consideration the specific challenges of MSMEs.

The importance of increased diversity and inclusion in trade facilitation reforms, including improving the conditions for women traders was also highlighted. The WCO supports this agenda through its Network for Gender Equality and Diversity, amongst others.

The WCO reiterated its commitment to the TFA agenda in developing and least developed country Members through the WCO Mercator Programme.

The NTFC Forum was made possible with the support of the United Kingdom’s Her Majesty Customs & Revenue (HMRC) through the HMRC-WCO-UNCTAD Trade Facilitation Capacity Building Programme, which brings together the WCO and UNCTAD in a partnership for TFA implementation.

The whole address of the Secretary General can be found here.

AfCFTA, EU and WCO join forces to support digital transformation of Customs work

Picture: Damien Patkowski

On 27 January 2022, representatives of the WCO, the AfCFTA Secretariat and the European Commission held a virtual meeting to review the state of play in the implementation of the African Continental Free Trade Area (AfCFTA). The meeting focused on the trade liberalization mechanism envisaged by the AfCFTA Agreement, the management of tariff offers and a possibility of setting up a continental digital platform to handle information on applicable tariff rates covering all African countries.

In opening the meeting, Mrs. Demitta Chinwude Gyang, Head of Customs at the AfCFTA Secretariat, expressed her appreciation for the support provided by the WCO and the EU on the implementation of the Harmonized System (HS) under the EU-WCO Programme for HS in Africa (HS-Africa Programme), funded by the EU. She emphasised that the trade under the AfCFTA had already started from January 2021, and 44 tariff offers had been submitted by AfCFTA signatories already. She explained that the AfCFTA Secretariat intended to create a web-based ‘tariff book’ whereby all the necessary information on tariff offers and applicable tariff rates would be made available in a user-friendly and easily accessible manner.

The representatives of the WCO and the EU welcomed the AfCFTA initiative to set up a digital tariff platform at the continental level, recalling that electronic tariffs had been successfully implemented in some African countries in the recent past, with the support of the HS-Africa Programme. They stressed that such digital tools contributed significantly to trade facilitation efforts of Customs administrations and Regional Economic Communities by providing data that were vital for trade operators. The EU and the WCO reiterated their firm commitment to offering continued support to the AfCFTA in that regard, under the HS-Africa Programme.

In conclusion, the meeting participants agreed that the initiative should start by developing terms of reference for the implementation of the AfCFTA digital ‘tariff book’ and launching a tendering process to select a service provider that would carry out the required technical work. It was felt that this project would contribute to scaling up digital transformation of Customs, announced as the theme of the year 2022, and create a foundation for the next steps in the establishment of the Customs union on the African continent.

For more details, please, contact capacity.building@wcoomd.org.

Africa and the adoption of HS2022

Picture: Samendra Singh on Unsplash

The new edition of the Harmonised Commodity Description and Coding System 2022 (HS2022) entered into force on the 1st of January 2022. This development means that Customs tariffs, associated Information, Communication and Technology (ICT) management systems as well as accompanying Harmonised System (HS) tools and instruments must have been successfully migrated from the previous edition (HS2017) to the new version (HS2022).

A few weeks prior to entry into force of HS2022, African countries’ experiences in this regard still indicated widely ranging inconsistencies and discrepancies in the application of the HS in general. Whilst all the Contracting Parties were expected to have fully migrated to the HS2017 by then, apparently some had not yet done so. The majority of those were still either using HS2012 or even HS2007, whilst some had huge delays in rolling out HS2017. Only 30 African countries had successfully migrated to HS2017 and were already applying it. At the launch of the operational phase of the African Continental Free Trade Area (AfCFTA) during the 12th Extraordinary Session of the Assembly of the Union on the AfCFTA in Niamey, Niger held on the 7th of July 2019, HS2017 was already in its third year. At that time, half of the African Union Member States were still to ratify the AfCFTA.

Source: TRALAC, Rwatida Mafurutu, 1 February 2022