Advancing the argument for sealing cargo and tracking conveyances

South African Customs law provides for a seal integrity regime. This consists in provisions for the sealing of containerised sea cargo as well as sealable vehicles and trailers. These requirements have, however, not been formally introduced into operation due to the non-availability (until recently) of internal systems and cross-functional procedures that would link seal integrity to known entities. To explain this in more layman’s terms, it is little use implementing an onerous cargo sealing program without systems to perform risk assessment, validation of trader profiles and information exchange. It’s  like implementing non-intrusive inspection (X-ray scanning) equipment without backward integration into the Customs Risk Management  and Inspection environment and systems. It has often been stated that a customs or border security programme is a layered approach based on risk mitigation. None of the individual elements will necessarily address risk, and automation alone will likewise not accomplish the objective for safe and secure supply chains. Moreover, neither will measures adopted by Customs or the Border Agency succeed without due and necessary compliance on the part of entities operating the supply chain. It therefore requires a holistic strategy of people, policy, process and technology.

In the African context, it is surmised that the business rationale will be best accomplished with a dual approach on IT connectivity and information exchange. Under the political speak there are active attempts within SACU, SADC, COMESA and the EAC to establish electronic networks to facilitate and safeguard transit goods. Several African states are landlocked and are not readily accessible, some requiring multiple transit trips through countries from international discharge in the continent to place of final destination. National laws of each individual country in most instances provide obstacles to carriers achieving cost effective means in delivering cargoes. Over and above the laws, there exists (regrettably) the need to ‘grease palms’ without which safe passage in some instances  will not be granted. Notwithstanding the existence of customs unions and free trade areas, internal borders remain the biggest obstacle to facilitation.

Several African logistics operators already implement track and trace technology in the vehicle and long-haul fleets. This has the dual purpose of safeguarding their assets as well as the cargoes of their clients which they convey. Since 9/11, a few customs administrations have formally adopted ISO PAS 17712 within their legislation to regulate the use of high security seals amongst cargo handlers and carriers. In most cases this mandates the use of high security ‘mechanical’ bolt seals. However, evidence suggests there is a growing trend to adopt electronic seals. Taiwan Customs for one has gone a significant way in this regard. Through technological advances and increased commercial adoption of Radio Frequency Identification (RFID) technology the costs are reducing significantly to warrant serious consideration as both a viable and cost-effective customs ‘control’ measure.

Supply chain custody using RFID as an identifier and physical security audit component – as provided for in ISO 17712 – is characterized by the following:

  • it uniquely identifies seals and associates them with the trader.
  • the seal’s unique identity and memory space can be used to write a digital signature, unique to a trader on the seal, and associating that seal with a customs declaration.
  • using customs trader registration/licensing information, together with infrastructure to read seal information at specified intervals along a route to create a ‘bread-crumb’ audit trail of the integrity of the cargo and conveyance.
  • using existing fleet management units installed in trucks to monitor seal integrity along the high risk legs of a cargo’s transit.
  • record the seal’s destruction at point of destination.

Looking forward to the future, it is not implausible for customs and border authorities to consider the use of RFID:

  • as a common token between autonomous customs systems.
  • to verify and audit that non-intrusion inspections have taken place en-route, and write that occurrence to the seal’s memory with the use of an updated digital signature issued to the customs inspection facility.
  • to create a date and time stamp of the cargo’s transit for compliance and profile classification – to confirm that transit goods have actually left the country as well as confirm arrival at destination (to prevent round tripping).
  • Lastly to archive a history of carrier’s activities for forensic and/or trend analysis.
This is a topic which certainly deserves more exposure in line with current regional developments on IT-connectivity and information exchange. A special word of thanks to Andy Brown for his contribution and insight to this post.
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WCO/SACU – IT Connectivity and Data Exchange

WCO-SACU IT Interconnectivity and Data Exchange Conference

On the occasion of International Customs Day, in January earlier this year, the World Customs Organisation dedicated 2012 as the year “Connectivity”, which encapsulates people connectivity, institutional connectivity and information connectivity among the members of the global Customs community.

Over the last week and a half delegates from the WCO, SACU, UNCTAD, SADC and COMESA have been hosted at SARS, Pretoria to discuss and deliberate over an approach to implement ‘IT connectivity’ within the Southern African region. During the first week representatives from UNCTAD, SACU and SARS were briefed on important developments at the WCO on IT-Interconnectivity and Information Exchange. We were privileged to have Mr. Satya Prasad Sahu, Technical officer from the WCO – a leading expert in all matters of ICT in international customs matters – present the developments towards finalisation of a future international customs standard called “Globally Networked Customs” (GNC). It entails a structured approach that will enable customs authorities to formulate and document bilateral or regional ‘standards’ on a variety of Customs-to-Customs topics, for instance Authorised Economic Operators, Cross Border Information Exchange, Risk Management, etc. A representative from UNCTAD presented a synopsis of the proposed ‘cloud computing solution’ which the Trans Kalahari Corridor (TKC) plans to pilot between Namibia and Botswana along the TKC route in the next few months. During the course of this week, delegates , under the guidance of Satya, prepared a proposed approach for information exchange between members of the Southern African Customs Region. This document is based on the GNC Utility Block structure (defined by the ad Hoc Committee on Globally Networked Customs at the WCO) and served as the basis for discussion for Week 2.

Mr. SP Sahu (WCO) and delegates from SACU SecretariatWeek 2 saw the arrival of customs and IT representatives from COMESA, SADC, UNCTAD, SACU as well as a delegation from Mozambique Customs. Mr. Sahu was invited to chair the session, given his vast experience on the subject matter as well as international experience in national and regional customs ICT programmes. Delegates were treated to various lectures on the GNC, a comprehensive overview of developments on ASYCUDA (Customs solution developed by UNCTAD), various updates from within the customs region – Botswana, Namibia, Lesotho, Swaziland, Mozambique and SARS. Beyers Theron informed delegates of ongoing developments of the SARS Customs Modernisation Programme as well as key implications for neighbouring countries. SARS presented a live demonstration of SARS’ Service Manager solution, navigating through all the functionality now available to SARS Customs officials. Of significant interest to all was the new iPod inspection tool. This technology is given prominent feature in the latest edition of WCO News.

A large portion of the week was, however, spent on deliberating the proposed scope and content of the draft Utility Block on Information Exchange in the Southern African Region. Significant progress was been made to attain first, a common understanding of the scope as well as the implications this has for participating countries. Delegates will return home with a product with which to create awareness and solicit support in their respective countries. Over the next few months SARS will engage both SACU and SADCOM (combined SADC and COMESA trading blocs) to establish firm commitments for information exchange with customs administrations in these regions. This conference is significant for SARS and South Africa as a whole as it provides a uniform, standardised and practical approach for engagement with other international trading partners. To view photographs of the conference please click here!

WCO News – February 2012 Edition

WCONews Edition February 2012Herewith a link to the latest edition of WCO News, providing a wealth of customs news and developments from across the globe. This edition focuses almost entirely on regional initiatives involving C-2-C information exchange. On pages 20 to 22 you’ll read about new developments emerging on customs inter-connectivity and information exchange in the Southern African Region. At this time, a conference lead by the WCO, involving representatives from UNCTAD, SACU, SADC and COMESA and SARS is taking place in Pretoria to establish a firm framework for introduction of customs information exchange. I will devote a dedicated article on these developments shortly, as this has implications for the business community as well. Also, don’t miss the feature on South Africa’s modernisation developments, pages 29 and 30. Besides the usual editorials this edition includes –

  • WCO Secretary General launches Year of Connectivity.
  • Evolving technology landscape and its impact on Customs.
  • Latest developments in Latin America, Southern Africa and Europe.
  • West Africa implements airport task forces to fight drug trafficking.
  • South Africa to roll out mobile Customs controls.
  • Operation “Short Circuit” successes and challenges.
  • WCO Tariff and Trade Affairs Directorate

SACU now a liability – telling it as it is

Windhoek:  The century-old five-member Southern African Customs Union is a stumbling block to the region’s economic integration agenda and has become a liability whose continued existence is no longer sustainable, analysts say.  They add that SACU, which comprises Botswana, Lesotho, Namibia, Swaziland and South Africa (the major contributor to the revenue pool), can best serve the region if it is integrated into the Southern African Development Community.

The Southern Times understands that the dominant feeling in the South Africa and BLNS governments is that SACU’s structural weaknesses prohibit it from advancing long-term regional strategic interests.  South Africa doles out billions of rand to BLNS under a revenue sharing agreement.

However, authorities in South Africa realise that the wider SADC market offers greater economic and strategic interests than the SACU enclave. South Africa has also apparently realised that economically and politically, its interests are better advanced through SADC than SACU. 

These are some of the findings of a study by Dr Sehlare Makgetlaneng, the head of governance and democracy research at Pretoria-based think-tank, Africa Institute of South Africa (AISA).

The Southern Times is in possession of an advance copy of the 2011 study in which key decision-makers in member states voiced their opinions on the usefulness of SACU to regional integration, economic development within the BLNS and South Africa’s weakening interest in the customs union.

The AISA study raises pertinent questions on what BLNS would do if SACU were disbanded. The over-dependence on SACU revenue ‑ vis-à-vis BLNS’s failure to come up with viable alternative revenue sources, lack of manufacturing capacity and a captive market for South African products ‑ also raises pertinent questions on BLNS’s future economic strategies.

That SACU has failed to address strategic economic interests of BLNS is bluntly captured by Namibia’s deputy Trade and Industry Deputy Minister Tjekero Tweya.  He says, “Namibia has been insane for 21 years of independence without a production capacity to produce even a toothpick. The same reason why we import toothpicks from China is because we need them, so we need to work on our production capacity and improve ways of collecting revenue.”

AISA lauds Namibia for establishing strategic partnerships within SADC to advance its economic and political interests.

According to the study, South Africa’s view is that SACU does not serve the regional economic powerhouse’s interests and even without the arrangement, trade with BLNS will continue under the aegis of SADC. Pretoria regards Zimbabwe, Mozambique, Zambia, Malawi, the DRC and Angola as more strategic to its economic goals.

“SACU may become a liability in the advancement of South Africa’s interests in the region and the continent particularly if South Africa is not able to effectively and structurally transform it to serve the popular interests of the region,” the AISA study says.

SACU’s mission is to “serve as an engine for regional integration and development, industrial and economic diversification and expansion of intra-regional trade and investment” among other things. For SACU, the issue is its transformation into SADC. South Africa’s contribution to Southern African regional integration is best and effective through SADC, not SACU. SACU is largely a revenue sharing and trade facilitation organisation. It is not the organisation through which to advance Southern African regional integration,” the research says.

AISA dismisses long-held suggestions that SACU could be used as a platform to establish a SADC customs union.  The customs union’s structural weaknesses make it an undesirable model for regional integration.  The research points out that if other SADC members want to join SACU, they have to address their tariff schedules and international obligations under the World Trade Organisation.

SACU’s present revenue-sharing formula also presents a challenge to admitting new members.

AISA says the formula is structured for a win-win situation among members but does not encourage a win-win solution to problems inherent in the contribution to the revenue pool and the way the pool is shared.

“It is a zero sum game in terms of the way it is shared. It is a definite pool. If one member gets more, another member gets less. If two SADC members who trade more with other SACU members are admitted, their membership will have a significant revenue change within SACU. The revenue sharing formula is determined on the basis of SACU intra-trade,” AISA’s Makgetlaneng says.

The revenue sharing formula is the obstacle to admitting other SADC members into the bloc.  South Africa contributes 98 percent to the revenue pool, which is then shared according to intra-SACU trade or imports.  The more South Africa trades with its partners in the region and beyond, the more the revenue pool grows.

“BLNS import more from South Africa and when the distribution formula is applied these countries get the average of 90 percent of customs revenue. In other words, South Africa compensates them for buying more from itself.”

His sentiments dovetail with previous suggestions from South Africa to establish a development fund in which revenue is ring-fenced and used to finance infrastructural projects that benefit SADC.  The study says that this view is strongly opposed by Botswana and Namibia, which claim entitlement to SACU revenue and have argued that as independent nations, they should spend it as they wish.

But AISA argues that since South Africa has a trade surplus with BLNS, it sets the tariffs within the customs bloc, clearly depriving the BLNS policy room to determine tariffs.

“This study has proved that SACU currently serves as a stumbling block to Southern African regional integration. Its revenue-sharing formula is the obstacle to the admission of other SADC countries as its members. The position that it is bound to absorb other SADC countries and even COMESA countries as its members is opposed by SACU officials, scholars and researchers interviewed by the author.

“They maintain that it is not possible for SACU to absorb other SADC countries as its members. Their position is that BLNS are structurally opposed to the admission of other countries as SACU members. As SACU revenue sharing is currently structured, they (BLNS) have no material interests to see other countries joining SACU as members,” Makgetlaneng says.

AISA maintains that SACU’s interests do not serve the region’s long-term socio-political, economic and security interests and implores South Africa to oversee integration of the union into SADC.

“The reality that SADC takes primacy in terms of importance in Southern Africa is such that SACU cannot be sustained in the long-term. Preparations should be made for it to no longer serve as a sub-group within SADC. It should be integrated into SADC. South Africa should prepare itself for SACU’s integration into SADC. It should strategically and tactically ensure that SACU is integrated into SADC. This will be the qualitative step forward towards the reduction and elimination of the weak links in SADC’s chain driving regional integration,” AISA’s chief researcher, Makgetlaneng, suggests. Original source: Southern Times