During December 2019, the World Customs Organization (WCO) issued its 2018 Illicit Trade Report, the annual publication in which the Organization endeavours to quantify and map the situation concerning illicit markets in six key areas of Customs enforcement.
Every year since 2012, the WCO has published its Illicit Trade Report with the aim of contributing to the study of the illicit trade phenomenon through robust and in-depth data analysis based on voluntary submissions of seizure data and case studies by its Member Customs administrations around the world.
This year, the analysis provided in this Report is based on data collected from 154 Member administrations, compared to 135 the previous year. The Report consists of six sections: Cultural Heritage; Drugs; Environment; Intellectual Property Rights, Health and Safety; and Revenue and Security.
For the third year in a row, the WCO has partnered with the Center for Advanced Defense Studies (C4ADS), a Washington, D.C.-based non-profit organization dedicated to providing data-driven analysis and evidence-based reporting, thereby enriching readers’ experience with advanced data visualization technologies and enhanced data analysis.
“This analysis of 2018 illicit trafficking trends and patterns around the globe is aimed not only at supporting law enforcement planning activities, but also at future-proofing countries’ borders from the multitude of threats faced on a daily basis,” stressed the WCO Secretary General, Kunio Mikuriya. He also expressed his gratitude to the Customs administrations having reported their seizure data to the WCO CEN database.
HS 2022, which is the seventh edition of the Harmonized System (HS) nomenclature used for the uniform classification of goods traded internationally all over the world, has been accepted by the all Contracting Parties to the Harmonized System Convention. It shall come into force on 1 January 2022.
The HS serves as the basis for Customs tariffs and for the compilation of international trade statistics in 211 economies (of which 158 are Contracting Parties to the HS Convention). The new HS2022 edition makes some major changes to the Harmonized System with a total of 351 sets of amendments covering a wide range of goods moving across borders. Here are some of the highlights:
Adaption to current trade through the recognition of new product streams and addressing environmental and social issues of global concern are the major features of the HS 2022 amendments.
Visibility will be introduced to a number of high profile product streams in the 2022 Edition to recognise the changing trade patterns. Electrical and electronic waste, commonly referred to as e-waste, is one example of a product class which presents significant policy concerns as well as a high value of trade, hence HS 2022 includes specific provisions for its classification to assist countries in their work under the Basel Convention. New provisions for novel tobacco and nicotine based products resulted from the difficulties of the classification of these products, lack of visibility in trade statistics and the very high monetary value of this trade. Unmanned aerial vehicles (UAVs), commonly referred to as drones, also gain their own specific provisions to simplify the classification of these aircraft. Smartphones will gain their own subheading and Note, which will also clarify and confirm the current heading classification of these multifunctional devices.
Major reconfigurations have been undertaken for the subheadings of heading 70.19 for glass fibres and articles thereof and for heading 84.62 for metal forming machinery. These changes recognize that the current subheadings do not adequately represent the technological advances in these sectors, leaving a lack of trade statistics important to the industries and potential classification difficulties.
One area which is a focus for the future is the classification of multi-purpose intermediate assemblies. However, one very important example of such a product has already been addressed in HS 2022. Flat panel display modules will be classified as a product in their own right which will simplify classification of these modules by removing the need to identify final use. Health and safety has also featured in the changes. The recognition of the dangers of delays in the deployment of tools for the rapid diagnosis of infectious diseases in outbreaks has led to changes to the provisions for such diagnostic kits to simplify classification. New provisions for placebos and clinical trial kits for medical research to enable classification without information on the ingredients in a placebos will assist in facilitating cross-border medical research. Cell cultures and cell therapy are among the product classes that have gained new and specific provisions. On a human security level, a number of new provisions specifically provide for various dual use items. These range from toxins to laboratory equipment.
Protection of society and the fight against terrorism are increasingly important roles for Customs. Many new subheadings have been created for dual use goods that could be diverted for unauthorized use, such as radioactive materials and biological safety cabinets, as well as for items required for the construction of improvised explosive devices, such as detonators.
Goods specifically controlled under various Conventions have also been updated. The HS 2022 Edition introduces new subheadings for specific chemicals controlled under the Chemical Weapons Convention (CWC), for certain hazardous chemicals controlled under the Rotterdam Convention and for certain persistent organic pollutants (POPs) controlled under the Stockholm Convention. Furthermore, at the request of the International Narcotics Control Board (INCB), new subheadings have been introduced for the monitoring and control of fentanyls and their derivatives as well as two fentanyl precursors. Major changes, including new heading Note 4 to Section VI and new heading 38.27, have been introduced for gases controlled under the Kigali Amendment of the Montreal Protocol.
The changes are not confined to creating new specific provisions for various goods. The amendments also include clarification of texts to ensure uniform application of the nomenclature. For example, there are changes for the clarification and alignment between French and English of the appropriate way to measure wood in the rough for the purposes of subheadings under heading 44.03.
Given the wide scope of the changes, there are many important changes not mentioned in this short introduction. All interested parties are encourage to read the Recommendation carefully (to be published soon).
While January 2022 may seem far off, a lot of work needs to be done at WCO, national and regional levels for the timely implementation of the new HS edition. The WCO is currently working on the development of requisite correlation tables between the current 2017 and the new edition of the HS, and on updating the HS publications, such as the Explanatory Notes, the Classification Opinions, the Alphabetical Index and the HS online database.
Customs administrations and regional economic communities have a huge task to ensure timely implementation of the 2022 HS Edition, as required by the HS Convention. They are therefore encouraged to begin the process of preparing for the implementation of HS 2022 in their national Customs tariff or statistical nomenclatures. The WCO will step up its capacity building efforts to assist Members with their implementation.
The contribution of Customs towards a sustainable future where social, economic, health and environmental needs are at the heart of our actions, is exemplified under the slogan “Customs fostering Sustainability for People, Prosperity and the Planet”.
The expansion of Free Zones has been mainly driven by political decisions closely affiliated with national economic development strategies. In some countries Customs is the primary governmental authority that regulates and governs Free Zones, while in others Free Zones are governed by other authorities, with less involvement from Customs. Depending on the institutional set-up, the scope and degree of Customs control in Free Zones and the economic operations carried out there varies considerably from one Free Zone to another.
Existing literature reveals that Free Zones attract not only legitimate business but also illicit trade or other illicit activities that take advantage of the regulatory exemptions of Free Zones.
Numerous papers have outlined the risks associated with Free Zones, along with economic benefits. Most of them deal with the legality of Free Zones policies, particularly in relation to export subsidies as governed by the WTO Agreement. Several other papers have dealt with illicit activities that have been perpetrated by exploiting characteristics of Free Zones. Such illicit activities include money laundering, tax-evasion and trade in counterfeit goods or other illicit goods.
The WCO research paper deals with Customs-related aspects of Free Zones, considering both the associated benefits and risks. The risks primarily concern illicit trade that exploits key aspects of Free Zones.
Literature that focuses on risks associated with Free Zones, particularly illicit trade or other illicit activities, have several things in common. They tend to highlight the fact that supervision over cargoes/companies in Free Zones is somewhat relaxed in comparison with other parts of the national territory. The following factors have been pointed out or quoted, although details are rarely provided due to the technical nature of the topic.
Relaxed controls inside Free Zones
Insufficient Customs’ involvement in the operation of Free Zones
Ease in setting up companies inside Free Zones
Insufficient integration of Information Technology(IT) systems by governmental agencies inside Free Zones
The WCO research paper’s key observations fall in line with those outlined above. It describes the low-level involvement of Customs in monitoring cargo movement and companies’ activities inside Free Zones. This includes Customs’ low-level involvement at the establishment phase of Free Zones, at the approving companies permitted to operate in Free Zones pahse, and during the day-to-day monitoring of cargoes in Free Zones. Limited Customs’ authority inside Free Zones is also mentioned. This paper touches upon relaxed Customs procedures/controls related to Free Zones and observes that they stem from Customs’ limited involvement and limited authority inside Free Zones. These limitations, combined with insufficient integration and utilization of IT, result in a lack of the requisite data concerning cargoes inside Free Zones, and render Customs’ risk-management-based controls – conducted for the purpose of preserving security and compliance without hindering legitimate cargo flows – virtually useless.
The research paper considers the concept of ‘extraterritoriality’ concerning Free Zones, stemming from a misinterpretation of the definition of Free Zones contained in the WCO Revised Kyoto Convention (RKC), to be behind the aforementioned limited involvement by and limited authority of Customs. The definition within Annex D, Chapter 2 of the RKC does not state that Free Zones are geographically outside the Customs territory. The definition means that the Free Zone itself falls within the Customs territory. ‘Goods’ located in Free Zones are considered as being outside the Customs territory for duty/tax purposes only.
As national Customs administrations and border agencies celebrate International Customs Day, no doubt showcasing their recent ICT endeavours, it is good to reflect not only on the available standards and tools which are becoming more available to Customs and Border Management Agencies.
The WCO spearheads and supports several initiatives aimed at fostering increased coperation and collaboration between member states under the banner of ‘Digital Customs’. In the post security era, throught is capacity building arm, the WCO champions global development of its Digital Customs concept and strategy. The WCO’s work programme in this regard covers a broad area of focus, for example:
to support the WTO Trade Facilitation Agreement,
the updating of related WCO instruments and tools,
ongoing promotion and maintainance of the WCO Data Model,
monitoring of new and emerging technological developments (3D printing, Big Data, Predictive Analytics, Drones and Blockchain),
promotion of e-services and apps,
exchange of information between stakeholders nationally and accross borders, and
promotion of the Single Window concept.
For most customs and border administrators, they have somewhere heard of, or to some extent are aware of the ‘buzz words’. The various chapters of the WCO through the working groups provide up-to-date developments in all facets on developments in the modern Customs operating and global trade environment. These are ably supported by several internal business organisations and umbrella associations adding credence to the developmental work and ultimately the standards, policies and guidelines published by the WCO.
In this modern era of uncertainty – global political and socio-economic risks – International Customs Day should be a combined celebration not only for Customs, but moreover, the associated supply chain industries and business intermediaries. If there was no trade in goods there would be no Customs or WCO. Without the providers of ‘big data’ there would be no need for data analysis. Without illicit activities there would be no need for expensive enforcement technology and equipment and the application of risk management.
Thanks to an imperfect and unequal world the WCO, through its association with the world’s customs authorities, big business and ICT service providers is able to develop a Digital Customs Maturity Model, which provides a road map for administrations from the least to most developed (mature rather). The pace and extent of maturity is undoubtedly determined by a country’s discipline and agility based on a clear strategy with the support and commitment of government and allied industries.Happy Customs Day!
The World Customs Organization (WCO) has launched on its website the WCO Implementation Guidance for the World Trade Organization (WTO) Agreement on Trade Facilitation (ATF) to support WCO Members in their efforts to implement the ATF.
The Guidance presents the importance of WCO instruments and tools such as the Revised Kyoto Convention for ATF implementation.
The Guidance contains the following categories of information for each ATF Article:
Text of ATF
Relevant RKC standards and RKC Guidelines
Other relevant WCO tools
The Guidance will be updated on a regular basis and a French version will be released shortly.
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 –
The World Customs Organization (WCO), in cooperation with the Federal Customs Authority of the United Arab Emirates (FCA), has officially launched the ‘IPM Mobile’ application, enabling Customs officers equipped with a mobile device to access IPM immediately when faced with a suspicious product.
Launched in 2010, the WCO’s online anti-counterfeiting tool IPM provides a communication hub between Customs officers on the ground and the private sector by allowing them to exchange crucial information in real-time in order to intercept counterfeit goods.
With the launch of the mobile application, field Customs officers can now access IPM via their mobile devices and retrieve all relevant information contained in the database. Several new features have been added to the mobile version such as the possibility to send or receive alerts regarding possible shipment of counterfeit goods, and, when faced with suspicious merchandise, Customs officers can contact right holders immediately and upload photos of the products in question.
This new version also allows using mobile devices to scan industry standard GS1 barcodes found on millions of products, enabling to search the products database more quickly. The unique product identifier embedded in the GS1 bar code facilitates access to multiple databases providing trusted sources of product information.
Scanning the barcodes enables automatic connection to any authentication services linked to the product controlled. This new feature is known as IPM Connected – a global network of security features providers (SFP) interfaced with IPM.
In cooperation with the FCA and the private sector, the WCO unveiled the IPM Mobile programme during a two-day workshop held in Dubai on 16-17 April. During this workshop, Customs officers tested the tool on a number of counterfeit and genuine products and were trained to make informed decision with the information contained in the IPM database.
“Faced with the growing trade in counterfeit goods, the WCO and its Members are determined to develop the most efficient tools to fight this menace. Safeguarding the health and safety of consumers across the globe is one of the WCO’s priorities, and IPM’s mobile version is a significant step forward” said WCO Secretary General, Kunio Mikuriya.
Secretary General Mikuriya added, “Working with the UAE on this pilot phase was an obvious choice given our previous successful cooperation to launch the PC version back in April 2012. The WCO appreciates the UAE’s ongoing efforts to tackle the illicit trade of counterfeit and pirated goods.”
The UAE is the first country to use the IPM Mobile application and will contribute to developing the tool before the official worldwide launch in June 2014 during the WCO’s General Council Meeting.
“The UAE is keen to support plans for facilitating trade and fighting counterfeit according to the established principles of the federation state including the protection of IPRs and fighting piracy and counterfeiting as they have serious economic and social impacts that may jeopardize the security of the society, consumer and producer altogether” said Khalid Al Bustani, Acting Director General of the Federal Customs Authority.
“The application is launched as a part of fulfilling the requirements of the smart government initiative announced last year by His Highness Sheikh Mohammed bin Rashid Al Maktoum by providing governmental services on mobiles”, continued Al Bustani. Source: WCO
The World Customs Organisation (WCO) has published the classification decisions taken at the last Session of the Harmonized System Committee (52nd Session) in September 2013 : the Classification Rulings, the Amendments to the Explanatory Notes and to the Compendium of Classification Opinions. You can locate the decisions via the following links:
The WCO’s annual photographic competition has been running successfully since 2009. Each year the entries, in general, represent an increase in both photographic and situational awareness. It is clear that entrants are continually seeking to portray a unique, if not ultimate shot of the work of their customs and border management staff in action. This years collection is based on the theme “Customs officers in action”. At least 36 member countries submitted their ‘best’ pictures and the adjudicators awarded first prize to the Thai Customs Administration for its picture illustrating ‘the challenge the Customs community faces to keep up with a fast-moving trade environment’. It depicts two Customs officers inspecting goods in a cargo warehouse, find themselves in the middle of fast paced logistics activities. To view all the excellent entries please visit the WCO Website or click here!