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October 2016 | n 81 | www.wcoomd.

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WCO news
Council 2016
Customs brokers
Cultural heritage
Carbon emissions

World Customs Organization


New edition of the
Harmonized System

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intro ial
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WCO news N 81 October 2016

Content

04 Flash info

06 Dossier

32 Focus 32 46
52 Panorama Outcomes of the Cameroons experience
WCO Study Report on concerning licensed
70 Interview Customs Brokers Customs brokers
75 Point of view

79 Events

75
52 Global warming,
international trade, and
Assessing Single Window the quantification of
performance carbon emissions

DOSSIER: COUNCIL 2016 FOCUS: CUSTOMS BROKERS INTERVIEW

08 The Secretary General of the 32 Outcomes of the WCO Study Report 70 Molly Fannon, the
WCO shares his thoughts on Director of the Office of
41 Some thoughts by the International
what the WCO has done, what it International Relations at the
Federation of Customs Brokers
will be doing, and what will impact Smithsonian Institution,
Associations
on its work in the coming months talks about the Institution
44 An overview of Japans Customs and its activities, with a focus
11 Latest developments in WCO
brokerage legislation on the illicit trade in cultural
areas of work: compliance;
goods and cooperation with
facilitation; capacity building; and 46 Cameroons experience concerning
law enforcement authorities
tariff and trade affairs licensed Customs brokers
30 Other highlights: election 49 A global Customs brokers insight
results; winner of the photo into the profession's challenges,
competition; and signing of successes and best practices
Memoranda of Understanding

Editor-in-Chief Advertising Editorial note Copyright World Customs Organization


Grant Busby WCO News is distributed free of charge in English All rights reserved. Requests and enquiries concerning
and in French to Customs administrations, international translation, reproduction and adaptation rights should be
Writer / Editor organizations, non-governmental organizations, the addressed to copyright@wcoomd.org.
Laure Tempier Bernard Bessis business community and other interested readers. Opinions
bernard.bessis@bb-communication.com expressed in WCO News are those of the contributors and do Acknowledgements: The Editorial Team wishes to express its
Editorial Assistant not necessarily reflect the official views of the World Customs sincere thanks to all who contributed to this publication.
Sylvie Degryse Publisher Organization. Contributions in English or French are
World Customs Organization welcome but should be submitted no later than 15December Illustrations: Our thanks also extend to all who provided
Online subscriptions Rue du March, 30 2016 for consideration. The WCO reserves the right to photos, logos and drawings to illustrate this issue.
http://www.wcoomd.org/en/media/wco- B-1210 Brussels publish, not to publish, or to edit articles to ensure their
news-magazine/subscriptions.aspx Belgium conformity with the magazines editorial policy and style. Photo cover: Paul Edmondson - Mint Images
The WCO Communications Service is available to answer
Tel.: +32 (0)2 209 94 41 all requests for subscriptions, submission of contributions, Design: www.inextremis.be - mp5444
Fax: +32 (0)2 209 92 62 and any other enquiries relating to WCO News. Please email
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3
FLASH INFO

Overview of the e-learning


courses available on the WCO
CLiKC! platform
Capacity Building Revenue Package

Leadership &
Integrity Customs Harmonized Transfer Pricing Rules of Origin
Management
Valuation System
Development

EN FR PT EN FR ES PT AR EN FR ES PT AR EN FR ES PT AR EN FR ES PT AR EN FR ES PT AR

Enforcement

* C ourse
Risk Post-Clearance Customs Customs Intellectual Drug
developed
Management Audit Controls Valuation: case Property Precursors
by the
Updated in 2016 studies Control * European
Commission
EN FR PT RU EN FR PT EN FR ES EN FR ES PT AR EN FR ES AR PT EN FR ES

The Montreal Customs, wild The Chemical The Cartagena


Protocol fauna and flora Weapons Protocol
Convention

EN FR ES RU EN FR ES PT AR EN FR EN FR

Procedures & Facilitation

The Revised Coordinated The TIR System The Istanbul Customs


The WCO SAFE
Kyoto Border Updated in 2016 Convention Transit
Convention Management
EN FR ES PT AR EN FR PT EN FR PT EN FR ES AR RU FA EN FR ES PT AR EN FR ES

Access to the CLiKC! portal is restricted More information


to Customs administration staff. http://clikc.wcoomd.org

4
WCO news N 81 October 2016

Environment

Multilateral
Environmental
Agreements
Latest accessions to
EN FR ES RU
WCO instruments
Revised Kyoto Convention

Lao Peoples Democratic


Republic
Date of accession: 16 July 2016
104th Contracting Party
The WCO Data
The WTO TFA
Model More information
communication@wcoomd.org
EN FR EN

5
DOSSIER

Council 2016
Directors General of Customs gathered at WCO Headquarters
from 14 to 16 July 2016 to endorse the work done by the
Organization covering the period July 2015 to June 2016, and
to chart the way forward in the months ahead.

This dossier touches on the WCO's main areas of work


compliance, facilitation, tariff and trade affairs, and capacity
building and presents the progress made and initiatives taken
in each of these areas over the 12 month period. It also reports
interesting events that occurred during the Council.

6
WCO news N 81 October 2016

7
DOSSIER

Members of the WCO engage on e-commerce,


security, coordinated border management, illicit trade,
and revenue at the July 2016 WCO Council Sessions
By Kunio Mikuriya, e-commerce platforms, and online the work of the Security Virtual Working
SECRETARY GENERAL, payment providers. Going forward, the Group by highlighting their revised
WORLD CUSTOMS ORGANIZATION
implementation of an electronic interface strategies and best practices, and providing
DURING THE 126TH/127 TH Sessions
of the WCO between Post and Customs at the national them to the WCO Secretariat. In relation
Council, which took place in July of this level through the use of joint WCO-UPU to information exchange, I plan to turn
year, Heads of Customs administrations messaging standards, as well as providing the WCO into an even more active player
representing the 180 Members of the WCO related strategic direction for future work, through initiatives like the new Information
engaged on many critical topics, such as should be a top priority. and Intelligence Centre (I2C), and through
e-commerce, security, Customs-Police the global Regional Intelligence Liaison
cooperation, Customs-Tax cooperation, E-commerce is a data-rich environment Office (RILO) network.
protection of cultural heritage, and t hat dema nds equa l ly st rong data
revenue. In this article, I take up each of capabilities. With Digital Customs Customs-Police cooperation
these topics in turn. being the WCOs theme for 2016, the Customs-Police cooperation is part of the
Council also discussed how to embrace WCOs coordinated border management
E-commerce a more digital environment, and create (CBM) framework. The WCO has a long-
The changing trade landscape is a dramatic an operating model that captures and standing cooperative relationship with
development for Customs, especially the exploits data from across the industry INTERPOL, based on a Memorandum
growth in e-commerce and the associated ecosystem. Two high-level speakers from of Understanding (MoU) that has existed
current and emerging challenges in terms the private sector addressed this issue: a since 1998. As a testimony to this good
of supply chain facilitation, security, representative of Microsoft who stressed relationship, this year we invited Jrgen
protection of society, and the collection the importance of embracing the cloud Stock, INTERPOLs Secretary General,
of duties and taxes. These challenges in order to access aggregated data; and to address the Council. However, the
are particularly in the context of cross- a representative of GS1 who highlighted challenges associated with overlapping
border low-value business-to-consumer the need for standards in order to connect activities and mandates have often been
(B2C) and consumer-to-consumer (C2C) stakeholders and share data. difficult to overcome at the national level.
e-commerce shipments.
Security With the above in mind, the WCO
The WCOs recent activities on e-commerce Border security continues to be an presented the draft Customs-Police
include the collection of WCO Members increasingly serious concern for countries Cooperation Handbook to the Council,
working experiences and practices, as well across the globe. The WCOs Punta Cana which, in its current form, will be further
as the different streams of work currently Resolution of December 2015 was a direct enhanced by the inclusion of WCO
being carried out in collaboration with the result of this concern, and highlighted the Members experiences, as well as different
Organisation for Economic Co-operation global Customs community's position in existing cooperation typologies.
and Development (OECD), the United relation to fighting terrorism. The WCO's
Nations Conference on Trade and key activities in this regard include high- While recognizing the importance of
Development (UNCTAD), the World Trade level political engagement at the UN and national legislation and the institutional
Organization (WTO), the Universal postal G7, accompanied by operational-level legal framework on Customs-Police
Union (UPU), and other relevant bodies activities across the five key focus areas of relations, the aim of this Handbook is to
and e-commerce stakeholders. the WCO Security Programme: passenger provide suggestions and recommendations
controls; Programme Global Shield; the for Customs administrations looking
In addition, the WCO has established a Strategic Trade Controls Enforcement to strengthen cooperation with Police
multi-stakeholder Working Group on (STCE) Programme; the Small Arms authorities. In this regard, a diagnostic
E-Commerce (WGEC), the first meeting of and Light Weapons (SALW) Project; and tool has been developed, enabling WCO
which took place in September 2016 with terrorist financing. Members to assess the current state of
a broad variety of stakeholders attending, play of Customs-Police cooperation in
including Customs administrations and My hope is that the WCOs global security their respective countries.
partner international organizations, strategy will increasingly inspire regional
as well as representatives of the postal counter-terrorism strategies. In addition, The Handbook also identifies opportunities
and express service industry, e-vendors, I encourage WCO Members to engage in for enhanced Customs-Police cooperation,

8
WCO news N 81 October 2016

and describes possible concrete areas of In this context, the key features of the
cooperation that allow both organizations WCO Customs-Ta x Guidelines for
My hope is that the
to achieve their strategic and tactical streng thening cooperation and the WCOs global security
objectives. As it is not possible to apply a exchange of information between Customs
one size fits all solution, the Handbook and Tax authorities at the national level,
strategy will increasingly
attempts to present the different tools that was developed with the support of WCO inspire regional counter-
could be used by WCO Members in their Members, the OECD, the International
countries to strengthen the relationship Chamber of Commerce (ICC), and other
terrorism strategies. In
between both authorities. stakeholders. addition, I encourage
I envision the Handbook serving as a The Guidelines aim to provide reference
WCO Members to
reference for Customs administrations guidance to Customs and Tax authorities engage in the work of the
look i ng to develop a cooperat ion for enhancing mutual cooperation and
framework and/or to strengthen existing strengthening existing information
Security Virtual Working
Customs-Police cooperation based on their excha nge mecha n isms, lead i ng to Group by highlighting
respective responsibilities, mandates and enhanced trade facilitation and an effective
competencies, as well as their operating coordinated approach to tax and fiscal
their revised strategies
environment and operational resources. crimes. The OECD has agreed to promote and best practices, and
the Guidelines in the tax world via the
Customs-Tax cooperation Forum on Tax Administration (FTA) and
providing them to the
Another important CBM issue is Customs- the Taskforce on Tax and Crime, as well WCO Secretariat.
Tax cooperation. In this regard, the as in the next edition of the Rome Report
WCO presented its work in this area to on Effective Inter-Agency Co-operation in
the Council, emphasizing the need for Fighting Tax Crime.
a whole-of-government approach in
addressing common challenges relating to Protection of cultural heritage
enhanced facilitation of legitimate trade Trafficking in cultural objects is one of the
and the effective control of illicit trade, most ancient forms of crime, but is now
including the evasion of duties and taxes, identified as an emerging risk for the WCO
illicit financial flows and other financial and its Members, particularly because of
crimes. the civil war in Syria, and the civil unrest

9
DOSSIER

in Iraq and Libya. Other organizations are In highlighting the risk of these objects and update the existing tools, provide
also prioritizing actions to address this being destroyed, she showed the image assistance to WCO Members, and assess
scourge for example, the UN Security of Palmyra which was destroyed by ISIS the impact of the application of the tools.
Council adopted two Resolutions on illicit in 2015. In this connection, she drew Part 2 includes a number of new initiatives
trafficking of cultural objects in 2015. delegates attention to the fact that by the related to closer cooperation between
time ISIS and other groups had publicly Customs and Tax, as well as matters
The WCO is extremely active on this topic, destroyed cultural heritage sites, they on origin, post-clearance audit (PCA),
providing capacity building, technical had already extracted as much economic Fragile Borders, control of mineral
assistance, and training to its Members. value from these sites as possible in order resources, and Customs laboratories.
During its Sessions, the Council adopted to finance their activities.
a Resolution on the Role of Customs in Going forward
Preventing Illicit Trafficking of Cultural Following her presentation, Ms. Fannon The WCO will continue to engage and
Objects, which reflects the commitment of and I signed a MoU between the WCO act on the critical issues facing the
the global Customs community to combat and the Smithsonian Institution as a global Customs community, of which
this crime. basis for further enhanced cooperation I have highlighted only a few in this
bet ween t he t wo orga n i z at ions . I ar ticle. Additiona l WCO activ ities
At the Council Sessions, a keynote am, therefore, quite sure that both are summarized in the articles which
address was given by Molly Fannon, the organizations will benefit tremendously follow, under the name of each WCO
Director of the Office of International from our cooperative efforts. Directorate, including other interesting
Relations at the Smithsonian Institution in highlights from the 2016 WCO Council
Washington, D.C. Ms. Fannon described Revenue Package III Sessions. In fact, I can quite happily state
the importance that cultural objects have The WCO also presented its current that this years Council Sessions were
for individuals and civilizations as they work on revenue matters to the Council, positive and dynamic, charting a clear
served to define themselves, to reveal their and announced the launch of Revenue path forward for WCO Members and the
history and their present, and to project Package III, which consists of two parts. international Customs community as a
their future. Under Part 1, the WCO will promote whole.

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WCO news N 81 October 2016

Tariff and Trade


Affairs
Cross-cutting activities: Revenue Package need and benefits of harmonized non-
and Advance Rulings preferential rules of origin, the WTO
THE WCO CONTINUED to assist its Members Committee on Rules of Origin (CRO) had
in the implementation of the Revenue not held any negotiations or discussions on
Package which provides guidance and the Harmonization Work Programme or
good practices for improving the efficiency the draft rules since its April 2015 meeting.
and effectiveness of revenue collection.
Preferential rules of origin
WCO experts conducted a national and a Through the initiatives contained in their preparations for the implementation
regional seminar to promote the Revenue the WCO Action Plan on Preferential of the new edition of the HS. For this
Package and Advance Rulings. The Origin, the WCO continued to be active reason, a presentation on the technical
national seminar was held in Swaziland in preparing its Members to face the update was made at the six WCO Regional
to assist the countrys Revenue Authority challenges arising from the growing Workshops on HS 2017 Implementation
in implementing an advance ruling system importance of preferential trade by that were conducted in 2016.
for classification and origin, as required providing them with all the necessary
under the Trade Facilitation Agreement tools and modern techniques to ensure Technical Assistance
(TFA) of the World Trade Organization that Rules of Origin (RoO) are clearly Capacity building activities relating
(WTO). understood and implemented. to RoO have included sub-regional
workshops for the Arab Maghreb Union
The regional seminar gathered 22 countries Comparative Study on Preferential (AMU), as well as for the Gulf Cooperation
in the WCO Asia/Pacific region. At the end Rules of Origin Council (GCC), and national workshops
of the event, all participants shared the A new section on the Trans-Pacific in the Democratic Republic of the Congo,
view that well-organized infrastructure Partnership (TPP) Agreement, which was Georgia, Haiti and Kazakhstan. WCO
formed the basis for objective, predictable signed on 4 February 2016, was added to experts also participated in the following
and transparent practices in the subject the Comparative Study on Preferential workshops:
areas, and recognized the importance of Rules of Origin which aims to enhance
increasing their institutional capacity to overall understanding of preferential RoO. A workshop organized in September
carry out the core Customs functions of The study now offers a comparison of the 2015 by the Asia Pacific Economic
classification, origin and valuation in an characteristics found in the four existing Cooperation (APEC) bloc, dealing
efficient and effective manner. origin models, i.e. the European EUR- with the new trade landscape, the
MED, NAFTA, ASEAN and the TPP, from complexities of RoO and the logistical
An accreditation workshop was also held which most of the preferential agreements challenges of trade facilitation;
in Ghana to identify expert diagnostic in force today derive.
facilitators on tariff and trade topics who A seminar organized in October 2015
will be expected to provide assistance to Technical update of preferential rules of by the United Nations Conference on
WCO Members on the Revenue Package origin Trade and Development (UNCTAD)
and its materials in the WCO West, To assist WCO Members with the updating a nd t he Eu rop e a n Un i ve r s it y
Central, East and Southern Africa regions. of their existing RoO in relation to changes Institute, aimed at improving the
in the Harmonized System (HS), the WCO RoO negotiating and drafting skills of
Rules of origin recently issued a Guide for the Technical representatives from Least Developed
Harmonization of non-preferential Update of Preferential Rules of Origin. Countries (LDCs);
rules of origin
As WTO Members continued to hold Such technical updates should be carried A workshop organized in December
extremely polarized views about the out in administrations at the same time as 2015 in Morocco by the Islamic

11
DOSSIER

Centre for Development of Trade Valuation June 2016 edition of WCO News]. In view
(ICDT) and the Organisation of The WCO continued its efforts in assisting of the strong interest from the business
Islamic Cooperation (OIC), focusing its Members with the uniform application community, the WCO has made Case
on the administration of regional of the WTO Agreement on Customs Study 14.1 available via its website. It will
trade agreements and regional trade Valuation, in particular, by providing also be published in the WCO Valuation
integration. guidance on the management of Customs Compendium.
valuation in an increasingly complex trade
In addition, WCO experts participated in landscape. As Members of the WCO Technical
several conferences, such as the Conference Commit tee on Customs Va luat ion
on Trade Compliance in the Middle East Examination of Customs valuation (TCCV) could not reach consensus,
held in the United Arab Emirates (UAE) questions two questions were placed in Part III of
in March 2016, the 14th World Free Zone One technical question posed by a WCO the Conspectus of Technical Valuation
Convention held in February 2016 in Member led to the adoption and release Questions, i.e. questions raised, but not
Thailand, the 5th International Origin of a new instrument on transfer pricing being considered by the TCCV at present.
Conference held in Korea in November and Customs valuation. The instrument, The two questions relate to:
2015, and the 8th Advanced Forum on Case Study 14.1, illustrates a specific
Customs Compliance held in the United scenario where Customs took into account the treatment of fees for unlocking
Kingdom in November 2015. transfer pricing information in the course a function of imported goods after
of verifying the Customs value [see the importation the application of
Articles 1, 8.1 (c) and 8.1 (d) of the
Agreement;

the treatment of advertising and


promot ion costs in a situat ion
where the seller decides to carry out
advertising and promotion activities
in the country of importation, and
requires the buyer to contract and pay
for the goods.

Two other questions were also placed in


Part III of the Conspectus as the issues
raised in these questions were already
covered in existing instruments. They
relate to:

the treatment of goods in a global value


chain (goods imported after a series of
purchases of goods and/or services for
transformation, processing or repair);

the meaning of the expression sold for


export to the country of importation
(one sale and split consignments to
different countries).

The TCCV continued and will continue


examining questions concerning:

related party transactions as they


pertain to the Agreement and transfer
pricing;

sa les condit ions, object ive a nd


quantifiable data whether a royalty
paid under a franchise agreement
could be added to the value of imported
inputs used in the manufacture of a
finished product;

12
WCO news N 81 October 2016

examining the circumstances surrounding a sale


under the provisions of Article 1.2 (a) goods
produced in different countries;

international marketing fees whether the


payment of an international marketing fee is
dutiable.

Technical assistance
National workshops on valuation issues took place
in Georgia, Swaziland and Tanzania. Two sub-
regional workshops on Customs valuation were
also organized, the first one in the Islamic Republic
of Iran which included the Islamic Republic of
Afghanistan and Pakistan, and the second one
in Belarus which included Armenia, Azerbaijan,
Georgia, Moldova and Ukraine.

Valuation-related diagnostic missions were


carried out in Cameroon, El Salvador, Togo and
Swaziland. Experts and trainers in Togo received
training to enable them to implement some of
the recommendations of the diagnostic as well as
guidance in developing a valuation database. The
WCO also provided assistance to the Democratic

OF EVOLUTION
Republic of the Congo, Ghana and Nigeria, in order
to enhance their capacity in light of the cessation of
contracts with private sector inspection companies.
years
A train-the-trainers mission was delivered in the
Maldives in terms of a multi-year assistance project,
aimed at improving Customs valuation control
ideally through post clearance audit (PCA) and
risk management, under which a training kit was
developed to remedy the gaps identified through
an observation tour conducted in May 2015. The
Maldives Customs Service now has its own trainers,
as well as a new tailor-made training module and
supporting material.

Moreover, accreditation workshops were organized


in Ghana for English speakers in the WCO West
and Central Africa and East and Southern Africa
regions, and in China for countries in the Asia/
Pacific region. The workshops focused on the
diagnostic tool for tariff classification, origin and
Customs valuation which was recently developed
by the WCO.

Transfer Pricing/Customs-tax cooperation


WCO experts participated in several conferences
to promote the Organizations work on transfer
pricing and Customs valuation to government
representatives and the tax business community,
with a view to encouraging closer Customs-tax
cooperation:

The 92 nd meeting of the Organisation for


Economic Co-operation and Development

13
DOSSIER

(OECD) Committee on Fiscal Affairs from 1 January 2012. Five WCO Members (UEMOA). The workshop also enabled
held in June 2016 in Japan; which are not Contracting Parties to the awareness to be raised among UEMOA
HS Convention have also implemented the administrations on the HS review cycle.
The 4th and the 6 th Global Transfer HS 2012 amendments.
P r ic i ng C on ferenc e orga n i z e d The 2017 edition of the HS includes
by Bloomberg BNA and Baker & Classification decisions and new specif ic prov isions for t he 33
McKenzie held respectively in March amendments to HS publications most traded chemicals covered by the
2016 in France and in June 2016 in the At its 56 th and 57th Sessions, the WCO Chemical Weapons Convention (CWC).
United States; HS Committee took 354 classification The Organisation for the Prohibition
decisions, of which 305 related to of Chemical Weapons (OPCW) invited
The 10th Meeting of the OECD Forum International Nonproprietary Name the WCO to present the provisions and
on Tax Administration held in May (INN) pharmaceutical products linked the use of the HS in controlling these
2016 in China; to the implementation of the WTO chemica ls at t wo training courses:
Agreement on Trade in Pharmaceutical the first one gathered GCC Customs
Transfer Pricing Minds International Products. The Committee also adopted 18 authorities and other Arabic-speaking
2016 held in March 2016 in the UK; amendments to the HS Explanatory Notes, States Parties to the CWC; and the second
44 new Classification Opinions, and a one brought together countries from East
The 5th Tax Planning Strategies and number of consequential amendments to and Southern Africa.
Experiences Forum held in November the HS 2017 Explanatory Notes.
2015 in the Netherlands; The WCO was also invited by the OPCW
The HS classification decisions (with the to introduce the role played by the WCO
The sub-regiona l Workshop on exception of those for which reservations in controlling the trade in chemical
Curbing Illicit Financial Flows held have been entered), the amendments products to participants of the OPCWs
in November 2015 in Ghana; to the HS Explanatory Notes, and the A s soc iate Prog r a m me , a n a n nu a l
amendments to the Compendium of programme conducted for participants
The Annua l Conference of t he Classification Opinions are available on from developing countries which aims
International Bar Association held in the WCO website. to enhance their capacities by offering
October 2015 in Austria; training in chemistry and chemical
Technical assistance engineering.
A transfer pricing course organized HS-related capacity building assistance to
by the Tax Institute for Austrian WCO Members is delivered in the form The HS 2017 amendments relating to
and International Tax Law at Vienna of national and regional seminars and the chemicals area were also presented
University in September 2015 in workshops on the implementation and to participants attending the Seminar
Austria; uniform application of the HS, on the of European Customs Chemists (SECC)
implementation of advance ruling systems which took place in the Netherlands
T h e a n n u a l Wo r l d C u s t o m s for classification, as well as advice on the in June 2016, gathering around 300
Law Meet ing orga nized by t he classification of commodities following the chemists and officials from 55 countries.
International Customs Law Academy submission of a request by a Member. The Seminar has become a regular event
in September 2015 in Switzerland. that is organized every three years with
Ten national seminars focused on the the objective of enhancing cooperation
Nomenclature and classification HS a nd related mat ters, includ ing a nd ne t work i n g a mon g Cu s t om s
The WCO continued to carry out its work Customs laboratory infrastructure and laboratories in order to improve the
on the uniform application of the HS, with analysis methodology, were conducted accuracy and effectiveness of Customs
the adoption of numerous classification in Bosnia and Herzegovina, Brazil, analysis work.
decisions and intensified capacity building Colombia, Costa R ica, Ecuador, El
efforts devoted to preparations for the Salvador, Guatemala, Kazakhstan, Serbia The WCO was a lso inv ited by t he
implementation of HS 2017, infrastructure and Tanzania. Moreover, a national Statistical Centre for the Cooperation
for classification, the implementation of workshop focusing on the development Council for the Arab Countries of the
advance ruling systems for classification, of a n a d v a nc e r u l i ng s y s t em for Gulf and the United Nations Statistical
and Customs laboratories. classification was held in Bangladesh. Division (UNSD) to present the HS and
its 2017 amendments at the Regional
Status on the implementation of HS A regional workshop on the Workshop on International Merchandise
2012 implementation of the HS 2017 was Trade Statistics held in February 2016 in
The fifth edition of the HS, or HS 2012, organized in each of t he si x WCO Oman.
entered into force on 1 January 2012 and, re g ion s . Te c h n ic a l a s s i s t a nc e on
at present, 118 out of 154 Contracting this topic was also delivered to the As for classification advice to WCO
Parties have notified the WCO of their committee in charge of managing the Members, 117 responses were provided
implementation of the amendments to the Common External Tariff of the West by the WCO Secretariat during the
HS Nomenclature that became effective African Economic and Monetary Union 2015/2016 period.

14
WCO news N 81 October 2016

Amendments to HS-related Convent ion on t he Prohibit ion


recommendations of the Development, Production,
In support of
Acceptance by HS Contracting Parties of Stockpiling and Use of Chemical Programme Global
the amendments to the 2017 edition of the Weapons and on their Destruction
HS impacted on three HS-related WCO (as amended in 1999, 2006 and
Shield, a Council
Council recommendations: 2011) was modified by, on the one Recommendation
hand, deleting the chemicals which
The Recommendation of 24 June 2011 have been included in the HS 2017
concerning the insertion
on the use of standard units of quantity Nomenclature and, on the other in national statistical
to facilitate the collection, comparison ha nd, i ncor porat i ng Mi x t u res
and analysis of international statistics consisting mainly of dimethyl methyl
nomenclatures of
based on the Harmonized System phosphonate, oxirane and phosphorus subheadings to facilitate
was completely revised. The amended oxide (P2O5), currently listed in the
version adopted by the Council is Council Recommendation of 26 June
the monitoring of the
dated 14 July 2016; 2009 which was revoked, but not international movement
included in the HS 2017 edition. The
The Recommendation of 26 June 2009 amended recommendation adopted
of goods required for
on the insertion in national statistical by the Council is dated 14 July 2016. the production and use
nomenclatures of subheadings for
substances controlled under the New recommendation
of improvised explosive
Convention on the Prohibition of the In support of Programme Global Shield, devices was adopted.
Development, Production, Stockpiling a Council Recommendation concerning
and Use of Chemical Weapons and on the insertion in national statistical
their Destruction (as amended in 2011) nomenclatures of subheadings to facilitate
was revoked as 33 of the 34 chemicals the monitoring of the international
covered by the recommendation movement of goods required for the
have been inserted in the HS 2017 production and use of improv ised
edition. It should be noted that this explosive devices (IED) was adopted.
recommendation is a simplif ied Under the terms of the Recommendation,
version of the recommendation of 18 WCO Members and Contracting Parties
June 1996 (mentioned below) which to the HS Convention are requested to
covers 76 chemicals, and was deemed insert in their statistical nomenclatures,
by some Members to be too complex as soon as possible, additional subdivisions
to implement; for products covered by HS heading 36.03.

The Recommendation of 18 June 1996 More information


on the insertion in national statistical origin@wcoomd.org
nomenclatures of subheadings for valuation@wcoomd.org
substances controlled under the hs@wcoomd.org

15
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DOSSIER WCO news N 81 October 2016

Procedures and Facilitation


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WCO STUDY RE
16 16:08:06

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with back

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JUNE 2016
SECURITY

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publications
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Article 23.2

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MARCH

EMENT
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TRADE FA OR
THE WTO E WCO MERCAT TO IMPLEMENTAT
ION

AND TH APPR OA CH

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Transpa tability
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July 201 toms Organiza
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Capacity building delivery with WCO Members, relating to the which will focus on the technical
MOR E TH A N 10 0 nat iona l or reg iona l implementation of the relevant trade aspects of TFA implementation;
events have been organized to support facilitation measures, in the TFA
WCO Members in implementing the Implementation Guidance developed Participating in high-level meetings with
Organizations existing instruments and by the WCO. This guidance aims key parties and individuals to emphasize
tools covering various important Customs- to support an understanding of the the key role of Customs and the WCO in
related areas, such as risk management, linkages between the TFA and WCO the implementation of the TFA;
authorized economic operator (AEO) instruments and tools, such as the
programmes, transit and the Single RKC; Developing e-learning courses on the
Window (SW), as well as the use of the WTO TFA, and on transit systems.
Time Release Study (TRS) and accession Delivering national and regional
to the Revised Kyoto Convention (RKC). missions for technical assistance The WCO continues to provide support
and capacity building to facilitate relating to accessions to the RKC, which
WTO Trade Facilitation Agreement preparations for the implementation is an excellent implementation instrument
Since the adoption in November 2014 of the TFA. In this regard, the WCO for WCO Members to comply with the
of the Protocol of Amendment to insert is continuing to develop its pool of TFA requirements.
the Trade Facilitation Agreement (TFA) experts with specific expertise in
into the main World Trade Organization TFA topics (Mercator Programme Advance Passenger Information (API)
(WTO) Agreement, 94 WTO Members Advisors, and Technical Operational and Passenger Name Record (PNR)
have ratified the TFA to date. The TFA Advisors on transit, the SW, the TRS, The WCO continues to develop, maintain
will take effect once the Protocol has been the RKC and others); and promote API-PNR standards together
accepted by two-thirds of the Members of with the International Air Transport
the WTO, i.e. 110 Members in total, as per Providing guidance and assistance in Association (IATA) and the International
the WTOs current membership figures. the setting up of National Committees Civil Aviation Organization (ICAO),
on Trade Facilitation (NCTF); as well as to facilitate the sharing of
The latest measures carried out by the experience between WCO Members on
WCO in the area of trade facilitation and Holding meetings of t he WCO the establishment of API-PNR systems.
TFA implementation under the WCO Working Group on the TFA (TFAWG); In this regard, WCO experts participated
Mercator Programme include: in two national workshops (Azerbaijan
Completing the first round of regional and Georgia) with the aim of providing
Adding new tools and best practices, awareness-raising workshops on the these countries with technical assistance
which have emerged from consultations TFA, and launching the second round and know-how, and to initiate discussions

17
DOSSIER

between Customs officials, officials from use of the DM, is available on the WCO to making it more comprehensible to a
other government agencies as well as website. broader audience.
representatives of airline industries.
The level of adoption of the WCO DM Efforts are also ongoing to work together
In order to keep passenger information appears to be increasing now that the with different international organizations
message standards up to date with the European Unions (EUs) Directorate in order to leverage the capability of
latest requirements, the WCO, in the Genera l of Ta xation a nd Customs the WCO DM to support seamless
framework of the API-PNR Contact Union (TAXUD) has developed the EU collaboration between and among cross-
Committee, maintains the API PAXLST Customs Data Model (EU CDM) based border management agencies. The WCO
and PNRGOV standards. The latest version on the DM. The EU CDMs high level Data Model Project Team (DMPT) worked
of the PNRGOV Message Implementation of conformance with the DM has been with the Secretariat of the International
Guide (MIG), namely version 15.1, as well achieved through the derivation of the Plant Protection Convention (IPPC), the
as PAXLST 5.0 (2015) were produced and DM information packages. The CDM is a Universal Postal Union (UPU) and the
thereafter endorsed by the WCO Council binding instrument within the EU, as it is International Maritime Organization
in July 2016. In addition, the WCO also included as a technical annex to the Union (IMO), in order to further facilitate
developed a Guidance for Customs Customs Code (UCC). This demonstrates trade and transport border crossing
administrations to use PNR/API which how the harmonized implementation of through the convergence of regulatory
aims to provide insight on how WCO the WCO DM can support integration and information requirements, which will
Members can effectively utilize passenger interoperability at the regional level. The enable traders and transporters to comply
information for passenger profiling and EUs decision to base its EU CDM on the with the requirements in a cost effective
risk assessment. WCO DM can, therefore, act as a reference manner. This effort also aims to clarify
model for implementation of the DM by the technical relationship between the DM
Customs information management WCO Members in other regions. and other international data requirements
through Information Packages, enabling
WCO Data Model (DM) In line with its strateg y to engage users to appreciate how these requirements
Seventy-two countries have reported that executive-level decision makers on the can be expressed and implemented in a
their information systems conform to bigger picture aspects of information harmonized way using the DM.
the WCO DM, and around 49 countries and communications technology (ICT),
have active projects underway involving which led to the publication last year of the The question to be considered is whether the
the implementation of the DM. A WCO IT Guide for Executives, efforts have been WCO and the Customs community should
Member-wide tabulation status report of made to develop guidance to demystify the allow other users of the DM, such as other
adoption, and indicating the increasing technical aspects of the DM with a view government agencies and international

18
WCO news N 81 October 2016

The WCO developed a


Guidance for Customs
administrations to use
PNR/API which aims
to provide insight on
how WCO Members
can effectively utilize
passenger information
for passenger profiling
and risk assessment.

organizations, to raise Data Maintenance Single Window (SW) Customs officials as well as officials
Requests (DMRs). This should be seen The WCO Compendium on How to Build of Customs partner agencies, and
against the fact that as interest by other a Single Window Environment is made representatives from the private sector;
international organizations in using the up of two volumes whose sheer length
DM is increasing, the ability to have their has been deemed problematic for capacity conducted two workshops in Zambia
data requirements accommodated in building activities. A shorter, simplified to assist the country in building a
the Model can be seen as an additional version called a supplement has been national SW and, more specifically,
benefit. An example of this is the United developed to serve training workshops of in finalizing the data harmonization
Nations Economic Commission for a three to five-day duration. for the countrys ASYCUDA Single
Europe (UNECE), which is using the Administrative Document;
DM as the basis for building the e-TIR The supplement addresses the key stages
system, and the UN Conference on Trade of SW development, including its essential organized two field missions to
and Development (UNCTAD), which concepts and applications, agenda setting support the establishment of a SW in
is aligning the data requirements for its and policy planning, establishing formal Mauritius;
ASYCUDA system to conform with the structures, business process analysis
requirements of the DM. and modelling, data harmonization, conduc ted a f ive-d ay nat iona l
and the dematerialization of supporting workshop on CBM, the SW and the
Moreover, work remains to be done documents. DM in Sudan, to provide an holistic
to develop more promotion material, understanding to the administration
especially concerning practical guidance WCO experts also supported activities on both information technology (IT)
on how to adopt the WCO DM, how to relating to the implementation of SW and non-IT issues that are critical to
migrate from previous versions of the solutions, and promoted the use of WCO the successful implementation of a SW;
DM to the newer version, and the linkage standards and tools in doing so. Evidence
between data requirements and business of this support is demonstrated by the attended a national SW conference and
requirements, so that the benefits of variety of work undertaken by these a back-to-back workshop, to support
implementing the Model can be seen from experts in which they: Ghana Customs in the implementation
a business perspective too. The WCO will, of its national SW;
therefore, have to look into these linkages he ld a re g ion a l work s hop on
and provide more detailed information coordinated border management conducted a workshop in Bhutan to
on how the DM should be used and (CBM), the SW and the DM for the enhance the collective understanding
understood, as it moves towards Version WCO Middle East and North Africa a nd technica l capabi lit y of a l l
4 of the Model. (MENA) region, which gathered government agencies as the country

19
DOSSIER

moves towards a more coordinated It held its first meeting from 21 to 22


electronic environment; September 2016, and is currently open to
Customs administrations and main NII
participated in the Workshop of manufacturers at this time.
the Trade Promotion Organs of the
Organisation of Islamic Cooperation Postal traffic
(OIC) on Single Window Modality and The WCO is closely working with the UPU
E- Trade, and their role in promoting on a number of issues of mutual concern,
intra-OIC trade; which, in particular, include advance
electronic exchange of data, postal supply
attended the 4th International Single chain security, and e-commerce.
Window Conference & Exhibition of
the African Alliance for E-Commerce To promote electronic pre-advice on postal
(AAEC). items, based on WCO-UPU Customs/Post profiling and more efficient collection of
EDI messages, experts of the WCO: duties and taxes where applicable, as well
Digital Customs as supporting postal administrations in
The WCO developed position papers participated in the SAFEPOST enhancing service delivery.
as well as a brochure presenting several Project Postal Security & Customs
tools and instruments which support Forum which brought together over E-commerce
the concept of Digital Customs, and is 60 postal operators and Customs The WCO participated in the Global
collecting best practices in this area. It administrations/border forces from C on ference on Trade Faci l it at ion
also organized the National Workshop on the WCO Europe region to discuss organized by the UPU. It also participated
Digital Customs and Interactive Services the project, whose aim is to enhance in a Workshop on Customs Control over
in Uzbekistan. the integrity and security of the postal Cross-border E-Commerce, which was
supply chain; jointly organized by the Asia Pacific
Considering the transversal nature of Economic Cooperation (APEC) bloc and
Digital Customs, the WCO has adopted organized, in conjunction with the China Customs, to promote the tools and
a Digital Customs Work Plan to carry UPU, joint workshops for countries the work done by the WCO thus far.
out future work in a comprehensive in the Eastern Europe, Central Asia
and cohesive manner. Additionally, the and Caucasus sub-regions as well as The WCO also organized the first ever
WCO has developed a Digital Maturity Latin America, to strengthen existing regional workshop on e-commerce for
Model to support Members in their ICT cooperative relationships between the North of Africa, Near and Middle East
implementation journey. Customs and postal operators at (MENA) region from 16 to 19 November
the national level, in particular by 2015 in Riyadh, Saudi Arabia to enhance
Technical Experts Group on Non- improving the exchange of advance understanding on current and emerging
I nt r u sive I nsp e c t ion E qu ipment electronic information. challenges posed by e-commerce, together
(TEG-NII) with possible solutions best suited to their
The TEG-NII was set up to develop Forms CN 22 (packages under 2 kg in respective economic environments, as well
standards for the following objectives: weight or valued at less than 300 special as related WCO tools and instruments,
drawing rights (SDR)), CN 23 (packages and ongoing work with other stakeholders
to allow interoperability of different valued in excess of 300 SDR), CP 71 in this domain.
NII equipment supplied by different (dispatch note) and CP 72 (manifold set)
manufacturers; have been amended. The changes include The WCO supported the Organisation for
to allow the exchange of images additional columns on the CN 22 for Economic Co-operation and Development
w it h i n a nd b e t we en Cu s tom s the Harmonized System (HS) code and (OECD) in terms of developing alternative
administrations; country of origin, "sale of goods" and models of revenue, which was published
to allow the development of a database "returned goods" as reasons for export, last year as part of the OECD report
or library of images a more long- the telephone number of the sender and titled Addressing the Tax Challenges of
term goal; addressee, and an optional S10 barcode, the Digital Economy. It is also working
to assist in the training of image in addition to substantially harmonizing with the Technical Expert Group on
analysts. and aligning these documents. The Measuring E-Commerce, in which the
amendments are expected to assist WTO, UNCTAD, the UPU, the OECD and
Customs in carrying out better risk representatives of the private sector are

20
WCO news N 81 October 2016

exploring potential avenues for measuring results of a survey to which WCO Members Partnerships Week Programme which
cross-border business-to-consumer had responded in large numbers. Among was organized by the UN Office for the
(B2C) and consumer-to-consumer (C2C) other things, the publication provides Coordination of Humanitarian Affairs
e-commerce. policy considerations as a reference point (UN-OCHA). The event brought together
for WCO Members who were considering 825 experts representing the national
A working group comprising WCO the establishment or adjustment of a institutions of 67 affected countries and
Members, representatives from the licensing/regulatory regime for brokers, donor governments, as well as 22 UN
WCO Private Sector Consultative Group in line with the provisions of the RKC and agencies, international organizations,
(PSCG), obser vers and e-commerce the WTO TFA [The Focus section of the the International Federation of Red
operators/intermediaries has been set WCO News magazine offers some insights Cross and Red Crescent Societies (IFRC),
up to deliberate on the opportunities into this topic]. 10 regional organizations, 53 national
and challenges stemming from growing and international non-governmental
e-commerce, in particular, cross-border Guidelines for Transparenc y and organizations (NGOs), alliances and
low-value business-to-consumer (B2C) Predictability partnerships, 35 private sector companies,
a nd consu mer-to-consu mer (C2C) The Guidelines are based on existing and 25 research and academic institutions.
shipments, and to carry out related future international agreements, such as the TFA,
work in a more cohesive and sustainable the RKC, and other WCO instruments and The WCO, in cooperation with UN-OCHA
manner in line with the WCO Strategic tools. It reviews terms and concepts, such as and the IFRC, held a seminar on the role
Plan for 2016/2017-2018/2019. It held its promptness, accessibility, enquiry points, of Customs in natural disaster relief for
first meeting in September 2016. data protection and confidentiality, freedom countries of the West, Central, East, and
of information, information on appeals, and Southern African regions. This was the
The future of Customs publication management. Examples of best fourth in a series of regional seminars
T he V i r t u a l Wor k i n g G r oup on practices complement the text. planned by the three organizations to give
the Future of Customs (VWG FC), effect to the June 2011 WCO Resolution on
consisting of representatives f rom Role of Customs in natural disaster relief the Role of Customs in Natural Disaster
Customs, international organizations, At the invitation of the UN Secretary- Relief. Aimed at promoting the use of
the private sector and academia, initiated General, the WCO Secretary General existing tools and instruments to help
a discussion on the implications of p a r t i c i p a t e d i n t h e f i r s t Wo r l d Customs administrations together with
enhanced use of 3D printing on Customs Humanitarian Summit. The role of other relevant agencies respond efficiently
and other government agencies, and Customs in facilitating the clearance to emergency situations, these seminars
on origin, valuation and intellectual of disaster relief consignments was also provide an ideal platform for Customs
property (IP). Developments relating to highlighted, as well as the contribution of authorities and their key humanitarian
drones, particularly the use of drones for the WCO in providing training to raise its aid partners to share experiences and
surveillance and monitoring purposes and Members awareness of WCO standards on perspectives, in order to obtain feedback
for legal or illegal cross-border delivery of relief consignments and to enhance their on Customs future needs and constraints.
goods, were also presented. preparedness.
More information
Customs Brokers The WCO and representatives of Customs facilitation@wcoomd.org
This year, the WCO published a Study administrations participated, for the first
Report on Customs Brokers, based on the time, in the Humanitarian Networks and

21
DOSSIER

Capacity Building
Four areas of activity (PM) in order to effectively demonstrate 2015 and April 2016 respectively, with
THE WCO CONTINUES to provide capacity the impact that activities have on the participation of 72 Customs officials
building (CB) assistance to WCO Members organizational performance. In this regard, from 42 WCO Member administrations.
around the world. Highlighted below is a two PM missions were conducted during the Upon completion of the activities, and
sample of the initiatives taken for each of 2015/2016 period in Colombia and in Oman. after being evaluated, 59 successful
the specific areas of activity outlined in Customs of f icers were awa rded
the WCO Organizational Development Human Resource Development certificates, six of them with honours.
Package: Strategic Advisory Support and WCO activities focusing on human T he WCO Secreta r iat is cu r rent ly
Delivery; Human Resource Development; resou rce development i nclude t he seeking funding, in order to translate the
Integrity; and Stakeholder Engagement. enhancement of the e-learning catalogue, curriculum of the VCOA and to pilot a
organizing the 2nd and 3rd sessions of the French Session in 2017.
Strategic Advisory Support and Delivery Virtual Customs Orientation Academy
This activity derives from the WCOs (VCOA) and the 67th, 68th and 69th sessions Fellowship programme
2003 Capacity Building Strategy. It is of the WCO Fellowship Programme, as The Fellowship Programme aims to assist
also ref lected in the WCO Mercator well as the delivery of support relating Customs administrations with their
Programme, a strategic initiative aimed at to the Leadership and Management organizational development by endowing
assisting WCO Members in implementing Development Programme (LMDP), the certain managers, selected on the basis
trade facilitation measures, including the Framework of Principles and Practices on of their potential for development within
World Trade Organizations (WTOs) Customs Professionalism (FPPCP) and their administrative structure, with
Trade Facilitation Agreement (TFA). The the People Development Diagnostic Tool the technical knowledge and capacities
strategy entails needs-assessments through (PDDT). required for their administrations reform
diagnostic missions, the development and modernization activities.
of comprehensive strategic plans, the E-learning catalogue
implementation of WCO standards, and The WCO CLiKC! Platform now has Three sessions were held during the
the regular monitoring of performance 23 e-learning courses avai lable. A 2015/2106 period for English, French and
indicators. Key WCO CB tools to support new e-learning course covers transit Spanish speakers respectively. In total,
these actions include the Diagnostic procedures, and is available in English they brought together 46 officers over a
Framework and the Capacity Building and in French. An e-learning course on the six week period: the first four weeks are
Development Compendium. implementation of the WTO TFA will be spent at WCO Headquarters in Brussels;
available shortly, in English and in French. and the last two weeks entail a study trip to
During the reporting period, five strategic a Customs administration in a developed
pla nning missions were delivered, The existing courses on Risk Management, WCO Member country. The calendar of
including one in Namibia as the country Post-Clearance Audit, Coordinated the upcoming sessions, as well as details
moves towards the establishment of a Border Management and the Revised on the selection procedure, is available on
revenue authority, and one in the Bahamas Kyoto Convention will soon be translated the WCO website.
to prepare a national training strategy into Arabic and Amharic. The course on
that includes executive, operational and Customs Controls has been revised in Scholarship programme
technical topics, as well as modern delivery terms of content and design, and is now The Scholarship Programme provides
methods, including blended learning. available in English, French and Spanish. Customs of f icia ls f rom developing
Moreover, one evaluation monitoring The course on the TIR system has been cou nt r ies w it h a n oppor t u n it y to
mission, under the auspices of Phase 3 updated and translated into the Farsi pu rsue Ma sters le vel st ud ies a nd
of the WCO Columbus Programme, was language. training in Customs-related f ields.
undertaken. This year, nine officers participated in
Virtual Customs Orientation Academy the Public Finance Programme at the
CB delivery during such missions is based on a (VCOA) National Graduate Institute for Policy
two-pronged approach, namely ownership The 2nd and 3rd sessions of the VCOA a Studies (GRIPS) in Tokyo, Japan, and
and results-based management (RBM). WCO initiative aimed at providing newly 10 officers participated in the Strategic
RBM ensures that strategic planning and recruited Customs officials, having less Management and Intellectual Property
implementation management are guided than four years ser vice, with basic Rights (IPR) Programme at the Aoyama
by focusing on the desired results. This knowledge and skills in international Gakuin University (AGU) in Tokyo,
requires effective performance measurement Customs standards took place in July Japan.

22
WCO news N 81 October 2016

After being successfully piloted, the


concept of a Top Executive Retreat
event has been finalized. Participation in
the retreat will be offered to the Director
General and his/her executive team,
as a means to further strengthening
their capacity in implementing strategic
objectives, building a high-performing
e xe c ut i ve t e a m a nd a n e f fe c t i ve
management culture based on trust and
openness, and reinforcing the leadership
qualities of individual members of the
executive team. Every Top Executive
Retreat is tailor-made, and designed to
take into account an administrations
prevailing situation as well as its future
direction.

Framework of Principles and Practices


on Customs Professionalism (FPPCP)
To assist WCO Members in understanding
and implementing policies relating to
professional qualifications and career
paths in Customs administrations, the
FPPCP was developed and linked to an
online repository of practices the CLiKC!
People Development Interactive Map
which provide guidance on five topics:

S t r a t e g i c h u m a n r e s o u r c e s
management;
Career Development programme Nine LMD workshops were conducted Strategic organizational design/job
The Career Development Programme during the reporting period, and an profiling;
provides an opportunity for selected additional four have been delivered as Recruitment processes;
candidates, k now n as Professiona l part of the WCO fellowship and career National training centre guidelines;
Associates (PA), to undertake work at development programmes. Two new Customs career paths.
the WCO Secretariat for 10 months. facilitators have been accredited.
Ten officers took part in the programme The Map provides a live overview of the
during the 2015/2016 period. To enable the WCO to measure the Customs communitys initiatives and
impact of LMD workshops on Customs solutions that have been implemented
Leadership and Management administrations and individual participants, worldwide, in order to efficiently manage
Development Programme (LMDP) a monitoring and evaluation concept competency-based human resource (HR)
The LMDP, which is intended to improve has been developed. Four to six months processes.
the capability of Customs leaders and after the LMD workshop is conducted,
managers in order to drive reform and participants, their superior and a colleague The WCO continues to deliver assistance
modernization, has been reviewed. The of the same management level, as well as to a number of WCO Members in
review took into account the experience two subordinates, evaluate the progress implementing elements of the FPPCP,
gained by the facilitators during the a participant has made in all areas of which was used as a basis for WCO HR
60 workshops that have been conducted leadership and management with the help management workshops in Jordan and in
over the last four and a half years, of a questionnaire consisting of 62 questions. Lebanon.
together with new insights and modern On a scale from no improvement at all to
leadership and management theories, as improvement beyond expectations, the People Development Diagnostic Tool
well as the evaluations provided by over results of the 10 LMD workshops held in (PDDT)
1000 LMD workshop participants. Some 2015 show that the overall impact is 80% (a The PDDT is intended to serve as a practical
LMD workshop facilitators tested the very high improvement in leadership and guide for administrations, enabling them
new version during a workshop, enabling management skills, attitude and behaviour, to gauge where they stand in the context of
them to lead future workshops using the including an increased impact at the Customs international standards and best
new material. organizational level). practices. The tool comprises:

23
DOSSIER

HR management component four


countries have benef itted from
national support in the development
of competency-based HR management
tools, and the project continues
to build a regiona l pool of HR
management experts;

Stakeholder engagement component


t h e C a p e Ve r d e C u s t o m s
Administration has established
a National Committee for Trade
Facilitation (NCTF), and initiated
efforts to conduct a WCO Time
Release Study (TRS) in 2016.

Integrity
Capacity building and integrity are closely
related, because a lack of integrity is an
impediment to Customs reform. During
the reporting period, 15 integrity-related
missions were conducted, and work was
Painting on display during the Council Sessions as part of an exhibition of Dominican Republic carried out on the following projects,
artwork
among others:

a form for entering the reference with HR expertise recognized by the assistance to Kyrgyzstan Customs in
documents for an HR strategy, aimed Secretariat. These arrangements aim to developing integrity training modules;
at identif y ing t he f unda menta l ensure coherence and consistency in using
components of an HR strategy and, the tool. a workshop organized by Cameroon
by default, elementary failures; Customs with a view to ta k ing
The HR diagnostic tool has already been stock of the implementation of PM
a diagnostic questionnaire focusing the subject of pilot schemes during HR and contracting in Cameroon and
on the existence and efficiency of the management diagnostic missions. It has elsewhere;
main HR practices and processes, and been piloted in Namibia, Peru and Tunisia,
the legal and ethical framework of an with the assistance of Swiss Customs in the a mission to assist the Mauritius
HR strategy; case of the latter. In addition, the tool has Revenue Authority (MRA) in the
been tested in the context of the support development of a corruption risk map;
a va lue creation matri x setting provided under the West African Customs
out t he perceptions of key HR Administrations Modernization (WACAM) assistance to the Malawi Revenue
players regarding shortcomings in Project. Aut hor it y to fol low-up on t he
implementing best practices in their implementation of its Integrity Action
experience of HR management in their WACAM Project Plan;
administration. The WACAM Project, funded by the
Swedish Government, aims to assist a mission to Armenia to assist the
A lt houg h t he tool ca n be used West African Customs administrations administration in developing integrity
autonomously in its simplified form by in the fields of strategic management, training material;
teams in charge of HR modernization HR ma nagement, a nd sta keholder
within their administrations, WCO engagement. The following developments the delivery of an integrity diagnostic
Members may benefit from a series of and/or activities have taken place: in Moldova and in Paraguay;
accompanying measures to support their
HR capabilities, including a WCO mission. Strategic management component providing guidance to assess related
These missions are facilitated by HR new WCO material on strategic corruption risks, as well as specific
experts, either from the WCO Secretariat management and business process training material to foster Customs
or from a Customs administration mapping (BMP) has been developed; reform in the area of integrity, in

24
WCO news N 81 October 2016

the WCO Middle East and North of on PM, at a research workshop organized
Africa (MENA) region in cooperation jointly by the Kosciuszko Institute in
with the United Nations Development Poland and the Ukrainian Institute
Programme (UNDP); for Public Policy. The workshop was
supported by the Science for Peace and
two missions to assist the Swaziland Security Programme of the North Atlantic
Revenue Aut hor it y a nd t he Treaty Organization (NATO).
Uganda Revenue Authority with
the implementation of PM to fight Stakeholder Engagement
corruption. Three donor-related events were held
during the 2015/2016 period: a donor
In addition to the above listed support conference for the West and Central
activities, assistance has been provided Africa region in July 2015; a donor meeting
virtually to WCO Members in five cases, for the East and Southern Africa region
comprising support in areas such as in September 2015; a meeting between
providing comments on integrity-related donors and entities from the Americas
documents, checking codes of conduct, and the Caribbean region in February
and obtaining information from other 2016, focused on learning how to work
administrations. and define regional priorities.

With regards to the WCO Integrity WCO CB efforts continue to enjoy support
Newsletter, the 12th and 13th editions were from established donors contributing to
published, containing articles on Members the Customs Cooperation Fund, such
best practices. Included were articles as the Governments of Germany, Japan
on reforms undertaken in Afghanistan, and Korea, as well as China Customs and
as well as articles on the policies and Eurocustoms. Other donors include:
strategies applied in Bolivia, Iceland,
Mauritius, Paraguay, and Uruguay. Her Majestys Revenue and Customs
(HMRC) in the UK;
The WCO took part in
T he WCO was represented at t he the Inter-American Development the G20 Anti-Corruption
Organisation for Economic Co-operation Bank (IADB);
and Development (OECD) Integrity Forum the Asian Development Bank (ADB);
Working Group which dis
which was held in April in Paris, France. the Japan International Cooperation cussed the G20 Strategic
This event provided the WCO with an Agency (JICA);
opportunity to share its work on integrity, the Swedish International Development
document on preventing
including the brochure entitled the Why Cooperation Agency (SIDA); and countering corruption
and How of Performance Measurement the Swedish Ministry for Foreign
Contracts, as well as promote the use of Affairs;
by promoting integrity in
data and corruption risk-mapping. the German Federal Enterprise for Customs, as well as a
International Cooperation (GIZ);
The WCO also took part in the G20 Anti- the Secretariat of the Convention on
compilation of the replies
Corruption Working Group (ACWG) International Trade in Endangered provided by Customs
which met in London, United Kingdom Species of Wild Fauna and Flora
(UK) during June 2016. The ACWG (CITES);
administrations to the G20
discussed the G20 Strategic document on the United States Department of State; integrity questionnaire.
preventing and countering corruption by the Norwegian Agency for Development
promoting integrity in Customs, as well Cooperation (NORAD);
as a compilation of the replies provided the Finnish Ministry of Foreign
by Customs administrations to the G20 Affairs;
integrity questionnaire. the UK Department for International
Development (DFID).
Last but not least, the WCO delivered a
communication on anti-corruption at More information
the border, based on research conducted capacity.building@wcoomd.org

25
DOSSIER

Compliance and Enforcement


Security Programme
THE PUNTA CANA Resolution, released in
December 2015, emphasizes the key role
that Customs administrations play in
tackling illicit cross-border movements
of goods that could ultimately support
terrorism and terrorist financing.

To support WCO Members in building


or enhancing their border security
capacity, the WCO recently launched the
Border Security Initiative (BSI). WCO
Members, following a specific WCO or
United Nations (UN) border security-
related assessment mission, can request
technical assistance from the BSI in
developing tangible plans to support
the implementation of relevant security
measures.

Under the Strategic Trade Controls


Enforcement (STCE) project, the WCO
continues to build the capacity of Customs
authorities in dealing with strategic goods,
which are defined as weapons of mass
destruction (WMD), and conventional
weapons and related items involved in the
development, production or use of such
weapons and their delivery systems.

A STCE curriculum and modules for


training purposes have been developed to
assist the evaluation of standard operating
procedures and work practices in this
area, allowing the tailoring of capacity
building and technical assistance activities
to address any outlined gaps in countries
strategic trade controls enforcement
systems.

In the past months, training of frontline


officers has also begun, with the aim of
providing Customs officials with the
required information and know-how on
how to detect dual-use goods. Future
trainers were also targeted in order to
strengthen the training capacities of the
WCOs human resources.

Under Programme Global Shield (PGS)


an initiative to monitor the trade in 14
chemicals that could be diverted for use
in the illegal manufacture of improvised

26
WCO news N 81 October 2016

explosive devices (IEDs) officers have Drug Enforcement Programme Operation SKY-NET II, which aimed
been trained to detect and handle these to combat the trafficking of drugs and
chemicals, and certain countries were Project AIRCOP precursor chemicals via postal and
provided with presumptive field test kits L au nc he d i n 2 010 to bu i ld d r u g express courier channels, gathered 108
for frontline officers, as well as electronic enforcement capacities at international administrations in November 2015. A
chemical detection devices. airports, Project AIRCOP has been workshop was organized in Shanghai,
responsible for the setting up of Joint China, during October 2015;
Other streams of work relate to small arms A i r p or t I nterd ic t ion Ta s k Forc e s
and light weapons, passenger controls (JAITFs) in 16 countries (Barbados, Operation COCAIR V, which aimed,
(the utilization of advance passenger Benin, Cameroon, Cape Verde, Cte in particular, to assess and test the
information (API) and passenger name d Ivoire, t he Dominica n Republic, skills of the JAITFs put in place in
record (PNR) data), and the prevention of Gambia, Ghana, Guinea Bissau, Jamaica, the framework of Project AIRCOP,
terrorist financing. Regarding passenger Mali, Niger, Nigeria, Panama, Senegal gathered 32 airport teams of 30
controls more specifically, guidelines on and Togo). In addition, four ot her administrations in December 2015.
the use of API/PNR have been released, and countries, two in Africa (Ethiopia and Two seminars were organized in Santo
workshops are planned across the globe to Mozambique) and two in South America Domingo, Dominican Republic and
test these guidelines as well as collect best (El Salvador and Peru), have recently Douala, Cameroon during November
practices from participating countries. been evaluated with a view to the setting 2015;
up of JAITFs.
In the field of operational activities, Operat ion Westerl ies 4, which
the WCO is currently coordinating a UNODC-WCO Container Control aimed to stop trafficking activities in
combined operation targeting small arms, Programme (CCP) methamphetamine and other drugs
light weapons and cash smuggling. The CCP is a joint initiative between the by air passengers at international
United Nations Office on Drugs and crime airports worldwide, gathered 97
Revenue Programme (UNODC) and the WCO. Port Control administrations in May 2016. Two
Units (PCUs) established under the CCP regional training workshops were
Post-Clearance Audit (PCA) are, at present, fully operational at 55 organized during April 2016 for the
To supplement the WCO Guidelines ports in 30 countries, and funding for the South American and Caribbean
for Post-Clearance Audit and the WCO integration of another 24 WCO Members region, and the African region.
Diagnostic Tool on PCA and Infrastructure, into the CCP is now available.
an additional tool Implementation Operation African Wings III was
Guidance on PCA has been developed Given the success of the CCP, a separate implemented in June 2016, targeting
and made available, and is expected to be joint programme on air cargo control has private aircraft in the West and Central
updated regularly with new and additional been established, and specialized units African region. The WCO participated
inputs from WCO Members. Another new to target suspicious shipments in this in the Operation Coordination Unit
tool is under development: the PCA How transport segment are already operational (OCU) which was set up in Dakar,
to Audit Typology. It will gather technical in Amman, Jordan, and in Karachi, Senegal.
skills currently being applied by auditors Pakistan, with more to come.
around the world, and already contains IPR, Health and Safety Programme
more than 20 practical cases. Operations
Severa l operat ions ta rget i ng d r ug Actions
Operation Gryphon II smuggling were organized between July Extensive capacity building activities
Initiated and coordinated by the WCO, 2015 and June 2016: in this area have been conducted, such
101 Customs administrations took part as regional or national seminars and
in GRYPHON II, a two month operation Operation CATalyst, which targeted diagnostics, as well as two large-scale
focusing on Customs controls associated the trafficking of new psychoactive operations coordinated by the WCO:
with shipments of tobacco products substa nces (NPS), gat hered 94 Operation Action IPR A/P from 23
which began on 1 March 2016 and ended administrations in October 2015. November to 4 December 2015, gathering
on 30 April 2016. GRYPHON II yielded In preparation for the operation, countries from the WCO Asia/Pacific
impressive results with 729 million a seminar on Combating NPS was region; and Operation Seascape, with a
cigarettes, 287,000 cigars, and 250 tonnes organized in Seoul, Korea during May focus on the South and Central American
of other tobacco products seized. 2015; region, conducted in April 2016.

27
DOSSIER

Interface Public-Members (IPM)


IPM is the WCO online database that
enables rights holders to provide Customs
officers in the field with real-time data
and information on their products. Both
web and mobile applications underwent
a facelift with some new data fields being
added (such as authorized exporters,
importers and manufacturers), as well
as a news section which keeps users
updated on the latest events in the field of
anti-counterfeiting.

Environment Programme

INAMA Project
Launched in October 2014, the INAMA
project, undertaken in conjunction with
the WCO Secretariats Capacity Building
Directorate, aims to strengthen the
enforcement capacity of targeted Customs
administrations in Sub-Saharan Africa,
while focusing on the illegal trade in
wildlife, particularly endangered species
listed in the Convention on International
Trade in Endangered Species of Wild
Fauna and Flora (CITES).

The projects capacity building activities


are organized into three components:
training courses and one course on virtual currencies/bitcoins, network
Inst itut iona l assessment t his investigation techniques with a focus monitoring tools to identify streaming
component is based on t he on the CITES have taken place; servers, trade-based money laundering,
Institutional Assessment Tool (IAT) and the United States Data Analysis
on Enforcement of the Convention on Enforcement this component aims and Research for Trade Transparency
International Trade in Endangered to enhance the capacity of Customs Sy s t e m (DA RT T S) a c omput e r
Species of Wild Fauna and Flora. ad m i n ist rat ions i n conduc t i ng forensics system. Meeting reports and
Participants assess their own capacity enforcement operations through the presentations on the activities of ECEG
building needs at the national level; use of a wide range of techniques, may be perused by WCO Members on
such as the conducting of controlled the WCO website.
Intelligence this component builds deliveries. To do so, practical training
on common needs identified, with courses will be delivered, and field WCO tools
basic and advanced training on manuals supporting the daily work of
intelligence being designed to improve frontline officers will be developed. The CEN suite
Customs capacities in all the relevant The CEN suite includes three standalone
phases of the intelligence cycle, Electronic crime applicat ions, na mely t he Customs
namely the collection, evaluation, During its last meeting, t he WCO En forcement Net work (CEN), t he
collation, analysis, dissemination, Electronic Crime Expert Group (ECEG) National CEN (nCEN) and the CEN
and re-evaluation of data. Curricula examined t he Dark Net (an overlay communication platform (CENcomm),
on Operations Planning and on network that can only be accessed with which are compatible and complimentary
Wildlife Investigations Training specific software, configurations or in nature each supporting Customs with
have also been developed. Over authorization, often using non-standard the digitalization of operational processes
the last few years, four intelligence communications protocols and ports), in the enforcement field.

28
WCO news N 81 October 2016

The legacy CEN application allows To date, the WCO CTS has been deployed COPES training activities are set to
WCO Members to consult a central in six countries, namely the Bahamas, intensify in the months ahead, as the WCO
global depository of enforcement-related Georgia, Jamaica, the Maldives, Panama Secretariat has difficulty in keeping up
information in order to produce valuable and Sri Lanka. Further deployments are with training requests. Enforcement teams
analysis and intelligence. Recently, the planned in the coming months in Chile, taking part in the UNODC-WCO CCP and
WCO introduced improvements to the Kenya, the Philippines and Ukraine. In Project AIRCOP are likely to benefit as a
features of the application, including addition, development of the WCO CTS result. The COPES Compendium itself will
updates to the underlying technology air cargo capability is nearing completion, be updated, and the educational support
for improved performance and ease and pilots are planned for later in the year. material used during training sessions
of maintenance, the reclassification of will be expanded and improved (see the
commodities for more accurate data Compendium of Customs Operational article published in the June edition of the
reporting, enhancement of the detection Practices for Enforcement and Seizures magazine).
method and risk indicator sections (COPES)
in accordance with the WCO R isk Not all Customs administrations have Cultural objects
Management Compendium, and changes investigative powers, but all of them should Cultural goods are the subject of a specific
to the data download feature for more implement best practices and procedures resolution endorsed by the WCO Council.
efficient data management by users. when dealing with a seizure, in order to This initiative came about as a result of a
facilitate the work of those in charge of the series of high-level meetings with the
In parallel to ensure the improvements of investigation, including the judge who will Heads of other international organizations
the CEN, the WCO launched a new version hear the case. having a role in the protection of cultural
of the nCEN application in 2015, which heritage, as well as expert level activities
was developed in close cooperation with To provide guidance in this area, back in and coordination efforts.
the 20 Customs administrations where 2012 the WCO produced COPES, and later
the nCEN has already been deployed. The secured funding for training with respect The resolution calls upon countries
new version integrates all improvements to the compendiums critical content. to conduc t a n a na ly si s a i med at
introduced in the CEN, as well as A Project Manager was subsequently identif ying and closing the gaps in
important upgrades of the electronic recruited in March 2015 to implement the current legislation and techniques as
data input component and of the in-built training activities. a means of addressing this scourge. It
information communication interface (see also encourages Customs authorities to
the article published in the June edition of Training modules were developed around introduce new export certificates, or to
the magazine). the following topics: risk; storage and revise existing certificates, in line with the
disposal of seized goods; sourcing of UN Educational, Scientific and Cultural
The use of CENcomm continues to expand information and sharing of intelligence; Organization (UNESCO)-WCO Model
rapidly, making it the most desired and coord i nated ac t iv it ies w it h ot her Export Certificate.
widely used application within the CEN agencies; recording and documentation
suite. In 2015, the platform hosted 87 of information; definitions and types of Moreover, the resolution also calls
operations and projects, continuing the evidence; integrity and traceability of for more cooperation with relevant
upward trend in activity seen in recent evidence; forensics; practical interrogation stakeholders, such as experts in the
years (an average of 20% per year). techniques; the role of the prosecutor; and field and cultural institutions. In this
Following the release of a new version management of cases. domain, Customs authorities and their
of the CEN and the nCEN, the WCO national counterparts are requested to
began a modernization project for the Seminars have already been held for use the ARCHEO platform to link up
CENcomm application which is intended Customs officials in almost all of the with experts, in order to facilitate, among
to improve the overall functionality and WCOs six regions. They consisted of other things, the determination of the
user experience, interconnectivity, as a general presentation on the COPES nature of the artefacts when confronted
well as protection against the latest data project, the relevance of the topics with a suspicious transaction. The tool
security threats. covered given the challenges faced by will also enable authorities to exchange
administrations in regard to cross- best practices and information on seizures.
WCO Cargo Targeting System (CTS) border criminality, and the delivery of
The CTS enables user countries to the training itself. National workshops More information
c apt u re adva nce elec t ron ic c a rgo have also been held in Peru, Senegal and enforcement@wcoomd.org
manifest information, and to perform Uganda for field officers working as part
risk assessment, profiling and targeting. of multidisciplinary teams.

29
DOSSIER

Signing ceremonies
DURING THE 2016 Council Sessions, the
WCO signed several Memoranda of
Understanding (MoU):

First, one with the Federal Customs


Service of the Russian Federation
on the creation of a Regional Centre
of Best Practices for the training of
specialists on progressive technologies
used in Customs work;

Second, one with Ukraine Customs


on the establishment of a Regional
Dog Training Centre in the city of
Khmelnytskyi;

Third, one with the Smithsonian


Institution to strengthen cooperation
between the two Organizations, and to
boost collaboration between Customs
and cultural experts and institutions
on the ground to better fight illicit
trafficking of cultural objects.

These MoU serve as a basis for furthering


the work of the WCO, and form a vital
part of the Organizations communication
outreach and stakeholder engagement
strategies.

More information
www.wcoomd.org/en/about-us/partners/
mou-new.aspx

30
WCO news N 81 October 2016

2016 WCO Photo Competition

Digital Custom is here is the caption of this years winning entry from Bahrain Customs.

Election

Mr. Ruslan Davydov of the Russian Federation was elected as Chairperson of the Council.

31
FOCUS

An overview
Focus: of the WCO
Customs In order to provide a
clear understanding of

Brokers practices relating to the


role of brokers, including
institutional frameworks
and the regulatory/licensing
requirements, and to
further provide guidance
to its Members, the WCO
developed a Study Report
on Customs Brokers.
Besides reviewing Members
practices, the Study, which
is based on the results of a
survey and research carried
out by the WCO Secretariat,
provides some policy and
organizational considerations
to serve as a reference point
for Customs administrations
who are considering the
establishment or adjustment
of a licensing/regulatory
regime for brokers.
Brandi Redd - Unsplash

32
WCO news N 81 October 2016

of the outcomes
Study Report

BACK IN 2015, a questionnaire was circulated Optional/mandatory Chapter 8 of the RKC


to all WCO Members in order to ascertain Consideration: Use of Customs brokers Standard 8.1: Persons concerned
Customs administrations practices should be made optional in line with shall have the choice of transacting
concerning Customs brokers. Ninety-nine the provisions of the WCO Revised Kyoto business with the Customs either
countries (55% of the WCO membership) Convention (RKC), and could potentially directly or by designating a third
responded to the survey questionnaire, be governed by free market principles as are party to act on their behalf.
which touched on a number of themes other professional services, keeping in mind
such as licensing requirements, sanctions/ the national social and economic situation. Article 10.6 of the WTO TFA
penalties, obligations, restrictions, and Paragraph 6.1: Without prejudice
cooperation mechanisms. The RKC obligates countries to make the to the important policy concerns
u se of Cu stoms brokers ser v ices of some Members that currently
Ninety-five reporting administrations optional. The World Trade Organizations maintain a special role for customs
stated that their country has some or (WTOs) Trade Facilitation Agreement brokers, from the entry into force
other mechanism for Customs brokers, (TFA) provides that, from the entry into of this Agreement Members shall
agents, representatives or third parties force of the Agreement, Members shall not not introduce the mandatory use of
who act on behalf of traders to handle introduce the mandatory use of Customs customs brokers.
Customs clearances and related activities. brokers. However, mandatory use of
The remaining four countries did not have licensed brokers services is still prevalent
any requirements for such activities as in many parts of the world, for example in
a result thereof, they did not provide any the Americas and Caribbean region or in
framework for the profession. some African countries.

The first finding of the Study is that there Of the 99 reporting administrations, 72
is a wide range of models among countries stated that the use of Customs brokers
regarding the use of Customs brokers. The was optional. Nine reported that the
function of a Customs broker also varies use of Customs brokers for Customs
greatly, from the preparation of documents transactions was mandatory. Fourteen
related to release and clearance, to the indicated t hat t he use of Customs
payment of duties and taxes, to providing brokers was mandator y, except for
assistance in post clearance audits, to certain specified categories of Customs
representing clients in dispute resolutions, clearance transactions, threshold values
and to providing advice/consultancy and goods household goods, used cars,
services to traders aimed at helping them non-commercial samples and postal
to meet various regulatory requirements. items were given as examples.

As there is no one size fits all solution, the Fees and charges
Study suggests a basket of considerations Consideration: Fees and charges for
that could serve as a reference point for Customs brokers should be neither fixed
countries wishing to establish or adjust a nor regulated by an authority, and should
regime for brokers. This article examines be left to be determined by the market.
some of these considerations, while However, depending on national-specific
highlighting some of the WCO surveys requirements, general oversight may be
findings under each consideration. required to protect the interest of traders.

33
FOCUS

Following free market principles means body also be entrusted with oversight Authority responsible for content and
that the engagement of the services of a authority in respect of the business ethics administration of brokers' examination
Customs broker or a similar entity is a and professional conduct of Customs 6060
commercial decision by traders. Eighty- brokers. 59
one reporting administrations noted
that free market principles apply in their In 80 cou nt ries, Customs has t he 5050
respective countries. Only in the case of responsibility of such an authority. Eight
12, are fees either fixed or monitored in reporting administrations indicated that
some way (e.g. setting out minimum fees this authority is vested with another 4040

or flat rates) by a government authority, government department or agency,


mainly a Customs administration, and such as the Ministry of the Economy in
3030
in some instances by Customs in concert Moldova, and the Professional Regulation
with a private sector body. Such practices Commission in the Philippines. At the
may have been adopted to avoid brokers economic community/Customs union 2020
overcharging for their services or to avoid level, such authority often lays with
cartels or monopolistic situations. the respective community/union (e.g.
Economic Community of Central African 1010 7
Individuals and companies States, or ECOWAS). In the case of two 4
2
Consideration: Both individuals (natural countries, a private sector body such as 0
00
persons) and companies (legal persons) a trade association or a Customs agents
should be permitted to become licensed chamber is the regulatory and licensing
brokers, in cases where licensing is required. authority (e.g. British International Customs department
This is to ensure equal opportunities Freight Association, or BIFA, in the United Other national government
for everyone, and also to have a wider kingdom). department/agency
availability of brokers. Government department, with input/
support from the private sector
Fifty-nine reporting administrations
Customs broker association
This is, according to the survey, the case that do have an examination as part
Other private sector body
in 45 countries. In 24, only companies of the licensing process have delegated
or legal persons can become licensed the responsibility of the examinations
Customs brokers. At the same time, in content and administration to their
15 countries, licensed Customs brokers Customs authority. Seven countries have
are solely individuals or natural persons. other national government departments/
Apparently, more WCO Members have agencies responsible for this, for instance Oversight authority for business ethics
corporate entities as licensed Customs the Ministry of Finances Training Institute and professional conduct of Customs
brokers than individuals, although in in the Dominican Republic, the Human brokers
80
many cases these companies need to assign Resource Development Service in Korea, the
at least one Customs broker/Customs International Business and Customs Institute 7070
specialist. Retired/former Customs officers of Riga Technical University in Latvia, a 64
are also allowed to act as brokers by some Tribunal (comprising one representative 6060
countries subject to specific conditions each from the Ministry of Economy and
for example in Korea, 54% of brokers are Finance, the Customs Directorate and the 5050
currently former Customs officers. Brokers Association) in Uruguay, and the
Customs Brokers Board in Trinidad and 4040
Customs as the regulatory and licensing Tobago. 33
authority 3030
Consideration: Due to the nature of the Two reporting administrations stated that
activities carried out by Customs brokers, in their country, a government department 2020
which are primarily related to Customs is the responsible body, but with the input
clearance, Customs should, to the extent and support of the private sector (e.g.
1010
possible, be the regulatory and licensing Professional Regulation Commission 6
authority for Customs brokers, where w it h inputs f rom t he Cha mber of
2
00
applicable. Responsibility for conducting Customs Brokers in the Philippines).
examinations for brokers, where applicable, Four reporting administrations have given
may also be entrusted to Customs. Where this responsibility to a Customs brokers Customs department
needed, Customs could together with association, apparently to optimize Other national government
brokers associations or any other private governments limited sources. department/agency
Customs broker association
Other private sector body

34
WCO news N 81 October 2016

Licensing requirements and penalties for Licensing requirements


brokers
25 Knowledge of Customs and
Consideration: Regulatory and licensing
73 related laws (individuals/
criteria, where applicable, should be employees)
56
transparent, non-discriminatory and Knowledge of trade-related
simple, and may specifically include transport and finance matters
sanctions and penalties for misconduct and (individuals/employees)
violations, including provisions dealing 36 Demonstrated compliance record
with informal/unauthorized brokers, in Financial capacity/solvency
49
order to ensure effective compliance with Minimum educational qualification
Customs and other government agencies (individuals/employees)v
40 Minimum work experience
requirements.
(individuals/employees)
40 Minimum number of hours of
The RKC and the WTO TFA requires that 36 training (individuals/employees)
national legislation and rules setting out 11
Electronic transmission capability
licensing requirements for Customs 25 43
Financial guarantee surety
brokers should be transparent, non- bond, security deposit
discriminatory, and reasonable. Article 10.6 of the WTO TFA Incorporated/established in
Paragraph 6.3: With regard to the country, citizenship and/or
Of the 95 reporting administrations which the licensing of customs brokers, residency
Other
have set out some sort of mechanism for Members shall apply rules that are
Customs brokers, 84 require Customs transparent and objective.
brokers, and wherever applicable third
parties, to meet certain requirements
before being allowed to handle Customs
clearances. Detailed results on the Examination
requirements as well as their use are Consideration: In order to test the Customs
presented in the chart below. knowledge of brokers and ensure that
they keep themselves abreast of the latest
Requirements for traders developments, Customs administrations
Con sideration: W here licen sing should consider designing suitable
requirements, if any, are foreseen for traders assessment/verification systems, for
who are permitted to carry out Customs example, an examination which could be
formalities for the clearance of their own either written or oral.
goods, they need not necessarily be as
stringent as the licensing requirements for Sixty-five reporting administrations stated
Customs brokers; however, some minimum that they have an examination system
prerequisites such as knowledge of Customs for verifying/testing Customs brokers
and related laws, a good compliance record, knowledge of Customs and related laws/
and financial solvency could be prescribed. regulations, prior to licensing a Customs
broker. Twenty countries did not have an
In countries where traders are allowed examination requirement. Ten countries,
to handle their own Customs clearance including some who do not have an
formalities, they are in general subject to examination system, employ additional
requirements broadly similar to those of mea ns for ver i f y i ng t he Cu stoms
Customs brokers. In 19 of the reporting knowledge of brokers.
countries, traders can handle their own
Customs formalities with no requirements A sample of the methods used to verify
from the government or Customs. In some brokers Customs knowledge include: the
cases, though, such a facility is restricted to conducting of interviews (Australia and
manufacturers and government agencies the Democratic Republic of the Congo);
only. the completion of an approved course
of study (Australia); a Customs diploma
programme (Fiji); a specific training
programme (Malta); five years of work
experience in Customs matters (Mexico);
and a fit and proper person assessment
based on education, work experience, and
industry knowledge (Seychelles).

35
FOCUS

Obligations and liabilities Challenges Asked about informal or unauthorized


Consideration: Obligations and liabilities Consideration: Challenges posed by some Customs brokers, 29 repor t ing
of brokers may include representing brokers, including informal/unauthorized administrations indicated that it was not a
their clients under proper authorization, brokers, could be met to some extent very serious problem, while 13 stated that it
advising their clients on various compliance by increased use of information and was a very serious problem in their country.
requirements, carrying out due diligence on communications technology (ICT), the In terms of measures being taken against
their clients and the information submitted application of demonstrative sanctions and such practices, one country is reportedly
to Customs, and not lending their licence penalties in appropriate cases, and through trying to limit the entry of informal brokers
or permitting any other person or agent to constant dialogue with traders and with by insisting on the wearing of uniforms and
use it under any circumstances. They may such brokers. the display of identification (ID) cards, in
also be jointly and severally liable for the order to sanitize operations at Customs
payment of duties, taxes and other charges Accord i ng to cou nt r ies d i f fer i ng ports, as well as by imposing penalties and
on behalf of their clients. regulations, suspension, termination, sanctions. Another country indicated that
fines and penalties, and prosecution their Customs administration was also
are all potential sanctions that could be cross-checking with the tax authority, in
Chapter 8 of the General Annex to imposed on Customs brokers/third parties order to verify that the person who issues
the RKC for violations or misconduct. Usually, the the bill for broker services is authorized to
Standard 8.2: National legislation nature of a sanction would depend on the do so.
shall set out the conditions under gravity of the offence. For example, in
which a person may act for and on cases of minor infractions, the Canada
behalf of another person in dealing Border Services Agency (CBSA) would
with the Customs and shall lay down simply provide advice and guidance to
the liability of third parties to the brokers to rectify their mistakes.
Customs for duties and taxes and for
any irregularities.

Obligations/liabilities of licensed Customs brokers Sanctions/penalties for violations/


misconduct by Customs brokers/
80 80 third parties including informal//
74 74
70 unauthorized/unqualified brokers
70 70 67
62 80
58 80
73
60 60 73
70 68
70
50 50 62
60
60
40 40

5050
30 30
24
4040
20 20

9 3030
10 10

2020
0 0
9
Act under proper authorization/agency agreement from/with the trader 1010

Advise clients on various compliance requirements


00
Verify antecedents of their clients
Exercise due diligence on the correctness of any information/declaration filed Suspension Prosecution
Liable (jointly and severally) for the payment of duties, Termination Other
taxes and other charges on behalf of the client Fine and penalty
Maintain and preserve records for a specified
period for Customs inspection/audit
Maintain high professional standards, transparency,
efficiency and business ethics
Other

36
WCO news N 81 October 2016

Cooperation National Committee on Trade Facilitation


Chapter 8 of the General Annex to Consideration: Opportunities for cooperation established under the WTO TFA or any
the RKC between Customs and brokers could include: other similar existing body.
Standard 8.5: The Customs shall Customs modernization and trade
provide for third parties to participate facilitation initiatives; implementation of AEO/trusted trader programmes
in their formal consultations with the bil ate ral /multil ate ral ag re e me nt s; Consideration: The remit of authorized
trade. compliance with Customs and other economic operator (AEO)/trusted trader
government agencies requirements, including programmes should be expanded to include
due diligence and data quality; enhancing brokers, with well identified tangible benefits.
supply chain security; enhancing the
professionalism and business ethics of brokers Fifty-eight reporting administrations who
(e.g. capacity building and joint training have implemented an AEO/trusted trader/
activities); and carrying out performance compliance programme also include
measurement (including conducting Time Customs brokers in such programmes. The
Release Studies). Where appropriate, benefits extended to Customs brokers in
Customs brokers could also be involved in the these programmes vary from one country
National Committee on Trade Facilitation to another. For instance, in the case of Japan,
set up/maintained under the WTO TFA. benefits include the pre-arrival filing of an
import declaration, and the facility to pay
Bilateral consultation, including through a duties after the release of the cargo. Benefits
brokers association (in a few cases by way of provided to such brokers in other Customs
a Memorandum of Understanding, or MoU authorities include a reduced data set for
e.g. Bhutan, Moldova, and Uruguay), is summary declaration, simplified clearance,
the most prevalent mechanism stated by self-assessment of declarations, access to
76 reporting administrations. Sixty-six training courses and pilot projects, service
countries have a broad consultative process outside of office hours, extended licence
involving all trade stakeholders, including validity period, reduced guarantees, and a
Customs brokers. Seventeen have started coordinator facility.
to consult Customs brokers, as part of their

Cooperation areas with Customs brokers Customs modernization and trade


facilitation initiatives, including new
00 100 policies and programmes (e.g.
88 automation, Authorized Economic
Operators (AEOs), Coordinated
Border Management, Single Window)
80 80
Implementation of bilateral/multilateral
agreements
63 (e.g. Free Trade Agreements
60 60 54 (FTAs), WTO TFA)
52
Compliance with Customs and other
40 government agencies requirements,
40 40 including due diligence and data quality
Enhancing supply chain security
24 Enhancing the professionalism
20 and business ethics of brokers
20
(e.g. capacity building and
5 joint training activities)
Carrying out performance measurement
0 0
Other

37
FOCUS

Country having a Customs brokers Brokers associations I n a s i m i l a r ve i n , 85 re p or t i n g


association
80 Consideration: Consideration could also be administrations noted that they had not
given to establishing/recognizing a brokers measured the release times of those who
7070 association at the national/regional level, use a Customs broker against those who
62 as such associations can provide support do not. Six countries who did carry out
6060 to their members while assisting Customs such studies had mixed results.
administrations with the fulfilment of
5050 their regulatory/licensing responsibilities. Extent of use
These associations can also provide Consideration: Consideration could
4040 valuable training, capacity building, and also be given to ascertaining the extent
an oversight framework which, given the to which Customs brokers are used in
27 limited resources some administrations the Customs clearance process. Several
3030
may have, might add to the overall Members reported a high percentage of
2020 capacity of brokers. However, Customs use of brokers despite this being optional in
12 administrations should support Customs their jurisdiction. Outcomes of such studies
1010 brokers, including through brokers might necessitate policy changes not only in
associations, by informing/educating them terms of adjusting licensing requirements,
00
about the regulations and requirements, but also in setting up an effective oversight
including, where appropriate, those of and capacity building mechanism.
Yes, a dedicated Customs other government agencies.
brokers association Twenty reporting administrations, where the
Yes, an association that also Compliance rate use of a broker is optional, have ascertained
includes Customs brokers
Consideration: Consideration could also the extent to which Customs brokers
No
be given to measuring the compliance are used. In those countries, the average
rates of traders who use a Customs broker percentage of broker usage was 85.26%, even
against those who do not, alongside studies reaching 99.99% in some cases.
that measure the release times of traders
Organization responsible for training who use a Customs broker against those of This brings to light the possibility of
and professional development of Customs traders who do not. Such studies, conducted eliminating any mandatory use of brokers
brokers at regular intervals, could provide valuable to comply with the RKC, rather letting usage
insights into the role and responsibilities be decided by traders/individuals based on
50
50 of Customs brokers, and identify potential market principles as is the case with most
47 areas for further improvement. other professional services. This also makes
48 a good business case for those countries
40
Eighty-two reporting administrations that are apprehensive about the social and
40
37 stated that they have not measured the political issues surrounding the elimination
compliance rates of traders who use a of the mandatory use of brokers.
32
Customs broker against those who do not.
30
30 Seven countries who have conducted such More information
a study did not indicate any clear finding www.wcoomd.org
21 on whether the compliance rate was better
20
20 with the use of brokers or otherwise.

1010
6

00
Customs broker association
Colleges and universities
Customs department (e.g.
Customs college/training school)
Customs department
together with Customs broker
association and others
Other government
departments/agencies
Other private sector organizations

38
Ar
m
en

77
B ia
er
m
ud
a

86
C
hi
na

80
C
yp
ru
s

Fi
ji 76
84

Fi
nl
an
d
85

Fr
an
ce
89

G
Customs brokers usage percentage by country

re
ec
e
98

Ic
el
an
d
70

I re
la
nd
100

Ja
pa
n
95

M
al
di
ve
s
75

M
ex
ic
o
M
95

ol
do
va
77

Po
la
Se nd
85

yc
he
lle
s
70

Sw
ed
en
87

To
n ga
95

Tu
Un r ke
i te y
d
88

St
at
es
95
85
WCO news N 81 October 2016

39
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FOCUS WCO news N 81 October 2016

Some thoughts about Customs brokers:


the WCO survey and beyond
By the International Federation
of Customs Brokers
Associations
THIS IS A time when there is a high level of
interest worldwide in the use of Customs
brokers, especially the value of Customs
brokers in creating efficiencies for moving
goods across borders in a cost effective way,
and in securing revenue while protecting
the public interest.

Yet, Customs brokers around the world


spend a considerable part of their time
explaining what they do. It isnt that the
explanation is difficult, but it is certainly not
universal, since the requirements to become
a Customs broker and the services provided
by them often vary from country to country,
and are prescribed by national legislation.

The definition of a Customs broker depends


on many things, such as national regulations
(if any), a countrys business marketplace, the
role of other logistics service providers, and

Mararie
something as fundamental as geography.

The International Federation of Customs


Brokers Associations (IFCBA) has thrived; countries in the world, including our scope of practice (what only licensed
not because of the differences among members in developing countries. Customs brokers can do that other
Customs brokers, but because of what they third parties cannot);
have in common. Customs brokerage licensing frameworks regulation of entry (development of
In fact, the analysis of the WCO survey knowledge through education and
Welcoming the WCO Survey results and the commentary in the report examination);
Customs brokers welcomed the news reinforces the principles outlined in the regulation of practice;
last year that one of the WCOs priorities IFCBA best practices model on Customs the role of national Customs broker
was a survey about Customs brokers. We broker regulation which was first endorsed associations.
were then delighted to learn that a very seven years ago after considerable research
significant number of WCO Members and discussion. At the time, there was Each of these areas is multi-layered, but
participated in the survey, enthusiastically an important conversation about the at the heart of the detailed regulatory
sharing their knowledge and experience mandatory use of Customs brokers at the framework is the belief that the public
on the regulation and practices of Customs World Trade Organization (WTO) as the interest is best served by government
brokers in their countries. WTO Trade Facilitation Agreement (TFA) regulation of Customs brokers.
was being crafted.
The survey responses and analysis contribute Benefits of using Customs brokers
to the body of knowledge about Customs In 2009, the IFCBA articulated the Governments in many countries are
brokers, and confirm the importance of principle that the IFCBA supports the going t hrough periods of dramatic
the subject for Customs administrations establishment of transparent, accountable change, with comprehensive regulatory
and the private sector alike. They also raise and consistent broker licensing regimes review and modernization programmes,
rich questions for further exploration. And, by relevant government agencies, and coupled with the challenges posed by
from an IFCBA perspective, we were pleased provided guidance in the following key global financial weakness and pressures
that the survey results were consistent with areas, critical to the development of to reduce deficits as well as cut spending,
feedback from, and the priorities of, IFCBA effective Customs brokerage licensing resulting in demands to do more with
members in some of the largest trading frameworks: less.

41
FOCUS

Customs brokers are


uniquely placed to help
More than ever, it is recognized that decisions, in profitability outcomes, and in Customs administrations
Customs administrations do not have a countrys competitiveness on the global achieve improvements,
the capacity to deal with thousands of stage. From a Customs broker perspective,
individual companies which import or three areas are especially important as we including efficiencies in the
export goods, and most of those companies look forward: application of regulations,
do not have the necessary capacity to deal
directly with the requirements of Customs building knowledge; the development of
and other government agencies in moving building capacity; programmes that optimize
goods across borders. strategic alignment.
the use of technology, and
The existence of licensed Customs brokers Knowledge is an important asset for the provision of support for
not only allows governments to allocate Customs brokers, and is critical in
scarce resources more efficiently, it also providing value to clients. The IFCBA is the application of supply
saves governments money. There are trying to better understand how knowledge chain security standards.
many examples of how Customs brokers is delivered, as an entry level requirement
represent a net transfer of costs from the and in ongoing professional development.
public to the private sector by taking on We see the potential for partnerships with
functions like data entry, management and Customs administrations in developing
analysis, and communicating information and delivering training, and believe that Stakeholder engagement and Customs-
about complex regulatory requirements to this provides benefits beyond Customs business partnerships
thousands of clients. broker licensing to areas like compliance Customs brokers are also a natural starting
management and risk management. point for work on stakeholder engagement.
Customs brokers are uniquely placed to In addition, we believe that there is an Customs brokers in many countries have
help Customs administrations achieve important role for national associations of a strong bilateral relationship with their
improvements, including efficiencies Customs brokers in this area building Customs administration, but they also
in the application of regulations, the capacity and strengthening the knowledge have relationships with other government
development of programmes that optimize base. We also recognize that there is more agencies and with other stakeholders. This
the use of technology, and the provision of that we can do in building capacity around multilateral positioning and reach can be
support for the application of supply chain Customs brokers and their regulation. of great value in opening and facilitating
security standards. dialogue, and in building political will.
The IFCBA has worked on capacity building
As the agenda and priorities of Customs initiatives in Latin America and Asia, The interaction of Customs brokers with
administrations have expanded to include in partnership with the Canada Border Customs administrations is another
border security, Customs brokers can be Services Agency (CBSA), the World Bank area of exploration which has delivered
seen as the original trusted traders, and the WCO itself. Through this work, we useful insight in the area of stakeholder
reg u lated by govern ment t hroug h have learned how important it is to improve engagement and Customs-business
such things as security background the understanding of national challenges partnerships.
checks, review of financial viability, and differing priorities, and to offer insights
and examination of expert knowledge. and support in areas such as training, Future research and collaboration
In addition, as early participants in business tools (for example, agreements Because things are constantly changing in
authorized economic operator (AEO)/ bet we en i mpor ters a nd brokers), the world of WCO Members, and in that
trusted trader programmes, Customs stakeholder engagement models, and of Customs brokers, the IFCBA is strongly
brokers can assist in building a safer and border processes, including coordinated in favour of future research activities. A
more secure supply chain. border management (CBM) and the Single collaborative effort with the WCO would
Window concept. The WCO survey results provide additional insight and guidance
Knowledge, capacity and strategic provide many ideas for future work that we related to good practice. The following
alignment can do to build and strengthen the capacity areas have been identified in the WCO
Over the past decade, little has remained of WCO Members in these areas. survey and in discussions with WCO and
the same in the international trade IFCBA Members as possibilities:
environment. The marketplace has There is also the question of the strategic
expanded beyond expectations as a result alignment of the objectives of the WCO, its 1. distinction between registration and
of the proliferation of free trade agreements Members and Customs broker associations regulation of Customs brokers;
(FTAs), and the fact that traders are facing both national associations and the 2. Mechanisms providing authority to
competitive pressures which require them IFCBA that is a positive way forward. In act on behalf of importers/exporters;
to focus on their core business, and make many countries, Customs brokers are the 3. scope of practice of regulation i.e.
strategic decisions about how to best original trusted traders. They are regulated what functions Customs brokers are
manage their businesses in this changing by government and one of the objectives licensed to perform;
environment. How borders work is an of that regulation is, as we have said, the 4. r at ion a le for Cu s tom s brok er
important consideration in investment protection of the public interest. regulation;

42
WCO news N 81 October 2016

5. consequences if unauthorized third informative, and the IFCBA does this from The road ahead
parties perform Customs broker time to time. We also constantly strive The IFCBA celebrated its 25th anniversary
functions; to better understand the business needs last year, which happily coincides with
6. the regulatory authority i.e. should of Customs brokers and their clients, so renewed interest in Customs brokers
it be Customs or another government that we can help to meet those needs. We on the part of the WCO and among its
agency; always remember that Customs brokers Members. We look forward to continued
7. mandatory use of Customs brokers; provide a window to the needs of small collaboration to explore rich areas of
8. requirements for companies which and medium-size enterprises (SMEs), and, inquiry, and further develop areas of good
clear goods themselves and do not use in fact, many Customs brokers are SMEs practice. We encourage those countries
third parties; themselves. w it hout a well-developed Customs
9. components of l icensi ng i.e. brokerage community to consider the
knowledge, financial capacity, and A final area of inquiry is the value of the establishment of one. The IFCBA exists
automation; Customs broker in the marketplace, and to meet the needs of its members, and to
10. requirements for licence renewal; continued development of the Customs support and promote the value of Customs
11. trends in numbers of Customs brokers broker as a knowledge expert and business brokers. By doing that, our members
and the use of Customs brokers; innovator. The value proposition of the facilitate economic growth by making the
12. exploration of the linkages between use of Customs brokers is particularly flow of goods across borders more efficient
the use of Customs brokers and important and intriguing for future and compliant for all parties.
compliance; research. There is additional work to
13. Customs brokers and stakeholder be done to better understand why most More information
engagement. importers around the world use Customs http://ifcba.org
brokers, and how Customs brokers can
The chance to take regular snapshots directly contribute to trade facilitation
of Customs broker practice is always and national prosperity.

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ERASMUS UNIVERSITY 43
FOCUS

An overview of Japans Customs


brokerage legislation
By Shoichi Sudo, supply chain security. This article provides
DEPUTY DIRECTOR, CUSTOMS AND TARIFF BUREAU, MINISTRY OF FINANCE, JAPAN an overview of the Customs broker regime
in Japan.
In Japan, about 920 companies or individuals are
Customs brokers and registered Customs
engaged in Customs brokerage as of April 2016. The specialists
To engage in Customs brokerage in Japan,
Japanese Customs broker regime has the following a company or an individual must obtain
a licence and be registered or employ
characteristics: the use of a broker is optional; brokers people registered as Customs specialists
a status which is granted to professionals
require a licence to operate; brokers must employ who have passed a specific examination.
In companies offering brokerage services,
qualified staff; and brokers may apply to join the only these professionals may examine and
process documents relating to a Customs
authorized economic operator (AEO) programme which clearance.

was introduced in 2008. The licence can be revoked, for example,


if it is found that the broker passed the
CUSTOMS BROKERS ARE specialists in import differs, there is no doubt that the use of examination by deception, or if the broker
and export procedures, and their use, these specialists contributes positively to is sentenced to a term of imprisonment or
while already high, is increasing in Japan. the Customs clearance process, ensuring receives a fine for violating the Customs
Although each countrys clearance system better compliance rates and enhancing Brokerage Law.

44
WCO news N 81 October 2016

Currently, there are about 9,000 registered clearance process on their own without to an AEO-certified Customs broker, the
Customs specialists nationwide. All of having to comply with any requirement importer will still be able to enjoy specific
them have passed a qualifying examination or any examination. Even though their benefits, even if the importer is not an
which is held once a year. In 2015, while service is optional and is an additional AEO. Such benefits include the possible
about 7,500 people applied to write the cost for traders, about 98% of all Customs release of goods before the declaration and
examination, only about 760 passed. Such clearances in Japan are done by Customs payment of duties and taxes. The importer
a demanding examination ensures a high brokers. can also be certain that the broker will
quality of service for traders, and a better meet specific compliance requirements
compliance rate for Customs. Supply chain coordinators when it comes to security.
There is a reason for the high rate of use of
Clea r i ng goods ha s become more Customs brokers. In Japan, few Customs Review on Customs brokerage legislation
complicated, especially when it comes to brokers limit their activities to Customs In March 2016, Japan Customs revised
classifying them, determining the rules of brokerage only. Most of them also offer its Customs-related laws and regulations.
origin which apply, and calculating their logistics services, such as warehousing One amendment specifically concerned
Customs value, particularly with the entry and/or transportation. the Customs Brokerage Law, in particular
into force of an increasing number of the licence-granting procedure. Under
Economic Partnership Agreements (EPAs) Importers and exporters actually use their the previous legislation, a Customs
or Free Trade Agreements (FTAs) in brokers as logistics coordinators. Indeed, broker could only do business within the
recent years. The number of cases deemed goods go through many stages on their jurisdiction of the region where it was
difficult has been increasing as the trade route from a manufacturer to a consignee. registered the reason being that it was the
environment becomes more complex and For example, when cargo is imported Director General of the regional Customs
diverse, leading to growing expectations into Japan, it is first placed in a Customs office who issued Customs brokerage
on Customs brokers. controlled area, where it is declared for licences.
importation, and thereafter released.
Optional use Then, the cargo is picked up from the Fol low i ng t he a mend ment of t he
Although Japan introduced a Customs Customs controlled area and transported Customs Brokerage Law, which will
broker regime, the use of their services to the consignee. It is hard for importers to ta ke ef fect in t he autumn of 2017,
is optional for importers and exporters commission different operators to handle Japans Finance Minister will now give
who may choose to handle the Customs each process, so most of them generally permission at the national level, enabling
commission one logistics operator to Customs brokers to work nationwide
handle the whole process. with a single licence.

AEO and Customs brokers Japan Customs Brokers Association


In 2008, in order to both secure and The Japan Customs Brokers Association
facilitate global trade, Japan Customs (JCBA), which is managed by Customs
introduced its AEO programme, and brokers, has an important role to play
included Customs brokers in the list in the development and maintenance of
of professions which could enter the the skills of Customs brokers staff. The
certification scheme. Being involved in JCBA shares information on Customs
the international movement of goods, procedures with its members, and hosts
Customs brokers are one of the key players workshops and training courses. The
in maintaining supply chain security, as JCBA hold several committees such as the
are manufacturers and freight forwarders. Customs Specialist Committee or the Air-
Cargo Committee.
The requirements for a Customs broker to
be an AEO are the same as those for freight It a lso ha s a n i mpor t a nt role i n
forwarders: for example, AEO brokers communicating any reform or revision
should have at least three years experience, of the legislation to its members, as well
no violations of Customs-related laws, the as with each regional Customs brokers
capability to use the e-system for Customs association. Furthermore, the JCBA can
procedures, establishment of a compliance participate in the policy review process
programme, etc. by submitting proposals and comments
on behalf of its members.
About 130 Customs brokers (14%) are
certified as AEOs. In cases where an More information
importer delegates the import clearance www.customs.go.jp/english/index.htm
Philippe Put

45
FOCUS

Cameroons experience concerning


licensed Customs brokers
By Cameroon Customs
pr ofe s s ion a l b o d i e s of L C B s , All LCBs which are legal persons
IN CAMEROON, A licensed Customs broker stevedoring companies (responsible must include certain documents in
(LCB) plays a very important role in for loading and unloading cargo), and their licence applications, including, in
the national supply chain. The national consignees; particular, evidence of the professional
directory of LCBs lists almost 200 brokers, experience and academic attainment
with the number changing as licences are the Chamber of Commerce, Industry, of one of their employees, known as
withdrawn or brokers cease their activities. Mining and Crafts; the lead declarant, who will be the
recognized Customs contact person and
Under the current regulations it is gover n ment aut hor it ie s t he take primary responsibility for Customs
compulsory to use an LCB. However, Directorate General of Treasury, the operations.
diplomatic missions, international bodies, Directorate General of Taxation, and
owners of imported second-hand vehicles, the Directorate General of Customs The LCBs lead declarant must have an
public authorities, and oil companies (where (the latter being an autonomous undergraduate (Bachelors) degree in a
their crude oil exports are concerned) are administration which is separate from subject related to transport, logistics or
permitted to lodge their own Customs the other administrations cited). international trade, coupled with at least
declarations. five years experience in the completion of
The Committee, chaired by the Director Customs formalities. The lead declarants
The profession is governed by the General of Customs, processes applications tax file must show that he/she is up-to-
Community Customs Code (Art.112 to for Customs broker licences, and checks date (all tax returns submitted, all taxes
119) of the Central African Economic and that the applicant satisfies the conditions paid, etc.), and that he/she does not have a
Monetary Community (CEMAC), of which laid down by the CEMAC Customs Code. criminal record.
Cameroon is a member. The Code defines The national licence authorizes the holder
a Customs broker as any natural or legal to carry out certain Customs operations In addition, all Customs brokers must,
person who is professionally engaged in only, namely the submission of Customs within three months from the date when
completing Customs formalities in relation declarations for home consumption (home their licence takes effect, provide evidence
to the declaration of goods on behalf of other use), and for the outright exportation of that they:
persons, either as his/her main profession goods.
or as a normal complement to his/her core have dedicated premises in which to
business. CEMAC Community licence conduct their business;
All Customs brokers who hold a national are registered with the Registry
Underlying the status of Customs broker licence may then apply to the CEMAC of Commerce, and listed on the
are certain requirements related to Community authorities for a CEMAC commercial tax roll;
professionalism and compliance with C om mu n it y l ic enc e , wh ich t hos e are members of a Customs brokers
ethical standards. The legal framework authorities will issue after seeking the trade association.
for the licensing of Customs brokers, and views of the National LCB Advisory
for engaging in the profession, as well as Committee of the applicants country of LCBs must retain on their premises, for
provisions aimed at combatting illegal residence. The Community licence, valid three years:
Customs brokering, are specified in this throughout the CEMAC territory, entitles
article. the holder to complete all formalities a record of the Customs operations
related to all types of Customs operations that they have carried out;
Licensing on behalf of other persons, regardless of the documents relating to each
There are two types of indefinite licences the Customs procedure involved. This is a clearance operation.
for LCBs in Cameroon: a national licence; full-service brokerage scheme.
and a CEMAC Community licence. An LCB may act in his/her own name or as
Engaging in t he Customs broker an agent for the owner of the goods. He/she
National licence profession draws up the declaration personally, and
National licences are issued by the Director The licensing conditions involve checks presents the goods for examination. Any
General of Customs, after the views of on the applicants academic, civil, tax, change in an LCBs business status (change
the National LCB Advisory Committee and judicial profile as specified by the of sponsor, lead declarant, business name,
have been sought. In Cameroon this Customs Code, and the lodging of security etc.) must be notified to the Customs
Committee, established under the CEMAC in an amount of 25,000,000 CFA francs administration within a two-month
Community Customs Code, is made up of (approximately 38 000 euro) for a licence to period.
representatives from: engage in the Customs broker profession.

46
WCO news N 81 October 2016

Illegal engagement in the Customs


broker profession
Some people who offer their services to
economic operators illicitly, by using
a false identity, assume the role of an
LCB in order to complete the formalities
associated with foreign trade. Thus, they
will initiate goods clearance operations,
and illegally collect Customs brokerage
fees from users. These practices are carried
on with the active connivance of certain
genuine Customs brokers who, in return
for payment, will domicile or agree to
take responsibility for the declarations
initiated by these clandestine operators.

To tackle this situation, Cameroons


Directorate General of Customs has taken
the following measures:

assigning an electronic code for the


initiation of Customs declarations to
licensed Customs brokers only, as a

Jun
means of monitoring their activities
more closely;

giving the staff of LCB firms an on the operation of ASYCUDA, Customs leg islat ion, t he fa i lu re to prov ide
access card admitting them to the procedures, the WCO Harmonized System sufficient financial security for engaging
Foreign Trade Operations Single (HS), the World Trade Organization in the profession or serious breaches of
Window building, where foreign trade (WTO) and its various instruments professional and ethical standards. The
stakeholders (banks, Customs, etc.) (Customs valuation, the Trade Facilitation penalties are applied systematically, and
operate under one roof; Agreement (TFA), etc.), as well as various the problems encountered relate primarily
developments in international trade. to:
s y s t e m a t i c a p p l i c a t i o n o f Another aim is to ensure that Customs
administrative and financial penalties procedures are transparent. the failure to maintain a proper record
(suspension of business or withdrawal of the Customs operations carried out;
of licence) to LCBs which have been These capacit y building initiatives
accomplices in the illegal validation of are accompanied by the development engaging in licensed brokering based
Customs declarations. of dialogue and partnership with the on false bank guarantees;
profession. The National LCB Advisory
Framework for improving the profession Committee is a forum for exchanges with the illegal validation of declarations
a nd ensuring complia nce w it h all of the LCB trade associations, permitting for the benefit of clandestine operators;
professional standards consultations on the improvement of
Given the major role played by LCBs the profession, and the enhancement of non- c ompl i a nc e w it h t h e fe e
in terms of protecting the interests of professionalism. Ad hoc consultations also framework;
the Treasury and facilitating trade, take place frequently, outside the Advisory
Cameroons legal framework provides for Committee. Testament to the success of engaging in brokering with lead
ongoing capacity building for LCBs. It has this partnership is the fact that licence declarants whose prof ile is not
also established a system of administrative withdrawal penalties are imposed in a compliant (evidence of professional
and judicial penalties, with the aim concerted manner within the Committee; experience and university degrees not
of improving the LCB profession and another example is the introduction of furnished, etc.).
ensuring compliance with the professions awards for the most deserving LCBs (a
ethical standards. professionalism award, an expeditiousness Administrative checks
award, a tax compliance award, etc.). The Directorate General of Customs has
The purpose of the capacity building introduced annual administrative checks
is to ensure that all LCBs are familiar Under the penalty system applicable to on LCBs, focusing on compliance with the
w it h t he feat u res of t he Customs LCBs, there are suspension of business professions ethical framework. A team
information systems, and are aware of the or withdrawal of licence measures for of Customs inspectors from the division
regulations. Specific training is delivered infringements of the tax and Customs responsible for legislation is responsible

47
FOCUS

for implementing the checks. The teams LCBs compliance with the system infringements, especially those relating
visits are pre-announced, and all LCBs are for invoicing fees, to avoid practices to, for example, non-compliance with
aware of the dates when the checks will involving dumped prices for services the trade associations ethical framework,
take place. and unfair competition there is a unlicensed brokering, or failure to lodge
legally-established framework of fees, a bank guarantee in respect of the licence.
The checks cover, among other things: to avoid abuses. Any person who declares goods on behalf
of others without having LCB status is, of
whether the licence is in order the the practice of validating declarations course, subject to financial and judicial
aim here is to tackle clandestine without following up on them, under penalties.
Customs declarants and, in particular, which LCBs use their electronic code
the case of entities whose company to lodge declarations on behalf of a The pooling of information by the tax and
name indicates that they are LCBs, clandestine Customs broker, without Customs administrations is underway,
but which have not in fact been the relevant Customs operations being as part of the development of a data
properly licensed and are exploiting entered in their records, and with no interface application. This will allow for
the ignorance of users; account being taken of the tax effect more effective checks on the operations of
induced by the operation remittance LCBs. In addition, users and the business
whether a bank guarantee has been of value-added tax (VAT); community have been made aware of the
lodged in respect of a licence to engage clandestine declarants issue, but this
in the profession; compliance with the obligations activity is difficult to eradicate. At present,
imposed by the trade association. those involved in this malpractice have
how the records of Customs operations more than one trick up their sleeves!
are maintained, and the archiving Any shortcomings observed may result
system; in measures involving suspension or More information
licence withdrawal in the case of blatant douanes-cam@minfi.gov.cm

eCustoms Solutions
20 years of experience delivering Customs IT
and Single Window solutions

Shutterstock, 2016

Todays customs administrations require modernized customs INTRASOFT International has developed a comprehensive
systems to meet multiple regulatory and technical demands. eCustoms framework that facilitates this transition while integrating
The transition to a next-generation customs system is a seamlessly with existing systems and standard platforms.
multidimensional challenge, encompassing financial, time
48 management, political, legal and technical elements. http://www.intrasoft-intl.com/e-customs
WCO news N 81 October 2016

A global Customs brokers insights


into the professions challenges,
successes, and best practices
By Dana L. Lorenze,
SENIOR VICE PRESIDENT, GLOBAL CUSTOMS, Customs brokerage, the consolidation carrying costs and working capital needs,
EXPEDITORS and forwarding of air or ocean freight, and ultimately, improve profitability.
vendor consolidation, cargo insurance,
The opportunity time-def inite transportation, order Traders should recognize that modernization
fac i l it at ion a nd
A S EN H A NCE D T R A DE management, warehousing, distribution efforts will take time, and that they should
ref ined Customs risk management and customized logistics solutions. utilize a staged approach. A patient, staged
strategies make possible the opportunity approach will enable them to validate
for common Customs frameworks and The benefit over time that the Customs process has
modernization efforts, such as regional Multinational traders face the challenge been simplified, and that inefficiencies or
Single Window initiatives, it is critical of meeting compliance and ser vice variables that were previously manual are
to educate both the public and private obligations while maintaining the cost not amplified through automation.
sector on the benefits available through required to deliver value to the market.
active support and participation. Only Global security concerns, economic From a public sec tor perspec t ive,
through such awareness can we hope to uncertainty, and varying Customs and the benefits of a common Customs
succeed in bringing together the myriad other government agency approaches framework and modernization efforts are
political, operational and legal innovations and processes represent true business relatively manifest. For effective border
necessary to capitalize on this opportunity. challenges. A drive toward a more coordination, Customs is seen as a nations
common Customs framework and process indispensable border control authority
Trade compliance and trade facilitation across the global economy would make it for managing international trade, and for
success are more likely to be enhanced easier for the private sector to manage processing import and export activities at
when Customs brokers, multinational global trade compliance and risk through a nations border.
traders, Customs administrations, and clear, consistent and common rules.
participating government agencies have a Customs is often the governmental
strategic framework for these initiatives to Automation is an important part of the single w indow for receiv ing and
take hold. Professional Customs brokers development of a common Customs distributing data a nd information
have a unique perspective given their broad process, a nd ma kes it possible to related to importations and exportations.
exposure to all parties engaged in the establish common rules that are easily Customs administrations may benefit
supply chain, their operational experience, understood. Automation can greatly from modernization and the use of a
and their exposure to various systems contribute to a targeted risk management common framework for automation,
and tools to manage Customs declaration approach that facilitates trade, and both allowing for earlier risk assessment,
complexity in multiple countries. As one improves revenue collection, compliance effective capacity building, and improved
such broker, it is Expeditors pleasure to and security. revenue collection.
share some insight into the profession's
challenges, successes, and best practices To ma ke the business case for the The need
in this regard. investment required to participate in To further a common Customs framework
modernization efforts, the private sector and modernization efforts, we will need
Expeditors is a global logistics company will need to demonstrate quantifiable a shared strategy for consistent, uniform,
e m p l o y i n g o v e r 15 , 3 0 0 t r a i n e d ret u r ns . Such ret u r ns w i l l l i kely and limited data models across regions.
professionals in over 331 locations across include reduced manual resources and A common data standard and structure
six continents. The company satisfies administrative costs occasioned by would minimize redundancy. We will
the increasingly sophisticated needs of consistent processes. In addition, common also need knowledgeable resources from
international trade through customized Customs processes should contribute the private and public sector to address
solutions and seamless, integrated to consistent and predictable release policy, regulatory concerns, programming
information systems. Its services include cycles that help traders reduce inventory requirements, business analysis, training,

49
FOCUS

To be sure, risk management efforts


may not always coincide with smooth
processes, and technology does not solve
all problems. Cargo holds happen due to
system mismatches. System holds cannot
be easily rectified when few know how to
solve complex system or process issues, or
if there is no deeper understanding of the
root cause of the actual problem.

Stakeholders will need to hold back from


blaming the new system as the cause of a
problem that previously existed, but which

Julie Kenward
was solved manually prior to the transition,
such as the manual border agency processes
in many countries. In addition, the public
sector will need to support process mapping
outreach, troubleshooting, process change, When disagreements arise regarding at a country and agency level before systems
and communication at all levels. the hierarchy of data, holds or timing, can be implemented.
inconsistent communication among
Single Window and trusted trader stakeholders can add to the cost and time The call
prog r a m me s requ i re cha nge , a nd required for implementation. A particular Unfortunately, there is no uniform
implementation takes commitment in challenge exists when there are competing acceptance of the need for a more common
time and resources from all parties to be policies and missions among stakeholders, Customs framework. There is a lot of work
effective. Success is more likely when the or when resources are not aligned or are to do in tying up all the moving parts
framework allows for implementation in not a priority. together, but it is work worth pursuing.
stages, where stakeholders test, analyse, We must review, pilot and test the policy,
and review progress at each step. When In sum, we believe there are several regulations, process, and technology at each
private and public participants work preconditions to the success of global and stage in a controlled manner across regions
together, the outcome should lead to regional modernization efforts among the and government agencies to ensure that the
release time predictability and consistency, public and private sectors: technology is seen as an improvement.
improved compliance and security, better
revenue collection, reduced supply chain the imperative for change must exist; Professional and highly qualified Customs
costs, and improved performance overall. t h e r e m u s t b e i n t e r a g e n c y brokers are uniquely positioned to help
cooperation, along with a with Customs modernization efforts
From the public perspective, there governmental mandate to collect due to their intersection between the
should be a clear, unambiguous, and and share data between Customs public and private sectors, and their
sincere mandate from governments. For and other participating government corresponding understanding of Customs
improvements to take hold, we will also agencies; responsibilities and processes, as well as
need a practical path for escalation and as described above, there must be the operational and supply chain issues
resolution, and a clear and practical work considerable public and private affecting trade. We believe that this unique
programme with key milestones aligned sector cooperation; perspective is imperative for the success
with appropriate resources. a ll sta keholders must recognize of any common Customs framework and
the need for investing in modern modernization efforts.
To work through potential obstacles, it is technology;
important to understand that technology st a keholders shou ld de velop a Interested readers may obtain source
development may sometimes move faster flexible and staged approach; references relating to this article directly
than policy, regulation, or stakeholder ensure that the technology is reliable; from the author, Dana L. Lorenze.
preparedness. Stakeholders will need to there must be an alignment of policy,
align policy, regulations, data, and system regulations, process, and technology More information
functionality early and continuously at at all levels in trade, and in the public dana.lorenze@expeditors.com
multiple levels. sector. www.expeditors.com

50
PANORAMA

Theilr
Assessing Single Window performance:
an overview of the peer review exercise
undertaken in five African countries
By the African Alliance for e-Commerce CREATED IN 2009, the AACE groups SW
operators in Africa with a view to
In the 20-plus years since first being established promoting the concept of a national and
regional SW, and has established a platform
in Singapore and Sweden, Single Windows (SWs) for exchanging SW implementation
experiences. Eighteen operators are
have remained the central focus of border clearance members of the Alliance.

strategies. The implementation of such an environment With SW solutions implemented by its


members having reached a certain level
is generally seen by trade experts around the world as of maturity after more than 10 years of
operation in some countries, in 2014 the
a very practical means of improving border clearance AACE decided to conduct an exercise in
five selected countries in order to evaluate
performance. Although the SW is but one aspect of the impact of existing systems on the
cross-border process.
a myriad of mechanisms to improve the effectiveness
To do so, a peer review mechanism was
of trade facilitation, it is quite an important one. This chosen. Representatives of countries
i nvolved i n t he exerc i s e , na mely
article presents an overview of a project undertaken by Cameroon, Ghana, Madagascar, Mauritius
and Senegal, reviewed their respective
the African Alliance for e-Commerce (AAEC) to assess systems with the support of World Bank
experts.
the impact of SW architecture on trade transactions in
About Single Windows
five African countries. Most SWs are unique, having being
developed according to different needs
and requirements, and customized to suit
specific contexts. Nevertheless, they can

52
WCO news N 81 October 2016

be grouped into distinct categories. The identify areas of improvement; as transit, transshipment and logistics
AACE identified three main models: prop os e re c om mend at ion s for operations. The aim was to measure,
improvement and evolution; based on data extracted from the Customs
SWs for clearance formalities the identify lessons learnt; automated system and the SW system, the
form that matches most the definition establish a roadmap for a regional SW. end-to-end:
of UN/CEFACT Recommendation No.
33 on establishing a Single Window; The SW environments of the countries 1. import process of a countrys strategic
involved were first evaluated against the products;
SWs for logistics coordination also strategic objective of facilitating trade, 2. export process of a countrys strategic
known as Cargo or Port Community or more specifically, facilitating the products;
Systems, and mainly used in port formalities and exchange of information. 3. transit process of the main product;
operations, they focus on the swiftness The questions covered the major aspects of 4. transshipment process of a container;
and reliability of logistics from the SWs, and were conceived in such a way as 5. logistics process of a container.
announcement of a vessels arrival to to be of relevance to all countries. Below
the physical delivery of the goods to a are some examples: Peer review mechanism
consignee; The review methodology defined three
the scope of the services covered by the steps:
SWs for business-to-business (B2B) SW (what the SW does);
transactions the less common form the level of the utilization of SW Step 1: Country Self-Assessment A
of a SW, often used as a complement to Services (who uses SW services); questionnaire was submitted to, and filled
the two previous models, is a platform the level of process optimization in by, each participating country;
that connects different business parties (business process reengineering);
to a trade transaction. the feedback of actors on the changes Step 2: Peer-to-Peer Team Review
induced by the SW; A team composed of international
About the review the impact of the SW on the cost of a nd i ndependent ex per t s , a s wel l
The aims of the performance reviews were operations; as government representatives, was
to: the level of transparency. established and tasked with validating
t h e s e l f- a s s e s s m e n t f o r m s . T h e
understand the different SW models; Evaluation was also conducted, based methodology employed is decomposed
ident i f y si m i la r conc e pt s a nd on indicators related to the time taken into a sequence of activities illustrated
functionalities between the models; to process imports and exports, as well in the following figure:

Overview of the peer review mechanism steps

Consolidatate,
Develop Present
Hold opening characterize &
preliminary preliminary
briefing prepare final
findings findings
findings

Review schedule
of onsite activities
Present final
findings
Review collected Attend presentations and
data demos, and conduct formal
interviews and onsite visits

Conduct Lay out


informal characteristics of
interviews the implementation

Identify gaps between the Lay out


implementation scope and the characteristics
projected scope of the SW

53
PANORAMA

Step 3: Path of Improvement The This limitation is understa ndable, The Single Windows which
results of the assessments, along with the considering the level of maturity and were evaluated do not yet
experiences of each country, including readiness of the organizations and trade
best practices, were identif ied and environments involved. deliver their full potential,
shared among AAEC countries during a mainly because they focus
Conference. A roadmap for improvement, Whilst dematerialization is an important
developed by the World Bank and pair efficiency gain for end-users, it does not on the submission of
countries experts, was also provided to impact on other areas of interaction data and the information
each country. between end-users and government
agencies, and does not support internal process only. The business
Impact on trade collaboration and information-sharing process and services
T he eva luat ion shows t hat t he processes. The SWs are now a channel for
implementation of a SW system in the five submitting information and documents, were developed with the
assessed countries has had a significant replacing the previous manual paper- objective of replacing
impact on transaction processing times. based transactions. However, little else
Clearance formalities were handled faster has changed with regards to the decision- paper documents. This
by the government bodies and other making process and internal processing by limitation is understandable,
actors involved, such as banks. Costs of administrations.
transactions also diminished as traders considering the level of
or their Customs clearing agents were Ver y lit t le innovative a nd for ward maturity and readiness of
no longer obliged to physically visit the thinking has occurred to take these SWs
agencies involved in the clearance process, to complete maturity. Enabling internal the organizations and trade
and to submit paper documents. The most com mu n ic at ion a nd col laborat ion environments involved.
significant gains for end-users are: during the clearance process, as well
as the sharing of strategic information
a reduction in waiting time for a cargo among agencies, is not yet possible
release; through the SWs which were assessed.
a reduction in processing times taken Internal data could be further integrated
by agencies involved in the clearance to suppor t a nd possibly automate
process; decisions or pa r ts t hereof. G oods
a reduction in costs for traders and inspections could be coordinated, and
governmental services due to the inspection results and risk assessments
elimination of paperwork; shared to reduce delays.
easy archiving of documents;
better statistics and traceability Moreover, the SWs support very little
capacities; interactions beside t he submission
enhanced possibilities to track a of documents by t he trader to a n
shipment and inform traders about administration. All five SWs assessed
the clearance process; have functionalities to provide transaction
better allocation of staff to more value- status updates and to allow messaging
added functions; between the actors, but these services
better capacity to deter the use of can still be improved to increase the user
falsified documents as it has become benefits from the system and to fully
easier to authenticate documents. move to a transparent and paperless
trade environment. It could, for example,
As for calculating the return on investment enable a user to seek information prior to a
(ROI) in the technology, this issue will be transaction, or to get an explanation from
addressed in the next round of assessment. government authorities having rendered
a decision, or to communicate with those
Areas to improve involved during the decision making
The SWs which were evaluated do not yet process.
deliver their full potential, mainly because
they focus on the submission of data and More information
the information process only. The business www.african-alliance.org
process and services were developed with www.swguide.org
the objective of replacing paper documents. www.conferencesw.org

54
WCO news N 81 October 2016

Improving cocaine profiling for better law


enforcement in Italy
By Maria Monfreda,
CENTRAL DIRECTORATE FOR PRODUCT ANALYSIS AND CHEMICAL LABORATORIES, ITALIAN CUSTOMS
COCAINE IS THE most widely used narcotic
drug, making the determination of
the geographic origin of illicit cocaine
the focus of intense investigation by
the forensic community. The Drug
Enforcement Administration (DEA)
in the United States (US) has created a
cocaine signature programme which
provides for in-depth signature analyses
to be performed on samples obtained
from bulk seizures throughout the US
and from around the world. The applied

Slovenia Customs
analytical methodologies enable evidence
to be given on how and where the coca
leaves were processed into a cocaine base
(determining the geographical origin),
and how and where the cocaine base was
A basic need of any law enforcement agency is to be able converted into cocaine hydrochloride salt
(determining the processing origin).
to positively identify controlled substances in seized
In Europe, a cocaine signature programme
drug samples, as well the purity of the drug, which such as the one created by the DEA does
not exist, and therefore determining
will support legal proceedings and, hopefully, result the origin of seized cocaine is highly
hypothetical. In most cases, only the
in successful convictions. Research aimed at shedding country of provenance is known. Even
though drug profiling is not yet officially
light on the chemical profile of seized drugs is also of done by the Italian Customs Agency, its
Directorate for Chemical Laboratories
great relevance in determining their characteristics, decided to perform a study using about
30 cocaine samples coming from large
such as their place of origin and processing, as well Customs seizures, corresponding to a total
weight of about 1,000 kg.
as trafficking methods. Combined with the results
Infrared spectroscopy
of criminal investigations, this data could be used to The aim of this study was to verify whether
a fast profiling method, based on infrared
establish connections between drug gangs and suppliers, spectroscopy, could be used as a useful tool
to enhance and speed up controls carried
and to trace drug distribution networks. This article out by the Customs authority, and to
move these controls to the field where the
presents an initiative undertaken by the Italian Customs seizures actually take place thanks to the
fact that FT-IR spectroscopy equipment is
Laboratory to go beyond the usual tests for identification a mobile identification system.
and quantification purposes, and to undertake cocaine Most mobi le laborator y tea ms are
furnished with scientific equipment,
profiling using a rapid method based on infrared c h a r ac t er i z e d by sm a l ler over a l l
d i m e n s ion s t h a n t ho s e of f i x e d
spectroscopy, and more specifically, Fourier Transform laboratories, but with excellent accuracy
in relation to analytical responses. Among
Infrared (FT-IR) spectroscopy. other equipment, most mobile team will
use FT-IR spectroscopy the method of

55
PANORAMA

Work also remains to be done on the harmonization of


the methodological approaches on drug profiling among
countries, including on the use of FT-IR spectroscopy.
The complete characterization of a drug sample
coming from the illegal market, done for comparative
purposes, may need various analytical steps, and
the methodological approaches used differ greatly
sometimes. As a matter of fact these procedures are
often difficult to standardize.

infrared spectroscopy that is now more minor alkaloids and residual solvents) was Conclusion
commonly used to determine the collected. The results were then analysed Drug profiling is not yet one of the
chemical composition of samples. against both knowledge coming from Italian Customs Laboratorys official
scientific literature and information about duties. Drugs are only analysed for
As the infrared spectrum of a molecule the provenance countries of the seizures. ident i f ic at ion a nd qu a nt i f ic at ion
is literally its fingerprint, the pattern purposes at t he moment. However,
of peaks in the infrared spectrum of a This allowed the laboratory to make a this study showed that it is possible to
substance is unique to that substance. If hypothesis about the geographical origin use ATR/FT-IR spectroscopy as a fast
two molecules have different chemical of samples: 92% of the cocaine might be of profiling method.
structures they will have different infrared Colombian origin; 6% of Bolivian origin;
spectra. and the remaining 2% shows elements of Some of its advantages include shorter
similarity, although not totally identical, analysis times (the entire sample analysis is
FT-IR spectroscopy has been applied as a with the samples of Bolivian origin. typically completed in less than a minute),
fast method in characterizing commodities reduced sample preparation, and rapid
and in discriminating between several The results of these analyses were used as assessment of possible heterogeneities in
commodities, such as defective and non- a starting point for the development of a a big seizure due to the different origins of
defective coffee beans prior to roasting for "fast profiling" method, based on ATR/ the respective seizure samples.
example. However, it is underutilized in FT-IR spectroscopy and statistical tools.
many forensic laboratories in the field of First, only pure samples were analysed as Work also remains to be done on the
drug profiling. this technique is best performed on pure harmonization of the methodological
substances. Second, the variation in the approaches on drug profiling among
Other devices, such as mass spectrometry fingerprint of pure cocaine samples cut countries, including on t he use of
coupled with gas-chromatography, are with adulterants or diluents was evaluated. FT-IR spec t roscopy. T he complete
usually used for drug profiling. They have cha rac teriz at ion of a d r ug sa mple
a higher discrimination power, i.e. they Eventua l ly, t he FT-IR met hod for coming from the illegal market, done
can identify most of the substances present comparative analyses of cocaine seizures for comparative purposes, may need
in a mixture, while FT-IR recognizes proved to be very fast and effective. Even if v a r iou s a na ly t ic a l s te ps , a nd t he
fingerprints of pure substances. However, the new method was developed by analysing methodological approaches used differ
these techniques are time consuming. samples that were free of adulterants or greatly sometimes. As a matter of fact
diluents, it still works when the sample these procedures are often difficult to
The test contains 50% of cocaine and only one standardize.
For purposes of the study, the Italian added substance, and 60% of cocaine with
Customs Laborator y f irst did time more than one added substance. However, one should not forget that the
consuming analyses in order to detect stakes are high. Ensuring a uniform
minor alkaloids and residual solvents in The method can be usefully employed for approach by different laboratories will
the drug samples. Then the laboratory used the comparative analysis of large seizures enable them to compare their results, and
Attenuated Total Reflectance FT-IR (ATR/ too, because, although they sometimes open possibilities, from an intelligence
FT-IR) to analyse the drug. Finally, the contain added adu lterants such as perspective, on who was involved, how the
results of the two methods were compared. levamisole (a synthetic compound used drugs were made, where they came from,
as an anthelmintic drug especially in and what routes they travelled.
First, the cocaine samples were analysed. animals, and in cancer chemotherapy), the
More specifically, information on the concentration of cocaine is often still high More information
chemical signature of samples (analysis of enough for the method to work. maria.monfreda@agenziadogane.it

56
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NUCTECH COMPANY LIMITED
BEIJING CHINA
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PANORAMA

Stephen Zuk
One World Trade Center proudly towers
above the Lower Manhattan skyline

Homecoming: after 15 years,


CBP returns to the World Trade Center
By Marcy Mason, Others such as Nina Rohan, a National Commodity Specialist branch chiefs.
A WRITER WHO COVERS TRADE FOR US CUSTOMS
AND BORDER PROTECTION
Import Specialist Associate who had Faingars mother called. She and her
worked 21 years at 6 World Trade Center coworkers had gotten out of the building
AS FA R BACK as Col leen Piccone ca n for the US Customs Service, were there that safely, but that is all that Faingar knew.
remember, the World Trade Center day. We had a seminar for staff working I tried to contact her after the second
was always a part of her life. Growing with the clothing industry. They came in building was hit and couldnt reach her.
up on Staten Island in the early 1970s, from all over the country, said Rohan. But Just the waiting and not knowing what
she watched from across the New York just as the meeting was getting underway, happened was agonizing, said Faingar.
Harbour as the Twin Towers were being there was a loud KABOOM and the room
built. After graduating from Brooklyn started shaking. The seminar host made Immediately following the attacks on 11
Law School, she started working at 6 a joke, recalled Rohan. You didnt know September, the US Customs Service was
World Trade Center for the United States we had earthquakes in New York, he said. displaced. Some employees moved to
(US) Customs Service, one of US Customs Everybody was laughing, and then all of Newark, others to JFK International Airport,
and Border Protections (CBPs) legacy a sudden we heard a voice yell, Get out! and within weeks the New York Field Office
agencies. Get out now! was relocated to midtown Manhattan at One
Penn Plaza. Miraculously, every employee
It was my first legal job, said Piccone, Denise Faingar would have been at the of the Customs Service had survived.
who is now CBPs Associate Chief Counsel building that day, but she was out sick. However, it was the first time in the agencys
in New York. It also was the only place at Faingar, a Supervisory Import Specialist 212-year history that the customhouse, the
US Customs that Piccone had ever worked at the time, was at her mothers home on government building for collecting duties
until 11 September 2001. But on that day, Long Island while her mother, who also and clearing vessels, was not headquartered
she wasnt in the building. She was headed worked for US Customs, was at 6 World in lower Manhattan. Even the original
to San Diego for training when her flight Trade Center at the seminar. I worried customhouse, built by the British before
was grounded in Las Vegas after the Twin terribly for her and all of my colleagues, Americas independence, was located on the
Towers were attacked. said Faingar, now one of CBPs National southern tip of Manhattan.

58
WCO news N 81 October 2016

Immediately following the attacks on 11


September, the US Customs Service was
displaced. Some employees moved to Newark,
others to JFK International Airport, and
within weeks the New York Field Office was
relocated to midtown Manhattan at One Penn
Plaza. Miraculously, every employee of the
Customs Service had survived.

There was a strong feeling among many apprehensive, said Smith, CBPs Deputy office I can see every other skyscraper in
that the government needed to reconstitute Associate Chief Counsel in New York, Manhattan as well as the Hudson River
a presence in lower Manhattan, said who was at 6 World Trade Center on 11 as it flows into the New York Harbour.
Robert Perez, CBPs Director of Field September. Initially, the word was that Sometimes its a little hard to remember
Operations in New York. But it wasnt until we were going to be on a lower floor, but to turn around and go back to work once
2014 that a final decision was made for then it turned out that we were up higher. Ive looked out the window and seen whats
CBP to move back to the newly reopened It really took going through the move in front of me.
World Trade Center. and settling in here to realize that its a
great place to work. Its a very comfortable Haywards wife, Rosemarie, a National
Earlier this year, after a 15-year hiatus, atmosphere. Coming in and working here Import Specialist, wasnt sure she wanted
CBPs New York Field Office returned day-to-day, I really dont think about it to come back. She had worked at the World
to its roots, moving to the 50 th and 51st very much anymore. Trade Center when she started her career
f loors of the soaring, 104-story One in the mid-1990s. I just kept thinking I
World Trade Center. With its spire, it Leon Hayward had no reservations about cant expect my husband to go there and
is the tallest building in the Western working in the building. Looking at how not go myself, she said. But then she had
Hemisphere. Moreover, the building, a this place was being built, I knew that it second thoughts.
gleaming monolith, rises from the ashes was going to be very safe, said Hayward,
of 6 World Trade Center. The building the Assistant Director of Field Operations When the anniversary of September
sits on the very footprint of our former for trade and cargo security at the New 11 came rolling around, I felt anxious. I
customhouse, said Perez. It sends a York Field Office. thought about asking if I could be placed
great message of resiliency, and instills somewhere else, but then I realized if
a sense of pride. Its so much more than The building uses a layered approach to I lived in fear, I wouldnt do any of the
just a building or just an office; its really a security. For example, street traffic isnt things I should do in life, said Rosemarie.
celebration of everything that CBP stands allowed near the building, theres no Im not going to let fear run my life. So a
for and why it was created. underground parking, a vehicle receiving lot of days, I dont think about where I am.
area will be located two blocks away, and I just go in, do my job, go home, and not
But then there are the challenges of getting delivery vehicles coming to the building think that Im on the 51st floor of Building
people to work in a building that was a will be screened. Theyll go through the One. Im going to just live my life and try
target. A lot of people have a legitimate same kind of screening that we apply to to enjoy each day.
fear, said Piccone, but I think it was vehicles that cross the border into the US,
really important for us to come back, said Hayward. Nina Rohan yearned to go back. For the
especially being part of the Department longest time, I wanted to go home to the
of Homeland Security. If were not coming Inside the building, security is also World Trade Center, but then when I got
back, who is? But then it dawned on me rigorous. One elevator bank is dedicated there, I had mixed feelings. I didnt expect
that there are a lot of mixed feelings about solely to government-leased f loors, but to feel the way I felt, said Rohan. Its like
coming back, said Piccone. Im very CBP took it a step further and programmed they say, You cant go home again. Well,
proud that in the end, about 75% of the the elevators. We made sure that only our you can go home again. Its just going to
employees at One Penn Plaza did come employees had access to our floors. That be different, and it doesnt feel the same.
back. Everybody was given an option. was a requirement that we put in, said
Nobody was forced to come back. It was Perez. Little by little, though, Rohan is getting
done very, very sensitively. back into a routine. Now I stop at the old
One of the best perks of the building deli I used to go to and get a cup of coffee.
At first, Todd Smith had some concerns is its views. We literally have million- Ive been finding places again, she said.
about returning. I definitely was a little dollar views, said Hayward. From my And there are other pluses. CBPs new

59
PANORAMA

Marcy Mason
CBP staff wait patiently for the elevator on the 50th floor of One World Trade Center

Marcy Mason

Million-dollar views from CBPs offices at One World Trade Center

offices are sleek, high-tech and modern. The National September 11 Memorial (also put a marker by that day, said Piccone.
Theres a lot of window space and a lot of known as the 9/11 Memorial), a large, Because with our rapid news cycle,
light coming in. Our old place was dark. public plaza directly south of One World everything becomes old news very quickly.
Everything here is new, light and airy, Trade Center, is a solemn reminder of the But I think for our mission, for the people
said Faingar. In a word, its energizing. tragedy that took place on the site 15 years who work here, it is a constant reminder
ago. Two square-shaped, recessed pools of how important what we do is. Beyond
The neighbourhood, although still in a with waterfalls cascading down the sides that, the site has personal significance for
construction mode, is vibrant too. Its are designed in the footprints of the towers everyone. For me, my life has come full
a nicer part of the city. Everything here that went down. Engraved along the rim circle, said Piccone. The World Trade
is brand new, said Smith. There are a of the pools are the names of every person Center has always been a part of my life,
lot of good shops and restaurants. The who died in the 1993 and 2001 terrorist and its just like coming home.
downside is its costing me 12 dollars to attacks on the World Trade Center, the
get a sandwich for lunch. Everything is Pentagon, and United Airlines Flight 93. More information
ridiculously expensive, said Smith. But www.cbp.gov
its just a much nicer experience to go out Sometimes there is a flag by a name or
at lunchtime and in five minutes, I can be a f lower. I try to make it a point every
out by the Hudson River. day to see the name that somebody has

60
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info@westblueconsulting.com www.westblueconsulting.com
PANORAMA

The Kazbegi Customs crossing point, located


on the border with the Russian Federation

Georgia, Europes first nCEN


By the Georgia Revenue Service The nCEN consists of three independent experts. The software, training and all
IN A MODERN globalized world, Customs databases. The principal database of other costs were covered by the WCO from
services require efficient and convenient national seizures and offences comprises donor funding.
tools to capture seizure data, data data required for analysis, as well as
which will enable to strengthen its risk means of conveyance, routes, and the A train-the-trainers session was held
management capacities. The Georgia possibility to view photos depicting in March 2015, ahead of the launch of
Revenue Service (GRS), which gathers the exceptiona l concea lment met hods. both the training and production servers
Tax and Customs Administration and Two supplementary databases contain in December 2015. User accounts were
the Sanitary and Phytosanitary Border information on suspect persons, methods created on the training server for 26
Control Agency under the same roof, is no of conveyance, and business entities of Customs officers working at different
exception in this regard, and to do so more interest to Customs, thereby facilitating a types of Customs places of entry (land, air,
effectively, it decided to implement the structured investigation process. sea, and rail crossing points), as well as at
National Customs Enforcement Network Customs clearance zones and within the
(nCEN) an application developed by the A f ter some prepa rator y work a nd Container Control Units set up under the
WCO. negotiations, the decision to implement framework of the United Nations Office
the nCEN was officially taken in 2014 and on Drugs and Crime (UNODC)-WCO
The application gives Customs an agreement was signed with the WCO Container Control Programme (CCP).
administrations the ability to collect, store, in January 2015, making Georgia the first This enabled the officers to get acquainted
analyse, and disseminate law enforcement country in the WCO Europe region to with the tool, and to quickly move to the
information more efficiently at the implement the tool. The GRS provided production server.
national level, in order to establish robust the hardware necessary for the installation
intelligence capabilities, enhance profiling and took care of the language adaptation Once the nCEN became operational on 1
at the strategic, tactical and operational of the application the translation was January 2016, the 26 trained officers were
level, and boost information-sharing both undertaken by a special group of Customs tasked with reporting seizure data into the
regionally and internationally. analysts and information technology (IT) applications databases (seizures, suspects

62
WCO news N 81 October 2016

Georgia Customs
country
and company cases). Once data is entered, on the nCEN. The application has 42 active data for risk management purposes will be
it is validated by system administrators users, and has proved to be a powerful made at the end of each year, and the GRS
located at the GRS. Among other things, platform for capturing data on seizures, hopes to create new risk profiles in order
these administrators are responsible for: suspects and companies. Seizures at each to keep abreast of the practices and modi
border crossing point, at Customs clearance operandi of criminals and fraudsters.
ensuring general communication and zones, and as part of the CCP are reported
information flow between nCEN users into the system. As of 14 September 2016, 625 T he GR S w i l l be pleased to sha re
and Customs headquarters; seizures and 137 company cases have been more about its nCEN implementation
reported into the system. experience with any countries interested
validating cases (data quality checks); in knowing more about the tool, and
Users deem t he appl ic at ion to be what the implementation required. In
ma nag i ng t he applicat ion user user-friendly, and the in-built mail addition, a GRS officer has enrolled
database (creation of new users, system, k now n as t he Information in t he nCEN t ra iner accreditat ion
deactivation of users, users role and Communication Interface (Icomm), programme, and is now at the disposal of
functions management, and password enables smooth and efficient information the WCO to assist other administrations
resets); f low a mong users a nd ex ter na l in implementing the application. Indeed,
connected parties, such as the WCO having implemented the nCEN, the GRS
t r a n s m i t t i n g n o n - n o m i n a l for sending seizure information to the is of the firm opinion that the tool has
components of their data to the global Global CEN database or other countries impacted positively on its operations,
WCO Customs Enforcement Network using the nCEN application. and has definitely strengthened its risk
(CEN) database (the transfer is made management capacities.
with a click of a button). No data analysis has been made at this
stage, but the process is made easy since the More information
After 10 months of utilization, the GRS is captured data can be extracted in different www.rs.ge
now able to provide some positive feedback formats. The processing and analysing of customs@rs.ge

63
PANORAMA

Dubai Customs launches the UAEs


innovative AEO programme
By Eman Badr Al-Suwaidy, Dubai Customs kicked off the implementation
DIRECTOR, CUSTOMS DECLARATION MANAGEMENT & OWNER, AEO PROGRAMME PROJECT, DUBAI CUSTOMS
project of its AEO programme in September
2015, with the programme being officially
The United Arab Emirates (UAE) is one of the worlds launched in October 2016. This rather
short implementation time, compared
largest and fastest growing trading hubs, as a result of to other AEO programmes around the
world, has been made possible by utilizing
its accelerated and extensive modernization initiatives international standards contained in the
WCO SAFE Framework of Standards,
in recent years, the quality of its infrastructure, the taking into account best practices from other
AEO programmes, and benefiting from
intellectual power of its workforce, and a genuine drive international experiences all backed by
an efficient in-house business model which
to achieve its goals. Against this background, the UAE takes on board the accumulated expertise of
Dubai Customs officials and their fine-cut
has officially rolled out its authorized economic operator know-how of the ins and outs of the supply
chain.
(AEO) programme.
AEOs in the UAE and the GCC
APPROXIMATELY 20 MILLION containers are Managing this increasing flow of goods The UAE consists of seven Emirates, each
processed by the UAE seaports every year. requires smart working methods to achieve with a separate Customs administration
In fact, the Port of Jebel Ali in Dubai is more results with the same or even less collectively governed by the Federal
the largest port in the Middle East and resources. An AEO programme provides Customs Aut horit y (FCA). Wit hin
North of Africa (MENA) region and the 9th Customs with a new control strategy based the UAE, a national AEO Committee,
largest globally, while Dubai Airport is the on a strong partnership with legitimate chaired by the FCA, has been established
busiest international airport in the world and compliant stakeholders in the global to coordinate AEO implementation in
with 75 million passengers. In addition, supply chain, marking a shift from all seven Emirates. Dubai is the first to
the UAE manages four million tons of transaction-based controls to system- implement the programme, which will be
airfreight annually. based controls. implemented by the other Emirates.

64
WCO news N 81 October 2016

As the UAE is part of the Gulf Cooperation The AEO validation


Council (GCC), the Customs authorities of Monitoring &
process Authorization
Management
each Emirate are responsible for applying
the GCC Common Customs Law and the
Unified Guide for Customs Procedures. The
UAE AEO programme has been designed Monitoring &
and prepared for regional implementation Application Validation Certification Evaluation
at the GCC level. The objective is to have
the programme implemented by all the
GCC countries a scheme which can be
compared to the AEO model used in the
European Union (EU), where all 28 EU Key Account
Authorization
Member States operate under the same Management
Customs legislation and the same AEO
programme.

A GCC AEO model that enables the


harmonization of AEO programme
characteristics, common AEO status There are no tiers or levels in the UAE A monitoring & management
recog n it ion, Cu stoms-to - Cu stoms AEO programme, as is the case with component, which includes t he
information exchange between GCC some of the established AEO programmes concept of Key Account Management
countries on trader identification codes, that, among other things, differentiate a nd cont i nuous, system-based,
AEO status, and any changes in the risk between traders with differing security monitoring and evaluation of the
profile of a company can facilitate and compliance levels, thereby offering client, as well as re-validation.
create opportunities for a strong AEO different baskets of facilitation measures.
programme in the Middle East region. Dubai Customs believes that in a modern The AEO Authorization starts when
AEO model, the distinct circumstances the company electronically submits an
A holistic approach and operational environment of each application for the AEO programme.
The UAE AEO programme takes a modern AEO need to be addressed individually. Customs ensures that the company is
and holistic approach by including both Companies applying for AEO status will eligible and meets the basic eligibility
compliance and security, along with be thoroughly validated and assessed to criteria. If it does, the process continues
all modes of transport and Customs ensure that their level of compliance and with a tailor-made Self-Assessment
procedures. Any actor in the supply chain security meet AEO requirements. There Questionnaire (SAQ) being filled in by
that has a relationship with Customs may are two main components in the AEO the applicant in order to provide Customs
apply for AEO status. Small and medium- validation process: with detailed information about the
sized enterprises (SMEs) are especially entitys overall status and under the
targeted, as their development is crucial A n a u t h o r i z a t i o n p r o c e s s hood operations.
to the national economy. component;
Dubai Customs performs an analysis and
risk assessment based on the SAQ and
additional available information. Then,
a detailed and thorough examination of
the applicant is performed, validating its
compliance, financial viability, record
keeping, and security measures and
practices. Several onsite visits are carried
out by Customs, including several meetings
and discussions with the applicant.

Depend ing on t he outcome of t he


va l idat ion, a decision is ta ken by
Customs whether the applicant meets
Michael Theis

65
PANORAMA

the eligibility criteria or if any further enhanced administrative management cost savings in the clearance of goods to be
actions or measures need to be taken. through dedicated Key Account measured. Customs expects that an AEO
This is a collaborative process with Managers; will save 25% in operational costs.
t he pu r pose to foster compl ia nce
and enhance security. If it is deemed financial benefits, such as the provision An AEO Centre of Excellence (CoE) will
that the applicant does not meet the of self- guarantees and possible penalty be established with the aim of undertaking
requirements, t he request for AEO mitigation; research in the AEO area, in cooperation
status will be denied. Otherwise, an with leading academic institutions. The
AEO certificate will be issued which better coordination with partnering CoE will also be responsible for KPI
gives right to extensive and tailored government agencies the Key measurement, as well as for marketing the
benefits. The certified company will, for Account Manager will assist the programme and further developing it. The
example, be provided with a dedicated company with other government idea is to ensure that the foreseen benefits
Key Account Manager who will assist it agencies requirements, such as pre- are actually delivered, and to develop new
with any issues related to Customs. approvals and permits related to a benefits in the future. The results of the
Customs clearance. KPIs will be made public.
As A EOs need to be cont i nuously
monitored and evaluated while ensuring Indirect benefits (benefits without explicit/ Way forward
that each AEO gets the benefits, Dubai direct government/Customs participation) As mentioned earlier, Dubai Customs is
Customs has developed an individual include: determined to develop the AEO concept
control plan for each AEO that defines to new levels using innovative solutions.
when and how control measures should increased marketing opportunities, as Transshipments, free zones, Customs-to-
be ta ken. A thorough re-va lidation companies may choose to rather buy Customs integration, and single or pan
will occur within three years to ensure products and services from AEO- government AEO status are some of the
sustained levels of compliance and certified parties; areas that will be addressed in the future.
security.
decrea sed nu mber of negat ive Lets take for example transshipments, a
The whole AEO process is electronic and incidents and disruptions in the supply regime applied to a significant number of
supported by information technology chain, thanks to an adequate set of consignments flowing through Dubai and
(IT) solutions for managing applications, security measures. the UAE. The Customs administrations
validations and certifications. The Customs of the UAE have a great opportunity to
IT systems have also been updated to Mutual recognition enhance the visibility and security of the
enable the differentiation of AEOs and The UAE aims to sign mutual recognition transshipment regime even further by
non-AEOs, the former benefitting from a arrangements (MRAs) with a significant efficiently using the AEO programme,
lower risk score, faster clearance, and given number of national and regional AEO along with innovative solutions. Actors
the highest priority status by Customs and programmes as a way of promoting trade that are AEOs and involved in the
other government agencies. and providing benefits to local and foreign transshipment process, such as exporters,
AEO traders. To achieve this goal, an MRA forwarders, carriers and cargo terminal
Extensive benefits package strategy and a national MRA model have operators (CTOs), will benefit from a
Forty-seven benefits will be provided been developed using a comprehensive set secure transshipment lane. This Secure
in different phases to AEO-certified of criteria (e.g. trade volume, diplomatic Transshipment Hub scheme and solution
companies. These benefits are intended to relations, and more) to methodologically are still concepts subject to further
motivate companies to join the programme prioritize prospective MRA partners. development.
and maintain the status. Without clear
and tangible benefits, and a demonstrable Measuring success Feedback and research reaching Customs
positive return on investment (ROI), During the positioning phase and the forecasts a considerable bundle of benefits
companies will be reluctant to join the extensive research that accompanied it, to businesses engaged in international
AEO programme, and, once in it, may it became clear to Dubai Customs that an trade activities in the UAE and Dubai,
elect to withdraw due to the fact that the efficient AEO programme should ensure which will surely secure a measurable
additional costs sustained by them in that businesses can receive genuine and contribution to the enhancement of
meeting prescribed AEO requirements tangible benefits, while avoiding an supply chain security, and facilitate
may become greater than the benefits arduous validation process, aggregated Customs transactions in the UAE. The
realized. onsite validations, unclear guidelines, and AEO programme will definitely result in
complex certification criteria. a rather unique and unmatched Customs
The direct benefits (benefits with explicit/ service for businesses, by saving them
direct government/Customs participation) Measuring the outcome of any projects is costs and efforts, while incentivizing trade
include: a requirement of the Dubai Government. activities in the UAE.
Key Performance Indicators (KPIs) have,
faster clearance through prioritization therefore, been developed to enable More information
and lower risks, etc; compliance, speed, predictability, and www.aeo.ae

66
WCO news N 81 October 2016
European Parliament

Cooperation: a cornerstone of the


EUs Customs Union
By Roel van 't Veld, Responsibility for Customs policy is at the Customs Cooperation Working Party
SPECIALIST POLICY ADVISOR, EU AFFAIRS, CUSTOMS level of the EU. It is one of the areas in Within the Council, technical work is
ADMINISTRATION OF THE NETHERLANDS
which the EU has exclusive competence. mandated to a large number of Council
TO ENABLE A Customs union to operate However, implementing the Customs working parties. Two of them are dedicated
properly, active cooperation between union relies on close partnerships with to the work of Customs:
Customs authorities within the union and between Member States.
must be established. This cooperation the Customs Union Group (CUG),
is not necessarily limited to legal issues The Council of the EU, which represents a working party closely related to
touching on core Customs domains, e.g. the Member States' governments, decides the trade and competiveness areas,
regulating import and export formalities on what duties to impose, and is jointly which discusses and decides upon
or establishing a common tariff. An responsible with the European Parliament matters regarding Customs policy and
effective Customs union must also provide for overseeing Customs cooperation legislation;
for Customs authorities to cooperate on between Member States and between
law enforcement issues, in order to ensure Member States a nd t he Eu ropea n the Customs Cooperation Working
security and safety within the union, and Commission (EC). Party (CCWP), which coordinates
the effective and efficient fight against operat iona l cooperat ion a mong
crime. The presidency of the Council rotates national Customs administrations,
among the EUs Member States every six and works on aligning the work of
About the European Union months. During this six-month period, Customs with the priorities of the
Such is the situation within the European the presidency chairs meetings at every law enforcement community while
Union (EU), a politico-economic union level of the Council, helping to ensure the ensuring that Customs valuable
currently comprising 28 Member States, continuity of the EU's work in the Council. knowledge on international goods
whose Customs union came into being transport is used to the fullest extent.
on 1 July 1968, when the remaining Member States holding the presidency
Customs duties on intra-Community work together closely in groups of three, Apart from the Member States, delegates
trade were abolished and the common called trios. The trio sets long-term from the EC and other EU agencies,
Customs tariff was introduced to replace goals, and prepares a common agenda such as the Anti-Fraud Office of the EU
national Customs duties in trade with determining the topics and major issues (OLAF) and the European Police Office
the rest of the world. In 1993, Customs that will be addressed by the Council over (EUROPOL), take part in the discussions
controls at EU internal borders were an 18-month period. On the basis of this of the CCWP.
abol ished, ma k i ng long queues of programme, each of the three countries
commercial vehicles at border crossings prepares its own more detailed six-month
a distant memory. programme.

67
PANORAMA

European Multidisciplinary Platform


against Criminal Threats (EMPACT) was
set up to implement the EUs priorities on
the fight against organized and serious
international crime though investigations
and operations. These priorities reflect the
fields which require the concerted activity
of EU law enforcement institutions,
according to the Serious and Organized
Crime Threat Assessment (SOCTA),
carried out by EUROPOL.

Dutch Customs
To underline the pivotal role of the CCWP
in this domain, the Dutch presidency
worked to ensure that Customs authorities
were better engaged in the decision-
making by senior justice officials. This
Dutch presidency their attacks, i.e. getting their hands on led to the closer involvement of Customs
The current trio chairing the Council firearms, explosives or finances. in the development of joint activities in
is made up of the presidencies of the the fight against organized crime, in the
Netherlands, Slovakia and Malta, with Part of the mandate of the CCWP is to context of EMPACTs priorities.
the Netherlands being the first to have approve business cases for Joint Customs
taken the six-month presidency from 1 Operations (JCO). During the Dutch Excise fraud
January to 30 June 2016. As such it has presidency, an enforcement operation was The fight against excise fraud remains
been planning and chairing meetings of started to fight the smuggling of firearms, an important issue for the EU. Not only
the Council and its preparatory bodies, jointly by the Customs authorities and does excise fraud pose a threat to the EUs
including the CCWP. police ser vices within the EU. The financial interests, it is often linked to
operation is currently in its final stage. organized crime. The CCWP dedicated a
More specifically, the CCWP was chaired Ahead of the operation, experts from the substantial part of its time to discussing
by the Customs Administration of the WCO provided valuable insight on the ways to tackle this particular type of fraud,
Netherlands with the support of a small international dimension of these crimes and decided on new operations that would
staff from the Secretariat of the Council. to the operations participants. be organized.
A dedicated team of six people [see photo
above] organized a total of 10 meetings, At the CCWP, the fight against terrorism OLAF presented the main actions that had
including a high level meeting gathering funding was also addressed through taken place and that were still ongoing
Directors General of Customs which was discussions on the role of Customs in the fight against cigarette smuggling
organized jointly with the CUG. in stopping the trafficking of illicitly and other forms of illicit trade in tobacco
obtained cultural goods and endangered products. The WCO also presented its
Initiatives related to the fight against wildlife. Among other things, experts ongoing activities in this area.
terrorism and organized crime exchanged best practices on their Customs
Under the Dutch presidency, its main administrations fight against wildlife Information exchange
priority regarding the CCWP was to crime. Ensuring the exchange of information
ensure that the Working Party played a between EU Member States appropriate
pivotal role in areas relating to Customs, The CCWP also started working on bodies is an important factor for making
and justice and home affairs. Several of the effective cooperation and coordination law enforcement cooperation work. A
activities carried out during this period b e t we en Cu s tom s a nd t he ne w ly major theme in the Dutch presidency
in relation to Customs involvement in established European Border and Coast was to improve data exchange between
the fight against terrorism and organized Guard Agency (EUBCG). In due time, a Customs and tax authorities, both at the
crime are listed below. coordinated border management strategy national and EU levels.
will be established and discussed at the
Terrorism CCWP, and the WCO will be consulted During a meeting gathering Directors
As a result of the attacks in Paris and during this process. General of Customs, tackling cross-border
Brussels, the fight against terrorism tax fraud and value-added tax (VAT) fraud
was high on the agenda of the Dutch Organized crime was discussed. As a follow up, two joint
presidency. Customs authorities play Ensuring cooperation with other law groups of Customs and tax experts were
an important role in protecting society enforcement agencies on a policy and established: the first one will look into
by preventing terrorist organizations practical level plays an important role combatting VAT fraud when goods are
from obtaining the means to carry out in the fight against organized crime. The imported into one Member State while

68
WCO news N 81 October 2016

A major theme in the Dutch presidency


was to improve data exchange between
Customs and tax authorities, both at
the national and EU levels. Two joint
groups of Customs and tax experts were
established: the first one will look into
combatting VAT fraud when goods are
imported into one Member State while VAT
is due in another; and the second one will
examine VAT fraud related to e-commerce
transactions, especially when it comes to
returned goods.

VAT is due in another; and the second


UV-light
one will examine VAT fraud related to
e-commerce transactions, especially when
it comes to returned goods.

Way ahead
In total, the CCWP met 10 times during
the Dutch presidency and many topics not
covered in this article were also discussed,
from the development of a Customs law
enforcement training catalogue, to the
creation of a roadmap for enhancing
i n for m at ion e xc h a n ge (i nc lud i n g
interoperability solutions), to governance
issues pertaining to the CCWP itself. In
the end, it is not the presidency that makes
jetStamp graphic 970
the CCWP successful the presidency is
only there to facilitate its work, while the
involvement of EU Member States ensures REINER handheld ink jet printer
its success.
Automatic number, date, time, barcode and logo
In the six months of the Dutch presidency, Security inks like UV visible or invisible, to print
a number of project groups comprising on porous or nonporous materials
different Member States started working
on tackling risks in areas concerning
excise, cash smuggling, firearms, and small REINER imprimante mobile
parcels. On 1 July 2016, the Slovak Republic jet d encre
took over the rotating presidency with an
ambitious agenda to continue the work Numros, dates et heures automatiques,
initiated under the Dutch presidency, based codes barre et logo
on a common agreement between members
of the trio. During the Slovak, and later the Encres de scurit type UV visible ou invisible,
Maltese presidency, enhancing cooperation pour impression sur supports poreux ou non
between Customs authorities and other poreux
law enforcement agencies in combatting
cross-border terrorism will again be at the
forefront of the CCWPs agenda.

More information
r.van.t.veld@belastingdienst.nl
www.consilium.europa.eu/en/council-eu
Ernst Reiner GmbH & Co. KG | Baumannstr. 16
78120 Furtwangen / Germany | Tel. +49 7723 657-0 | reiner@reiner.de
69
INTERVIEW

The looting of cultural heritage has been happening


since the very existence of cultural heritage, it is not
anything new, but what we see now is that looting has
become highly organized
Molly Fannon,
DIRECTOR OF THE OFFICE OF INTERNATIONAL RELATIONS, SMITHSONIAN INSTITUTION

E V E RY Y E A R , T HOUSA N D S of a r t e f a c t s knowledge to identify illicit transactions. at helping them to identif y cultural


disappear from museums, churches, Yet, enforcement authorities face many heritage objects.
private collections, public institutions or difficulties due to a lack of expertise in
archaeological sites. From antique weapons determining the quality of the objects they What is the mission of the Smithsonian
to paintings, from coins to watches, from come across, together with the problem of Institution and what type of professionals
religious objects to archaeological finds, assessing their value and the authenticity does it have on its staff?
tens of thousands of specimens forming of their provenance.
part of the worlds archaeological and T he Sm it hson ia n I nst it ut ion wa s
cultural heritage are stolen or looted. Hence the need for cooperation with established in 1846 with funds given by a
r e le v a nt s t a k e ho ld e r s , i nc lu d i n g man named James Smithson to the United
Trafficking in items dating back to previous professionals and experts committed to States (US) government. He was a British
generations began thousands of years ago. the protection of cultural heritage. To scientist and someone who had never set
However, over the past few decades, the understand how this cooperation works foot in the US before. He left his entire
phenomenon has, unfortunately, become in practice, we spoke with Molly Fannon, estate to the US government to create an
a problem of epidemic proportions. the Director of the Office of International organization dedicated only to the increase
Relations at the Smithsonian Institution, and diffusion of knowledge with the world.
Estimates of the size and profitability and asked her about the Institution and its
of black markets in looted, stolen and activities, with a focus on the illicit trade That gift created the worlds leading
smuggled works of art and antiquities in cultural goods and cooperation with law museum, education and research complex.
are notoriously unreliable, but specialists enforcement authorities. Today, the Smithsonian Institution has
agree that this is one of the world's biggest 21 museums. We just opened our 21st
illegal enterprises, worth billions of US During the 2016 Council Sessions, the museum, the National Museum of African
dollars, which has naturally attracted WCO and the Smithsonian Institution American History and Culture, on 24
interest from organized crime as well as signed a Memorandum of Understanding September of this year.
military and terrorist groups. (MoU) in which both parties agree to
consider joint projects and activities, We have the largest collection of items
Combating this illegal trade requires such as the development and delivery with more than 159 million objects.
the dedicated mobilization of Customs of training or the supply of information But, as the Smithsonians first Secretary,
administrations as well as specif ic and expertise to field officers, aimed Joseph Henry, said in 1852, the worth and

70
WCO news N 81 October 2016

importance of the Institution is not to be which enable them to see inside an object official looting permits to looters,
estimated by what it accumulates within or get the exact shape of an object or an allowing theft from archaeological sites
the walls of its building, but by what it inscription. Thanks to our own staff and and then collecting tax on looted goods.
sends forth to the world. the network of professionals they have So we know that looting is being used in a
built, we can say that there are very few systematic way for financial gains.
Today, we work in more t han 150 areas where we do not have specialization.
cou nt r ies, doi ng ever y t h i ng f rom Lets not forget that the aim is also to
astrophysics research to under water deep Despite difficulties in obtaining accurate terrorize people, to erase their memory.
sea archaeology and exploration, from global statistics on the scale of the The Czech historian Milan Hbl wrote
climate change science to biodiversity problem, have you recently witnessed any some enlightening lines back in 1971 on
conser vation, from anthropological specific developments in the illicit trade in this subject. He said, the first step in
research to modern art, every thing cultural goods? liquidating a people is to erase its memory.
under the sunThe key to all we do, our Destroy its books, its culture, its history.
motivation, is to safeguard the worlds In terms of the size of the issue, there is Then have somebody write new books,
memory; the memory of life on earth general consensus among experts in this manufacture a new culture, invent a new
from prehistoric time to the memory of area that the threat has not been this history. Before long the nation will begin
cultures around the world, and to share large since World War II (WWII). The to forget what it is and what it was. The
this knowledge with the world. actual level of destruction really is highly world around it will forget even faster.
debated right now between scholars and
Because we have such diverse museums other practitioners who are involved, but On the f lip side, we have also seen an
and research centres, we also have, as you what is not debated is that the destruction enormous outpouring of support from
would imagine, very diverse staff. More of cultural heritage is funding terrorism the global community, and a demand
than 6,000 employees, including more in parts of the world. The Wall Street for action to combat this threat. The fact
than 500 PhD level scientists, work at the Journal, for example, reported recently that the WCO signed a MoU with the
Smithsonian. They work in partnership that the revenue from the Islamic States Smithsonian is part of a pattern of what
with colleagues all over the world and have (ISIS) illegal trade in antiquities is second we see as many organizations standing
built a global network of scholars in order only to its revenue from oil. up and waking up to the severity of the
to help us achieve our mission. crisis, to the fact that cultural heritage
What we see, which are especially troubling really matters for a wide range of reasons.
The sheer number and diversity of the developments, is the systemization and
objects in our collections has enabled professionalization of the looting. The In June this year, 21 dedicated cultural
our staff, among which are researchers, looting of cultural heritage has been professionals from 18 different countries
a nt hropolog ists, conser vators a nd happening since the very existence of participated in the First Aid to Cultural
curators, to develop specific knowledge cultural heritage, it is not anything new, Her itage cou rse orga ni zed by t he
in the cultural heritage of most of the but what we see now is that looting has Smithsonian and the Internationa l
worlds regions we have, for example, become highly organized! Centre for the Study of the Preservation
staff specialized in pre-Columbian art. and Restoration of Cultural Property
For example, when you look at satellite (ICCROM). They came to Washington,
To understand the object and learn how imagery of sites like Dura Europos in D.C. for a month to learn how to coordinate
to conserve it, they have at their disposal Syria, you see an enormous growth in their response to protecting heritage in
the most advanced technology in the world the looting paths. In documents which times of crisis. This is a testimony to the
such as advanced microscopes, chemical were secured by the US State Department diversity of support out there in terms of
analysers or even pet scans or 3D scanners, in Syria, we learn that the ISIS has issued combatting this issue. There is also an

71
INTERVIEW

overall acknowledgement that we have


gotten to the point of a crisis in this area,
and that once a cultural object is lost, it is
often lost forever. So, the time for action
is now.

Photo: FBI
W hy should governments and
enforcement authorities spend time and
Satellite imagery of Dura Europos, a 150-acre site in Syria dating to 300 B.C., shows how it
money on the cultural sector, and why looked in 2012.
does it matter?

All governments have to weigh different


priorities. They might consider that
stopping the trafficking in guns or
spending money on economic development
or education is more important than
protecting a painting or an archaeological
object. Ill talk about why the cultural
sector also matters. But, let me first share
a story with you

Just after the earthquake hit Haiti in


2010, t he Smit hsonian, w it h many
partners especially USAID and the State
Department, launched a major project in
response to the disaster. We had very close
ties with our cultural heritage colleagues

Photo: FBI
in Haiti, given our long history of working
together. The then Minister of Culture in
Dura Europos as it appeared in 2014, covered by looters pits.
Haiti, Olsen Jean Julien, explained that
after saving peoples lives, the next thing
to save was their reasons for living. Memory, and in Bosnia and Herzegovina, How do you suppor t enforcement
where highlighting shared heritage is also authorities in their fieldwork in general
I will talk in a second about why cultural an opportunity to bring communities and in the area of cultural goods in
heritage is valuable to the economy, but together. particular?
let me first highlight that it has enormous
intrinsic value: it represents what we all are Of course, as I mentioned, real economic We have provided support to actors
as people; it helps nations come together; value should not be underestimated. involved in the fight against illegal
it helps a community to get a sense of its The cultural sector is an enormous traf f ick ing in w ild life by tailoring
identity; it helps us negotiate differences, driver of economic growth. The 2015 sophisticated DNA barcoding tools
often in a peaceful way; and it gives us study by CISAC estimated that the so that they can be used more easily,
resilience as societies. sector worldwide contributes around and by harnessing our collections of
2.25 billion US dollars to the global millions of species to develop a global
So, countries coming out of conflict are economy. It is an amazing employer; and DNA reference library. In Kenya, for
increasingly looking to restore cultural is particularly an enabling employer of example, our scientists have worked
institutions and to recover cultural women. In most developing countries, with the National Museums and with
heritage that they might have lost or that handicraft is second only to agriculture the Wildlife Service on DNA barcoding.
might have been damaged during the i n ter ms of employ ment . Cu lt u re The objective is to be able to prove that
warfare. We have seen it in Colombia, contributes to the tourism and education confiscated wildlife items were sourced
where the Smithsonian is partnering with sectors. There are, therefore, a lot of from Kenya, and to be able to identify
the National Center for Historical Memory reasons to invest in the protection of the exact location where the items were
to build a new National Museum of cultural heritage. sourced.

72
WCO news N 81 October 2016

Because we are a trust instrumentality seized those objects and sent them to our hope to help bridge these communities of
of the US federal government, we have a museum for study. law enforcement professionals and cultural
long partnership with the Department experts, so that together we can all address
of Homela nd Secu rit y (DHS), t he We envision expanding our partnership this global crisis.
De pa r t ment of Defen s e , a nd t he with US enforcement officials and taking
Department of State. Among other things, that model of partnership global. One of The Smithsonian Institution has a vast
we help support and deliver training to US the reasons we are so excited to work with collection of artefacts. What due diligence
Customs and Border Protection through the WCO and its Members is that we can does it carry out to ensure that they are
an agreement with the State Department learn from our experience in training not stolen or looted?
and DHS. Since 2008, our museum together, and bring that sort of training
curators, our conservators, and many experience to Customs officers all over We acknowledge that museums, especially
other professionals have trained more than the world. The goal is also to partner with in the past, have been part of the problem.
350 Customs officers to recognize looted local cultural organizations and museums Museums often had objects in their
cultural objects. We do it once or twice a around the world, so that they can be part collection that might not have been
year, and hold our training sessions inside of the solution too. acquired through the proper channels.
our museums so that Customs officers are So, the Smithsonian takes due diligence to
able to interact with the collections and You also cooperate with museums around ensure that objects have not been stolen or
visit our laboratories. They also get to the world. Can you describe some of looted very seriously.
know our staff, making it easier to know the activities undertaken under such
who they can call upon if they come up cooperation frameworks? For example, for all new acquisitions, each
with a case and need assistance. of our museums has set up a collection
At the Smithsonian, we cooperate with management policy which requires
Recently, one of our anthropologists museums and peer institutions all the documentation of the provenance, of the
worked with to analyse 100 objects that time around scholarship and research, kind of chain of custody of those objects
DHS agents had discovered and which to build capacity and undertake training over time. Each has its own unique policy
appeared to be of pre-Columbian origin. programmes. These are reciprocal learning as museums collections vary so widely.
DHS needed to know whether the objects programmes as we learn from each other These policies are made available to the
were authentic or whether they were fakes in developing master plans, collection public.
as the importer was claiming. It came out ma nagement pla ns, a nd educat ion
that more than 90% of the objects were programmes. As a general rule, we only collect items
authentic pre-Columbian artefacts. They when there is a good faith intention to
were priceless. Many of them had never We a lso work w it h museu ms a nd keep them in our collection for a long
been seen before by the anthropologist ministries of culture in countries which are time. We also have multiple programmes
working on the case, although she had coming out of some sort of natural disaster across ou r museu ms to ca rr y out
more than 40 years experience. If they had or man-made disaster. In Haiti, after the provenance research. Provenance is the
successfully been imported into the US, earthquake, we gathered 30 partners and history of ownership of an artwork or an
a lot of knowledge would have been lost organized a response. Over a few years, we artefact which provides really important
about that pre-Columbian era. Had those trained our Haitian colleagues and worked information about the attribution, which
objects disappeared, that would have been alongside them to rescue more than 30,000 is the authorship of the object. We follow
a whole part of our memory gone. pieces. We also trained more than 100 guidelines such as those of the American
new Haitian cultural professionals. Just Alliance of Museums or the Association
The objects were removed from their last year, a new centre in Port de France of Art Museum Directors, especially
original site, and often what is most was created to continue this work. We are concerning objects that may have been
important for archaeologists and other working in Nepal in a similar way. confiscated during WWII for example.
scholars is studying objects in context:
how they relate to each other; and how What we are increasingly seeing is a We have a specific programme which aims
they relate to where they have been found. desire from all of our colleagues around to identify the provenance of all objects in
Once they are removed from their context, the world in the museum sector to play a collections that were created before 1946
a lot of knowledge is nearly impossible to part in solving the real crisis we are facing or acquired after 1952, that underwent a
put back in place. So, it is not like there when it comes to the preservation of the change of ownership during the period
was nothing lost, but there would have worlds cultural heritage today. Through of WWII, and that might have been in
been a greater loss had DHS agents not our new partnership with the WCO, we central Europe during that time. All the

73
INTERVIEW

Customs Connection

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provenance research is made available to natural and cultural heritage. If we take


the public. Our Freer and Sackler Galleries the time to know one another, we will What we have learned over
of Asian art also initiated, in 2008, a find that we complement each others the last eight years working
comprehensive provenance research skills and can establish very productive
programme for their entire Asian art relationships. with Customs officials is
collection. We repatriate objects when that while Customs officials
necessary and when possible, and have I t hi n k t hat i n most cou nt ries, a
repatriation objects officers who deal with partnership already exists, at the national and museum professionals
how to send objects back. level, between Customs and national might speak different
museums or with ministries of culture.
Cooperation is once again a key word, but But, should a WCO Member need help languages, might think
is it always straightforward? in establishing a dialogue with such about the world in different
institutions, we would be delighted to
What we have learned over the last discuss options with them, and perhaps ways, and perhaps have
eight yea rs work ing w it h Customs make recommendations. In most cases, different priorities on the
officials is that while Customs officials the Smithsonian would already have
and museum professionals might speak relationships and contacts at the national surface, they have the same
different languages, might think about level, and we would be able to help the goal in mind, which is to
the world in different ways, and perhaps conversation get started.
have different priorities on the surface, protect what global citizens
they have the same goal in mind, which More information value as natural and cultural
is to protect what global citizens value as www.si.edu
heritage.

74
POINT OF VIEW WCO news N 81 October 2016

Global warming, international trade, and the


quantification of carbon emissions: production-
based and consumption-based accounting
Carbon dioxide concentration at Mauna Loa Observatory
410
By Robert Ireland,
HEAD OF THE WCO RESEARCH UNIT 400
Latest CO2 reading, September 12,2016
390
Global warming is on 380
401.74 ppm
a dangerous trajectory. 370

360
Human-induced carbon
350

dioxide pollution 340

330
and deforestation are
320
steadily increasing levels 310
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
of atmospheric CO2
CO2 atmospheric accumulation Table 1 Top ten warmest years on
concentration which is Dr. Charles Keeling of the Scripps record, 1880-2015, average surface
Institution of Oceanography at the temperatures
resulting in, among other Mauna Loa Obser vator y in Hawaii
began to measure the atmospheric CO2 Rank Year
things, higher global concentration in 1958. On 12 September 1 2015
2016, the concentration of CO 2 was
2 2014
average temperatures 401.74 parts per million (ppm) in the
3 2010
sky above Hawaii; the chart above from
and extreme weather Scripps reflects the rise in average annual 4 2013
atmospheric CO2 concentration from 1958 5 2005
events. This article opines to 2016. The current levels of atmospheric 6 2009
CO2 concentration have increased by 43%
7 1998
on the latest global from the approximate rate of 280 ppm in
8 2012
the 1880s (evidenced by carbon isotope
warming data, mitigation analysis) when the inexorable escalation 9 2007
caused by human industrial activity began. 10 2006
policies, and the two The last time the Earths atmospheric
carbon concentration was over 400 ppm Sources: US National Oceanic and
major methods of carbon was at least two million years ago before Atmospheric Administration (NOAA) and
humans existed! US NASA
emissions quantification
Global warming Table 2 Number of warmest years
(production-based and T he Un ited St ate s (US) Nat iona l per decade, 1880-2015, average surface
Aeronautics and Space Administration temperatures
consumption-based), (NASA) recently announced that in early
2016, global average temperatures reached Decade Number of years in
particularly the synergies a point approximately 1.3 degrees Celsius top ten
higher than pre-industrial levels. As 2010s 5
between consumption- ref lected in Tables 1 and 2, nine of the 2000s 4
top ten warmest years since at least 1880
1990s 1
based accounting and have occurred in the 21st century. 2015 is
1880s-1980s 0
currently the warmest year on record, and
international trade. 2016 is on track to become the warmest.
Sources: US NOAA and US NASA

75
POINT OF VIEW

Extreme weather events infrastructure development (such as probably more acceptable to politicians
While scientific models predict that renewable energy transmission lines); and constituents, which is why most
g loba l wa r m i ng w i l l i ncrea se t he st reng t hened c a rbon pol lut ion governments are choosing ETS.
number of extreme weather events, peer- regulations (such as vehicle emission
reviewed research indicates this is already standards); The performance of the largest ETS
happening and intensifying. In its 2014 public investments and subsidies in has been discouraging. The European
report, the Intergovernmental Panel on low-carbon technologies; Unions (EUs) ETS has experienced
Climate Change (IPCC) summarized reducing or eliminating fossil fuel sharp volatility and sizable price declines.
that changes in many extreme weather subsidies; The extremely low price (4.38 euro per
and climate events have been observed international trade policies (such carbon ton on 1 August 2016) has largely
since about 1950. Some of these changes as lower ta rif fs on low-ca rbon been attributed to an oversupply of
have been linked to human inf luences, technologies); carbon allowances. More recently, this
including a decrease in cold temperature reforestation; has been exacerbated by the long-term
extremes, an increase in warm temperature carbon pricing. weakness of the EUs economy, and fears
extremes, an increase in extreme high sea concerning Brexit (the referendum of
levels, and an increase in the number of While it should be only one of several 23 June 2016, whereby British citizens
heavy precipitation events in a number of global warming mitigation policies, voted to exit the EU). Accordingly, the
regions. governments of major emitters should EU ETS is failing to signal a potent and
signal a CO2 price so that carbon pollution predictable carbon price to incentivize
Policies to mitigate global warming becomes more expensive, and thus lower CO2 emissions.
Carbon emissions and atmospheric incentivizes conservation and transitions
carbon accumulation will not diminish to low-carbon energies. The two general Production-based and consumption-
sig n i f ic a nt ly w it hout gover n ment policy options for carbon pricing are a based accounting of CO2
intervention. In particular, public policies carbon tax, and an emissions trading The traditional way to measure a nations
must shift energy sources from coal and system (ETS) which is also known as a carbon emissions is by calculating the
petroleum to renewable energies (solar, cap-and-trade system. total generated from within its national
wind, geothermal, and hydropower) territory. Under this methodology, the
and nuclear power. To support this, In evaluating carbon pricing under both carbon emissions from the production
gover n ment s shou ld i mplement a an effectiveness and efficiency criteria, a of goods that will become exports are
combination of strategies. Although no carbon tax is probably preferable to an ETS allocated to the exporter country not
individual policy will comprehensively because it likely results in more consistent the importer country where the goods
and adequately reduce carbon emissions, carbon prices that can be increased more are ultimately consumed or used. The
there are several that in combination could easily when necessary. Under a political United Nations Framework Convention
make significant contributions, including: feasibility criterion, however, an ETS is on Climate Change (UNFCCC) and the

76
WCO news N 81 October 2016

In combination with carbon pricing, some


countries might opt to implement carbon
tariffs to reduce carbon leakage. Carbon
tariffs predominantly, but not exclusively,
entail a tax on the embodied carbon of
imports. Partially because these actions
could face World Trade Organization
adjudication, proponents frequently call
them border tax adjustments , which are
Augustin Ruiz

an acceptable equivalence mechanism


under WTO law.

IPCC have largely used this production- and brings together the many strands of Carbon leakage
based accounting. consumption-based accounting. Carbon leakage is the concept that if a
country adopts robust carbon mitigation
Consumption-based accounting takes The implications of consumption-based policies (such as a carbon tax) unilaterally,
a different approach. Goods that are accounting of CO2 industries with high-carbon emissions
consumed but not produced in Country C onsu mpt ion-based accou nt i ng will then shift to countries that do not
A are allocated to Country As account, introduces an a lternate met hod of have similarly strong carbon pricing
not Country B where the goods were qu a nt i f y i ng c a rbon em i s sions by mechanisms. For instance, a steelmaker
produced. Thus, the carbon emissions specifically incorporating international may shift its production from an abating
generated by the manufacture of goods trade into the calculation. Moreover, it (the one that is purposely and successfully
in Country B but imported by Country can reduce the carbon emissions score reducing its CO2 emissions) country to a
A would be considered to be Country of some large export-heavy nations, and non-abating country, in order to enjoy
As carbon emissions. In other words, increase the carbon emissions score more lax environmental laws and lower
the carbon emissions resulting from of some large import-heavy nations. If costs. Consequently, there would be no
the production of goods intended for an export-heavy nation is not credited global reduction in carbon emissions; the
international trade are allocated to the with the carbon emissions triggered volume has merely switched countries.
importing country not the exporting by their manufacture of goods that are
country. purely intended for export, their carbon Carbon leakage also raises several issues,
emissions score is lower. including business competitiveness and
CO2 under this delineation is sometimes climate mitigation policy. Regarding
called embodied carbon, which has I n p a r a l l e l , c o u nt r i e s t h a t h a v e business competitiveness, carbon leakage
been defined by Kejun, Cosbey, and experienced reductions in domestic could mean that high-carbon businesses
Mur phy (20 08) as carbon diox ide indust ria l ma nu facturing (such as will fail in an abating country, and similar
em it te d at a l l s t a ge s of a go o d s cement, chemicals, steel, and paper) and businesses will thrive in a non-abating
manufacturing process, from the mining simply import such goods would have country. As for climate mitigation policy,
of raw materials through the distribution their carbon emissions score increase global carbon emissions may not decrease
process, to the final product provided because their consumption becomes because they have merely shifted from an
to the consumer. Consumption-based part of the assessment. Some critics abating country to a non-abating country.
accounting and its implications are contend, however, that the implications
gaining prominence in academic fields of using consumption-based accounting Thus, even if an abating country reduces
too. Economist Christian Liningers 2015 are deleterious for emerging economies, its carbon footprint, a non-abating
book Consumption-Based Approaches pa r t icu la rly if worries concerni ng country will experience carbon emission
in International Climate Policy is a carbon leakage are dealt with by 'carbon increases. Accordingly, the gains made by
classic reference manual on this topic, tariffs. an abating country are canceled out, and

77
POINT OF VIEW

result in no climate mitigation globally. these actions could face World Trade assert that they are merely another form
Christian Lininger has described carbon Organization (WTO) adjudication, of eco-protectionism.
leakage as an effect that may occur if not proponents frequently call them border
all regions of the world abate: emissions tax adjustments (BTAs), which are an Conclusion
may not be reduced on a global scale, acceptable equivalence mechanism under Some policy analysts are raising the
but merely shifted from abating to non- WTO law. prof ile of t he still-unconventiona l
abating regions. notion of measuring CO2 emissions with
The WTO has described BTAs as consisting consumption-based accounting rather than
The government of an abating country of two situations: (i) the imposition of a production-based accounting. Advocates
may subsequent ly decide to act to tax on imported products, corresponding suggest that it is a more accurate system, and
dilute carbon leakage in order to keep to a tax borne by similar domestic products would better incentivize CO2 abatement.
certain manufacturers in their country, (i.e. BTA on imports); and (ii) the refund
and ostensibly to lower global carbon of domestic taxes when the products are Such an approach also draws from the
emissions. Conceptually, although it has exported (i.e. BTA on exports). perspective that international trade is both
not happened yet, this could be pursued a contributor to global warming, and an
with carbon tariffs. D i s c e r n i b l y, c a r b o n t a r i f f s a r e intrinsic component in the many solutions
controversial. Advocates contend that that exist. Consequently, regardless of
Carbon tariffs they will be necessary to incentivize what policies are being adopted, and by
In combination with carbon pricing, countries with high carbon pollution whom, international trade and border
some countries might opt to implement and weak climate policies to change management are being incorporated into
carbon tariffs to reduce carbon leakage. their ways, and that domestically they the global warming policy framework.
Carbon tariffs predominantly, but not will be necessary to inoculate against
exclusively, entail a tax on the embodied a c c u s at ion s of h a r m to bu si ne s s More information
carbon of imports. Partially because competitiveness. Conversely, critics robert.ireland@wcoomd.org

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EVENTS

Calendar of Events
November
3-4 Information Management Sub-Committee (IMSC), 71st Meeting
9 - 11 Working Group on Revenue Compliance and Fraud, 3rd Meeting
14 - 15 ATA/Istanbul Administrative Committee
16 - 17 Revised Kyoto Convention Management Committee, 15th Meeting
21 - 22 WCO/IATA/ICAO API/PNR Contact Committee, 10th Meeting
23 - 24 WCO/UPU Contact Committee
28 - 30 WCO Counterfeiting and Piracy (CAP) Group, 13th Meeting

December
5 - 7 Policy Commission, 76th Session (Russian Federation)
12 - 16 Harmonized System Review Sub-Committee, 51st Session

January
9 - 13 Data Model Project Team
17 - 20 Scientific Sub-Committee, 32nd Session
23 - 24 Global RILO Meeting, 20th Meeting
25 - 26 CEN Management Team (CENMaT) Meeting, 16th Meeting
26 International Customs Day

February
6-7 Technical Committee on Rules of Origin, 35th Session
20 - 21Audit Committee, 11th Meeting
22 - 23Technical Experts Group on Air Cargo Security, 11th Meeting
27 - 28Private Sector Consultative Group
27 - 28Administrative Committee for the Customs Convention on Containers, 1972,
17th Meeting
28 SAFE Members Only Meeting

March
1 - 3 SAFE Working Group, 17th Meeting
2 - 3 Regional Offices for Capacity Building (ROCBs)/Regional Training Centres (RTCs),
12th Meeting
6 - 7 Agreement on Trade Facilitation Working Group, 7th Meeting
7 - 9 Capacity Building Committee, 8th Session
9 - 10 Integrity Sub-Committee, 16th Session
13 - 14 Harmonized System Committee Working Party
15 - 24 Harmonized System Committee, 59th Session
27 - 31 Enforcement Committee, 36th Session

It should be noted that WCO meetings are mentioned for information purposes and are not all open to the public. Unless otherwise
indicated, all meetings are held in Brussels. Please note that these dates are indicative only and may be subject to change. The WCO
meetings schedule is regularly updated on the WCO website.

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