WCO presentation

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Trade Facilitation and the role of WCO
Customs High Level Meeting on Trade Facilitation
in the Asia Pacific Region 13-15 February 2007,
Tokyo, Japan
Kunio Mikuriya Deputy Secretary General World
Customs Organization (WCO)
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Trade Facilitation

• Market access
• Tariff Non-tariff barriers
• Infrastructure
• Port facilities, roads
• Trade-related services
• Transport logistics, communication, banking,
  insurance
• Trade procedures
• Official and business procedures
• Regulatory framework governance
• At and beyond border
• Security concern

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Background

• Technology development
• Transport
• Container improved movement of goods
• Information Communication Technology (IT)
• Supply chain management
• Change in policy
• Trade liberalization
• Promote investment
• Global production distribution system
• Off-shoring of tasks of manufacturing process
• Place of best cost-performance
• Intra-company trade
• Efficient logistics required

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More background

• Trade Security
• 9/11 terrorist attacks
• Customs attention shifted to the entire trade
  supply chain
• Trans-border organized crime
• Drug trafficking, counterfeiting
• National competitiveness
• Increased awareness of trade transaction costs
• Several figures (2-10)
• Secure and facilitate global trade
• Security as part of facilitation
• Partnership with trade
• Global regional integration
• Increasing number of regional trade
  arrangements

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World Bank Doing Business 2007- Trading across
Borders -
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Evolution of customs
Revenue Collection of import taxes (duties
excise)
Protection of Economic Interests (domestic
industry)
Protection of Society lthealth, safetygt (drug
trafficking, firearms, environment, counterfeit
etc.)
Customs function
Economic Development lttrade, investmentgt
(trade facilitation agenda)
Security ltterrorismgt (shifting focus to
entire supply chain)
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Challenge for customs

• Achieve effective and efficient control in a wide
  range of missions
• Revenue, economic interest, protection of
  society, security
• Respond to the growing needs for trade
  facilitation
• Development agenda
• Implementation of modern customs procedures,
  based on international standards
• Need for a higher political support
• Implement international regional standards
• Cooperation with other border agencies and trade
  in achieving more expeditious movement of goods

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WCO agenda

• Trade facilitation
• Support for WTO negotiations
• Promote Revised Kyoto Convention, Data Model etc.
• Continue to review and develop standards
• Supply chain security and facilitation
• Promote SAFE Framework of Standards
• Review
• Counterfeiting
• Develop standards
• Capacity building
• In support of implementation of WCO standards

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WTO Trade facilitation agenda

• WTO scope limited to official border procedures
• Infrastructure outside the scope
• Classic GATT 1947 rules on border procedures
• Operationalize the relevant articles
• Standards best practices developed in customs
  area
• Improvements in GATT articles to draw on these
  works and encourage their implementation under
  the WTO framework

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WTO TF Developments

• 1996 Dec Singapore Ministerial Conference
• 2001 Nov Doha Ministerial Conference
• (Launch of the Doha Development Agenda)
• 2004 Aug July Package (agreement on
  modalities)
• 2004 Nov- TF Negotiating Group (start
  negotiations)
• 2006 July Suspension (agriculture)
• 2007 Feb Resumption
• (2007 July US Congress (Trade Promotion
  Authority)

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International Customs Communitys Message to the
WTO Cancun Ministerial Conference (adopted by the
WCO Council in June 2003)
Potential benefits of WTO work

• Political will for simplified border procedures
• Ministerial level commitment by WTO
• Support and co-operation with trade community
• Awareness of customs requirements and improved
  compliance
• Greater co-operation with other border agencies
• Single window
• Impetus for a comprehensive customs capacity
  building
• Infrastructure, institutional reform

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International Customs Communitys Message to the
WTO Cancun Ministerial Conference (adopted by the
WCO Council in June 2003)
Suggestion to maximize the benefits

• Participation of customs administrations in
  preparing national positions
• Enhanced co-operation in the work of WCO and WTO
• Involvement of other border agencies
• Need full support for the customs capacity
  building efforts

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WTO July Package modalities of negotiations
(August 2004)

• Clarify and improve the GATT Articles V
  (transit), VIII (fee formalities) X
  (publication appeal)
• Co-operation on customs compliance issues
• Special differential treatment (SD)
• Transitional period, implementation capacities
• Provision and review of TA CB
• Identify trade facilitation needs and priorities
• Role of relevant international organizations
• TA/CB with IMF, OECD, UNCTAD, WB, WCO
• Take due account of the relevant work of the WCO
  and other Intl organizations

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WTO proposals

• Around 120 contributions from WTO members
• 14 main areas 28 groups of measures (some have
  sub categories (45)) TN/TF/W/43 series
• 34 --- 3rd Generation Proposals
• Most of the substantive issues are based
  on/inspired by or addressed in the WCO
  instruments
• Many refer to the WCO instruments

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WTO July Package - Annex D

• 9. Due account shall be taken of the relevant
  work of the WCO and other relevant international
  organizations in this area.

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WCO instruments addressed in the WTO proposals

• Revised Kyoto Convention
• (TN/TF/W/10, 18, 24, 30, 34, 36, 39, 42, 44, 45,
  46, 49, 50, 52, 53, 55, 57, 58, 62, 66, 75, 79,
  85, 109, 112, 113, 117, 119, 131, 133, 134, 138,
  140)
• Harmonized System
• (TN/TF/W/24, 45, 46, 52, 62, 66, 79, 85, 111,
  126, 131)
• WCO Data Model
• (TN/TF/W/ 18, 46, 57, 62, 79, 133, 135)
• Immediate Release Guidelines
• (TN/TF/W/ 10, 44, 45, 50, 117)
• Time Release Study Guide
• (TN/TF/W/ 18, 45, 46, 101, 130, 133)
• Istanbul Convention
• (TN/TF/W/ 30, 79, 131, 133)

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Revised Kyoto Convention (Harmonization
simplification of customs procedures)

• Originally adopted in 1973 (in Kyoto)
• Revision to keep abreast of developments in IT
  and customs control techniques in 1999
• Ratification (52)
• Entry into force in February 2006 with 40
• Enforcement
• Peer pressure
• Market sanction
• Technical assistance

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RKC Structure
Body of the Convention
Specific Annexes A-K
General Annex
Additional provisions For specific customs
regimes
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Key Principles of Kyoto

• Transparency and predictability
• Maximum use of information technology
• Risk management
• Simplified procedures for authorized traders
• Audit-based control
• Partnership with trade

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Harmonized System

• Description and 6-digit code for goods
• Most popular instrument
• 120 Parties, de facto standards for all trade
• Wide application
• Basis for tariff application, GATT tariff
  schedule, trade negotiations, trade statistics,
  implementation of border measures (quota,
  controls, etc)
• Uniform application by WCO
• Interpretation, dispute settlement
• Periodic review HS 2007

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WCO Data Model

• Harmonized maximum data sets their electronic
  message format to complete border procedures
• Effective efficient tool for B2G, G2G exchange
  of information
• Compatible with UN/EDIFACT
• Interoperable with trade and transport
• Latest version June 2005
• Review towards covering other border agencies
  requirements
• Supporting Single Window

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Immediate Release Guidelines

• Scope
• Shipments requested for immediate release
• Express operators, carriers, freight forwarders,
  postal services
• Categorization of shipments into 4 categories
• 1. Correspondence and documents 2. Low
  value consignments for which no duties and taxes
  are collected 3. Low value dutiable
  consignments 4. High value consignments
• Procedures specific to each categories
• Identification of a set of data

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Time Release Study

• To measure the average time for the entire import
  procedures between the arrival and the release of
  goods and for each step
• Useful tool
• to identify problems and bottlenecks, caused
• by customs, other border agencies and trade
• to measure performance of IT and other
• facilitative measures (e.g. introduction of
  pre-arrival declaration) and
• to stimulate efforts to improve the efficiency
• and effectiveness
• WCO guide and software available

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Time Release Study mode of transport/ content
of cargo
(hours)
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Time Release Study pre-arrival lodgment of
declaration
(hours)
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Periodic TRS (Sea Cargo)
7.0Days
6.2Days
4.8Days
4.0Days
3.6Days
3.1Days
2.4Days
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• Temporary Admission
• For certain imports that are known to be
• re-exported in the same state, customs allows
  duty-free access with simplified formalities
  supported by security (guarantee)

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Istanbul Convention (1993)

• Simplifies and harmonizes customs formalities for
  temporary admission, in particular, by making the
  acceptance of ATA carnets obligatory
• Gathers all existing temporary admission
  facilities under a single instrument
• Guaranteeing chain/association
• remains a key
• 50 Contracting Parties

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Use of international standards -- TN/TF/W/131 --

• Shall use relevant international standards or
  parts as a basis
• Presumption of compliance with WTO
• Exception with rationale that must be accountable
  
• In addition, encouraged to use regional standards
  
• Encouraged to take part in standard-setting and
  managing work
• WCO is listed in the annex

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Elements for consideration

• Picking up vs. Balance between TF controls
• Interpretation authority
• RKC Standards (binding) and guidelines
  (non-binding)
• Keeping standards up to date with trade
  participation
• Scope (subject agencies), mutatis mutandis?
• Better synergies and Mutually supportive
• Framework for implementation (SD, TA/CB, DS
  mechanism)

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WTO July Package - Annex D

• 8. In order to make technical assistance and
  capacity building more effective inviteIMF,
  OECD, UNCTAD, WCO and World Bank to undertake a
  collaborative effort

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Self-Assessment Tools

• TA/CB needs identification in relation to the
  proposals on WTO TF negotiations
• Promote dialogue between customs, trade
  ministries, other border agencies at national
  level
• Assist Geneva-based negotiators to participate in
  the negotiation
• Pilot studies on cost by OECD, World Bank (with
  IMF / WCO)
• Country specific
• Individual analysis necessary
• Cost might be manageable

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Security concern

• Security of international trade supply chain as a
  basis for global trading system
• Terrorist threats global issue
• Need for global cooperative arrangements
• Avoid difference in national approaches
• Coordinated approach with other international
  regional organizations (UN, IMO, ICAO, APEC etc.)
• Avoid marginalizing developing countries
• Need to facilitate legitimate trade
• New arrangements based on the revised Kyoto
  Convention and other WCO instruments
• Outside the scope of WTO negotiations

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Modern customs controls

• Trade supply chain
• Physical movement of goods
• Parallel movement of commercial data
• Receive information for risk assessment as early
  as possible in supply chain
• Who get what information, when, from whom
  (WCO Integrated Supply Chain Management
  Guidelines)
• Free and smooth flow of legitimate trade
• Compliant traders authorized for a simplified
  procedure
• Physical integrity of consignments
• SAFE Framework of Standards
• Security and facilitation combined

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SAFE Framework of Standards

• Four core elements
• Harmonize advance electronic cargo information
• A consistent risk management approach
• Outbound inspection of cargo by non-intrusive
  equipment
• Partnership with business Authorized Economic
  Operator
• Based on existing WCO instruments
• Integrated Supply Chain Management Guidelines
• Revised Kyoto Convention
• Customs Data Model
• Revised Arusha Declaration on customs integrity
  etc.
• Modernize customs and prepare for the 21st
  Century

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Two pillars

• Customs-to-customs network arrangements
• Integrated Supply Chain Management Guidelines
• Encourage cooperation among customs
  administrations on the basis of common and
  accepted standards
• Use of advance electronic information to identify
  high-risk cargo
• Towards mutual recognition of controls
• Customs-to-business partnership
• Identify business with a high degree of security
  guarantee as Authorized Economic Operator (AEO)
• Tangible benefits to AEO
• Mutual recognition

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Authorized Economic Operator (AEO)

• Approved by customs as complying with security
  standards
• Share mutual responsibility in security
• Document adopted at Council in June 2006
• A core or basic set of standards
• Supplementary national requirements
• Tangible benefits
• Faster clearance reduced examination rates
• Priority clearance trade disruption or high
  threats
• Further review
• Move towards mutual recognition
• Implications on small and medium sized
  enterprises

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Implementation of AEO

• National or Economic Unions programs
• US C-TPAT more than 6000 companies, covering 45
  OF IMPORT
• EU AEO common criteria, mutual recognition (2005
  Code, 2008 implementation)
• APEC (Asia Pacific Economic Cooperation)
• Adoption of Framework as a new Common Action Plan
  (CAP) in 2005
• AEO workshop in 2006
• China-EU cooperation
• A pilot project (Shenzhen, Rotterdam, Felixstowe)
• Other regional initiatives

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Implementation of Framework

• Phased approach in accordance with each
  administrations capacity and legislative
  authority
• WCO regional structure to promote, monitor and
  report
• A holistic approach, built upon political will
  and integrity
• Involve other border agencies integrated border
  management and control
• Need for standards on integrated border
  management at intra-agency, inter-agency
  international level
• Single window

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Columbus program

• WCO Capacity Building Directorate
• Assist members in ownership for modernization
• Diagnostic missions in support of Framework
• 144 customs intend to implement Framework
• More than 100 members for the 1st phase of
  Columbus program (18 months, 2006 2007 June)
  together with other donor countries (60
  completed)
• 2nd phase action planning and implementation
  (20)
• 3rd phase monitoring
• Workshops for diagnostic experts
• SAFE seminars

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The way forward

• Participation in setting international standards
• WCO, WTO
• Implementation of standards
• Capacity building
• Use of IT technology
• Partnership with trade
• AEO
• Dialogue cooperation among customs

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Thank you very much! For more information,
please visit WCO Web-site www.wcoomd.org