USASEAN Business Council Dialogue with the ASEAN Customs DirectorsGeneral, Manila, Philippines, July

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US-ASEAN Business Council Dialogue with The
ASEAN Customs Directors-General
Bangkok, Thailand July 10, 2003
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Agenda
I. Challenges for Business and Government -
Ensuring a Facilitative, Secure Safe Border
ASEAN Project ACCESS An Update Ira Wolf,
CAPEC II. Customs and the AFTA Rules of
Origin John Grice, PricewaterhouseCoopers III.
ASEAN Customs Automotive Industry
Priorities John Parker, Ford Motor Company IV.
Customs IT concerns solutions How latest
technology solutions may help Jan Kremer,
Unisys
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Challenges for Business and Government -
Ensuring a Facilitative, Secure Safe Border
IRA WOLF Executive Director CAPEC
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Security Initiatives - US Customs Advance
Manifest Proposal
TIMELINES January Published Strawman
proposals. Public meetings March COAC
recommendations May 1 The Strawman proposals
were issued for the sole purpose of generating
discussion among the tradethe timeframes
enunciated in the Strawman proposals were to
generated discussion only.- US Customs and
Border Protection(CBP) web site July CBP to
issue Notice in the Federal Register. August
Deadline for comments. October 1 CBP to
issue final regulations.
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Security Initiatives - US Customs Advance
Manifest Proposal
APEC Leaders created the STAR initiative (Secure
Trade in the APEC Region) to integrate thinking
about trade and security. The US Customs process
demonstrates how this integration can work
successfully.
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Security Initiatives

• CAPEC member companies are committed to ensuring
  the maximum effective security in all our
  activities, including the establishment over the
  last decade of numerous programs and investment
  of enormous resources to ensure the protection
  and safety of
• our employees
• our customers
• the packages that we carry
• the facilities that we use
• the planes, trucks, and other conveyances that
  carry our shipments
• the national interests of countries that we
  operate in

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Security Initiatives
In sum, CAPEC members are committed to continue
working with all Customs Administrations in ASEAN
to ensure that we maximize security while
providing the services that are vital for your
economies to grow.
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ASEAN Project ACCESS
UPDATE Project ACCESS (ASEAN Customs Clearance
and Express Services) was first discussed by
ASEAN Trade Ministers in October 1999. ASEAN
Customs Directors-General welcomed this
initiative whereby industry will collaborate
closely with ASEAN Customs Administrations to
re-engineer and modernize customs procedures and
regulations.
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ASEAN Project ACCESS - Update
M A L A Y S I A April 2000 Malaysia
volunteered to be the Pilot country June
2002 3 month trial began to expedite clearance
of non- dutiable shipments below RM 2,000 value,
with direct release upon provision of manifest.
Malaysian Customs agreed to continue this
practice. Oct 2002 Malaysia announced
increase of de minimis level to RM 500, a
significant improvement from the previous
threshold (RM200 at KLIA RM10 in other Malaysian
airports) May 2003 Began a trial to
initiate post-release declaration for inbound and
outbound shipments in free trade zones.
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ASEAN Project ACCESS - Update
R E S U L T S Malaysian Customs reduced
processing work by approximately 50. Direct
release of 60-65 of inbound shipments. Formal
declarations declined by 20-25. Businesses in
the free trade zones benefit through earlier
delivery of import shipments and later pick-up
for export shipments
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ASEAN Project ACCESS - Update

• V I E T N A M
• January 2002
• Project ACCESS launched in Vietnam
• Sept 2002
• Benchmarking visit for Vietnam Customs to
  Indonesia and Singapore to observe best Customs
  practices and review the operations of Express
  companies
• Late 2002
• Vietnam Customs working committee developed a
  set of procedures to
• increase number of shipment categories, thus
  recognizing the different levels and types of
  risks posed by different category types of
  shipments
• provide pre-flight clearance of shipments and
  selective physical inspections
• Next step Begin trials

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ASEAN Project ACCESS - Update

• Project ACCESS has been an excellent vehicle for
  co-operation and collaboration between Customs
  and the Private Sector

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SUMMARY
To meet the vital needs for both Compliance and
Trade Facilitation and expansion, the Air Express
industry urges ASEAN Customs Administrations to
continue to encourage an environment for Open
Dialogue and close consultation with Business.
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Customs and the AFTA Rules of Origin
JOHN GRICE Managing Partner, Worldtrade
Management Services PricewaterhouseCoopers
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Background

• ASEAN trade bodies are currently discussing ways
  to strengthen the AFTA Rules of Origin and their
  Operational Procedures
• Current moves by SEOM to study changes to the
  general direction of the Rules of Origin
• PwC previously made a presentation on ASEAN Form
  D to the ASEAN Finance Ministers and the ASEAN
  Customs DGs
• PwC and the US-ASEAN Business Council are
  currently involved in providing inputs at the
  policy level
• gt There is an important a role for ASEAN
  Customs authorities in this process

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Role of Customs in the AFTA RoO

• Business views that Customs play an important
  role in the AFTA RoO process because
• Customs authorities have the final say to accept
  or reject based on their respective laws and
  procedures
• AFTA RoO not aligned with customs laws and
  procedures
• Apparent unequal enforcement levels between
  Issuing and Receiving Authorities
• Differing interpretation of the Rules and its
  application between Issuing and Receiving
  authorities
• Uncertainty to companies - rejections by Customs
  though approved by Issuing Authority
• gt Need to enhance coordination between
  Issuing-Receiving authorities in the
  verification process

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Key Messages

• Question to address What certainty can be made
  for companies claiming CEPT benefits?
• PwC proposes closer cooperation between ASEAN
  Customs and Trade authorities in the on-going
  AFTA Rules of Origin discussions
• PwC proposes the creation of a more transparent
  Rules of Origin methodology such that it is
  easier for companies to comply and there is
  greater certainty in the CEPT benefit claims
  process reduced risk of rejections at Customs
• PwC is committed to be involved in providing
  inputs to ASEAN Customs on the operational and
  procedural aspects of the AFTA Rules of Origin

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Current Form D Acceptance and Verification Process

• Current verification process
• If Customs doubts a Form D, it can request for
  verification with the issuing authority who
  usually verify its authenticity but not the basis
  of origin calculation
• If Customs disputes the basis origin was
  calculated for a product Form D is rejected and
  company pays the MFN duty rate
• Selected cases are taken up by the Issuing
  Authority at the CCCA level for resolution
• Impact on companies
• There are no clear channels for companies to
  appeal this at the ASEAN level
• Outcome of regional discussions uncertain and
  prolonged
• Companies are unclear of the Rules and where they
  have not complied

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Proposed Verification Process by Customs

• Proposed verification process by Customs in
  cases of doubt
• Customs to request the Issuing Authorities for
  information including supporting
  data/documentation submitted during the Form D
  application
• Where additional information is required, Customs
  sends a questionnaire to the exporter, via the
  Issuing Authority
• In limited cases, Customs visits exporters
  premises with Issuing Authority (as already
  agreed by CCCA)
• Specified time frame for the verification process
• Clarify the responsibilities of the importer and
  exporter - to balance trade facilitation with
  customs control

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Summary Recommendations

• ASEAN Customs have stake in AFTA Form D process
  closer cooperation with ASEAN trade authorities
  proposed
• Customs DGs to look into clarifying the
  procedures and the responsibilities of the
  importer/exporter for Form D
• Customs DGs to play active part in developing
  Form D acceptance and verification process
  balance trade facilitation and control
• Customs DGs to consider PwCs proposal on the
  verification process
• PwC pledges the support of ASEAN Customs DGs
  effort in this process

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ASEAN Customs Automotive Industry Priorities

• JOHN PARKER
• President, Ford ASEAN Operations

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AREAS OF INTEREST

• Summary of APEC Auto Dialogue Customs Working
  Group Report
• Customs Valuation Procedures
• Expedited Clearance
• Periodic Filings
• Rules of Origin for Autos in ASEAN

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APEC AUTO DIALOGUE CUSTOMS WG REPORT

• Focus -- Mandate of Last APEC Leaders Summit
  (Los Cabos) to cut transaction costs by 5 in
  APEC by 2006
• Objective Identify Any Customs Procedures in
  APEC Impacting on Business Efficiency of Auto
  Sector
• Recommend -- Best Practices to Improve Business
  in 3 Key Areas

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CUSTOMS VALUATION
APEC AUTO DIALOGUE CUSTOMS WG REPORT

• Best Practice Identified as WTO Valuation Code
  Article VII using Transaction Values
• Eliminates Arbitrary Methodologies
• Promotes Predictable, Consistent Transparent
  Valuation of Imported Goods
• Improves Trade Flow Planning Investment
  Decision-Making Key for Auto Manufacturers

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EXPEDITED CLEARANCE
APEC AUTO DIALOGUE CUSTOMS WG REPORT

• Customs to Focus Physical Inspections and
  Document Reviews on High-Risk Importers
• Major Global Automakers are Generally Stable,
  Reliable, Trustworthy Customs Partners
• Just-in-Time Delivery Manufacturing Means
  Uncertainty Delays are Very Costly

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PERIODIC FILINGS
APEC AUTO DIALOGUE CUSTOMS WG REPORT

• Monthly or Quarterly Filing of Customs Paperwork
  Rather Than Item-by-Item Filing by Low Risk,
  Compliant Importers
• Would Significantly Improve Efficiency, Reduce
  Costs for Importers and Help Combat Opportunities
  for Corruption
• Win-Win by Allowing Customs to Focus on High
  Risk Importers and Auto Makers Improve efficiency

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AUTO RULES OF ORIGIN IN ASEAN

• Fully Support Goal of Clearer More Transparent
  Rules of Origin for Autos
• Ask That Any Changes to Rules do not Damage
  Existing Investors or Impact New Investments
• Key Area --Treatment of Profit

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AUTO RULES OF ORIGIN IN ASEAN

• TREATMENT OF PROFIT
• Limiting Profit May Have Negative Impacts
• Profits Reflect Commercial Risk Reduced Profit
  May Impact High Value-Added Investments
• Damage Viability of Existing High-Value
  Investments
• Systems Required to Ensure Profit Levels are Not
  Inflated or Abused
• Benchmarking, Comparability
• Form D Applicant Must be Able to Support Claimed
  Profit Level
• Ford Supports Retaining Current System of
  Including Profits, With Some Additional
  Safeguards for Regulators

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IN CONCLUSION..

• What Globally Reputable Companies Ask For from
  Customs Organizations
• Predictability We Need to Know How Long a
  Vehicle Valuation or Customs Clearance May Take
• Transparency We Want to Be Treated Fairly and
  Equally, Using Clear and Open Regulations
• Efficiency Understanding the Role of Customs,
  We Want Customs to Minimize Time Money Cost
• An ASEAN Perspective Customs Need to be
  Positive Agents for Economic Success in the ASEAN
  Region

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Customs IT concerns solutionsHow latest
technology solutions may help
JACOB KREMER Architect Director Unisys
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OUTLINE

• Common Customs IT problems/Concerns
• IT Cost and Efficiency
• Total Cost of Ownership (TCO)
• Provided Service Levels
• User/Customer Support Acceptance
• EDI including secure electronic payments
• Enforcement/user access tools
• Risk Management/Valuation technology (GATT)

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IT Cost/Efficiency TCO

• Problem/Concern
• High cost with distributed Client-Server
  implementations. (Application on PC, Data from
  server)
• Solution
• N-Tier technology implementation
• Tier 1 thin client at user just running standard
  web browser
• Tier 2 Web Server proving user presentation data
• Tier 3 Application Server with business rules
  kept external of application code (Several COTS
  products provide this feature such as Ilog)
• Tier 4 Database Server, which can be new server
  or existing mainframe RDBMS supporting ODBC or
  JDBC
• Tier 5 Middleware messaging XML legacy data
  interfaces

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IT Cost/efficiencyService Levels

• Problem
• Performance
• IT systems availability
• Response times
• Solution
• Performance monitoring and analysis tools
• Browser - user
• Web server
• Application server
• Database server
• Messaging (middleware)
• Operating system
• Network

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User/customer Acceptance -- EDI

• Problem
• High Cost
• Reliance on VAN supplier
• Complex to use
• Solution
• Usage of public available solutions such as EDI
  over Internet or ebXML using Internet
• COTS or Open Platform based implementation using
  Java or .NET

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User/Customer acceptance Access Tools

• Problem
• Manual Inspection logs, later added to IT
• Accurate and instant status for broker, shipping
  agent related to status clearance
• Solution
• Usage of Internet wireless mobile access
  devices and protocols for inspection
• Implementation of m-Commerce for clients

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User/customer AcceptanceRisk Management/valuation

• Problem
• Long Clearance Process
• Heavy dependency on paper trail
• Solution- IT system that supports
• Good risk management/valuation system
• Treat Customs declaration not as a daily tax
  return.
• Use risk assessment and valuation to simplify
  clearance
• Use paperless, no attachment clearance for
  selected qualified importers/exporters using a
  tax return like rule stating company must for 6
  years keep supporting documents at their system
  for possible audit purposes

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SUMMARY

• SOLUTION E-CUSTOMS
• e-Customs provides for
• Trade Facilitation
• Faster and more efficient clearance process
• Secure automated electronic clearance process
• Revenue generation
• e-Customs features
• Pre-arrival information
• Electronic Lodgment
• Paperless Submission
• Automated Selectivity
• Computer aided Risk Management
• Electronic Alerts/Clearance
• Transaction/document tracking and status check
• Paperless Trading

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Thank you!
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