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Role of Customs in Trade Facilitation

Ramchandra Man Singh

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Outline of Presentation

• Background• Trade Facilitation (TF)• Customs Role• Customs and TF• Modern Customs• WCO Instruments• TF Initiations in Nepal• Coordination• Conclusion

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Background

Accurate, predictable, and speedy movement of goods across the border offers an attractive feature in the strategy of economic development

Certainty, clarity, Flexibility, &Timeliness

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Trade Facilitation

Simplification, Harmonization, Standardization and Modernization of trade process

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Contd.

• It aims at-developing a consistent , transparent, and predictable environment for international trade transactions.

• It is based on internationally accepted norms and practices.

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Trade Facilitation- a necessity

• Growing volume of trade. Global traffic increased from 137 to 417 million containers between 1995 and 2006.

• Fall in tariff levels after the conclusion of Uruguay Round.

• Availability of modern technology. The OECD (2003) calculates that each 1% saving in

trade related transaction costs yields a worldwide benefit of US$ 43 billion.

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Goal

Reduces the transaction cost and complexity of international trade and improves the trading environment in a country, while at the same time enhancing government controls.Helps in successful integration into the world

economy

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Benefits

Results in direct benefits both to Governments and to Business community in terms of increased economic efficiency, better security, faster delivery of goods, and reduced costs

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Customs

Customs has become the hub around which the wheel of globalization turns, and that hub must be both strong and flexible in order to global trade to operate efficiently while society remains safe.

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Customs RoleFulfills three fold mission• Fiscal mission• Economic mission• Social mission

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Changing Role

The role of customs has been changing-• From a primary focus on revenue collection to

one of trade facilitation, by enabling successful balance between effective control measures and facilitation of trade

• Development of a nation through promotion of trade and investment.

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Customs and TF

TF and WTO negotiations:• 1996 WTO Singapore Ministerial conference recognized TF

in WTO agenda.• 2001 Doha Ministerial conference adopted a declaration-

mandate for negotiations in area of TF. Particular reference to modernization of Articles V, VIII

and X of GATT 1994• 2004, WTO General Council on Doha work

Program decided to commence negotiation on TF.

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WCO Support the WTO Work on TF

GATT 1994Articles V-Freedom of Transit Article VIII –Fees/FormalitiesArticles X- Publication & appeals

WCO (Kyoto)• Effective rules for transit procedures• Fees limited to the cost of services rendered• Simplified procedures and limited data

requirements• Publication of regulations• Appeals

High Principles Tool to implement WTO Principles

Compatible

Complementary

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Customs in the 21st Century

New strategic Direction

Enhancing growth and Development through trade facilitation and border security.

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Contd.

Ten building blocks• Globally networked Customs• Better coordinated border management• Intelligence-driven risk management• Customs Trade partnership• Modern working methods

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Contd.

• Enabling technology and tools• Enabling powers• A professional knowledge based service culture• Capacity building• Integrity

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WCO instruments to TF

• Revised Kyoto Convention• Harmonized System on Tariff Classification• Istanbul Convention on temporary admission• Immediate Release guidelines• Customs Data Model and time Release Guide• Framework of Standards to Secure and Facilitate

Global Trade.

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Efficient Customs

• Achieving high compliance and facilitation is the definition of world class Customs

Customs must reduce the burden of trade as measured by 3 C’s

• Clearance time• Cost of Compliance• Consistency of practices

Improved trade security, trade efficiency and effective enforcement.

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Trade Facilitation Initiatives In Nepal

Customs related• Adoption of Harmonized System• Implementation of WTO Agreement on Customs Valuation• Tariff Structure rationalized • Implementation of ASYCUDA• Important provisions of Revised Kyoto convention

incorporated in Customs Act.

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Contd.

• Post Clearance Audit, Pre arrival clearance and risk management

• Physical infrastructure improved• Inter sectoral coordination committee• Operationalisation of ICD• Bonded ware house facility• Accession to WTO, SAFTA, BIMSTEC• Integrated customs Border Points.

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CoordinationA Study by World Bank in 2004 revealed

• Increasing global capacity in trade facilitation by half, when compared with the global average, would increase world trade by US$ 377 billion 9.7% rise in global trade.

• About US$ 107 billion of the total gains would come from improvement in port efficiency, about US$ 33 billion for improvements in customs environments and US$ 83 billion from improvements in the regulatory environment

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Contd.

• Significant scope for improvement outside customs.

• Focusing on customs reform alone will not produce significantly improved border management performance.

• Time for a new and more comprehensive approach to border management reform

- Coordinated Border Management.

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Conclusion

• Trade facilitation is no luxury it is a must• Customs must become even more effective. So, Streamlined, effective systems are a

prerequisite to fully exploit the opportunity of unfettered global trade in an increasingly hostile environment by enabling a successful balance between effective control measures and facilitation of trade.

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Thanks