Customs administrations feel $queeze
With the decrease in global trade, customs administrations worldwide are collecting less import taxes and fees from shippers.
'We see a deteriorating market for trade finance; declining exports/imports for some countries; projections that aggregate international trade will decline; and customs administrations under pressure to continue to meet revenue forecasts despite the current conditions,' the Brussels-based World Customs Organization said in a statement from its Dec. 9-11 Policy Commission in Buenos Aires. The WCO said its 172 member administrations reported a 'slight decrease' in revenue collected in November.
The WCO is most concerned the global economic meltdown could lead to a 'new wave of protectionism that would exacerbate rather than alleviate the crisis.' Many developing countries, in particular, rely on revenue collected from trade to finance government programs.
'Revenue collection can be harmed by commercial fraud and in a financial crisis there is a heightened risk of tax avoidance,' the WCO said. 'Accordingly, customs should ensure that revenue collection, trade facilitation, and commercial fraud are addressed during the crisis.'
The WCO urged its members to avoid introducing 'new barriers to trade, or measures which will increase costs and generate additional delays at the border.' In response, the WCO said it would take the following steps:
' Support security, safety and revenue collection efforts without hindering trade by developing a package of instruments and technical assistance supporting risk management and audit-based control and use of technology.
' Continue to support the World Trade Organization's trade facilitation work.
' Strengthen customs modernization through expanded capacity building.
' Continue to work on the Authorized Economic Operator (AEO) system and mutual recognition arrangements, with the objective of maintaining consistency to ensure that they are implemented broadly worldwide.
' Take into account the need of the costs and benefits of supply chain security arrangements to be consistent with the current financial climate and also – at a time of falling revenues – to recognize the importance of budget security for the developing countries.
' Promote enforcement of intellectual property rights to ensure public health and safety, and facilitate legitimate trade.
The WCO emphasized that these measures are already embodied in the revised International Convention on the Simplification and Harmonization of Customs Procedures, or Kyoto Convention. – Chris Gillis
Freedom to choose
Express carriers remain concerned that the World Trade Organization and World Customs Organization appear to be 'retreating' on a previous commitment to eliminate national mandates for companies to file import declarations to customs administration via customs brokers.
The Brussels-based Global Express Association recently told Eduardo Ernesto Sperisen-Yurt of Guatemala, who chairs the WTO Negotiating Group on Trade Facilitation, and WCO Secretary General Kunio Mikuriya that the use of customs brokers should not be a requirement for companies to interact with national customs administrations. The association's members are UPS, FedEx, DHL and TNT.
'Mandated use of the services of a favored professional group is a symptom of and contributor to political corruption,' warned John P. Simpson, director general of the association, in a letter.
Express carriers, with their capacity as both transporter and importer, believe they are technologically and regulatory sophisticated enough to interact with customs administrations directly, if they choose.
'Customs brokers can provide highly valuable services and many importers choose to use the services of customs brokers even when they are free to submit their own declarations,' Simpson said. 'Both customs and brokers like all other professionals should rely on the market for their business, not government coercion.'
In specific, the Global Express Association is concerned about language in a July 11, 2008 WTO revised trade facilitation document that states: 'From the entry into force of this commitment, members not requiring the compulsory use of customs brokers shall not introduce or apply any new requirements to use customs brokers.'
The initial WTO facilitation document, released on June 6, 2006, specifically stated that 'Without prejudice ' (country) members shall not require the use of customs brokers' and that 'developing country and least-developed country members shall eliminate any requirements to use customs brokers not later than [X] years from the entry into force of this commitment.'
'The revised document in effect creates a 'grandfather clause' that sanctions the use in perpetuity of a practice that is recognized as being undesirable, in those countries where it is already in use,' Simpson said.
Simpson also pointed up a November speech by Mikuriya to the directors generals of customs from Latin America, Spain and Portugal, in which he 'opened the door for deviation' from the 2006 WTO facilitation text and the WCO's revised International Convention on the Simplification and Harmonization of Customs Procedures (Chapter 8, Standard 1), in an effort to 'persuade more Latin American countries to ratify the convention.' Customs administrations in the region are wary about potential political backlash from customs brokers if importers are allowed to conduct business directly with customs.
Mikuriya suggested in his speech a scenario requiring importers to obtain 'prior consent' of customs before they have direct access to customs. 'Will this interpretation help you to overcome a possible fear among customs brokers?' he said.
'Whether customs administrations in such countries will ever authorize direct lodgment of declarations by importers is a matter for speculation, but it is undoubtedly true that additional signatories can be added to the (revised Kyoto) convention by obfuscating its standards to ignore their violations,' Simpson said. 'But then what is the point of having standards?'
Simpson added in an interview that the Global Express Association has been informed the proposed WTO revision would not necessarily affect its members' ability to file directly with customs using their own in-house brokers, but could affect many other importers, particularly small and mid-sized businesses, that may not maintain an in-house broker.
'Our opposition (to the WTO revision) is based on principle,' he said. 'Even if it is clarified that we can continue to use our own in-house brokers we believe that the mandatory use of brokers is unnecessary and experience has show that it can even be harmful.' – Chris Gillis