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, Secretary General, World Customs Organization

During the 126th/127th Sessions of the WCO Council, which took place in July of this year, Heads of Customs administrations representing the 180 Members of the WCO engaged on many critical topics, such as e-commerce, security, Customs-Police cooperation, Customs-Tax cooperation, protection of cultural heritage, and revenue. In this article, I take up each of these topics in turn.

E-commerce

The changing trade landscape is a dramatic development for Customs, especially the growth in e-commerce and the associated current and emerging challenges in terms of supply chain facilitation, security, protection of society, and the collection of duties and taxes. These challenges are particularly in the context of cross-border low-value business-to-consumer (B2C) and consumer-to-consumer (C2C) e-commerce shipments.

The WCO’s recent activities on e-commerce include the collection of WCO Members’ working experiences and practices, as well as the different streams of work currently being carried out in collaboration with the Organisation for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD), the World Trade Organization (WTO), the Universal postal Union (UPU), and other relevant bodies and e-commerce stakeholders.

In addition, the WCO has established a multi-stakeholder Working Group on E-Commerce (WGEC), the first meeting of which took place in September 2016 with a broad variety of stakeholders attending, including Customs administrations and partner international organizations, as well as representatives of the postal and express service industry, e-vendors, e-commerce platforms, and online payment providers. Going forward, the implementation of an electronic interface between Post and Customs at the national level through the use of joint WCO-UPU messaging standards, as well as providing related strategic direction for future work, should be a top priority.

E-commerce is a data-rich environment that demands equally strong data capabilities. With “Digital Customs” being the WCO’s theme for 2016, the Council also discussed how to embrace a more digital environment, and create an operating model that captures and exploits data from across the industry ecosystem. Two high-level speakers from the private sector addressed this issue: a representative of Microsoft who stressed the importance of embracing the “cloud” in order to access aggregated data; and a representative of GS1 who highlighted the need for standards in order to connect stakeholders and share data.

Security

Border security continues to be an increasingly serious concern for countries across the globe. The WCO’s Punta Cana Resolution of December 2015 was a direct result of this concern, and highlighted the global Customs community’s position in relation to fighting terrorism. The WCO’s key activities in this regard include high-level political engagement at the UN and G7, accompanied by operational-level activities across the five key focus areas of the WCO Security Programme: passenger controls; Programme Global Shield; the Strategic Trade Controls Enforcement (STCE) Programme; the Small Arms and Light Weapons (SALW) Project; and terrorist financing.

My hope is that the WCO’s global security strategy will increasingly inspire regional counter-terrorism strategies. In addition, I encourage WCO Members to engage in the work of the Security Virtual Working Group by highlighting their revised strategies and best practices, and providing them to the WCO Secretariat. In relation to information exchange, I plan to turn the WCO into an even more active player through initiatives like the new Information and Intelligence Centre (I2C), and through the global Regional Intelligence Liaison Office (RILO) network.

Customs-Police cooperation

Customs-Police cooperation is part of the WCO’s coordinated border management (CBM) framework. The WCO has a long-standing cooperative relationship with INTERPOL, based on a Memorandum of Understanding (MoU) that has existed since 1998. As a testimony to this good relationship, this year we invited Jürgen Stock, INTERPOL’s Secretary General, to address the Council. However, the challenges associated with overlapping activities and mandates have often been difficult to overcome at the national level.

With the above in mind, the WCO presented the draft Customs-Police Cooperation Handbook to the Council, which, in its current form, will be further enhanced by the inclusion of WCO Members’ experiences, as well as different existing cooperation typologies.

While recognizing the importance of national legislation and the institutional legal framework on Customs-Police relations, the aim of this Handbook is to provide suggestions and recommendations for Customs administrations looking to strengthen cooperation with Police authorities. In this regard, a diagnostic tool has been developed, enabling WCO Members to assess the current “state of play” of Customs-Police cooperation in their respective countries.

The Handbook also identifies opportunities for enhanced Customs-Police cooperation, and describes possible concrete areas of cooperation that allow both organizations to achieve their strategic and tactical objectives. As it is not possible to apply a “one size fits all” solution, the Handbook attempts to present the different tools that could be used by WCO Members in their countries to strengthen the relationship between both authorities.

I envision the Handbook serving as a reference for Customs administrations looking to develop a cooperation framework and/or to strengthen existing Customs-Police cooperation based on their respective responsibilities, mandates and competencies, as well as their operating environment and operational resources.

Customs-Tax cooperation

Another important CBM issue is Customs-Tax cooperation. In this regard, the WCO presented its work in this area to the Council, emphasizing the need for a “whole-of-government” approach in addressing common challenges relating to enhanced facilitation of legitimate trade and the effective control of illicit trade, including the evasion of duties and taxes, illicit financial flows and other financial crimes.

In this context, the key features of the WCO Customs-Tax Guidelines for strengthening cooperation and the exchange of information between Customs and Tax authorities at the national level, was developed with the support of WCO Members, the OECD, the International Chamber of Commerce (ICC), and other stakeholders.

The Guidelines aim to provide reference guidance to Customs and Tax authorities for enhancing mutual cooperation and strengthening existing information exchange mechanisms, leading to enhanced trade facilitation and an effective coordinated approach to tax and fiscal crimes. The OECD has agreed to promote the Guidelines in the tax world via the Forum on Tax Administration (FTA) and the Taskforce on Tax and Crime, as well as in the next edition of the “Rome Report on Effective Inter-Agency Co-operation in Fighting Tax Crime.”

Protection of cultural heritage

Trafficking in cultural objects is one of the most ancient forms of crime, but is now identified as an emerging risk for the WCO and its Members, particularly because of the civil war in Syria, and the civil unrest in Iraq and Libya. Other organizations are also prioritizing actions to address this scourge – for example, the UN Security Council adopted two Resolutions on illicit trafficking of cultural objects in 2015.

The WCO is extremely active on this topic, providing capacity building, technical assistance, and training to its Members. During its Sessions, the Council adopted a Resolution on the Role of Customs in Preventing Illicit Trafficking of Cultural Objects, which reflects the commitment of the global Customs community to combat this crime.

At the Council Sessions, a keynote address was given by Molly Fannon, the Director of the Office of International Relations at the Smithsonian Institution in Washington, D.C. Ms. Fannon described the importance that cultural objects have for individuals and civilizations as they served to define themselves, to reveal their history and their present, and to project their future.

In highlighting the risk of these objects being destroyed, she showed the image of Palmyra which was destroyed by ISIS in 2015. In this connection, she drew delegates’ attention to the fact that by the time ISIS and other groups had publicly destroyed cultural heritage sites, they had already extracted as much economic value from these sites as possible in order to finance their activities.

Following her presentation, Ms. Fannon and I signed a MoU between the WCO and the Smithsonian Institution as a basis for further enhanced cooperation between the two organizations. I am, therefore, quite sure that both organizations will benefit tremendously from our cooperative efforts.

Revenue Package III

The WCO also presented its current work on revenue matters to the Council, and announced the launch of Revenue Package III, which consists of two parts. Under Part 1, the WCO will promote and update the existing tools, provide assistance to WCO Members, and assess the impact of the application of the tools. Part 2 includes a number of new initiatives related to closer cooperation between Customs and Tax, as well as matters on origin, post-clearance audit (PCA), “Fragile Borders,” control of mineral resources, and Customs laboratories.

Going forward

The WCO will continue to engage and act on the critical issues facing the global Customs community, of which I have highlighted only a few in this article. Additional WCO activities are summarized in the articles which follow, under the name of each WCO Directorate, including other interesting highlights from the 2016 WCO Council Sessions. In fact, I can quite happily state that this year’s Council Sessions were positive and dynamic, charting a clear path forward for WCO Members and the international Customs community as a whole.