Dossier

Reflections on the six areas of work identified by WCO Members as a priority

By Kunio Mikuriya, Secretary General, World Customs Organization

At the December 2016 WCO Policy Commission session in Moscow, Russia, Members asked the WCO Secretariat to identify the priorities it would focus on. Six areas of work were identified, based on the outcomes of WCO regional meetings: trade facilitation; e-commerce; security; Customs-tax cooperation; illicit financial flows; and performance measurement. The Council, at its July 2017 sessions, agreed with this work programme. In this article, I take up each of these topics in turn.

Trade facilitation

The WTO Trade Facilitation Agreement (TFA) entered into force in February 2017 and it is now of utmost importance to ensure its implementation. A “Communiqué from the international Customs community regarding the entry into force of the WTO Trade Facilitation Agreement” was endorsed by the WCO Council this year. Among other things, the Communiqué recommends that WCO Member administrations take steps at national level to encourage their Governments to support WCO involvement in the work of the WTO Committee on Trade Facilitation. The Communique also, amongst others, requests Customs administrations to urge all other border agencies to inform the National Committees on Trade Facilitation about their level of readiness to implement the TFA.

The WCO has committed to providing its Members with the technical support necessary for their TFA implementation plans, in coordination with the WTO and other relevant international organizations. Under the Mercator Programme, tailor-made technical assistance is offered, and Mercator Implementation Plans have already been developed in some countries.

These plans represent multi-year engagements across various technical and organizational development matters. Some of the early results of actions under the tailor-made track include new risk selectivity systems, comprehensive roadmaps for implementing authorized economic operator (AEO) programmes, forward plans for the elimination of destination inspection regimes, along with cross-cutting organizational development activities, such as improved training and human resource management systems, and stretchered leadership competencies among senior Customs managers.

Besides working on the implementation of the TFA, the WCO continues to promote accession to the RKC as well as the use of information technology (IT) and the development of digital environments such as Single Windows, based on standards such as those contained in the WCO Data Model.

In addition, the WCO currently has around 50 existing instruments and tools that greatly help its Members to implement the binding Customs-related provisions contained in the TFA. This guidance is updated on an ongoing basis with best practices from WCO Members. Among the new tools are the recently published “Transit Guidelines,” which can be used to enhance the efficiency of transit regimes.

E-commerce

The WCO Working Group on E-Commerce (WGEC) is progressing towards the preparation of guidelines, or a framework, on cross-border e-commerce by the June 2018 Council Sessions. Four areas of work had been identified: facilitation and simplification; safety and security; revenue collection; and measurement and analysis. WCO Members’ working experiences and practices in these four areas have been collected, and a “Study Report”, based on the analysis of the received information, has been published.

Enhancing the digital capacities of Customs and their partners is also critical, in order to create an enabling environment for e-commerce activities and enforcement authorities. The WCO continues to work closely with the Universal Postal Union (UPU) to ensure electronic exchange of information between Customs and Post, and both Organizations are contemplating the joint organization of a high-level conference to encourage the implementation of electronic systems at the national level. Implementation of an electronic interface between national Customs and postal operators through the use of joint WCO-UPU messaging standards in particular, should be a priority.

Security

As a result of the December 2015 Punta Cana Resolution, which highlights the global Customs community’s position in relation to fighting terrorism, the WCO launched a Security Programme that focuses on six areas: passenger controls; the fight against chemicals that could be used in the manufacture of improvised explosive devices (IEDs); strategic trade Controls; the fight against small arms and light weapons (SALW) trafficking; and against terrorist financing.

Under this framework, in cooperation with the Government of Japan, the WCO began a new initiative for Customs administrations in the Asia/Pacific region, specifically focusing on border security-related challenges in South-East Asia. The Project, which will run for two years, is aimed at strengthening the capacity of Customs administrations to counter terrorist-related travel and trafficking through better controlling the movement of goods and people.

Support is also being offered by the WCO through a research activity, which focuses on the management of fragile borders. The management of these borders requires a two-fold strategy, based on security and economic development, within which Customs has a natural role to play due to its relations with traders and transporters, both of whom are major economic actors in many borderlands.

The WCO has undertaken several field studies with the support of its Members at the borders between Tunisia and Libya, Sudan and Chad, Jordan and Syria, and at the borders throughout northern Mali, Chad, Nigeria and the Central African Republic. Additionally, two workshops gathering experts from North, West and Central Africa and the Near and Middle East took place to discuss the conceptual framework and specificities of the role of Customs at fragile borders. They were held respectively in Abuja, Nigeria in December 2016, and in Riyadh, Saudi Arabia in April 2017.

Moreover, the WCO has provided support to the West and Central Africa region via the Security by Collaboration Project (SPC++), an initiative proposed by the Nigeria Customs Service to explore how countries in the region could better collaborate and share information and best practices. I would certainly encourage other WCO Members to consider initiating such initiatives.

Customs-tax cooperation

Building upon the “Guidelines for strengthening cooperation and the exchange of information between Customs and tax authorities at the national level,” further work is now being conducted with regard to the sharing of data between Customs and tax authorities through inter-operable systems and databases or a common database, as well as joint activities and initiatives, such as joint audits and joint risk management.

This cooperation has to be viewed in the context of domestic resource mobilization, which figured prominently among the United Nations (UN) Sustainable Development Goals. Customs contributes to indirect tax collection. According to the WCO Annual Report, Customs collected more value-added tax (VAT) and excise tax than Customs duties. Therefore, it is important to highlight the strengths of Customs, based on their physical presence at the border, their strong background in data management, and the fact that, unlike tax authorities, Customs operated in transactional, real-time mode.

With that in mind, the WCO Secretariat has prepared a policy statement intended for its Members’ use, with a view to advocating the importance of “well-resourced Customs,” which needs to be fully understood by those responsible for financial and budgetary matters in Member countries, such as Finance Ministers, as well as other concerned parties, such as international finance organizations and development donors.

The paper underlines the importance of securing resources for a multi-faceted Customs service within the context of taxation, from three perspectives: revenue collection as a Customs function per se; the Customs functions that are not related to revenue collection, but impact it; and the need to derive benefits from Customs’ specificities within a Customs-tax cooperation framework.

Illicit financial flows

During the G20 meeting in China in 2016, the G20 leaders issued a communiqué on illicit financial flows (IFFs), which focused on trade mis-invoicing and which requested the WCO to produce a study report. The report, which is being developed, will be composed of three parts: analysis of IFFs through trade mis-invoicing; best practices; and policy recommendations.

Meanwhile, as an outcome of WCO Members’ deliberations, and in order to ensure that the G20 was kept informed of the WCO’s role and work progress on this matter, a WCO action plan on how to combat IFFs, highlighting the fact that IFFs were not limited to trade mis-invoicing, was developed and sent to the German G20 Presidency and the G20 Heads of Customs. References to the WCO’s action plan on countering IFFs and the subsequent study report on the subject were included in the latest Annual Progress Report for 2017, which was approved by the G20 Development Working Group in May 2017.

I was also invited to speak at the Conference on the G20 Africa Partnership, held in Berlin, Germany in early June. This meeting provided me with an ideal opportunity to meet relevant stakeholders, such as representatives of the African Tax Administrations Forum, and to discuss how we could work together against IFFs.

Performance measurement

As part of the Achieving Excellence in Customs (AEC) initiative, which aims to assess the degree of implementation of WCO tools and norms by Customs administrations, the Secretariat wrote to all WCO Members requesting them to complete and submit the AEC form. The AEC performance measurement tool consists of 20 indicators depicting the four categories in the WCO Strategic Plan, namely Trade Facilitation and Security, Fair and Effective Revenue Collection, Protection of Society, and Institutional and Human Resource Development.

The purpose of the initiative is to help administrations develop their narratives to explain the progress made in Customs modernization based on WCO instruments and tools to political leaders as well as external and internal stakeholders. Moreover, the AEC was designed in such a way as to assist administrations with their planning, and to help Directors General to engage with national decision-makers about the support they might require to implement WCO instruments.

To date, the AEC form has been completed by 109 WCO Members, and their responses are currently being analysed. Preliminary analysis shows that there is a correlation between accession to the RKC and the SAFE Framework of Standards to Secure and Facilitate Global Trade and an administration’s level of performance.

The AEC is to be used for self-assessment only and not for purposes of ranking administrations. In this domain, WCO Members have expressed concerns on other institutions’ performance measurement initiatives, such as the World Bank and its “Doing Business” project. Following discussions at the December 2016 Policy Commission session, the WCO Secretariat sent the World Bank an invitation to initiate a dialogue on the subject.

In the meantime, WCO Members are urged to provide more information and data on this matter, including details of their experiences with regard to the “Doing Business” project, in order to feed future discussions with the World Bank. Other institutions have also been approached by the WCO Secretariat to broaden any future dialogue.

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.

I trust that you will enjoy reading about what the WCO has done and what it will be doing in the months ahead, and that you will equally appreciate the other articles that were selected for this edition of the magazine.