Reflections on the areas of work identified by WCO Members as a priorityBy Kunio Mikuriya, Secretary General, World Customs Organization
At the 2017 Council Sessions, Members endorsed six priorities that the WCO Secretariat would focus on: trade facilitation, e-commerce, security, Customs-tax cooperation, illicit financial flows, and performance measurement. At the June 2018 session, they reviewed the progress related to this work programme and charted the way forward. While doing so, they also discussed possible new areas of work and established a new priority: the revision of the WCO’s revised Kyoto Convention. In this article, I take up each of these topics in turn.
Following the entry into force of the World Trade Organization’s (WTO’s) Trade Facilitation Agreement (TFA), the WCO is providing tailor-made technical assistance under its Mercator Programme to assist countries in implementing the provisions of the Agreement and related WCO standards and tools. During the 2017/2018 period, 150 TFA-related missions had taken place.
There are two “relationship models” with beneficiary Members under the Mercator Programme. The first model is the “My Mercator Programme,” where a dedicated Mercator Programme Advisor is assigned to work with the Secretariat in developing a multi-year plan that addresses not only the technical aspects and requirements, but also the enabling conditions for implementation and moving forward with a reform agenda. The second model focuses on the delivery of specific and targeted demands by Members, normally as a training initiative or a workshop, the greater majority of which are related to a technical agenda, such as a Time Release Study or risk management.
To monitor progress, a “maturity model” assessment tool related to the TFA has been developed, and all Mercator Programme recipients have been asked to conclude a first assessment round to enable the Secretariat to issue a report by the end of 2018 on the progress of the Mercator Programme to date.
In terms of engagement with the WTO, the WCO Secretariat continues to work closely with the WTO Secretariat by, for example, discussing and reporting on support delivery to ensure coordination with other international organizations. Since May 2018, the WCO is also invited to attend the WTO Trade Facilitation Committee (TFC) meetings, contributing to the discussions on implementation of the TFA alongside the other “Annex D” organizations, namely the IMF, OECD, UNCTAD and the World Bank Group.
The WCO also continues to develop tools supporting TFA implementation, the latest one being the Guidelines on Customs Brokers and the FAQ document on the linkages between authorized economic operators (AEOs) as defined in the WCO SAFE Framework of Standards and Article 7.7 of the TFA. Of critical importance also is the Time Release Study Guide, which has been updated, notably to make it more responsive to TFA requirements.
Besides activities conducted under the Mercator Programme, another major effort in the coming months, and years, will be the review of the revised International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention or RKC). The RKC, which was adopted in 1999 and entered into force in 2006, currently has 115 Contracting Parties. Although this number is significant, acceptance of the RKC’s Specific Annexes remains low.
While recognizing that the RKC Guidelines have been updated on a continual basis and that several new WCO tools and initiatives have been developed to complement the revised Convention, WCO Members have decided that there is a need to update the instrument, nearly 20 years after its adoption. In this regard, the WCO Council has just approved the creation of a working group to undertake the review, and its work will start in the autumn of 2018.
Among the important tools adopted by the WCO Council in June 2018 is the Framework of Standards on Cross-Border E-Commerce, which will assist WCO Members in developing strategic and operational frameworks for e-commerce. The Framework will be equally useful for Members seeking to enhance existing frameworks, in order to effectively meet the requirements of new and evolving business models.
The Framework places emphasis on advance electronic data for pre-arrival risk assessment. For the past 20 years, the WCO has been advocating for a move towards a paperless environment for traditional trade. The same should apply to e-commerce. Express carriers are largely providing advance electronic data as recommended in the Framework of Standards, enabling Customs to conduct risk assessments in advance. However, postal operators are lagging behind, although progress has been made in some countries with leading support being provided by the WCO and the Universal Postal Union (UPU).
The WCO and the UPU have already developed the relevant harmonized international standards, and have been encouraging the implementation of electronic systems at the national level. The data elements that may be further required to address the challenges and risks associated with cross-border e-commerce are being developed. Both Organizations are further engaged with the development of additional guidance on the exchange of advance electronic data, including data capture and data quality, as well as the associated legal and operational frameworks. The two Organizations are also contemplating the organization of a joint high-level conference to mobilize all actors around the issue and to get a strong commitment for change from decision makers.
Although the core Framework of Standards has been developed, quite a lot of work still needs to be done. This led to the WCO Council agreeing to extend the mandate of the Working Group on E-commerce (WGEC), in order to further enrich the Framework, primarily through the completion of technical specifications, addressing issues such as identity management for example, and other items such as definitions, data elements, revenue collection models, and case studies.
The WCO Secretariat is developing a global implementation strategy and a capacity building mechanism to further help its Members with the implementation of the Framework of Standards in close cooperation with other relevant government agencies and e-commerce stakeholders. In order to ensure the expeditious and harmonized implementation of the Standards in a phased manner based on national priorities, specificities and resource availability, cohesive capacity building support will be provided.
The WCO’s work and the Framework are focused on cross-border e-commerce and physical goods. They complement and support the WTO’s Work Programme on E-Commerce, moving forward. Additionally, the WCO is actively collaborating with other international organizations to support their respective work in the area of e-commerce from a wider facilitation and compliance perspective. These organizations include the Organisation for Economic Co-operation and Development (OECD), the International Civil Aviation Organization (ICAO) and the UPU, as well as the Secretariats of the Convention on Biological Diversity (CBD), the International Plant Protection Convention (IPPC) and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).
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 five streams of work: passenger controls; the fight against chemicals and components that could be used in the manufacture of improvised explosive devices (IEDs); strategic trade Controls; the fight against trafficking in small arms and light weapons (SALW); and terrorist financing.
Some of these work areas are quite advanced, such as Programme Global Shield (PGS) that focuses on IEDs and which is referred to in several United Nations (UN) resolutions, encouraging States to support PGS, or the Strategic Trade Control Enforcement (STCE) Programme that focuses on preventing the illicit trafficking of strategic commodities (e.g., weapons of mass destruction, conventional weapons, and related items).
The WCO now has two regional projects, which aim to build the capacities of Customs administrations to counter terrorist-related travel and trafficking through better control of the movement of goods and people, both projects financially supported by the Government of Japan: the Asia/Pacific Security Project (APSP), which commenced in March 2017 with activities currently at full speed; and the West and Central Africa Security Project (WCA-SP), which began in April 2018.
During the recent session of the WCO Council and at other forums, some countries highlighted the need to further address the security topic, in particular the potential implications for Customs and other border agencies of the growing cruise ship industry. In response, the WCO agreed to convene a group of Brussels-based Attachés to look into issues around the format and transmission of advance data (e.g. passenger name records or PNR data), notably to explore the possible standardization of PNR data for maritime passengers and to involve relevant stakeholders, such as the International Maritime Organization (IMO), in their deliberations.
Furthermore, the WCO Council adopted the 2018 edition of the SAFE Framework of Standards to Secure and Facilitate Global Trade. Following a three-year review cycle, this year’s Framework offers new opportunities for Customs, relevant government agencies and economic operators to work towards a common goal: enhancing supply chain security and efficiency, based on mutual trust and transparency. The 2018 version augments the objectives of the SAFE Framework with respect to strengthening cooperation between and among Customs administrations, for example through the exchange of information, mutual recognition of controls, mutual recognition of authorized economic operators (AEOs), and mutual administrative assistance.
In addition, the SAFE Framework calls for enhanced Customs cooperation with government agencies entrusted with regulatory authority over certain goods (e.g., weapons and hazardous materials) and passengers, as well as with entities responsible for postal issues. More notably, it now includes a comprehensive list of AEO benefits with certain minimum assured benefits.
The WCO Council and Policy Commission have discussed the concept of cooperation between the International Monetary Fund (IMF) and the WCO for a while now. As the IMF is often asked by Ministries of Finance to provide advice on Customs policy, the WCO has engaged with the Fund to expand its perspective beyond the fiscal functions of Customs, in order to achieve further recognition of Customs’ non-fiscal role.
In order to review its revenue-focused position, the IMF needed access to specific datasets, hence the idea to develop a specific survey tool for the collection of data called the International Survey on Customs Administrations (ISOCA). Participation in the survey will be voluntary, and no external measurement, ranking or scoring system is envisaged. Benefits that the survey will provide to WCO Members include the following:
- reducing Members’ administrative burden by avoiding duplication of questionnaires from the WCO and the IMF;
- providing a single, unified survey on an annual basis, using common questions, terminology and definitions, fully based on WCO standards, tools and instruments;
- establishing a baseline for better planning and tailor-made technical assistance and capacity building;
- building support, and ensuring complementarity of expertise and synergy on any assistance provided;
- enabling progress to be assessed, while serving as a useful tool to obtain Ministerial support for Customs reform and the allocation of resources;
- acting as a means to explore the capacities of both institutions.
To establish a framework for the instrument, a Memorandum of Understanding (MOU) with the IMF has been drafted. At the request of some WCO Members, more time has been allotted to enable them to contribute to the text of the MOU, which is expected to be signed in December 2018.
The WCO also continues to develop tools and to share best practices with respect to enhancing Customs-tax cooperation at the national level. Based on a concept paper on Customs’ role in the collection of indirect taxes on imported goods, in July 2017 the WCO Policy Commission tasked the Organization’s Permanent Technical Committee to develop guidance. The development of this guidance is currently underway and the Secretariat continues to collect Members’ practices, as well as engage relevant international organizations, such as the OECD, in this regard. In addition, research is being conducted to examine various working models and associated processes and requirements. The draft guidance is expected to be finalized by December 2018.
Moreover, a few new areas are being explored for future work that include cooperation opportunities in the areas of tax and transparency (including the exchange of information), e-commerce, and special Customs zones, as well as the use of blockchain technology in improving business processes, revenue collection, and tackling fraud and crime.
Illicit financial flows
The Study Report on Illicit Financial Flows (IFFs), which the WCO was requested to produce by the G20 leaders, has been adopted by the WCO Council. The fruit of a long collaboration between the WCO Secretariat, Members of the WCO, academia and other international organizations, the Report focuses on concrete actions to combat IFFs.
It lists a number of recommendations inviting countries, in particular, to ensure that Customs has a sufficient mandate and the necessary resources to tackle trade mis-invoicing, has access to the right information and technology, and cooperates with Tax Authorities, Financial Intelligence Units and other relevant agencies. Following its adoption, the WCO Secretariat has engaged with the current Presidency of the G20 – Argentina – and with other G20 Members to garner support for the Study Report and ensure that it is conveyed to the appropriate G20 working bodies.
Based on the WCO Action Plan on Customs and the Fight against IFFs, the Secretariat has continued to provide technical assistance to Customs administrations, encouraging them at the same time to secure a mandate to investigate IFFs and/or seek a formal cooperation framework with the relevant authorities. In addition, regional workshops on IFFs, focusing on bulk cash flows and trade-based money laundering, were organized for countries in East and Southern Africa and South East Asia. Enforcement operations targeting bulk cash smuggling will also take place in late 2018.
Many WCO Members have expressed concerns about the performance measurement initiatives of other institutions, such as the World Bank Group (WBG) with its “Doing Business” report. Following discussions at the December 2016 Policy Commission session, the Secretariat initiated a dialogue on the subject with the WBG.
The WBG team in charge of preparing the report agreed to seek input from Customs by sending its survey to all administrations in addition to trade service providers, thus giving Customs the opportunity to engage in the process. Ninety-six countries completed surveys and the Bank plans to publish this year’s survey, including Customs’ inputs, in October 2018. A representative from the Bank will also explain its work in relation to the “Doing Business” survey at the Policy Commission session in December 2018.
Moreover, a new WCO Working Group on Performance Measurement has been established to examine the possible development of a comprehensive WCO performance measurement tool, which would cover all Customs work areas. The Working Group has also been tasked with analysing the outcomes of the WBG survey and possible means of improving it. The WCO Private Sector Consultative Group has been invited to join the Working Group.
Let me remind you that the list of priority areas will be adjusted in the coming months with discussions on the WCO Strategic Plan for the 2019-2022 period starting at the Policy Commission session in December 2018. The Plan will then be presented for endorsement at next year’s Council Sessions.
Focusing on the current priority areas, I have highlighted only a few of the activities carried out and results achieved over the last months. Additional WCO activities are summarized in the articles which follow, under the name of each specific 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.