welcome an introduction to the world customs organization and its instruments

WELCOME

An introduction to the

World Customs Organization

and its Instruments

1. The World Customs Organization in brief

2. The WCO Trade Facilitation Instruments / Standards

3. The WCO – WTO relationship in the context of the WTO TFNG

Structure of the presentation

In 1994, the Customs Co-operation Council (CCC) adopted the informal working name

“World Customs Organization”

…to better reflect its worldwide membership

The WCO, a change of name

The WCO, some brief facts…▲ As of April 2009 : 174 Members*

▲ Two official languages : English and French**

▲ Headquarters : Brussels, Belgium

▲ Budget for 2008/2009 : € 15 million

▲ Democratic traditions : One Member = One vote

* excludes the European Communities which, since July 2007, has rights akin to those of a WCO Member for matters falling within its competences as an interim measure

** increased use of Arabic, Portuguese, Russian and Spanish as « working » languages

Europe

Americas

Asia Pacific

East and Southern Africa

North Africa, Near and Middle East

West and Central Africa

The WCO, an Organization with global reach…

174 Members divided into 6 regionsresponsible for processing 98% of international trade

Yellow

Maroon

Magenta

Evolution of CustomsEvolution of Customs

Revenue Collection of Import Taxes (duties & excise)

Protection of Society <health, safety> (drug trafficking, firearms, environment, etc.)

Economic Development <trade, investment> (trade facilitation)

Protection of Economic Interests (domestic industry)

Security <terrorism> (shifting focus to the entire supply chain)

Framework of Standards

The WCO Mission StatementTo enhance the effectiveness andefficiency of Customs administrations …by improving their ability to

economic prosperity and social development

Apply trade regulations & Trade

Facilitation

Protect Protect society society

Collect fiscal revenue

...which promotes...which promotes

The WCO’s objective…

…to secure the highest degree of harmony and uniformity in

Customs systems

The WCO’s key activities I

Developing and maintaining international Customs instruments such as the Harmonized System, the Revised Kyoto Convention, the Istanbul Convention, the Nairobi Convention, the Time Release Study, etc.

Encouraging uniform application of simplified and harmonized Customs systems and procedures and the increased use of IT as well as the implementation of the WCO Data Model (Single Window)

Administering international instruments developed by other multilateral institutions such as the WTO Agreements on Customs Valuation and Origin and the UN Convention on Containers

Securing and facilitating the movement of goods in the international trade supply chain through the WCO SAFE Framework of Standards to secure and facilitate global trade (implementation of the Authorized Economic Operator system and mutual recognition of such systems)

Promoting integrity in Customs through the revised Arusha Declaration on Integrity and the development of tools that assist Members to implement integrity best practices

Encouraging Customs-to-Customs co-operation and mutual assistance, and collaborating with international organisations on issues that impact on the global Customs community

…key activities II

Providing sustainable capacity building guidance and assistance to facilitate Customs modernisation initiatives, and to implement international Customs and trade instruments

Promoting partnerships between Customs and the international business community

Combating transnational organised crime, environmental crime, drug trafficking, money laundering, smuggling, the illicit diamond trade, illegal arms and ammunition, stolen motor vehicles and other Customs offences

…key activities III

1. Negotiations shall aim to clarify and improve relevant aspects of

Articles V, VIII and X of the GATT 1994 with a view to further expediting

the movement, release and clearance of goods,….

WTO July Package - Annex D

Due account shall be taken of the relevant work of the WCO and other relevant international organizations

in this area.

(Shall use relevant international standards or parts as a basis – TN/TF/W/131/Rev.1)

WTO July Package - Annex D

WCO TF Instruments (referred to in the WTO Members’ 3rd generation proposals)

Revised Kyoto Convention(TN/TF/W/117/Rev.1, 134, 131/Rev.1, 140)

Harmonized System(TN/TF/W/126, 131/Rev.1)

Istanbul Convention(TN/TF/W/ 131/Rev.1)

(referred to in the WTO Members’ 3rd generation proposals)

Immediate Release Guidelines(TN/TF/W/ 117/Rev.1)

Time Release Study(TN/TF/W/ 139/Rev.1)

WCO TF Instruments

International Convention on the simplification and harmonization of Customs procedures (Kyoto Convention, adopted in 1973)

Revised in 1999 after 4 years revision work (consultation with the private sector) and entered into force in February 2006 – 600 legal provisions

Blueprint for Modern Customs procedures

effective controls facilitate legitimate trade

Revised Koyto Convention (RKC)Revised Koyto Convention (RKC)

Revised Kyoto Convention (RKC)Revised Kyoto Convention (RKC)Core provisions and definitions of general application to all Customs

procedures in ten Chapters of the General Annex - obligatory

Specific Annexes contain Chapters relating to specific procedures (25) - optional

Implementation period for Standards/Recommended Practices (3 years) and Transitional Standards (5 years)

Detailed Guidelines containing information for - the interpretation of the provisions

- the implementation of the provisions - methods of application and best practices

Revised Kyoto ConventionRevised Kyoto Convention – Management Committee– Management Committee

Management Committee (Article 6 of the Convention) responsible for

- securing uniformity in the interpretation

- application and in any amendments proposed

59 Contracting Parties (accession process ongoing in many countries)

Observers (WCO Members, UN Members – incl. WTO Members, International Organizations and Trade)

WCO Members (174)

IcelandMexico

MaltaRomania

1973 Kyoto (63)

EU (27+1)

OECD (30)

RKC (59)

GermanyGreeceHungaryIrelandItalyLuxembourgNetherlandsPoland

ECCyprusLatvia

AustraliaCanadaJapan

AlgeriaBotswanaChinaCroatiaIndiaLesothoMadagascarMalaysiaMoroccoPakistanSenegalSerbiaSouth AfricaUgandaVietnamZimbabweZambia

Africa, middle-east (10)BurundiCameroonCôte d'IvoireDem.Rep. Congo*GambiaKenya MalawiNigeriaRwandaSaudi Arabia

Asia (1)Sri Lanka*

Europe (1)Israel

Latin America (1)Cuba

Other non-CPs*: Signed subject to ratification (not yet)

KoreaNZNorway

AustriaBelgiumBulgariaCzechDenmarkFinlandFrance Portugal

Slovak RepSpainSwedenUK

AzerbaijanEgyptJordanMauritiusMongoliaMontenegroNamibia

Switzerland Turkey US

Estonia

LithuaniaSlovenia

Transparency and predictability - Rules for providing information - Clear and transparent appeal procedures (Customs, independent authority, courts)

Standardization and simplification of goods declaration and supporting documents - Minimum data requirements - Provisional / Incomplete Goods Declaration - Submission by electronic means

Simplified procedures for all operatorsSeparating release from clearance procedures

Key Principles of RKC (I)

“Fast track” procedures for authorized persons with good compliance records such as : release of goods with minimum information to identify goods

(with subsequent declaration)

Pre-arrival information (prior lodgement and registration of the Goods declaration and supporting documents – cargo declaration)

Maximum use of information technology - Use of international standards - Consultation of all relevant parties when introducing computer

applications - Electronic commerce methods as an alternative to paper-based

requirements

Key Principles of RKC (II)

Minimum necessary controls to ensure compliance

Risk management - Identify high risk consignments based on risk analysis

(intelligence) - Shift from documentary and physical checks to targeted checks - Facilitation of legitimate trade while maintaining effective control - Effective and efficient deployment of Customs resources

Audit based controls - Post-clearance audit

Key Principles of RKC (III)

Juxtaposed Customs office and joint controls

Co-ordinated intervention - Inspection with other border agencies

Partnership with the trade - Formal consultative relationships - Memoranda of Understanding (MOU)

Benefits of an effective implementation of the RKC for Economy/Customs/Trade

Key Principles of RKC (IV)

Main Trade Facilitation Techniques

Standard and simplfied procedures and practices

Risk Management Programme

Risk Assessment

Control TechniquesPost Entry Audits

Publication of accurate, up-to-date

information & Advance Rulings Maximum use of

Information TechnologyAutomation

Partnershipwith the Trade

System of appeals

Pre-arrival Declaration

WORLD CUSTOMS ORGANIZATION

Harmonized System

- "HS" is a multipurpose international product Nomenclature developed by the WCO (through the Harmonized System Committee)

- Used by more than 200 countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics

- 136 countries and the EC have signed the HS Convention (entered into force on 1 January 1988) and are Contracting Parties (April 2009)

- Universal economic language and code for goods, and an indispensable tool for international trade

- Recommendation (1996) on the introduction of programmes for binding pre-entry classification information

4DQTCOCT2001.PPT

What is the HS ?

21 SECTIONS of goods grouped together into sectors

96 CHAPTERS

1,221 4-digit headings (2007 Version). Goods are arranged in the HS in order of their degree of manufacture

5,052 6-digit subheadings (2007 Version) and

General Interpretative Rules

6DQTCOCT2001.PPT

What is the HS ?

The goods - their description - 6-digit subheadings :

Dolls 9502.10

Lawn-tennis rackets 9506.51

Yogurt 0403.10

6DQTCOCT2001.PPT

- No duties and taxes collected for the temporary importation of goods

- Covered by an internationally valid guarantee systemCovered by an internationally valid guarantee system

- ATA Carnet replaces national Customs formalitiesATA Carnet replaces national Customs formalities

- Istanbul Convention merges 13 existing temporary admission Istanbul Convention merges 13 existing temporary admission agreements into a single instrumentagreements into a single instrument

- 54 Contracting Parties - entered into force on 54 Contracting Parties - entered into force on 27 November27 November 1993

Istanbul Convention / ATA System

- First half of 2008, 88,865 ATA Carnets were issued for goods representing a total value of US$ 11,711,747,130

- During the corresponding period of 2007, 83,712 ATA Carnets were issued for goods representing a total value of US$ 9,163,847,511

- e-ATA Carnet initiative

Istanbul Convention / ATA System

Immediate Release Guidelines (adopted in June 2003)

Identification of a set of data that was to be provided for grant of release of Identification of a set of data that was to be provided for grant of release of goods as well as procedures to be followed goods as well as procedures to be followed (4 c(4 categories of goods)ategories of goods)

Submission of cargo information in advance of the arrival of the goods for Submission of cargo information in advance of the arrival of the goods for risk assessment purposes risk assessment purposes

Clarification of coverageClarification of coverageAll operatorsAll operatorsAll means of transportAll means of transport

Promoted by the international business communityPromoted by the international business community

= = to measure the average time taken between the arrival of the to measure the average time taken between the arrival of the goods and their release, and at each intervening step goods and their release, and at each intervening step (including intervention by agencies other than Customs)(including intervention by agencies other than Customs)

Useful tool: to identify problems and bottlenecks; and to stimulate efforts to improve the efficiency and

effectivenessIT software available ( + training)WCO Web-based service is availableWidely used by WCO Members (regional approach)

Time Release Study

Parties involved (example)

Arrival of vessels

Lodge import declaration

with Customs

Lodge import declaration

with Customs

Obtain importpermission

Delivery of goods from

Customsstorage

Manifest from the ship

Import licence from the Trade

Technical conformity certificate from the

Standard Board

Payment of the duty/tax by the

importer

Receipt issued by the bank

Source: Customs and Tariff Bureau, Ministry of Finance, Japan

0 20 40 60 80 100 120 140 160 180

------------------------------

------------------------------ 47.6

4.937.831.1

26.194.5

(Hours)

ARRIVAL - TRANSFER INTO HOZEI AREA

TRANSFER INTO HOZEI AREA - DECLARATION

DECLARATION - PERMISSION

Feb 1991

Mar 2001- 81%- 81%

Other relevant WCO TF Instruments

The SAFE Framework of Standards to secure and facilitate global trade

The WCO Data Model (Version 3)

SAFE Framework of Standards

Adopted by the Council in June 2005 (revised in 2007) and mainly developed according to the RKC principles

To date, 155 of the WCO’s 174 Members have signed a “letter of intent” to implement the SAFE FoS

The principles of SAFE are found in different Customs legislation (AEO Programme)

Columbus Programme to implement the SAFE

Objectives of the SAFE FoS Establish standards that provide supply chain security and facilitation

to goods being traded internationally;

Enable integrated supply chain management for all modes of transport;

Strengthen networking arrangements between Customs administrations to improve their capability to detect high-risk consignments;

Promote co-operation between the Customs and business communities;

Champion the seamless movement of goods through secure international trade supply chains.

The Core Principles

Advance electronic information

Common Risk management approach; 27 key data elements

Inspection of high-risk cargo at port of origin; export controls

+ Use of modern technologies (scanners, e-seals,…)

Enhanced trade facilitation for legitimate trade; Authorized Economic Operator (AEO) concept

Structures: 2 Pillars / 17 Standards

Pillar 1: Customs-to-Customs Cooperation; Using Commonly Accepted Standards to both secure and facilitate trade (11 Standards)

Pillar 2: Customs-to-Business Partnership; Identify secure business partners / Offer tangible benefits (6 Standards) + AEO Guidelines

Importance of Co-ordinated Border Management and the Single Window concept

= maximum framework of standardized sets of data & electronic messages (EDIFACT & XML) to complete border procedures

1996 to 2002 G7 Initiative (WCO Data Model is a continuing effort to standardize, harmonize and reduce Customs data requirements initiated by the G7)

Version 1.0 – the Data Sets (2002)

Version 1.1 – security concern (2003)

Version 2.0 – modelling, conveyances and Customs transit (2005)

WCO Data Model

- Version 3.0 – response, XML, data structure, more transit, Other Government Agencies / SW (2009)

└> Customs Procedures (IM,EX, Transit / TIR, CR)

└> Supports “Single Window” environment - Incorporates “OGA” data - agriculture, food safety, hazardous waste (Basel Conv.) - Also looks at response messages and an increased scope for Customs transit - Considers the implications of XML, refinement of our models and basic data structures

- - WCO Recommendation on the use of the WCO DM to WCO Recommendation on the use of the WCO DM to be adopted in June 2009be adopted in June 2009

WCO Data Model

Compatible with ISO, UN/CEFACT and other international codes

Key for effective and efficient for B2G and G2G exchange and sharing of information - Trade and Transport organizations involved in its development / maintenance

Standardized and harmonized information requirements and procedures are essential

└> common understanding └> effective and efficient └> all parties in the international cross-border

movement

WCO Data Model provides this common understanding

WCO Data Model

Seamless transaction / faster release (single, global data set and uniform electronic messages to conduct business)

more effective exchange of information between export and import

aligned export and import data requirements (export information reused at import)

includes data requirements of other governmental regulatory authorities (eliminating redundancies and differences)

└> Single Window environment └> traders to submit information only once

WCO Data Model – Some of the benefits

Evolution of WCO standards Evolution of WCO standards (not exhaustive)(not exhaustive)

Convention establishing a CCC (1950)

HS Convention (1988)

Harmonization of coding and

Standardization of procedures

Simplification and

modernization of procedures

Support tools for national TF

initiatives

Revised Kyoto Convention and its Guidelines(1999)

Recommendation on Pre-entry classification

(1996)

Immediate Release Guidelines (2003)

Guidelines for Express Consignments Clearance (1993)

Data Model Version 2.0 (2005)

Post-clearance audit Guidelines (2006)

Istanbul Convention (1990)

Resolution on UCR and Implementation Guide (2004)

Time Release Study (2003)

Recommendation on the use of WWW (1999)

Risk Management Guide (2003)

Benchmarking Manual (Guide) (2003)

ICT Guidelines (2004)

SAFE Framework of Standards (2005)

ATA Convention (1963)

AEO Guidelines (2007)

Diagnostic Framework* (Guide) (2003)

*Diagnostic Framework is a living *Diagnostic Framework is a living document and contains entire Customs document and contains entire Customs themes, including the TFthemes, including the TF

Kyoto Convention (1973)

Modalities of TF negotiations

Trade facilitation needs and priorities

TA/CB during and after the negotiations

Collaborative capacity building efforts by international organizations

(Annex D Organizations = IMF, OECD, UNCTAD, WCO, World Bank)

Due account to the relevant work of the WCO

WCO: Guiding Principles

Participation of Customs administrations in preparing national positions

Enhanced co-operation in the work of the WCO and WTO

Involvement of other border agencies

Need for full support for Customs capacity building efforts

Compatible and complementary relationship between the work of the two Organizations

WCO work in this area

Promotion of Customs engagement (message, letters, WCO meeting documents, briefing sessions,…)

Contribution to the negotiation process

Provision of technical inputs

Promotion of compatibility of WCO instruments (WCO tools to implement WTO principles)

WCO work in this area

Provision of resource persons

OECD TF Cost survey

World Bank TF Needs identification

WTO Regional Workshops,…

Capacity Building (WTO TF Needs Assessment)

– extended pool of WCO experts

– participation of the WCO in more than 20 NA workshops

Possible Customs gains

High and sustained political commitment to Customs reform and modernization

Receive TA/CB support

Compatible and complementary relationship with WCO work

Better understanding of Customs by others

WTO vis-à-vis WCO TF Instruments

WTO rules set high principles while the WCO instruments provide implementation tools of these high principles with detailed standards

Consistency of the measures negotiated at the WTO vis-à-vis the WCO instruments- the majority of the proposed WTO texts are compatible with the WCO instruments- a minority of the WTO measures do not currently appear to be covered by WCO instruments

Scope of many proposals is wider than Customs (involvement of other border agencies)

Telephone : +32 (0)2 209 93 44Fax : +32 (0)2 209 94 93

thierry.piraux@wcoomd.org

www.wcoomd.org________________________________________________________________________________________________________

WCO Publications Service WCO Information Service publications@wcoomd.org information@wcoomd.org

Thierry Piraux

welcome an introduction to the world customs organization and its instruments

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