1 TWINNING PROJECT FICHE LEBANESE CUSTOMS ADMINISTRATION MODERNIZED CLEARANCE PROCESS Glossary of Terms AEO Authorized Economic Operators ASYCUDA Automated System for Customs Data ATS Advanced training Skills BC Beneficiary Country CB Capacity Building CIDA Canadian International Development Agency CVA Customs Valuation DTI Data Transfer Interchange ENP European Neighborhood Policy EU European Union GDP Gross Domestic Product GoL Government of Lebanon ICT Information and Communication technology IRI Industrial research Institute IT Information technology KPI Key Performance Indicators LCA Lebanese Customs Administration LITE Lebanon International Trade Exchange MEDSTAT Regional Programme of Statistics in the Mediterranean Region MoET Ministry of Economy and Trade MS Member State
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TWINNING PROJECT FICHE
LEBANESE CUSTOMS ADMINISTRATION
MODERNIZED CLEARANCE PROCESS
Glossary of Terms
AEO Authorized Economic Operators
ASYCUDA Automated System for Customs Data
ATS Advanced training Skills
BC Beneficiary Country
CB Capacity Building
CIDA Canadian International Development Agency
CVA Customs Valuation
DTI Data Transfer Interchange
ENP European Neighborhood Policy
EU European Union
GDP Gross Domestic Product
GoL Government of Lebanon
ICT Information and Communication technology
IRI Industrial research Institute
IT Information technology
KPI Key Performance Indicators
LCA Lebanese Customs Administration
LITE Lebanon International Trade Exchange
MEDSTAT Regional Programme of Statistics in the Mediterranean Region
MoET Ministry of Economy and Trade
MS Member State
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NAJM Arabic acronym for Customs Information System
NIP National Indicative plan
NOOR NAJM Online Operation
OECD Organization for Economic Co-operation and Development
PAO Project Administration Office
PL Project Leader
ROO Rules of Origin
RTA Resident Twinning Advisor
SA Advisory Services
SME Small and Medium Enterprises
STR Support to Reforms
UNCITRAL United Nations Commission On International Trade Law
UNCTAD United Nations Conference on Trade and Development
WCO SAFE
Framework
World Customs Organization Standards to Secure and Facilitate Global Trade
Framework
WTO World Trade Organization
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1. Basic Information
1.1 Programme: Support to Reforms III
1.2 Twinning Number: LB12/ENP-AP/FI/08
1.3 Title: Modernized Clearance Process
1.4 Sector: Finance
1.5 Beneficiary country: The Republic of Lebanon
2. Objectives
2.1 Overall Objective
To provide better conditions for economic growth through trade facilitation and expedite the
process towards WTO accession by further harmonising and simplifying customs legislation and
procedures in accordance with WTO rules and the Palermo recommendations, including
computerization with further upgrading and rolling out of the NAJM and NOOR systems to the
whole customs territory. The implementation of the NAJM (Arabic acronym for Customs
Information System) since 1997 produced significant improvements, and in particular has ensured
compliance with the Lebanese Law and regulation, reduced cost and time of clearance procedures,
and provided accurate and timely international trade statistics. NAJM, which is based on the
UNCTAD ASYCUDA++ system, was funded by the Lebanese Government, World Bank and the EU.
The NAJM system has been extended by NOOR system - which provides the trader or customs
broker with remote online access to NAJM in order to enter and track Customs declarations
improved Data Transfer Interchange –(DTI-) – and Lebanon International Trade Exchange (LITE)
system - which provides web access to public Customs information.
2.3 Project purpose
To streamline customs procedures and processes to achieve a simple and paperless environment
for customs and trade and enhance the Lebanese Customs Administration’s institutional capacity
for trade facilitation and effective customs control through
1- Looking at trade facilitation mechanisms and improving procedures and controls governing
the movement of goods so as to reduce associated cost burdens and maximize efficiency
while safeguarding legitimate regulatory objectives. Business costs may be a direct function
of collecting information and submitting declarations or an indirect consequence of border
checks in the form of delays and associated time penalties, forgone business opportunities
and reduced competitiveness. The project focuses on analyzing, streamlining and
integrating the current business processes relevant to customs clearing inside and outside
the customs administration via automating the manifest, transit, travelers halls, warehouse
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and free zone in addition to simplifying the process of import and export declarations by
restructuring the inspection, cars’ importation, physical exit of goods via the Customs gates
and by implementing E-Government (starting by linking the Customs system with the
Industrial Research Institute and the Ministry of Economy and Trade), E-Payment ( to allow
24/7 payment, reduce physical movement to cashier, avoid counterfeited money, increase
transparency and interaction check, and improve cash management facilitation), paperless,
post clearance (auditing, look for smuggling, risk management, archive management),
single window ( through a centralized single platform) and legislation review.
2- Establishing an automated and integrated clearance process on a single platform that is
shared by all stakeholders in all international trade cycle
3- Building capacity of customs and sister administrations to operate and manage the new
integrated system
2.4 Contribution to National Development Plan / Cooperation agreement / Association
Agreement /Action Plan
The Modernized Customs Clearance process project will support a priority result defined by the
government in its Reform National plan, as presented at the Paris III conference in January 2007
and the Joint EU-Lebanon ENP Action Plan1. This document stresses the need to increase Lebanon’s
role in the free trade system, speed up the negotiations regarding Lebanon’s accession to the
World Trade Organization (WTO) and strengthen the capacity of the Lebanese administration on
international trade issues.
EU legislation will serve as a reference all along the entire Twinning project. The twinning fiche
complies with the Action Plan and EU expectations towards the Lebanese customs. In addition, it is
in line with points (a) and (b) of Article 56.2 of the Association Agreement – ‘Customs Co-
operation’:
“Cooperation will focus in particular on:
(a)the simplification of controls and procedures concerning the customs clearance of goods,
(b) the possibility of interconnection between the transit systems of the Community and of
Lebanon,
(c)the exchange of information among experts and vocational training;
(d) technical assistance where appropriate.”
The proposed project will be a logical extension of what has been accomplished, hence “further
harmonizing and simplifying customs legislation and procedures in accordance with WTO rules and
the Palermo recommendations by strengthening co-operation between customs and other agencies
to develop an Integrated Border Management Strategy2 . This will contribute to the European
Neighborhood and Partnership instrument, NIP’s 2011-2013 expected results which cite the need to
further “develop and implement trade facilitation strategies.”
1 EU- Lebanon Action Plan- 2007-2010
2 ENP, EU-Lebanon Action Plan
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3. Description
3.1 Background and justification
Since it was launched in 1999, Lebanon's bid for World Trade Organisation (WTO) membership has
served as an underlying pillar for Lebanon's international trade policies, and as a part of the
broader goals of the Paris III Fiscal and its Economic Reform Programme in general. Lebanon's
WTO accession and the required reform efforts are considered by the Government of Lebanon
(GoL) as instrumental to boosting competitiveness and reducing the cost of doing business in the
country. Accession to WTO entails a comprehensive review of a wide range of legal and technical
matters. Having said that, new laws and amendments to existing legislation are needed in order to
create mechanisms aiming mainly to:
a) Increase predictability and certainty for exports and imports;
b) Promote Lebanese exports of goods and services;
c) Ensure protection for intellectual property rights; and
d) Take steps against unfair trade practices.
While the current automated customs procedures (NAJM/ ASYCUDA) provide a quantum leap over
the earlier bureaucratic processes, there has not been a significant reduction in clearance delays
and costs over the past 13 years.
According to the World Bank Doing Business report 2011, which is a comparative analysis on the
ease of doing business over 183 countries, Lebanon ranks 95 in terms of Trading Across Borders,
as opposed to much better figures such as Saudi Arabia standing at 18, Egypt 21, Tunisia 30 and
Bahrain 33.
In addition, it takes 26 days to export and 35 days to import to Lebanon, as opposed to only 10.9
days and 11.4 days in the OECD countries, and 20.4 days and 24.2 days in the Middle East and
North Africa.
These bottlenecks are highlighted by the fact that there is still poor sequencing and coordination
between Lebanese customs activities and other permitting government agencies, such as the
Industrial research Institute, Ministry of Economy and Trade, Ministry of Agriculture, Ministry of
Health, etc. In addition, there are still non automated and paper based phases which cannot be
tracked nor monitored (and which crucially includes the release of cargo by the port authority).
Apart from the loss of transparency and associated opportunities for malpractice, the clearance
process is not optimal in terms of port logistics movement. Inspection is positioned in mid process
and precedes final payment and release. For example in the case of Red lane declarations cargo is
physically moved from the storage to the inspection area and then returned to storage awaiting
payment by declarant/trader. This means additional cost and time in clearance.
All these hindering factors mean additional cost and time in the clearance process.
Accordingly, and knowing that the value of imports and exports represents 60 % of GDP and
generates 40% of GoL's tax revenue, this Twinning project will strive to achieve a better
streamlining, sequencing and integration of Lebanese customs and non customs procedures, so as
to achieve a reduction of clearance delays and costs.
The Twinning project’s main task will consist of establishing an automated clearance process
platform common for all parties that will allow for collaboration of distinct automated sub-systems
in different organizations via secure messaging interfaces while retaining the confidentiality of each
party. In other words, it will build on EU best experience and expertise to achieve better
sequencing, streamlining and integration of Lebanese customs and non-customs procedures, in
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particular governmental regulatory agencies so as to achieve a significant reduction of clearance
delays and cost.
3.2 Linked activities
In the field of Customs Automation, as stated above, the implementation of the NAJM (Arabic
acronym for Customs Information System) since 1997 produced significant improvements, and in
particular has ensured compliance with Lebanese Law and regulation, reduced cost and time of
clearance procedures, and provided accurate and timely international trade statistics.
In addition, a new customs law was enacted by the Council of Ministers and which went into effect
on April 23, 2001. It introduced significant improvements to the old Customs Law. The new law is
largely based on best and modern international practices and substantially conforms to the WTO
requirements, specifically the WTO Agreement on Customs Valuation (CVA), the Agreement on
Rules of Origin (ROO), and the main principles of the General Agreement on Tariffs and Trade
(GATT 1994).
Finally, in 2006, the Ministry of Finance and Customs started a two year cooperation program with
UNCTAD for implementing ASYCUDAWORLD, the latest version of the ASYCUDA software. This
version uses state-of-art technology for automating customs clearance operations.
In order to ensure the sustainability of the modernized customs clearance process and to turn
Customs Administration into one of the most modern administrations of Lebanon, this Twinning
project would be a logical extension of the implementation of the automated customs clearance
system in Lebanon enabling technical and operational sustainability, building on the lessons learned
and best practices in advanced countries, and disseminating the acquired expertise regionally
In addition, this Twinning project consolidates a series of EU-funded support to reforms actions
under Support to Reforms STR1 and STR2. It will build upon the achievements and structures
reinforced by 2013, the EURO 16 million “Integrated Support to Small and Medium Enterprise” and
the EURO 14 million “Strengthening Quality Management, Capabilities and Infrastructures”, which
tackles trade, investment and production aspects at micro-economic level.
Complimentary Project: e-Payment gateway
The Twinning project will also benefit from an EU funded project for introduction of E-payment
services that is currently being implemented at Ministry of Finance ((the software and hardware of
this project were delivered and installed and we will go live in the near future)
Currently taxes are collected using traditional ways such as payments through the bank or Ministry
of Finance Cashiers.
With the technological evolutions and the widespread of the Internet throughout the country, these
payments are expected to be online.
By implementing the E-Payment Gateway, local authorities can not only deliver better service for
the residents, but can also make significant efficiency gains. These include staff time savings,
financial savings (for example from lower transaction charges), and more streamlined and error-
free business processes.
The E-Payment Gateway has three main objectives:
1. Creating a central secured governmental payment gateway by developing a central
electronic payment hub, controlled by the ministry of finance, and connecting government
entities (customs, cadastre, taxes, mecanique, ministry of justice and any other
governmental entity) to the Lebanese banks.
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2. Achieving cost savings for stakeholders by streamlining payments through an electronic
infrastructure, reducing elapsed time and effort spent on transactions.
3. Establishing operational transparency by defining a set of clear and transparent operational
and financial rules under standardized and automated E-Payment mechanisms.
The E-Payment Gateway should play three primary roles:
- The first role is that of a payment processor where the gateway facilitates the electronic
payment between the payee (governmental entity) and the payer (the resident). The
payment is issued by residents through their bank’s internet banking systems. The banks
insure the completion of the transactions.
- The second role is that of a payment consolidator where the hub should route all payments
to the concerned governmental entity through the ministry of finance.
- The third role is that of a payment monitor where reports and monitoring tools are provided
to the Ministry of Finance to trace the transactions.
The e-Payment project has been delivered on September 6th, 2011.Customs staff played a critical
role in aligning its concept with NAJM 2.0
In preparatory work for e-Payment at Customs, LCA received administrative and legislative
assistance (listed below) from CIDA (Canadian International Development Agency) in the form of a
short-term expert 6 weeks. The objective of this support is to map out current and existing duty
payment procedures at branch and HQ level with the aim of identifying administrative, process and
legislative changes required for roll-out of e-payment. The study titled “Revenue collection
disbursement and reconciliation processes- Transformations for an e-payment environment » was
shared with LCA relevant staff at end of the mission.
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The following on-going projects support and compliment project objectives:
Reform
Programme
Project Title Donor Budget Project Duration
Automated
system for
Customs data -
ASYCUDAWORLD
Facilitate and
accelerate
trade
UNCTAD
(Government)
~USD
450,000
2011-2013
Enhancement of
security and
safety at the
borders and
facilitation of
trade
National
Radioprotection
Infrastructure
related to
Lebanese
Trade and
Border Control
EU EUR
2,100,000
18 months (2008-
2010- Extended until
March 2012)
Provide advice on
implementation
of e-payment of
customs duties
via commercial
banks. Review
legislation and
practice of e-
payment
processes.
Provide advice on
audit and
financial tracking
in an electronic
environment.
Financial
Management
and
Accountability
CIDA USD
80,000
2011
It is worth noting that all imports and exports should be subject to global radioprotection control
and regulations in order to establish confidence in trade and increase public health and safety.
Accordingly, the responsibility to combat illicit trafficking and the inadvertent movement of
radioactive material has been tackled in Lebanon.
Lebanese Customs was the primary Beneficiary of this € 2.1 Million project of "strengthening
National Infrastructure Related to Lebanese Trade and Border control project ". Following the
decision of Lebanese Customs to improve its overall monitoring and detection capabilities by
establishing radiation detection infrastructure at Lebanon’s borders, the International Atomic
Energy Agency (IAEA) provided training to Lebanese Customs and helped install EU-funded
radiation detection equipment at one border crossing. This project was extended untill March 2012
and currently it is successfully being implemented and running on all the Customs border offices
except in the Abboudieh office because it is currently being relocated (However, , it is expected to
be implemented in Abboudieh office in the coming month).
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In addition, it should be noted that Customs also played an important role in the following projects
which have cross-cutting objectives:
1. World Customs Organization, January 2009. A diagnostic review of Customs Administration in
Lebanon with recommendations for short, medium and long term.
2. World Bank - International Finance Corporation - Doing Business Report for Lebanon - Latest
workshop June 2010
3. World Customs Organization - e Learning for Customs Personnel – Ongoing project since 2002
4. EU MEDSTAT project - Ongoing project since 2002 - Harmonization and standardization of
international trade statistics and improvement of quality of trade data
3.3 Results
The Modernized Customs Clearance project is expected to increase Lebanon's competitiveness in
international trade and enhance integration with global trade systems. The new proposed clearance
process is expected to reduce the processing time and cost of international trade transactions.
The project will improve the ranking of trading across borders of the Doing Business report,
currently standing at 95.
Results Description Monitorable Indicators
1 Facilitation of
Compliant
Trade
LCA should endeavor to
minimize obstacles faced
by compliant trade
operators and minimize
the cost and time of
clearance
1.1 Decrease in time for trade community for
completion of trade documentation 30%
1.2 Decrease in time for relevant government
authorities to process clearance operations 25%
1.3 Decrease in time for LCA to process clearance
operations 30%
1.4 Decrease in transaction cost for trade operators
25%
2 Enforcement
of relevant
laws and duty
collection
LCA must ensure
intelligent compliance
with Customs Law and
regulations, other
national mandated
governmental laws and
regulations, obligations
to international
agreements and
protocols. LCA within its
scope of operations must
ensure safety and
security of community
against threats such as
smuggling of drugs,
firearms, human
2.1 Increase in duty collections
2.2 Decrease in non-compliant operations 20%
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trafficking, terrorism and
money laundering
Regarding the WCO SAFE Framework of Standards and in accordance with the Lebanese Customs
capacity and applicable laws, the following output will be achieved by the end of the project,:
- Clearance cost of Import/Export cargo: Less than 30%
- Free zone operations: Less than one day
- Warehouse operations: Few hours
- Transit operations: Less than one day
- Percent of revenue due to enforcement: more than 15 percent
- Non-compliant operations: Less than 5 percent
- Support to SME in Export operations: Increase in share of SME relative to overall exports
Annual 15%
In ensuring the delivery of the above mentioned results, this Twinning Fiche will focus on six
components:
A. Process re-engineering and electronic Customs review
Based on best practices, a suitable Information and Communication Technology system is
developed and adopted.
The implementation of the project will lead to the development of Customs procedures in addition
to a prototype of an optimized Single Window topography across all governmental agencies and
Customs Administration so as to increase efficiency through time and cost savings for traders in
their dealings with various government authorities for obtaining the relevant clearance release. The
immediate exchange of data between customs and these other authorities and agencies will also
allow for better and quicker validation of all of the data submitted by traders. In addition, it will
enable the following results:
Lower barriers to trade, which makes it possible for traders to focus on strategic and
commercial considerations as opposed to regulatory regulations. The lower barriers should
provide more opportunities specifically to SME’s involved in trade related activities. The
project aims in enabling Lebanese SME to compete in global markets by lowering their
regulatory and administrative costs and reducing “time to market” production span
Easier access to information through better co-ordination between all involved authorities
leading to time savings when looking for information and increased compliance due to better
understanding
Improved efficiency when submitting information through exchange of data between
authorities involved allowing economic operators to give the same information only once to
these authorities – faster processing, more rapid clearance, greater accuracy of data and
increased compliance; From this improved efficiency will benefit all international trade cycle
Fewer delays, less uncertainty, and more targeted inspections through better coordination
between authorities involved in international trade cycle
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Combined with the development of simpler, standardized and harmonized information, the effective
application of an ICT can help maximize data flows, resulting in faster, easier and lower cost
international trading. The proposed ICT backbone will allow for the trader to submit electronic trade
declarations to the various controlling authorities for processing and approval in a single
application. In addition, duties and taxes will be paid electronically via the related bank resulting
from the applied ICT infrastructure. Governmental and non governmental agencies (IRI, MoET…etc)
will also benefit from processing and tracking information faster.
Based on re-engineered procedures, a system will be developed by the Customs Administration.
Prior to implementation, and in order to guarantee that the system meets the design specifications,
the system will undergo testing and validation following a detailed testing plan and based on real-
case scenarios.
B. Regulatory framework for international trade environment
A new Customs law was introduced in 2001 which included provisions for a modernized and
business-friendly operational environment. A core objective of this track “Regulatory Framework” is
to build and on this new law and to provide a comprehensive and modern legal framework as a
foundation upon which an effective Customs and trade facilitation regime is built. This track will
include a thorough review and modernization of the Customs (and other border agency) laws,
regulations, administrative guidelines and standard operating procedures so they fully support the
new requirements, procedures, systems, and controls. This legal framework benchmarking will be
based on internationally accepted standards and best practices as set out in the Revised Kyoto
Convention and allow for the implementation of related international instruments, agreements, and
standards.
The Regulatory framework track will establish the responsibilities and authorities of the Customs
service to administer and enforce Customs laws, develop supportive administrative regulations, to
adjudicate and settle cases, and take decisions on Customs administrative matters.
The new regulatory environment would promote transparency and predictability, e.g., timely
dissemination of information, advance rulings, independent audit, appeals processes, which would
provide for modernized Customs systems and procedures supporting establishment of risk-
management, post-clearance audit based controls and adequate automation;
This track would review and provide support for compliance with international commitments, e.g.,
WTO agreements; and simplify customs procedures such as simplified customs declarations and
advance lodgment of declarations. Additionally this track will provide for an environment to allow
for release of goods without all clearance formalities having been completed;
A new regulatory framework would include simplified and special procedures for authorized persons
Authorized Economic Operators as AEO as recommended by World Customs Organization
As emphasized on the outset of this Regulatory Framework track a key output is an environment
which supports the use of modern information technology and communication, including electronic