Trade Logistics and Facilitation Customs and Border Management: New insights on an old problem World Bank Gerard McLinden International Trade Department World Bank
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Trade Logistics and Facilitation
Customs and Border Management:
New insights on an old problem
World Bank
Gerard McLinden
International Trade Department
World Bank
Typical perspectives
My goods were stuck in Customs for 3 weeks
They are inefficient, poorly managed, lacking in
competence, oblivious to the needs of clients, unwilling
to accept foreign documents, resistant to change and
unwilling to give up power
We need a Single Window system like Singapore
We need to sack everyone in Customs and start over
This is pretty simple stuff - why is it so difficult to fix?
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GOODS
PAYMENT
The Trade Transaction
S BINFORMATION
But its not so simple
The import/export/transit process is complex
It involves many players, with different objectives,
incentives, competence and constituencies
Private sector far from homogeneous – not always the good
guys
Lack of genuine political will and commitment to make
tough decisions that affect local constituencies that benefit
from the status quo
No lack of good ideas – But which ones make sense?
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•Manifest•Bills of Lading•Sea/AW Bill•Container Plans
•Invoice•Packing List•Declaration•Delivery Note
Storage
Air, Sea, LandInternational
Transport Customs Port
Pay TaxesClear CustomsRelease Goods
Ship’sDocuments
CertificatesOf Origin
Chamber ofCommerce
ForeignChambersCommerce
OverseasEmbassies
Post/Courier
“LegalInvoices”
DOMESTICSUPPLY CHAIN
•Raw Materials•Packaging•Transport•Storage
•Quotations•P.O.s•Delivery Notes•Con. Notes•Invoices•Statements
•Payments•Remittance
Advice
IMPORTER
MANUFACTURER
EXPORTERFOREIGN
BUYER
•Licenses•Certificates•Government
Approvals
•Certificates Of Origin
•Form A•EUR.1
GovernmentDepartments& PIAs
FinanceMinistry
Port
•Invoice•Packing List•Declaration•Delivery Note
Pay TaxesClear CustomsRelease to Port
Port Processes•Internal Transport•Storage•Container Handling•Loading
Port Customs
ReceiveGoods
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•P.O.•Contract Terms•Delivery Instructions•L.O.C.
PayBank
•L.O.C.•Packing List•Invoice LOC Courier
LOC Approval
ShippingDocuments
Book/Confirm Transport
•Licenses•Certificates•Government Approvals
Customs
A simplified map of the international trade process
Finance,
Commerce
Health,
Agriculture,
Industry
Interior
Transport
Immigration
Anti-terrorism; Gun controls;
Arm trafficking;
Weapons of mass destruction
Insect/pest control;
Toxic wastes;
Production processes;
Manufacturing emissions;
Endangered species
Food; Consumer goods;
Animal disease;
Plant disease;
Generic safety
Health and Safety
Military International Security
Entry Controls
Duties; Taxes; Fees
Dumping; Industry protection
Patent; Trademark; Copyright
Drugs, narcotics; Pornography;
Money laundering; Fraud
Health and Safety
Environmental Protection
Revenue Generation
Entry Controls
Intellectual Property
Prohibited Transactions
Vehicle safety; road taxes
Resent research suggests
Customs only responsible for one third of clearance delays
Customs typically have:
Risk management
IT systems in place
Private sector consultation mechanisms in place
Understanding of the trade facilitation agenda
Some performance metrics
WCO blueprints and guidelines
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What traders thinkPercentage of LPI respondents indicating the quality and competence of customs and
other border agencies is high or very high, region averages
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0%
10%
20%
30%
40%
50%
60%
70%
Logistics friendly Consistent performers
Partial performers Logistics unfriendly
Customs Other border agencies
What traders thinkPercentage of LPI respondents claiming improvement in Customs and other border
agencies since 2005
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0%
10%
20%
30%
40%
50%
60%
70%
OECD East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
Middle East & North
Africa
South Asia Sub-Saharan
Africa
Customs agencies Other border agencies
The obvious conclusion is that focusing on Customs reform alone
will not produce significantly improved border management
performance
Time for a new and more comprehensive approach to border
management reform
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Integrated Border Management
Coordinated Border management
Single Window Systems
Port Community Systems
One Stop Border Posts
ICT enabled Collaborative Border Management
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No shortage of great solutions
But all based on similar themes
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Current Practice Future Practice
Focus on Agency requirements Focus on trade supply chain
Control focus Facilitation/control balance
High levels of Physical inspection Intervention by exception
Focus on the goods Focus on information
Focus on identifying non-compliance Compliance/non-compliance balance
One size fits all Flexible solutions for different clients
Limited use of ICT Extensive use of ICT
Adversarial relationship with trade Constructive partnership with trade
Competition between agencies Collaborate border management
Limited incentives for compliance Strong incentives for compliance
Limited cooperation with neighbors Extensive cross border cooperation
Limited operational statistics Clear measures of performance
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The key question for
reformers is:
What level of ambition is
realistic?
Depends on
Clear understanding and agreement on the problems and
reform priorities
Degree of political will and commitment
Clear Vision of the future state shared by all key
stakeholders
Availability of resources
Local capacity (public and private)
Empowered counterparts to work with
Realistic assessment of challenges and risks
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What Works in practice? Start with sound diagnosis and problem identification
leading to agreement on priorities for reform
Development of a shared vision for the future
Business process identification and mapping
Reengineering to simplify and reduce duplication
Trade Information Website
Single inspection policy
Joint risk profiles (intelligence sharing)
One time submission of documentary requirements
Leading to development of an (ICT enabled) Single Window
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One example of a Vision
Implementation of a paperless trading environment in which 100% of all required import, export and transit documents are able to be prepared, submitted, processed and cleared electronically and appropriate duties, fees and taxes calculated and paid electronically;
Government agencies share information and have rationalized their individual requirements and processes to eliminate duplication, redundancy and overlapping mandates;
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One example of a Vision
A trade information website is established to provide a single gateway to all information necessary to comply with import, export and transit requirements;
The same website provides a user friendly gateway to complete the electronic submission and processing of regulatory requirements;
Traders are informed of their rights and obligations and are able to challenge decisions through administrative and legal means;
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One example of a Vision
Adoption by all of a comprehensive risk management and compliance improvement philosophy leading to targeting of high risk shipments and reduced need for intrusive and time consuming routine physical inspection of cargo;
Genuine incentives are provided for traders that play by the rules;
There is real cooperation between government agencies and the private sector;
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One example of a Vision
One fee implemented to replace the range of different fees collected by regulatory authorities – income distributed fairly to cover costs and finance maintenance of facilities and infrastructure; and
Organizational structures and merit based HRM practices are implemented to emphasize “value added” activities and ensure officials are well trained and appropriately paid – border officials are respected and are proud of their role.
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Barriers identified
Personal and organizational rivalries, competition for influence and conflicts of interest between agencies;
Inadequate remuneration and incentives to engage in reform;
Limited access to external assistance when required;
Lack of experience in alternative regulatory environments;
Lack of an effective regulatory framework governing the behavior of customs brokers and other intermediaries;
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Barriers identified
Resistance to change brought about by removal of existing unofficial incentives;
Frequent leadership changes leading to a lack of willingness to support the long term effort needed to achieve meaningful improvement;
Limited IT use and capacity in non-Customs agencies; and
Political interference in staff recruitment, selection and promotion – merit not a factor in promotion.
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Where to go for help?
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Where to go for help?
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Where to go for help?
Gerard McLinden (E) [email protected]
Toni Matsudaira (E/F) [email protected]
Enrique Fanta (E/F/S) [email protected]
Tom Doyle (E/F) [email protected]
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