The Role of Customs in Trade Facilitation

1. Role of Customs in Trade Facilitation Ramchandra Man Singh 1

2. Outline of Presentation Background Trade Facilitation (TF) Customs Role Customs and TF Modern Customs WCO Instruments TF Initiations in Nepal Coordination Conclusion 2

3. Background Accurate, predictable, and speedy movement of goods across the border offers an attractive feature in the strategy of economic development Certainty, clarity, Flexibility, &Timeliness 3

4. Trade Facilitation Simplification, Harmonization, Standardization and Modernization of trade process 4

5. Contd. It aims at-developing a consistent , transparent, and predictable environment for international trade transactions. It is based on internationally accepted norms and practices . 5

6. Trade Facilitation- a necessity Growing volume of trade. Global traffic increased from 137 to 417 million containers between 1995 and 2006. Fall in tariff levels after the conclusion of Uruguay Round. Availability of modern technology. The OECD (2003) calculates that each 1% saving in trade related transaction costs yields a worldwide benefit of US$ 43 billion. 6

7. Goal Reduces the transaction cost and complexity of international trade and improves the trading environment in a country, while at the same time enhancing government controls. Helps in successful integration into the world economy 7

8. Benefits Results in direct benefits both to Governments and to Business community in terms of increased economic efficiency, better security, faster delivery of goods, and reduced costs 8

9. Customs Customs has become the hub around which the wheel of globalization turns, and that hub must be both strong and flexible in order to global trade to operate efficiently while society remains safe. 9

10. Customs Role Fulfills three fold mission Fiscal mission Economic mission Social mission 10

11. Changing Role The role of customs has been changing - From a primary focus on revenue collection to one of trade facilitation, by enabling successful balance between effective control measures and facilitation of trade Development of a nation through promotion of trade and investment. 11

12. Customs and TF TF and WTO negotiations : 1996 WTO Singapore Ministerial conference recognized TF in WTO agenda. 2001 Doha Ministerial conference adopted a declaration- mandate for negotiations in area of TF. Particular reference to modernization of Articles V, VIII and X of GATT 1994 2004, WTO General Council on Doha work Program decided to commence negotiation on TF. 12

13. WCO Support the WTO Work on TF GATT 1994 Articles V-Freedom of Transit Article VIII Fees/Formalities Articles X- Publication & appeals WCO (Kyoto) Effective rules for transit procedures Fees limited to the cost of services rendered Simplified procedures and limited data requirements Publication of regulations Appeals High Principles Tool to implement WTO Principles Compatible Complementary 13

14. Customs in the 21 st Century New strategic Direction Enhancing growth and Development through trade facilitation and border security. 14

15. Contd. Ten building blocks Globally networked Customs Better coordinated border management Intelligence-driven risk management Customs Trade partnership Modern working methods 15

16. Contd. Enabling technology and tools Enabling powers A professional knowledge based service culture Capacity building Integrity 16

17. WCO instruments to TF Revised Kyoto Convention Harmonized System on Tariff Classification Istanbul Convention on temporary admission Immediate Release guidelines Customs Data Model and time Release Guide Framework of Standards to Secure and Facilitate Global Trade. 17

18. Efficient Customs Achieving high compliance and facilitation is the definition of world class Customs Customs must reduce the burden of trade as measured by 3 Cs Clearance time Cost of Compliance Consistency of practices Improved trade security, trade efficiency and effective enforcement . 18

19. Trade Facilitation Initiatives In Nepal Customs related Adoption of Harmonized System Implementation of WTO Agreement on Customs Valuation Tariff Structure rationalized Implementation of ASYCUDA Important provisions of Revised Kyoto convention incorporated in Customs Act. 19

20. Contd. Post Clearance Audit, Pre arrival clearance and risk management Physical infrastructure improved Inter sectoral coordination committee Operationalisation of ICD Bonded ware house facility Accession to WTO, SAFTA, BIMSTEC Integrated customs Border Points. 20

21. Coordination A Study by World Bank in 2004 revealed Increasing global capacity in trade facilitation by half, when compared with the global average, would increase world trade by US$ 377 billion 9.7% rise in global trade. About US$ 107 billion of the total gains would come from improvement in port efficiency, about US$ 33 billion for improvements in customs environments and US$ 83 billion from improvements in the regulatory environment 21

22. Contd. Significant scope for improvement outside customs. 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 - Coordinated Border Management. 22

23. Conclusion Trade facilitation is no luxury it is a must Customs must become even more effective. So, Streamlined, effective systems are a prerequisite to fully exploit the opportunity of unfettered global trade in an increasingly hostile environment by enabling a successful balance between effective control measures and facilitation of trade. 23

24. Thanks 24