|
|
|
|
International group of customs agencies starts opening doors to industry. For close to 50 years, the World Customs Organization in Brussels has been a gathering place for government officials to express big ideas about how to reform customs operations. Senior ranking members of the organization are learning that changes can’t be made in a vacuum and that the concerns of the shipping industry must be heard. "Customs cannot play an inhibiting role in this new world of global manufacturing, assembly and trade," said David Hesketh of U.K. Customs’ International Cooperation Team. "We must consider more actively collaborating with businesses with an eye to the future and give room to radical and free-thinking ideas on the future of freight, information systems, tax and Customs." Those are revolutionary words that would have never been openly expressed in the halls of most customs agencies a few years ago. As a signal of this change, the WCO held its first "Open Day for Trade" meetings in 1999, and again in November. WCO officials said attendance from the private sector at these meetings has been slowly building. "The WCO is not a well-known organization and has traditionally resisted attempts by the industry to talk to it," said Peter Wilmott, president of the Office de Developpement par l’Automatisation et la Simplification du Commerce Exterieur (ODASCE), a French industry group dedicated to information technology and simplified procedures. "Business is also slow to understand what this international organization can do for them." "Last year, I had the privilege of speaking at the first ‘Open Day for Trade’ program and it is an enormous pleasure to see this event now firmly on its way to becoming not only an annual event, but possibly the most important international customs conference in which the global business community could possibly participate in each year," said Fermin Cuza, senior vice president of international trade and worldwide government affairs and chairman of the Customs and Trade Regulations Committee for the International Chamber of Commerce. Mistrust has long been the foundation of the battle line that has separated customs agencies and international shippers. Customs’ traditional role has been to collect revenue from shippers for the government through duties, taxes and fees and to protect the public from illegal drugs and contraband. Shippers have simply done their best to work with or around these perceived barriers in moving their goods to markets. "The challenge in this era of globalization — for business and customs — is to find a healthy balance between facilitation and enforcement," Cuza said. "In order to accomplish this, we must work together. This is why we need collaboration today more than ever before."
The WCO began in 1947 when the 13 European governments of the Committee for European Economic Cooperation agreed to set up a Study Group to examine the possibility of creating one or more inter-European Customs Unions based on the principles of the General Agreement on Tariffs and Trade. A year later, the Study Group established two committees — an Economic Committee and a Customs Committee. The Economic Committee was the predecessor of the Organization for Economic Cooperation and Development (OECD), and the Customs Committee became the Customs Cooperation Council (CCC). In 1952, the convention that formally established the CCC became effective. The council became the "governing body" of the CCC and the inaugural session of the Council was held in Brussels on Jan. 26, 1953. Representatives from 17 European countries attended the first Council Session of the CCC. Membership continued to expand over the years. In 1994, the Council decided to adopt the name World Customs Organization to "more clearly reflect its transition to a truly global intergovernmental institution." Today, the WCO comprises more than 150 customs administrations, which operate on all continents and within different levels of national economic development. Members are responsible for more than 95 percent of all international trade. The WCO’s mission is to improve the efficiency of customs administration. "Customs is recognized as a critical institution to good governance, prosperity and the protection of society. The World Customs Organization aids the national economic wealth and social protection of its members by promoting an honest, transparent and predictable Customs environment. This permits legitimate international trade to flourish and effective action to be taken against illegal activity."
The WCO is credited with developing the Harmonized Commodity Description and Coding system, which is used by customs agencies worldwide as the basis for classifying goods and for the collection of customs revenue. The WCO works closely with the Geneva-based World Trade Organization. It is responsible for administering the WTO Valuation Agreement, formerly known as the Agreement of Implementation of Article VII of the General Agreement on Tariffs and Trade. The original GATT Valuation Code was developed in 1979 during the Tokyo Round of multilateral trade negotiations. It helped to eliminate arbitrary customs valuation policies, which plagued the shipping industry at the time. It promotes a policy of customs valuation based on the price paid for the goods. It’s the WCO responsibility to ensure that its member countries fully implement the WTO Valuation Agreement. It must be applied in a "uniform, predictable and transparent manner," the WCO said. So far, about 80 WTO member countries use the agreement in their customs operations. The WCO recently developed the Harmonized Rules of Origin, which have been forwarded for consideration this year by the WTO for eventual use by its members. The organization also operates programs that assist members with training and other improvements to their operations. "We develop concepts and ideas," said Michel Danet, secretary general of the WCO. "We show them the way to the future."
Many WCO members signed it, but the convention never lived up to its potential, because countries could pick and choose what they wanted to implement from it. "Countries only had to ratify one annex to be considered contracting parties to the Kyoto Convention," said Patricia McCauley, deputy director of procedures and facilitation at the WCO, and an official of U.S. Customs. "It could not do its job to simplify and harmonize customs procedures this way." About five years ago, the WCO began to revise the Kyoto Convention to give it more muscle and to account for increased trade volumes, changes in information technology, and the need for modern customs practices based on cooperation with the industry. The organization’s members approved it in June 1999. "In a highly competitive world environment, international trade and investment will flow toward efficient, supportive and facilitative locations," the WCO said. "At the same time it will rapidly ebb away from locations which are perceived by business as bureaucratic and synonymous with high costs. Customs systems and processes must not be allowed to serve or be perceived as a barrier to international trade and growth." The revised convention, a "blueprint" for modern customs operations, comprises a general annex and 10 specific annexes. Those countries that ratify the revised convention must accept and apply all the principles listed in the general annex. The key aspects of this annex are: • Maximum use of automated systems. • Development of risk management techniques, including risk assessments and selectivity of controls. • Use of pre-arrival information to drive programs of selectivity. • Use of electronic funds transfer. • Better coordination of activities with other government agencies. • Improving how customs requirements, laws, rules and regulations are disseminated to the industry and others. • Creation of a system of appeals on customs issues. • Development of working relationships with industry. The 10 specific annexes contain a number of chapters, each of which deals with a specific customs procedure, such as transshipments, transit cargo, warehouses and free zones, and temporary admissions. The chapters of these specific annexes are optional for acceptance. "A country may accept one or more of these chapters," McCauley said. In addition, the WCO added implementation guidelines for customs agencies and industry in the revised convention. It also included an important "protocol of amendment" to bridge the transition from the former convention to wide acceptance of the revised convention. "The new structure makes this a living document intended to be continuously updated to reflect modern practices," McCauley said. However, the revised convention will only come into force when 40 of the 61 "contracting parties" to the 1974 Kyoto Convention have ratified it. So far, seven WCO members have ratified the revised Kyoto Convention: Algeria, Australia, Canada, China, Lesotho, Morocco, and New Zealand. Eight other members have signed it but haven’t ratified it. They are the Democratic Republic of the Congo, Czech Republic, Latvia, Slovakia, Sri Lanka, Switzerland, Zambia and Zimbabwe. The WCO plans to sign up at least 40 members to the revised convention by end of the year. But it’s not expected to be an easy sell. "Nothing is more frustrating than to have 151 members approve the revised convention and have so few countries readily signing it," Danet said. The revised convention is being considered for ratification by the governments of the United States, Japan, and European Union, said McCauley, who will finish a five-year term with the WCO this month and returns to U.S. Customs headquarters for her new assignment. Meanwhile, the WCO hopes that once the industry becomes better educated on the principles of the revised Kyoto Convention that it will help to lobby national governments to ratify it. All sized shippers are encouraged by the WCO to get involved in the lobbying effort. "We must not give the impression that it’s just for the multinational firms," said Douglas Tweddle, director of compliance and facilitation for the WCO and an official of U.K. Customs.
But individual shippers haven’t been quick to jump into WCO issues, nor has the organization been willing to open the door completely to them. "Government tends to take the long view and business takes a short view," Wilmott said. "If it doesn’t turn a profit this year, business’ attitude is why spend the time in Brussels (at the WCO)?" But some shippers have used their skills to indirectly influence the WCO to benefit their international customs operations. In a recent case, Polish Customs had a dispute with a major importer over the classification of Pringles potato snacks. Polish Customs decided to take the dispute to the WCO’s Harmonized System Committee. When this occurs, the WCO Secretariat prepares a document that frames the issues, and often suggests a classification. In this case, the Secretariat suggested the classification to be a "prepared vegetable product" under tariff heading 2005, because the snack consists of mostly potato. Countries that participate in the Harmonized System Committee (HSC) meetings develop positions on the agenda. In the United States, the agenda of the committee is published in the Customs Bulletin about a month before the meeting. Procter & Gamble Co., the manufacturer of Pringles, found out that Poland placed the classification of its potato snacks on the Harmonized System Committee’s agenda and quickly went to work to get its views across to the committee. "Decisions from the HSC are followed by Customs throughout the world. For this reason, they directly impact the interests of the trade community," said Leonard L. Rosenberg, attorney with Sandler, Travis & Rosenberg in Miami who is familiar with the case. "Although private parties cannot participate directly in WCO issues, they can influence the outcome of many disputes." In some countries, higher duty rates apply to goods of heading 2005 because of restrictions on agricultural products, Rosenberg explained. But in the United States and many other countries, Pringles are classified under the heading 1905 as bakers’ ware, which applies a much lesser duty rate. Procter & Gamble also had the backing of an opinion of the Court of International Trade (Frito Lay vs. U.S.), in which the court held that a similar product at issue be classified as bakers’ wares under heading 1905. With this information, the company asked U.S. Customs to represent its position before the Harmonized System Committee. "Countries may submit technical arguments in favor of a classification," Rosenberg said. "A country may elect to do so for purely technical reasons, to defend a position that has an impact on trade policy, or to support a private party." "Since the position of the U.S. and the manufacturer were united, they collaborated to develop a submission for consideration by the HS Committee. The U.S. argued that potato snacks should be classified as bakers’ wares because they are produced from dough that has been cooked. The U.S. position was published for consideration of all member countries," Rosenberg added. Procter & Gamble also enhanced its position by meeting with other customs agencies on the committee prior to the meeting. At the meeting, the committee members debated the issue and a majority vote called for Pringles to be classified as bakers’ wares. Committee members may file a reservation to prevent the decision from entering into force, which they did in this case. However, a year later the committee again affirmed that the potato snacks be classified as bakers’ ware and the decision entered into force. "Typically these cases take about one to two years, which is a lot faster than it takes for a company to challenge a U.S. Customs decision in court," Rosenberg said. "The problem is that the decision is technically not enforceable. But once a decision is reached in the WCO, there’s a tendency for member customs agencies to implement it." Sandler, Travis & Rosenberg is representing clients involved with "personal digital assistant" devices and Sony Play Station II classifications before the WCO.
"Why is there a customs at all?" Wilmott said. "Society determines the type of economy you have. Customs is there to help protect those differences. Except for how customs deals with trade, that won’t change." Some analysts believe that customs operations should be rolled up with other government agencies at the border, such as immigration and agriculture, to create a more efficient "frontier force." "There’s no ready-made solution right now," Hesketh said. "I’ve heard that trade will come up with the answer. I think that’s right."
|
|
|
|
|