Cross-border Management and Customs

Customs and other government agencies play a pivotal role in the facilitation of international trade. Besides having to efficiently manage the clearance and ensure the security of international cross-border movements of goods and conveyances, these organizations also have to apply coordinated cross-border management principles to foster cooperation and to coordinate their respective regulatory activities. Border formalities must be accomplished with Customs and the other governmental players in both the export and import countries (and often during transit). Therefore cross-border coordination of government activities within a country and among countries (e.g. through mutual administrative assistance and exchange of relevant information) is vitally important for the free, smooth and unhindered flow of international trade. The Revised Kyoto Convention (RKC) defines Customs as the government service that is responsible for the administration of Customs law and the collection of duties and taxes, and which also has responsibility for the application of other laws and regulations relating to the importation, exportation, movement or storage of goods.

Malfunctioning government authorities at a border, in particular Customs administrations, have a strong negative impact on the economic development of a country because they cause, for example, high transaction costs and long clearance times. According to two OECD reports published in 2011 and 2013 on the cost impact of trade facilitation measures, the policy areas that seem to have the greatest impact on trade volumes and costs in OECD countries are advance rulings, information availability, formalities and procedures, and inter-agency cooperation. Improving all these can lead to a reduction in trade costs of around 10%.

Problems may be due to an opaque and corrupt administration that is only paper-based and where decisions are made only at the top with multiple reporting layers. Rules and regulations are not made public, which makes it nearly impossible for the trading community to comply with them. The malfunctioning of Customs is often the result of a malfunctioning government and the country at large. In such cases, lack of integrity in Customs is part of a government/country-wide issue. Examples of such administrations/countries can be identified by cross reading and analysing international perception indexes such as the World Bank's Doing Business and Logistics Performance Index as well as the Corruption Perception Index of Transparency International.

Solutions are often as complex as the underlying problems. As a minimum, countries should apply such international standards and good practices as contained in relevant international instruments such as the Convention on the Harmonization of Frontier Controls of Goods or the WCO Revised Kyoto Convention. Since its adoption in 1999 by the WCO, the number of countries having become a contracting party and thus having committed to implement the General Annex with all key provisions for a modern Customs administration has grown to 91 as of October 2013. This Annex is obligatory for all contracting parties, while the Specific Annexes (with provisions on individual Customs procedures such as warehousing and transit) are optional. Implementation of these key international instruments provides many benefits ranging from higher duty collection to increased competitveness of the economy. The implementation of the RKC and other relevant instruments requires a strategy-based reform and modernization programme that addresses various aspects of Customs as an institution: the organization, the legal environment, technology and people. Combined with a business-oriented approach in the day-to-day application of these international instruments, such reforms will enable Customs to find the right balance between its two main objectives: trade facilitation and control/security.
The WCO Strategy on Customs in the 21st Century is a ‘vision statement’ by global Customs leaders aimed at meeting the requirements of governments, citizens and other stakeholders. The strategy expresses the need for Customs administrations to be more responsive in the context of globalisation, the dynamics of international trade, the technicalities of the trade supply chain, emerging policy directions and the complexities of the global landscape.

A wealth of relevant information and material about Customs and trade facilitation is available from the main international bodies engaged in this area: the World Customs Organization (WCO), the United Nations Center for Trade Facilitation and e-business (UN/CEFACT) and the World Trade Organization (WTO).

A Handbook of best practices at border crossing has been recently published by OSCE jointly with UNECE.