Trade facilitation work undertaken by intergovernmental organizations

United Nations Conference on Trade and Development (UNCTAD) back to top

1.1 UNCTAD became involved in trade facilitation work in 1970 when it was agreed, within the ECE context, on the need for facilitation work to be co-ordinated on a global basis and for the existing technical functions of the United Nations to be strengthened in this area. The regional economic commissions agreed that the United Nations Development Program (UNDP) provided an appropriate framework for an interregional project to be attached to UNCTAD. As the work expanded, it became necessary to separate the UNDP-financed technical assistance activities and the substantive UNCTAD secretariat work. In 1973, UNCTAD and the ECE agreed that UNCTAD would provide secretariat technical expertise on a global basis. In 1975, a separate unit in the secretariat was established called the Special Programme on Trade Facilitation (FALPRO).

1.2 FALPRO (which was subsequently absorbed by the Special Programme on Trade Efficiency - see below) did not report to any of the bodies within UNCTAD's permanent organization structure and was not part of UNCTAD's policy or negotiation work. Its attachment with UNCTAD enabled it to work globally with the regional economic commissions, particularly the UN/ECE, and with the International Trade Centre (ITC). The original terms of reference of FALPRO essentially aimed at ensuring the full participation of developing countries in international trade facilitation work and in dealing with facilitation matters cross-sectorally with other UNCTAD programmes such as the commodity agreements; generalized system of preferences; transport work; harmonization of customs procedures, etc. The means to achieve this were to create representative national facilitation bodies and to arrange training of officials from the countries concerned in order to enable them to carry out trade facilitation work in their own countries and to participate in international meetings.

 

1.3 In 1992, at the UNCTAD VIII Cartegena Conference(1), it was agreed that an Expert Working Group on Trade Efficiency be established within UNCTAD. While taking due account of work done in other international organizations, the Group "would seek to support, accelerate and enhance these initiatives...The Group would produce guidelines needed to take concrete steps towards trade efficiency at the national and international levels, especially in developing countries...The culmination of the work of the group would be an international symposium on trade efficiency, which was to be held in 1994."(2) The symposium was to reinforce international discussion on the promotion of harmonized national and regional infrastructures for trade and trade efficiency. At the secretariat level, UNCTAD's work in the context of the inter-secretarial FALPRO was incorporated into the Special Programme for Trade Efficiency (SPTE). In the 1996 re-organization of UNCTAD, SPTE was transformed into the Division of Services Infrastructure for Development and Trade Efficiency (SITE) and trade facilitation activities fall under its Trade Facilitation Section. The objective of SITE is to simplify and harmonize trade procedures world-wide and give governments and traders access to advanced technologies and information networks.

 

1.4 At the conclusion of UNCTAD X in Bangkok, the Plan of Action(3) of the Bangkok Declaration(4) provides a new mandate for the UNCTAD secretariat, in particular regarding transport, trade facilitation and e-commerce:

 

150. UNCTAD’S work should focus on its comparative advantage in the fields of the applied economics of transport, trade facilitation and multimodal transport. UNCTAD must treat problems relating to the provision of, and access to, international transport services as an integral part of international support measures designed to enable the trade and industry of developing countries and particularly the least developed, land-locked and transit developing countries to participate more effectively in the globalization processes.

152. In close co-operation with other relevant international organizations, UNCTAD should continue to undertake studies on the implementation of multimodal transport rules.

156. UNCTAD should contribute to informing international debates on the developmental impact of global information networks addressing, in particular, developing countries’ specific problems, such as access to information technology, infrastructure constraints and build-up of human resource capacity".

 

SITE carries out a wide variety of activities which are described below.(5)

 

United Nations Symposium on Trade Efficiency

 

1.5 The United Nations International Symposium on Trade Efficiency was held, at Ministerial level, in Columbus, Ohio, in October 1994. The Columbus Ministerial Declaration on Trade Efficiency(6) contains the substantive outcome of the Symposium. The Symposium noted the signing of the Final Act of the Uruguay Round in Marrakesh as "the successful conclusion of years of negotiations on the macro-economic framework required for the emergence of an open, predictable, secure and non-discriminatory trading system. However, efforts made to secure an open trade environment will not bear their full benefits unless the enterprises of all nations can import and export efficiently...[delegates] have gathered to find solutions to these micro-economic issues of international trade".

 

1.6 The Symposium concluded that "adoption of trade efficiency measures can significantly lower the costs of trade transactions. Estimates place the costs of trade transactions at 7 to 10 per cent of the total value of world trade". The Columbus Ministerial Declaration put forth a set of practical actions, recommendations and guidelines for governments, international and national organizations and enterprises. They addressed six areas which were considered ripe for tangible results for international trade: customs, transport, banking and insurance, information for trade, business practices, and telecommunications. UNCTAD's role, as agreed at the symposium, was to act as the focal point in the implementation of the Declaration, which would require co-ordinated efforts by many national and international bodies, particularly the United Nations. In particular, the symposium called for "coordination with the GATT/WTO and all United Nations regional economic commissions...[as] of particular importance in facilitation of trade".

 

1.7 The Declaration called for, in the area of customs, "governments, through their customs authorities, to simplify procedures for determining customs value, which can cause significant delays in the clearance of import consignments, through the use of the customs valuation method prescribed in the GATT Agreement, as administered by the Customs Co-operation Council, which is administratively less complex than other methods currently in use in some countries...". In addition, the Declaration called for governments to "avoid as far as possible the use of pre-shipment inspection agencies to carry out customs-related activities. While recourse to such services might be a necessity in certain circumstances, it should be regarded as an interim measure and conducted in conformity with the provisions of the Agreement on Preshipment Inspection annexed to the Marrakesh Agreement...".

 

Trade Point Programme

 

1.8 UNCTAD's Trade Point Programme was launched in 1992 as part of a larger campaign towards improving trade efficiency. Its main objective is to facilitate the access for small and medium-sized enterprises (SMEs) to international markets, in particular using newly emerging electronic commerce technologies. Through the electronically interconnected network of Trade Points, known as Global Trade Point Network (GTPNet)(7), in many countries of the world, SMEs gain access to the latest information and telecommunication technologies and services, and this enables them to get their products known to potential customers and find business partners in other countries. These services are provided at a reasonable cost, with an overall objective of reducing the risk of exclusion and increasing the participation of SMEs, particularly from developing countries and countries in transition, in international trade.

 

1.9 Trade points may be government-subsidized; entirely private-sector operations; or mixed public-private ventures. They may be based in such institutions as ministries, trade promotion organizations or universities.

 

1.10 The Global Trade Point Network, launched at the Columbus Symposium, is an electronic network inter-linking the central web site of the Trade Point Programme and web sites of individual Trade Points. It has recently undergone a substantial renovation in order to keep pace with the most recent market and technological trends. Evidence indicates that the proliferation of new sites and information services on the Internet often does not make it easier for users to find the right information. Nor does it automatically guarantee information providers that they will find customers. UNCTAD Trade Point administrators believe that demand seems to emerge for: (a) quality instead of quantity of information; (b) complete, not rudimentary information; (c) trustworthy information, and (d) user-friendly access to information. The new GTPNet is conceived so as to embrace these trends. The approach chosen is based on a decentralized structure and active involvement of Trade Points with a view to empowering them to eventually become true owners of the system.

 

1.11 The redesigned Global Trade Point Network, or GTPNet, is a database-driven Internet (with password-protected areas) for providing international traders with up-to-the-minute listings of potential buyers and sellers of products and services and other trade-related information not usually available online. The clients - most of which are small and medium-sized enterprises - access the network through UNCTAD's "trade points", which compile, standardize, centralize and update information on a national or local basis.

 

1.12 Interactivity and decentralization are the keywords of the new network architecture, which uses state-of-the-art tools for uploading, downloading, automatically updating and searching for information. On the GTPNet, information is shared through central databases, making data retrieval easier and faster. A full text search capability, and customized search tools including user-defined fields for sorting and matching, are available. Electronic trading opportunities are posted for registered clients for an 8-day period before being listed on the publicly accessible part of the site. All the information on each trade point has been formatted into standardized categories and codes, and the trade points in turn periodically verify the data on their member enterprises.

 

1.13 Three types of information can be found on the GTPNet website:

 

-- General information maintained by UNCTAD, including a list of trade points world-wide, their home pages and status, relevant guidelines and frequently asked questions;

 

-- Specific information on individual trade points, providing details on their services and fees, direct business contacts, and national trade regulations, posted by the trade points via online secured forms or automated replication processes; and

 

-- Open areas for the exchange of information, such as electronic trading opportunities or technology developments, and for user feedback, a discussions database, newsletters and special announcements. A knowledge management framework will be set up shortly to make this type of pooling of knowledge, information and experience among trade points even easier.

 

1.14 There are currently more than 200 trade points in 130 countries, of which 54 are operational.(8) As this number continues to grow, along with the sheer volume of available business information and quantum leaps in information technology, the GTPNet is expected to expand even further.

 

1.15 The long term objective is for the Trade Points to become self-sustainable and to take the ownership of the GTPNet. The forthcoming VI World Wide Trade Point Meeting that will be held from 6 to 10 November 2000 in Geneva, will be a great opportunity to strengthen and institutionalize the growing community of Trade Points.

 

ASYCUDA(9)

 

1.16 As concerns technical assistance under the SITE, the ASYCUDA customs software program is the largest technical assistance project in UNCTAD. The core of the program is a computer software program which, since 1985, has been installed in over 80 developing and transition economies throughout the world. It is designed to streamline and reduce customs forms and procedures and is based on and incorporates UN/ECE and WCO Recommendations and Standards, (including those related to the Document Layout Key), codes and other standards. The basic idea is to rid the customs system of outdated procedures, practices and incorporate international practices and standards in order to increase the country's customs revenue through reduced costs and faster clearance. The first program was developed by UNCTAD in 1983 on micro computers. Since then, the program has been updated and revised numerous times to improve capacity and performance. The software can be adjusted to each country's customs valuation methodology and translated into its official language.

 

1.17 A new improved version of ASYCUDA (ASYCUDA++) offers the traditional core features, i.e. system administration, national configuration, tariff and masterfile maintenance, cargo manifest handling, declaration processing and accounting. In addition, ASYCUDA++ offers to users a number of important new features: one of the most important enhancements is the full implementation of the European Single Administrative Document (SAD). The system also has the technical ability to introduce new declaration formats based on other regional declaration standards. The concept of direct trader input (DTI) offers important advantages to customs and brokers who can now enter a number of declarations locally before establishing the connection to customs to submit them for processing; the concept of direct shipper input (DSI) offers similar advantages to customs and shippers who can now enter the manifest information in their offices and transmit it to customs for processing; external system communication can be done through UN/EDIFACT messages; and a modern and user friendly tariff language has been developed enabling customs to maintain their tariff rules and calculation algorithms without the need to do any programming or recompilation of any part of the system; this language can access all declaration data elements and link them with formulas using standard logical and mathematical functions. A flexible selectivity module provides customs with a powerful tool to significantly accelerate the goods clearance process while at the same time improving its control capacity; it efficiently selects consignments for inspection through selection criteria (including a random rate) which can be maintained at national, regional and local levels. Full auditability of the transaction files provide an additional tool to tighten the functional security of the system.

 

ASYCUDA and transit issues

 

1.18 In May 1997, UNCTAD called an expert meeting on the use of information technologies to make transit arrangements more effective. The main objective of this meeting was to provide opportunities to experts to assess information technologies for facilitating transit transport operations, strengthening customs transit control and simplifying customs transit procedures.

 

1.19 The meeting’s recommendations highlight that "UNCTAD should in co-operation with all other interested parties, work towards developing a transit module, in the context of ASYCUDA and ACIS."(10) Furthermore, "the transit module could cover all functions of customs control and transport monitoring of transit goods from the beginning to the completion of the transit operation, including the release of securities where appropriate."

 

1.20 As a result of the expert meeting, ASYCUDA ++ has been enhanced to include a new module for the management of transit procedures (the MODTRS module). A release of this module was issued for live testing in selected user countries in April 1999 and the fully operational module was included in an upgraded version of the software (version 1.15) and delivered to all the user countries.

 

1.21 This module handles three transit documents, namely the T1, the TIR carnet and the First Identification Procedure (FIP). It is usable for all the types of transit as defined in the Kyoto Convention covering the movements from the:

 

-- border office of entry to an inland office (Import transit);

-- border office of entry to a border office of exit (Through transit);

-- inland office to a border office of exit (Export transit);

-- inland office to another inland office (Internal transit).

 

1.22 The three documents are different and present specific features but all apply the following principle: the system allows for data capture by the traders using the DTI module and/or by the customs officers. Upon validation of the document a message is automatically transmitted to the office of destination using the appropriate ASYCUDA software, A++ GATE, (ASYCUDA Global Access to Trade Efficiency), through the national telecommunication network. This message informs the office of destination that a cargo should arrive within a given time period. When the cargo arrives at destination the transit message is retrieved, the transaction is closed and a release message automatically broadcast to the office of departure. This functionality gives customs complete and timely information on all operations.

 

1.23 The module works satisfactorily on a national scale and it has been recently enhanced by the development of new functions such as the re-routing (change the office of destination). As customs receive in advance complete and timely information on all the operations and there is no need for re-keying at the office of destination, processing delays are tremendously reduced at borders, thus facilitating trade.

 

1.24 The system is technically designed for permitting future extension to cover the international transit operations (data exchange of messages between countries).

 

Bilateral and regional transit agreements

1.25 Since the mid-1970s UNCTAD has offered technical assistance to help land-locked developing countries and their transit neighbours to intensify their co-operative arrangements for the development of transit infrastructure, institutions and services in order to facilitate faster movement of goods in transit. This assistance is based on the recognition that high transit transport costs are a major disadvantage to landlocked developing countries and economies in transition; moreover, long, unpredictable transit times undermine the competitiveness of many developing countries.

 

1.26 The Meeting of Governmental Experts from Land-locked and Transit Developing Countries and Representatives of Donor Countries and Financial and Development Institutions, which meets once every two years, has provided a forum for interactive debates and its conclusions and recommendations for action at the national, regional and international levels have been transmitted for review and endorsement by the General Assembly of the United Nations.

 

1.27 Priority areas of work where achievements have been made include: assistance in negotiating and/or implementing bilateral and regional transit agreements and arrangements; streamlining and harmonizing administrative and customs procedures and documentation; assistance in implementing policies and procedures to reduce transit costs; and assistance in institution building and human resource development in the transit sector.

 

1.28 Much of UNCTAD’s earlier technical assistance support work was concentrated in Africa, but more recently, assistance has been extended to other countries and regions, notably, the newly independent and developing states in Central Asia where, in co-operation with the Economic Co-operation Organization (ECO) a Transit Transport Framework Agreement was adopted (1998). A similar agreement between the People’s Republic of China, Mongolia and Russia is currently being negotiated with assistance from UNCTAD. UNCTAD continues to work closely with regional integration groupings (ECOWAS, COMESA, SADC, ECO etc.), which play a major role in promoting regional standards, procedures, documentation and practices designed to facilitate faster movements of goods in transit.(11)

 

Transport

 

1.29 The transport sector has received the most attention of all sectors of economic activity in UNCTAD's trade facilitation work. In particular, UNCTAD promotes the implementation, through advisory services as well as technical assistance and training activities, of the concept of National Trade and Transport Facilitation Committees (NTTFC) along the lines suggested in the UN-ECE/CEFACT Recommendation No.4.(12) These committees bring together representatives of public and private parties concerned with international trade and transport facilitation in a country, i.e. governmental entities, services providers, and transport users. Established as a consultative body, an NTTFC serves as a national forum to establish formalities, procedures and documentation used in international transport and trade; its mandate is to prepare recommendations and advise on domestic and foreign policy matters related to the development of trade and transport through proposals to the institutions concerned and to the executive branch of the government. UNCTAD and the Latin American Association for Integration (ALADI) have signed a Memorandum of Understanding to promote jointly the creation of NTTFCs in Latin America. In a particular sub-region these committees can serve as focal points to monitor and co-ordinate regional activities on trade facilitation.

1.30 Other activities in the transport area have concentrated on the increasingly multimodal transport operations of transport services, on the use of different terms of shipment (e.g. cif, fob) with special emphasis on shipping and ports. The latter work is often coordinated with the International Maritime Organization (IMO), which concentrates on technical and safety problems in shipping and ports. The technical assistance focuses on advice, management assistance and training with regard to economics and management of shipping, and shipping companies, including corporate planning and fleet operation. It provides advice on the implementation of conventions negotiated under UNCTAD and on maritime administration and maritime law. With regard to ports, UNCTAD's assistance has concentrated on both the economic and commercial aspects. This includes port operations, administration and organization (including legislation and regulations), financial management, cost control and information systems.

 

ACIS

 

1.31 UNCTAD has developed and is installing a transport management tool called the Advance Cargo Information System, or ACIS. The objective is to counter the high cost of transportation resulting from extended door-to-door transit times. ACIS is a set of computer applications designed to produce management information to address multimodal cargo transit and transport problems. ACIS has four main modules, each tracking cargo on a mode or interface: rail (RailTracker), port (PortTracker), lake/rivers (Lake/RiverTracker) and road (RoadTracker). These modules are linked together through the Backbone Information System which can interface with ASYCUDA. These, in turn, have sub-modules performing different, but inter-related functions, especially with regard to statistics and performance indicators. ACIS provides improved information to help control the operations of individual transport operators and facilitate rational corporate planning. It is also a database facility available to parties registered as having an interest in a consignment and its transportation, providing them with the latest reported location and status of goods and transport equipment. As a long term record of transport movement data, it permits governments and institutions to analyze national, sub-regional and regional problems and investigate alternative investment opportunities in the transport sector.

 

1.32 ACIS PortTracker and RailTracker modules have been installed in 15 countries and the system is currently being implemented in another five countries. Project documents are presently under negotiation with a number of Far East Asian Countries (Sri Lanka, Mongolia, Vietnam, Thailand), and implementation in Nigeria, Brazil and Lebanon should start in September 2000. Installation in the Port of Bandar-Abbas in the Islamic Republic of Iran, after an international meeting in Tehran, could constitute the first step to an extension to ECO and Arabic countries.

 

TRAINFORTRADE(13)

 

1.33 The TRAINFORTRADE programme aims at strengthening training capacities in developing countries, particularly in the least developed countries (LDCs), in the fields of international trade and trade-related services.

 

1.34 To intensify the training activities in the field of legal aspects of electronic commerce, especially for developing countries and their SMEs, a new TRAINFORTRADE course on "Legal and regulatory aspects of electronic commerce" is currently under preparation.

 

  United Nations Economic Commission for Europe (UN/ECE) back to top

2.1 Work on trade facilitation activities began in the ECE in 1960, following a 1959 initiative from the Nordic countries, when it was decided to set up a Group of Experts to explore ways in which export documents could be simplified and standardized. In 1971, the trade facilitation work was reorganized into the newly established Working Party on the Facilitation of International Trade Procedures, also referred to as Working Party 4 or WP.4. Its activities were concentrated in two areas, each carried out in a group of experts (GE.1 and GE.2):

 

"the analysis of trade 'formalities' and procedures as embodied in information requirements (whether legal, administrative, commercial or operational) of participants in international trade; and

 

the development of improved transmission methods (computerized processing and tele-transmission) for trade information which could replace traditional paper documents."

 

2.2 Participants included representatives from the ECE member governments, representatives from national trade facilitation bodies, major international organizations as well as countries not members of the ECE.(14)

 

2.3 The work of the two expert groups has been oriented towards the following trade facilitation objectives:

 

- seeking improvements in trade procedures in order to assist governments and trade participants to be more efficient and effective while also minimizing delays and costs...thus reducing 'artificial' barriers to increased participation in world trade;

 

- reducing the cost of the paperwork used in trade by seeking, in cooperation with the interests and authorities involved, the reduction, simplification and international harmonization of the information and documents required for foreign trade;

 

- standardizing the formats (whether electronic or paper) used in transaction information flows for administration, commerce and transport at an international level;

 

- ensuring that the information flows related to the distribution of goods and services facilitate and do not impede national industrial development or growth in external trade.

 

2.4 In February 1997, WP.4 was reorganized into the Centre for Facilitation of Procedures and Practices for Administration, Commerce and Transport (CEFACT) by decision of the Committee on the Development of Trade. In March 2000 considering that trade facilitation and electronic business were central to the remit of the UN/ECE and to achieve improved world-wide coordination of trade facilitation, UN/ECE modified the Centre’s name into the Centre for Trade Facilitation and Electronic Business (UN/CEFACT) which reflected its new focus.(15) UN/CEFACT reorganized the work of the WP.4 in order to streamline decision-making, leverage collaborative efforts and delegate technical decision to field experts. It works through informal technical groups; allows the full participation of non-ECE countries, interested international organizations and recognized NGOs within its meetings and management structure; and makes use of focal points in interested UN Regional Commissions and an inter-secretariat task force of the ECE, UNCTAD and the ITC. UN/CEFACT also co-operates with private business and other intergovernmental organizations which participate directly in its work.

 

2.5 UN/CEFACT has produced 28 UN/ECE Trade Facilitation Recommendations(16), developed over the past 37 years. Several of these recommendations have been adopted by the International Standards Organization (ISO) as ISO international standards. The first Recommendation was the United Nations Layout Key which essentially establishes a set of rules on how national trade documents should be formulated. Before its implementation, the information on the numerous documents needed for trade was scattered in different places on different forms without any uniform system. Implementation, which intensified in the 1970's, saw the forms printed on the same size of paper with common items of information occupying the same relative position on each form. In the area of trade procedures, the Recommendation 18 "Facilitation measures related to international trade procedures" is to be noted. It covers, inter alia, some aspects of customs procedures and pre-shipment inspection. UN/CEFACT is currently reviewing and updating this recommendation. UN/CEFACT has also developed a Compendium of Trade Facilitation Recommendations which is currently under revision and is intended to be used as a reference by those engaged in the process of simplifying, harmonizing and rationalizing trade procedures and practices.

 

2.6 As a result of the work on the UN Layout Key, the importance of structured trade and business data was recognized. This resulted in the development of standardized codes and data elements for use in both paper and electronic based information exchange. These standards are compiled in a publication called the UN Trade Data Element Directory (UNTDED), as well as in some Recommendations. Volume I contains definitions of data elements including UN/EDIFACT and is an ISO standard (ISO 7372), which is jointly maintained by the ECE and the ISO central Secretariat. Volume III contains the ECE Recommendations(17).

 

Electronic Data Interchange (EDI)

 

2.7 The use of computers to carry out buying and selling between individuals, individuals and companies, and companies and companies, known as electronic commerce, has contributed significantly to facilitating international commerce because it is reducing the amount of paperwork that is related to doing business. This can be done through the Internet, the World Wide Web, E-mail and Electronic Data Interchange (EDI). EDI can be defined as the "structured exchange of data between applications in different companies." A structured message is formatted according to a predefined arrangement of putting the information into a file. On paper, this would be a "form." In EDI, the format used in general is called UN/EDIFACT or the United Nations Electronic Data Interchange for Administration, Commerce and Transport.

 

2.8 UN/EDIFACT is an international standard for the formatting and sequencing of data for EDI. It was developed through the work of WP.4 to develop an international standard to replace the two regional standards, which had emerged in the United States and in Europe and whose incompatibility with each other was creating difficulties for international trade. The UN/EDIFACT is "a set of standards, directories and guidelines for the electronic interchange of structured data, in particular related to trade in goods or services, between independent computerized systems in different organisations, irrespective of the type of computer or software used". In other words, EDI is used for the automation of data exchange.

 

2.9 Within the work programme of UN/CEFACT there are activities for the review, monitoring and evaluation of on-going developments in the information technology area in order to incorporate appropriate new technologies, such as those related to Electronic Commerce, into its work. Recommendation 25 (adopted by the UN Economic and Social Council as a UN Recommendation in July 1997) encourages the use of UN/EDIFACT by governments in their administrations and in their EDI communications with the private sector. A description of the technical aspects of EDI and UN/EDIFACT is included as Annex II of this note. Recently, in order to take advantage of information technology, UN/CEFACT decided to asses the use of internet technology and new techniques and methodologies to transfer data in line with the work done over the years (UN/CEFACT’s Strategy for Electronic Business, document TRADE/CEFACT/2000/21, February 2000).

 

Other work of UN/ECE

 

2.10 Another area relates to legal issues arising from trade facilitation initiatives and is based on the recognition that the removal of legal impediments is a key requirement to enable global trade to develop and be facilitated. In carrying out its legal work programme, UN/CEFACT liases with other organizations, particularly the UN Commission on International Trade Law (UNCITRAL) and the International Chamber of Commerce (ICC). In March 2000 the UN/CEFACT Plenary approved a recommendation on the Electronic Commerce Agreement that proposes a model for a contractual approach of electronic commerce operations. This approach takes into consideration the need for a framework of basic provisions to be agreed by business entities combined with the flexibility required to conduct day-to-day commercial transactions.

 

2.11 The UN/CEFACT International Trade Procedures Working Group (ITPWG) is dedicated to identify, simplify, harmonize and align public and private sector practices, procedures and information flows relating to international trade transactions both in goods and related services. Its key deliverables are:

 

-- development of relevant instruments and recommendations for trade facilitation, and proposals for revision, amendment or abolition of these recommendations, in co-operation with the other working groups;

 

-- evaluation of the state and progress in the implementation of trade facilitation measures; systematic review and monitoring of the implementation of trade facilitation Recommendations; notification to other working groups of constraints identified in the field of international trade procedures;

 

-- contributions in support of and to influence related work in other relevant intergovernmental and non-governmental organizations; and

 

-- provision of relevant know-how, educational and promotional material.

 

2.12 The UN/CEFACT Business Process Analysis Working Group (BPAWG) is dedicated to the analysis of current business processes, identification of constraints and the development of proposals for appropriate changes to business processes. Its key deliverables are:

 

-- analyses of business processes relevant to the mission and objectives of UN/CEFACT using the common descriptive techniques and methodology agreed within the Centre;

 

-- identification of constraints to more effective business processes;

 

-- proposals, including draft Recommendations, for more effective business processes;

 

-- assistance to other working groups in understanding approved proposals in order to enable them to develop solutions, based on these proposals, for the migration from existing to new business processes.

 

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World Customs Organization (WCO)  

3.1 The World Customs Organization was founded in 1953 as the Customs Co-operation Council (CCC). Established originally by 13 European countries, its membership has expanded to 151 members. All aspects of the WCO’s work relate closely to questions of trade facilitation. The WCO’s mission is to enhance the efficiency of customs administrations in the areas of compliance with trade regulations, protection of society and revenue collection. The WCO's main activities include:

-- examination of the technical aspects of customs systems, as well as the related economic factors, and promotion of communication and co-operation among Members and with other international organizations;

 

-- fostering of human resource development and of improvements in the management and working methods of customs administrations and the sharing of best practices;

 

-- preparation of draft conventions and other legal instruments for the harmonization and uniform application of simplified and effective customs systems and procedures governing the cross-border movement of commodities;

 

-- making recommendations to ensure the uniform interpretation and application of conventions;

 

-- making recommendations for the settlement of disputes concerning the interpretation or application of the conventions;

-- furnishing interested governments with information or advice on customs matters;

-- promoting co-operation between customs administrations and between customs administrations and the trading community to improve communication and facilitation.

3.2 While not all the aspects of the WCO's work programme can be depicted here, the various legal instruments established and maintained under its auspices are introduced below. Due to the vast amount of material, not all conventions can receive detailed treatment. However, the Kyoto Convention, as the key convention covering customs procedures, and the Istanbul Convention on temporary admission, are described in more detail.

International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention) 1973

3.3 The Kyoto Convention, agreed in May 1973, consists of two parts. The first is comprised of 19 Articles setting out the general provisions essential for the implementation of the instrument. The second consists of 31 Annexes (26 of which have entered into force), each devoted to a specific customs procedure(18). An Annex enters into force when five Contracting Parties have accepted it. Each Annex consists of a set of definitions clarifying the main customs terms used and the rules governing the implementation of the procedure concerned. These provisions take the form either of Standards, whose general application and incorporation in national legislation are considered essential for harmonization and simplification, or the form of Recommended Practices, which are provisions recognized as constituting progress towards the harmonization and simplification of customs procedures, and whose application is considered to be desirable. Both categories of provisions may be accompanied by Notes, intended to indicate ways in which the relevant Standard or Recommended Practice might be applied.

3.4 The Kyoto Convention is open for accession by any State, and by Customs or Economic Unions. Presently, the Kyoto Convention has 59 Contracting Parties. The 31 Annexes are the real instruments of harmonization of customs procedures, since they contain the principles intended to be incorporated in national legislation. At the time of accession to the Convention, a State has to accept at least one Annex. Subsequently, each of the remaining Annexes can be accepted individually. For the purposes of the rights and obligations of a Contracting Party each of the Annexes it has accepted together with the body of the Convention constitutes a single legal instrument. Countries may select Annexes if they want to limit their obligations to those particular sections of their legislation which they wish to modernize or to align with international practice.

3.5 Contracting Parties which are not yet in a position to implement a particular provision of an Annex can enter a reservation in respect of that provision, indicating the differences between the provisions of their national legislation and those of the Standard or Recommended Practice concerned. Disputes regarding the interpretation or application shall be settled through negotiations. Any party may refer a dispute to the Permanent Technical Committee of the WCO which will make recommendations on the settlement of the dispute.

3.6 The Annexes to the Kyoto Convention, A through J, are listed below. More detail is contained in Annex III of this report.

Annex A: Formalities Prior to the Lodgement of the Goods Declaration

Annex B: Clearance of Goods for Home Use

Annex C: Clearance of Goods at Exportation

Annex D: Origin of Goods

Annex E: Conditional Release Procedures and Processing Traffic

Annex F: Special Customs Procedures

Annex G: Relations between Persons Engaged in International Trade and the Customs administrations

Annex H: Disputes and Offences

Annex J: Customs Applications of Computers

  

Revised Kyoto Convention (1999)

3.7 In 1999, the WCO completed a full revision of the 1973 Convention. The goal of the revision work was to provide customs administrations with a modern set of uniform principles for simple, effective and predictable customs procedures that also achieve effective customs control. The revised Convention is intended to be the blueprint for standard and facilitative customs procedures in the 21st century.

3.8 This revision was necessary as a result of the radical changes in trade, transport and administrative techniques since the Convention had originally been adopted. An additional reason was that the Convention had not significantly resulted in the harmonization and simplification of customs procedures world-wide. In the modern international trade environment, the original structure of the Convention and the limited obligations it imposed on administrations to apply the legal provisions ran counter to the goal of simplification and harmonization of customs procedures. Furthermore, the original version of the Convention had only a small number of Contracting Parties to the individual annexes, and additionally, many Contracting Parties had entered reservations to the legal provisions in the annexes that they had accepted.

3.9 The revision was completed in June 1999 when the Council of the World Customs Organization adopted the revised texts along with a Protocol of Amendment which would give effect to the amendments once it entered into force.

3.10 The existing Articles of the Convention and the provisions of its Annexes have been reviewed and updated to ensure that they reflect modern procedures and address the requirements of both the trade and customs administrations. New provisions have been added and the texts now incorporate modern methodologies to provide a balance between the customs functions of control and revenue collection with that of trade facilitation. The use of information technology and risk management techniques have been integrated into the core of the revised Convention. These will ensure that customs are able to carry out their responsibilities more efficiently and effectively, and are able to facilitate the international movement of goods while ensuring full compliance with national laws.

3.11 The key feature of the revised Convention is a new structure consisting of a General Annex and ten Specific Annexes. The General Annex contains the core procedures and practices for clearance of goods that are common to all customs procedures. The General Annex is obligatory for accession and implementation by Contracting Parties. This key Annex contains 10 Chapters and covers areas relating to the clearance of goods, payment of duties and taxes, customs trade co-operation, information to be supplied by customs, and appeals in all customs matters – areas that are of concern both to customs administrations and to the trading community. It also covers customs control including risk management, audit-based controls and mutual administrative assistance between customs administrations and with external organizations, as well as the use of information technology which provides the key to simple procedures while ensuring adequate customs Control.

3.12 No reservations can be entered against the Standards and Transitional Standards of the General Annex. However, in recognizing that many countries may not be able to commit to a number of Standards immediately, the revised Convention provides a transition period for the present and new Contracting Parties to make any necessary changes in their national legislation in order to apply the provisions. Contracting Parties will have a period of up to three years to implement Standards and five years to implement Transitional Standards.

3.13 The revised Convention has 10 Specific Annexes containing a total of 25 Chapters, each dealing with a different customs procedure. Contracting Parties are required to accede to only those Specific Annexes and/or Chapters applied by their administration. As in the General Annex, the Standards are obligatory and binding on Contracting Parties accepting an Annex(es) and/or Chapters, and there is the same transitional period for the application of the Standards. Reservations, however, can be entered against the Recommended Practices in the Specific Annexes.

3.14 A Management Committee which is required to meet at least once every year will administer the revised Convention. This will ensure that the provisions in the Convention are kept up-to-date and, if necessary, revised at appropriate times to meet the needs of customs and trade. The Management Committee is also empowered to extend the time periods for implementation of the provisions of the General Annex and Specific Annexes on request from Contracting Parties.

3.15 The revised Convention contains comprehensive Guidelines for each of the Annexes. It was recognized during the revision process that implementation guidelines for simplified customs procedures were essential if the principles contained in the Convention were to be applied successfully by customs administrations. Guidelines on simplification through the use of effective control techniques and automation, which include examples of best practices, have been developed for each procedure. The Management Committee will regularly update these in order to provide information on new and modern practices, which in the future will become the basis of legal texts in the Annexes to the Convention.

3.16 The revised Convention will be brought into force by a Protocol of Amendment. Forty of the current Contracting Parties will have to accede to the Protocol for it to come into force. As of July 2000, five Contracting Parties have acceded to the Protocol and nine have signed the Protocol subject to ratification. Many other Contracting Parties are carrying out the necessary internal consultations and legislative processes for their accession to the Protocol. The WCO Secretariat is conducting a number of technical assistance missions and regional seminars to promote the revised Convention and to assist Contracting Parties in their accession.

3.17 The text of the General Annex of the Convention, as well as an index of its Specific Annexes can be found in Annexes III and IV to this document.

 

Customs Convention on Temporary Admission (Istanbul Convention)

3.18 The Istanbul Convention, which entered into force on 27 November 1993, combines in one legal instrument all existing agreements covering temporary admission of goods into one state or customs union from another, and creates a framework for accommodating future requirements. The Convention also provides for the continuing use of the ATA carnet (carnet de passage en douane pour l’admission temporaire) for temporary admission and broadens its application. It currently has 35 Contracting Parties, and another 8 signatories subject to ratification. It is open for accession by any state and customs or economic unions. Since it is expected that for some time not all those implementing the ATA and CPD (carnet de passage en douane) carnet scheme will be a Contracting Party to the Istanbul Convention, the WCO Council adopted a Recommendation inviting Contracting Parties to accept ATA and CPD carnet regardless of whether they are issued under the Istanbul Convention or other legal instruments.

3.19 The body of the Convention consists of 34 Articles representing the main principles and provisions essential for the uniform implementation of the instrument, such as scope, administration, accession and amendment procedures. The main provisions foresee that each Contracting Party may require presentation of a document and security for temporary admission; security shall not exceed the amount of import duties and taxes from which the goods are conditionally relieved. General minimum periods for re-exportation of six or twelve months were agreed in specific annexes.

3.20 The Convention has 13 Annexes, of which Annex A (concerning temporary admission papers, ATA and CPD carnets) as well as at least one other Annex have to be accepted by each Contracting Party:

Annex A: concerning temporary admission papers (ATA carnets and CPD carnets)

Annex B.1: concerning goods for display or use at exhibitions, fairs, meetings or similar events

Annex B.2: concerning professional equipment

Annex B.3: concerning containers, pallets, packings, samples and other goods imported in connection with a commercial operation

Annex B.4: concerning goods imported in connection with a manufacturing operation

Annex B.5: concerning goods imported for educational, scientific or cultural purposes

Annex B.6: concerning travellers' personal effects and goods imported for sports purposes

Annex B.7: concerning tourist publicity material

Annex B.8: concerning goods imported as frontier traffic

Annex B.9: concerning goods imported for humanitarian purposes

Annex C: concerning means of transport

Annex D: concerning animals

Annex E: concerning goods imported with partial relief from import duties and taxes.

3.21 To date, only Annexes A, B.1., B.2, B.5 and B.6. have entered into force. The other Annexes have not yet reached the minimum number of five signatories. Both the provisions of the body and the Annexes are accompanied by explanatory commentaries, which are designed to facilitate implementation of the provisions. More detailed information on the annexes of the Istanbul Convention can be found in Annex V of this document.

3.22 Other instruments dealing exclusively or mainly with temporary admission which are contained in the relevant annexes to the Istanbul Convention will be terminated and replaced for those Contracting Parties who have accepted these annexes.

 

International Convention on the Harmonized Commodity Description and Coding System

3.23 The Harmonized Commodity Description and Coding System (Harmonized System) is an international product nomenclature in force since 1 January 1988. Its main application is for customs purposes such as classification and valuation, but also for the collection of trade statistics, rules of origin and for all kinds of transactions in international trade (transport, insurance etc.) The WTO schedules of almost all Members are based on the Harmonized System, which means that more than 95 per cent of world trade is covered by the Harmonized System. The Harmonized System groups product items in 96 chapters, 1,241 headings and more than 5,000 sub-headings. It provides a legal and logical structure for tariff classification. In order to keep the Harmonized System up to date and to take into account changes in technology and the development of new products, the Convention provides for periodic amendments. Two revisions have taken place (1992 and 1996) and a third set of amendments is to be introduced in 2002.

3.24 The Harmonized System (HS) contributes to the facilitation of international trade by providing a common basis for classification of goods. The HS Convention has 102 Contracting Parties to date, and about 170 countries apply HS-based customs tariffs and trade statistical nomenclatures (October 1998). In order to secure uniform interpretation and application of the legal texts of the HS, the WCO has put in place a number of programmes. These include settling of classification questions and disputes, publishing of classification related information on the internet (www.wcoomd.org), development of a classification infrastructure and best practices in developing countries, pre-entry classification information programmes and development of a commodity database (CD-ROM) giving HS classification of more than 200,000 commodities in trade.

 

International Convention on Mutual Administrative Assistance for the Prevention, Investigation and Repression of Customs Offences (Nairobi Convention)

3.25 In the face of increasingly widespread customs offences concerning all countries, the WCO Council in 1974 felt the necessity to go beyond the development and promotion of bilateral and multilateral agreements, which were until then the standard instruments for customs co-operation. The Nairobi Convention was drawn up between 1974 and 1977 to combat customs fraud. It consists of a body and 11 Annexes, one of which has to be accepted at minimum by each Contracting Party. Acceptance with reservations is not permitted (Article 18). As a basic principle, "customs administrations shall afford each other mutual assistance with a view to preventing, investigating, and repressing customs offence". The Convention is based on the concept of reciprocity: a Contracting Party has an obligation to render assistance to another Contracting Party only in so far as both have accepted the same Annex. The Nairobi Convention currently has 34 Contracting Parties. All 11 Annexes are in force (each Annex enters into force after acceptance by at least two Contracting Parties) and are listed in Annex VI of this document. The WCO Council administers the Convention with assistance from the Enforcement Committee.

3.26 In 1996, the WCO updated its 1967 "Model Bilateral Agreement on Mutual Assistance for the Proper Application of Customs Law and for the Prevention, Investigation and Combating of Customs Offences". The model agreement sets out and explains a number of provisions that should be considered when drawing up a bilateral agreement.

 

Other Customs Conventions administered by the WCO

3.27 The following Customs Conventions, details of which can be consulted in Annex VII, were designed to solve certain specific customs problems:

- on the temporary importation of packing;

- on the temporary importation of professional equipment;

- concerning customs facilities for the importation of goods for display or use at exhibitions, fairs, meetings or similar events;

- concerning welfare material for seafarers;

- on the temporary importation of scientific equipment;

- on temporary importation of pedagogic material;

- on the ATA carnet or the temporary admission of goods (ATA Convention);

- on the international transit of goods (ITI Convention);

- on Containers, 1972.(19)

 

Other instruments and programmes

3.28 The WCO has drawn up Recommendations which do not have a binding character. They are intended as tools for improvement of customs techniques by national customs administrations and "they are designed to be accepted by as many States as possible and cover facilities on which a large measure of agreement already exists and lay down precisely the scope of any facilities granted." WCO Members indicate their acceptance of a recommendation, and have, in certain instances, accepted them with reservations. Recommendations have been issued in five areas, as set out in Annex VIII.

3.29 International Customs Norms, developed by the WCO, are designed to guide customs administrations in addressing certain specific customs issues. Each norm deals with a specific point of customs technique and sets out the fundamental principles to be incorporated in customs legislation or regulation. These norms will be reviewed and incorporated as appropriate in the guidelines of the revised Kyoto Convention. For a list of the existing norms, refer to Annex IX.

3.30 The WCO has developed "Guidelines for consignments for which immediate release is requested" to provide a tool for customs administrations to grant fast clearance while maintaining customs control with regard to consignments that require immediate release. Guidelines are given on the scope of documentation necessary for clearance, on valuation, on conditional and unconditional clearance, and on the differentiation between high- and low-value consignments. The Guidelines have no legal character or binding force. The principles in the new General Annex of the revised Kyoto Convention reflect the same principles contained in these Guidelines. It was recently noted by the WCO that the term "Express Guidelines" was used in normal parlance when referring to these Guidelines, even though they were to be applied for all consignments for which immediate release was requested. It has been agreed to refer to these Guidelines as "Immediate Release Guidelines". It has also been agreed to review the documentation requirements for the different categories of goods covered by these Guidelines and to take into account the changes in the customs and trade requirements in the years since the Guidelines were adopted. It is expected that these Guidelines will be revised and available for application by the end of 2001.

3.31 The WCO has issued three Resolutions. They concern the abolition of the passenger manifest in respect of passengers arriving or departing by air; customs facilities for tourists; and abolition of control of motor vehicle insurance at frontiers.

 

Integrity of Customs administrations

3.32 The international customs community realized the need to deal effectively with the problem of integrity at the trade/customs interface and the WCO adopted the Arusha Declaration in 1993. The Declaration calls for:

-- clear and precise customs legislation, moderated import tariffs, limited number of tariff rates, minimum administrative regulation of trade, and standard rules with minimum number of exemptions;

 

-- simple, consistent, non-discretionary and easily accessible customs procedures with possibilities of legal remedies;

-- utilization of automated processes;

-- appropriate measures in human resource management including rotation of assignments and relocation of staff, proper recruitment, adequate training, and sufficient remuneration;

-- more responsibility and accountability of line managers in identifying weakness;

-- more effective internal and external audit;

-- more loyalty and pride among customs officers;

-- clear direction to customs officers on expected behaviour;

-- open and transparent relationship with the business community.

3.33 The WCO Secretariat hosted an open discussion on this issue in Brussels in April 1998. The Customs Integrity Forum was attended by heads of customs administrations, relevant international organizations (OECD, ICC, Interpol, Transparency International) and representatives of the business community.

3.34 The recommendations from the Forum were discussed at the annual meeting of the Council of WCO in Morocco in June 1998 and it was decided to establish an Integrity Working Group to develop an Integrity Action Plan to assist Members' to implement the provisions of the Arusha Declaration and improve the level of integrity within their administrations. The Working Group has since met three times and has developed a comprehensive Action Plan which was approved by the Council in June 1999.

3.35 As a part of the WCO Integrity Action Plan, the WCO Secretariat, with the assistance of a number of Member administrations, has:

-- developed an Integrity Self-Assessment Guide which assists administrations to examine their own systems and procedures and identify areas for improvement;

-- developed and piloted an Integrity Workshop to assist Member administrations to design and implement integrity action plans based on their own needs and unique operating environments. To date, workshops have been conducted on a national basis in the Czech Republic, Sri Lanka, Zambia, India and Vietnam and on a regional basis in Japan, Lesotho and Australia;

-- drafted a Model Code of Ethics and Conduct which can be used by Members to develop an appropriate code of conduct or alternatively to review and upgrade an existing code;

-- established an Integrity Resource Centre that is designed to provide Members with access to a wide range of integrity-related information and resource material.

  

Customs Reform and Modernization Programme

3.36 The Customs Reform and Modernization (CRM) Programme is a comprehensive approach to help improve the overall performance of customs administrations and meet the growing expectations of society, business and governments. The CRM Programme is a collection of management tools available to customs administrations to assist them to better understand the requirements of their changing external and internal environment, and to develop self-assessment abilities and skills to implement a comprehensive and sustainable organizational improvement and change programme.

3.37 The current programme consists of several stages. Firstly an initial mission is undertaken to determine the needs of the administration and its readiness to implement the program. This mission also involves the delivery of the Customs Orientation Package for Policy Makers which explains the role of modern customs administrations and their importance to society, business and government. During the initial mission attention is given to securing the necessary political commitment and financial resources from both the participating government and the private sector. The second stage involves conducting an intensive diagnostic and planning mission which involves assisting key managers of customs to undertake a comprehensive assessment of the current situation and to develop a range of practical and sustainable solutions. The key outcome of this stage is the development of an agreed Implementation Plan. Depending on the nature of the solutions identified during the diagnostic phase further follow-up assistance and evaluation missions may be undertaken. Likewise, depending on the nature of the corrective strategies identified, the WCO can assist Member administrations through the provision of technical assistance in areas of WCO competence or by assisting participating administrations to identify alternative sources of donor support.

3.38 WCO CRM Programmes have been completed in Latvia, Senegal, Uganda, and are currently under implementation in Cuba, Lithuania, Mauritius, Namibia, Sri Lanka and Vietnam and on regional basis in the Southern African Development Community (SADC). The Programme is currently under preparation in Bangladesh and Mongolia.

3.39 The WCO has developed the necessary tools for implementation, trained 150 experienced customs officers to use these tools and maintains a pool of accredited facilitators who support the process of self-assessment in beneficiary countries. The WCO Secretariat is currently reviewing the content of the CRM program to further improve its effectiveness and to ensure it remains relevant to the needs of Member administrations.

 

Other WCO technical assistance activities

3.40 The main objectives of the WCO training and technical assistance programme are:

- to ensure the implementation and uniform application of Customs Conventions, Instruments and Recommendations (e.g. the Single Goods Declaration) developed and administered by the WCO;

- to improve the effectiveness and efficiency of customs administrations in the enforcement of regulations and in the delivery of quality service to the society, to the business community and to government;

- to help Members' customs administrations to reform and modernize their organizations, to employ modern technologies to introduce better management practices and human resource management including training system development, greater transparency in procedures, and improve the integrity of their staff.

3.41 The WCO offers 38 standard training programmes in the fields of Harmonized System, customs valuation, origin of goods, customs procedures, computerization of customs, enforcement, organization and human resources development in customs administrations. The WCO has developed 66 training modules to assist technical training for customs officers. The WCO carries out approximately 250 seminars, training courses and expert missions annually.