Guidelines 1 and 2 - Strategic Plan

Translating customs/trade co-operation from a concept to a sustained, constructive working relationship calls for much mutual effort and understanding. Success, however is most rewarding and ICC has noted the many ways in which its own co-operation with the WCO has brought substance and practical effect to this concept, with real benefits to global trading.

Experience, here and elsewhere, shows that such relationships need to be focused on, and justified by, a sense of common purpose, strong enough to bring customs and their trader customers together, despite the strict customs obligation to enforce legislation and the pressing commercial need for maximum operational liberty.

Strategic planning, by customs, on the lines set out in these guidelines, opens the way to constructive reconciliation of these requirements. Instead of deciding on, and implementing, a purely internal customs plan, to which businesses are obliged to adjust their own operations, farsighted administrations associate thei r trade partners with all stages of drafting and developing a public set of aspirations and objectives.

The inclusion, in the resulting plan, of "performance measures" should be interpreted with complete neutrality between customs and traders, covering both compliance performance as mentioned in Guideline 14 and customs efficiency in processing and releasing goods (Guideline 18).

The resulting needs for detailed consultation and discussion should provide invaluable, automatic mutual insight into constraints and responsibilities falling on both parties.

Publication of the plan and of regulations (Guideline 28) and regular consultation on changes in customs requirements and procedures (Guideline 29) are powerful reinforcements for the central concept.

Governments will benefit from a clear view of customs objectives and commitments. They can expect improved private sector experience and opinion of official services and a reduction in customs-trade disputes and differences compared with those likely to arise from "go it alone" customs policies.

This is particularly important in the many developing countries in which efficient revenue collection and the repression of fraudulent practices are often constrained by mutual suspicion between customs and the trading community.

In such economies a customs strategic plan, placed at the centre of a suitable consultative mechanism, and providing continuous subject matter for practical discussion, will be a powerful catalyst for increased understanding and confidence and high standards of customs integrity.

The provision, in Guideline 2, for an annual review of progress should help ensure that all relevant government departments, including, for example, transport and commerce/industry, have a regular, close view of developments in customs corporate planning, enriched by the extra dimension of business participation and partnership.

Businesses, now increasingly dependent on expensive computer systems, cannot change operational methods or directions overnight. Major alterations in procedures and information flows to meet customs requirements may often require months of skilled reprogramming and investment in new hardware or communication facilities. If customs change the rules of the regulatory game for traders, at short notice, the results can be confusing and expensive for all concerned.

The three to five year, roll-over, planning period, mentioned in the guideline, should provide business managers with full warning of significant alterations in customs practice and provide the ideal background for the full implementation of the consultative arrangements set out in Guideline 29.

The one-year management plan and annual review will stimulate mutual attention to op timal co-operation in implementation of immediate operational detail.

customs will find that discussing the plan with operators can be invaluable in identifying any significant changes on the location and size of key commercial activities. For example, proposals, by a large manufacturing company to establish production units in a port area or by a major express operator to shift one of its main airport hubs, could, if sprung on customs without adequate warning, intensify normal difficulties of staff recruitment and deployment.

As such information may have high commercial confidentiality, consultation on the plan could call for both general public examination and private one-on-one discussions. Such working relationships will give very useful support to integrity at the customs/trade operational interface.

Finally the plan will offer an excellent means of reviewing and updating the practical application of the Memoranda of Understanding (Guideline 30), which many companies have signed with their national administrations, and will facilitate a broadening of the co-operative scope of such memoranda, beyond the initial focal purposes of illicit drug and commercial fraud interdiction.

Guideline 3 - Customs Workforce

The prescription for a modern customs workforce, set out in this guideline, may not be attainable, quickly or in every respect.

One basic requirement, however, is that customs officers, often handling considerable amounts of money from duties and taxes, and in a position to affect important financial outcomes for traders, should be paid at levels enabling them to maintain a reasonable standard of living within the norms of their local community.

Salaries, which, in too many countries, fall far below this level, are a tacit permission, if not incitement, to seek and take irregular payments. These, in turn, poison customs-trade relations and make it impossible to operate efficient risk-management systems and other facilitation techniques as prescribed in Guidelines 14 (Selectivity) and 19 (Post-entry Audits) or improve controls, through good relations with the trading community, by the memoranda of understanding described in Guideline 30.

Written, standardized job descriptions are particularly important when dealing with traders and carriers, who will be able to comply much more easily and effectively with official requirements when these are administered by customs staff with a clear, well-structured knowledge of the scope and limits of their responsibilities.

Training is a key element in good customs performance. Many Memoranda of Understanding contain undertakings by customs to familiarize traders' staffs with official security and enforcement routines. It is equally desirable, with or without such memoranda, to extend the training of customs staff to enhance understanding of relevant trade operations, principles and requirements. Short-term exchanges of operational staff can be very effective.

Governments are major beneficiaries of a sound, self-confident customs service, capable of protecting revenue and the public and applying trade policies, with the minimum inconvenience, cost and delay to legitimate international transactions.

Inadequate pay, stimulating dishonesty, will put revenue at risk and incur heavy, hidden losses through fiscal distortions and increased opportunities for commercial malpractice.

Business has a right to expect that revenue collection and other customs controls will be carried out by appropriately paid, properly trained officials. Any lack of integrity in those applying customs procedures will be seen as evidence that honest statements and documentation may carry a competitive and financial handicap in comparison with preferential customs treatment, readily available in exchange for illicit payments.

Conversely, traders and carriers in a country that enjoys customs services corresponding, in all respects, with the criteria in this guideline, will have powerful, cumulative market advantages from simple, transparent fiscal and other control procedures and predictably rapid, often immediate, release of goods.

Customs, operated and operating in accordance with this guideline will gain enhanced work satisfaction, social status and self-respect. Apart from enjoying these benefits, themselves, customs managers will be able to call, and count, on high-quality human resources. Their task will be easier and results will come more readily. They will make an important contribution to the success of national trade performance.

Guideline 4 - Customs Integrity

Customs integrity failure takes two broad forms - the problem of a bad apple in a barrel full of otherwise sound fruit and that of a barrel where sound apples are exceptional.

The first scenario is typical of an advanced customs service, in a country with acute political and public concern with illicit drugs, the street price of which can support very substantial bribes to secure clandestine importation or movement. Here the problem of sub-standard pay levels covered in Guideline 3 is hardly relevant. The basis for corruption is more likely to be a character defect, some urgent, large financial need or, sometimes, fear, induced by threats of physical violence.

The remedies are constant vigilance, the sort of recruitment and screening precautions referred to in this guideline, and severe penalties, on detection, for the criminal dealer as well as the guilty customs employee.

The second, more familiar situation, of routine misbehaviour, is usually a reflection of a certain cultural and social environment. In countries where customs are subject to such influences irregular payments can range from routine gratuities designed to maintain good personal relationships, through trifling b ribes for small departures from valuation or classification rules, up to significant payments for collusion in gross avoidance of duty or evasion of other controls.

Here inadequate customs pay is a major stimulant to malpractice. Increases for customs may be particularly difficult in countries where customs scales are linked to those for the police, military and other low-paid public order services. In such circumstances any adjustments for customs can have large central budgetary effects. Much can be done by an ingenious director general, however, to improve living standards, and so lessen the force of temptation, by other means, including subsidized, good-quality housing, educational and sporting facilities and favourable retirement and pension arrangements.

Automation can yield useful improvements in integrity. It can provide many extra controls and checks, by, for example, recording the time taken to complete each stage of a given procedure. A longer-term but important advantage is the possibility of securing higher pay-levels for computer operators and programmers and the associated improvement of staff educational standards and job-satisfaction. Unfortunately, if repressed pay levels are maintained, then once customs have trained staff in new technical skills they are almost immediately tempted off to other, better paid employment.

The feasibility of the reporting system mentioned in this guideline varies with the broad category of customs corruption. Where general standards of official and commercial behaviour are high and bribes have to be very large to secure collusion, a trader may run little personal or commercial risk in reporting any knowledge of wrongdoing to a designated customs or external integrity unit.

In countries where all degrees of misbehaviour are endemic, however, the business manager will think very carefully before making statements, which could mean long term victimization in his obligatory relations with customs, and retaliation with serious, perhaps fatal, injury. In such circumstances setting up an integrity unit, within or outside customs might amount to little more than window-dressing.

The need for officers to carry proper identification (Guideline 5), especially when operating out of uniform, as a justification for seeking information or assistance from the public sets a useful limit to arbitrary or improper exercise of the considerable powers vested in customs services.

Governments, faced with serious customs integrity problems, need every help they can get from the trading community which has special opportunities of seeing customs at work and observing, if not actually experiencing, specific examples of dishonesty.

They cannot expect to get direct, timely and reliable information of actual infringements from such sources in the absence of adequate safeguards against subsequent reprisals. The only reliable route to such assistance is through improving Customs standards so that a majority of the staff are honest and have a corporate reputation to defend against the exceptional delinquent. This limits the main practical application of Guideline 4 to countries where there is substantial success in meeting recruiting and retaining a high-quality workforce

Business will have considerable reservations in pressing and responding to this guideline in countries with adverse cultural backgrounds, for reasons already identified and described. Access to an impartial appeal tribunal, external to customs, as mentioned in Guideline 48, will be an essential element on encouraging traders to report and oppose instances of customs misbehaviour.

In those places where information of offences can be offered without fear of consequences, ad hoc reporting can be an integral part of sustained, day-to-day, customs-trade co-operation, especially where re-inforced by Memoranda of Understanding (Guideline 30).

Customs cannot function efficiently for governments and their electorates without high standards of corporate and individual behaviour. Moving in that direction from unacceptable levels of integrity will always be difficult. Directors general, who must lead any reforms, can get considerable assistance and reassurance from an internal or external integrity unit as recommended in this guideline and the application of such safeguards as proof of official identity (Guideline 5).

Guideline 5 - Customs Employee Identification

This is a minor, but useful operational requirement. Many customs operations are carried out by uniformed staff in circumstances and surroundings that give implicit support to their status.

Non-uniformed staff, on the other hand, are most likely to operate in enforcement situations where identification by a suspect would be undesirable. In such circumstances, however, traders will run considerable risks in responding to calls for information or assistance from anyone falsely claiming to be a customs officer. This gives practical support to the identification requirement set out in this guideline .

Governments have every interest in ensuring that public servants, especially those with such sweeping law-enforcement powers as customs, are clearly identified as such in all their dealings with the ordinary, law abiding citizen.

Business is not equipped or required to enforce the law, but will wish to fulfil all legal obligations to assist those official agencies that have that responsibility. Some easy means of identifying their representatives will be essential if that assistance is to be rendered with a minimum of possible adverse consequences for all concerned.

Customs will run serious integrity risks if they allow non-uniformed staff to deal with the legitimate trader and other innocent members of the public under conditions in which their official status is in doubt and they are not personally identifiable. It will be difficult to get any useful information out of the reporting arrangements figuring in Guideline 4 if there is no specified and enforced rule, which would justify a request for the identity of a non-uniformed Customs official.

Guideline 6 - Fraud Investigation

Guideline 4 deals with arrangements to benefit legitimate traders by enhancing discipline on customs. Guideline 6 responds to a customs requirement to repress illicit commercial practices. Guideline 30 sets out some of the advantages of memoranda of understanding in securing trade support for customs controls, beyond the bare legal obligation to comply with regulations.

this guideline deals with a relatively minor aspect of enforcement, customs training of expert officers to deal with complex offences. It may be useful, however, to look, beyond this narrow intention to the broader issue of customs-trade co-operation in enforcement generally.

In every customs service conventional smuggling and fraudulent declarations present relatively simple enforcement problems compared to those now forced on control agencies by organized international crime and the new communication and automation technologies.

Customs now need officers with expert knowledge of international trade and transport patterns, supported by detailed expertise in, for example, the retrieval of deleted files from computer hard disks. False account books have been replaced by fake databases.

There are complicating legal difficulties, compounded by the free and instant global movement of profits from, and investments in, illegal operations.

The provision of the necessary technical expertise, from usually meagre and often diminished customs budgets, over and above the ordinary requirements of the basic workforce referred to in Guideline 3, will never be easy.

On the other hand there is no way back, in modern trading economies, to the old, more manageable conditions of paper documents, manual procedures and, in some countries, continuing exchange controls. Customs have to field a reasonable reply to the modern fraudster, operating with many more technical resources and sometimes, in countries where customs salary levels are unduly depressed, aided and abetted by undesirable elements among customs themselves.

Traders have an understandable reluctance to act as policemen. They have no relevant expertise and in many countries any attempt in that direction would carry high personal risk. The key to moving beyond this inertial situation to one in which the trader and carrier can routinely help customs enforcement, apart from any undertakings in a MOU, lies in the overall consultative and co-operative environment in which the parties find themselves.

A well-managed, active consultative committee, the design and selective grant of premium procedures, rewarding high ly compliant companies with special simplicities and the development of close operational links between customs and commercial computer systems will all combine to open the way for sympathetic and fruitful discussion of common interests in repressing customs fraud.

Where there is little or no real consultation, requests for and offers of improper payments are customary and procedures still depend on manual handling of paper documents co-operation against fraud will be minimal.

Recent experience with the Business Anti-smuggling Coalition (BASC) has shown that business, interests, acting in the light of their own commercial needs and advantages, can be powerful, unofficial enforcement agencies.

Port operators and traders who have to operate under great disadvantages, from countries which are notorious drug exporters and industries with sensitive products which would take a marketing dive if they were ever connected, by the public, with illicit drug insertions, have proved that they are fully capable of effective and secure self-regulation and auto-enforcement to the highest customs requirements.

The clue to these innovative and very potent developments is careful, prior consultation with import customs and a prompt and positive response, to trade action, in the form of rapid reliable release of BASC consignments.

Governments have a primary, evident interest in protecting the revenue. Complex frauds, the subject of this guideline, are usually based on expectations of large illicit advantages, and therefore justify special, if expensive measures of detection and repression.

They should encourage their customs to monitor the development of BASC -type initiatives and to design and apply their own versions of this very successful example of business support for customs enforcement.

Business will always benefit from the discovery and punishment of criminal commercial activities. Effective enforcement is the best background for progressive facilitation for legitimate traders. Where fraud is seen or felt to be getting out of hand the inevitable, automatic reaction is to tighten controls. The business community is therefore on constant notice of the dangers to itself of any serious weakness in customs anti-fraud methods and mechanisms. this guideline should have their universal support.

The ICC is very active in publicizing and promoting the BASC concept. Other international trade bodies would be helping their members by similar moves, and should familiarise themselves with the latest BASC applications and results.

Customs cannot handle large scale, invariably well-concealed fraud without expertise on a scale and at a level compatible with that being employed against them. Such skills in legal niceties, computer and communication techniques, accounting malpractices, all played out against a world in which frontiers are increasingly permeable to people and payments, are hard to come by and need to be properly rewarded.

It is a matter for consideration whether, in such a situation, full attention is being paid to the expertise, under all these heads, which has been built up and deployed by global businesses. No sensible company will take on direct policing or enforcement duties, but there are, in all major international undertakings, highly paid and carefully selected managers with special knowledge of the ways in which goods, means of transport and money are now moved in every form of legitimate international trading.

A good deal of operational synergy has been developed under Memoranda of Understanding (Guideline 30) but there is no comparable and complementary consultation at the strategic level of business and customs management.

The one remarkable exception is the strategic innovation implicit in BASC operations. Here management has give careful and constructive attention to the ways in which company policy, at the highest level, could be brought to bear to eliminate the possibilities of any, even the most innocent, contact with illicit consignments.

Another growing sector of trade co-operation in customs enforcement, reflected in frequent WCO meetings, is the protection of intellectual and industrial property rights. It is important to note, however, that these, like many tax issues, are often open to doubt and legitimate dispute, so that full support from relevant trade interests can only be expected, and safely accepted, when the rights in question are unquestioned and fully established in all respects.

Guideline 7 - Kyoto Convention

The long drawn-out process of revising the Kyoto Convention, to which the ICC, as an observer organization, was happy to make its own contributions, ended with adoption of a final text by the WCO Council in June 1999.

In its current revized form, the convention provides a set of mainly obligatory, standards, with effect, in customs practice, immediately on accession. There are, however, some transitional standards designed to afford less developed economies an extended preparatory period to adjust to new requirements.

The main purpose of the revision, apart from bringing the original texts, dating from 1974, up to date in such respects as the use of e-commerce techniques and automated Customs systems to reconcile enhanced control with improved facilitation, especially through the use of risk-management, is to define and support international standards for good, modern customs services .

The key to success resides in a radical change in convention structure. Whereas it was possible to adhere to the original instrument by accepting only one out of some thirty individual annexes, signatories to the revized convention will need to accept and apply a comprehensive general annex, setting out basic components of sound, effective customs procedures and practices.

In addition the opportunity has also been taken to provide a management committee, which, once the revized convention has come into force, will meet annually to make any necessary adjustments to the texts, to en sure that this important instrument will be constantly reviewed and updated.

It is important to note that the ICC and other qualified trade organizations, will be able to attend the management committee, as observers, and to suggest and support desirable amendments to reflect changes in trade patterns and practices. Business in general, and ICC members in particular, have a very real interest in the successful acceptance and implementation of the convention and in its subsequent maintenance and adjustment by the management committee.

Governments will benefit from the certainties and modernizations that have been built into the new provisions. These combine to form a well-defined procedural framework for a modern customs administration. Given full and efficient implementation the convention gives an assurance to central governments that their customs services are operating on the basis of sound, well-tried procedures and practices.

Business can derive a two-fold advantage. Firstly, countries adhering to the revized Kyoto will be obliged to set customs operational standards well in advance of those prescribed in the existing instrument. Secondly, in seeking better Customs performance in non-signatory countries, by for example, advocating adoption of ICC guidelines, business interests can now cite a set of supporting principles set out in an international convention, produced by the customs own international organization.

In addition, when making approaches for customs reform and modernization to such intergovernmental institutions as the WTO, OECD or G7, the trade can now produce the revized Convention as a detailed blue-print for professional performance and excellence.

Customs, in countries that adopt the revized convention, now have firm provisions to guide progressive improvement and can attend management committee meetings to put forward any amendments that they feel necessary to meet their own special situation.

Furthermore the substantive Kyoto texts are supported by the innovative introduction of detailed guidelines, giving advice on how each standard can be applied to best effect and pointing the way to possible future improvements in customs practice, which though not yet sufficiently well-defined to figure as standards, should be taken into account by all forward looking administrations.

The convention, with guidelines, is, in effect, not just a legal instrument, but also a regularly up-dated textbook, giving invaluable material for training course and seminars at all levels of customs management.

Even countries which may, for the time being, feel unable to sign the convention, are well served by the revision process, as the full text, with guidelines, is an extremely useful source of advice and guidance on many important aspects of customs procedures and practice.

Guideline 8 - Temporary Admission

Temporary admission is a procedure allowing articles that enter and leave a customs territory, without having undergone any change, conditional relief from customs duties and taxes. It should not be confused with temporary importation applying to imported goods, which are processed, incorporated in, or combined with other items and then exported.

The most recent and comprehensive temporary admission instrument is the Istanbul Convention, adopted by the World customs Organization (WCO) on 26 June 1990. The Istanbul Convention incorporates in one single instrument all the existing provisions on temporary admission in a number of other conventions, including the Customs Convention on the ATA Carnet for the temporary admission of goods (ATA Convention) adopted in 1961 by the customs Co-operation Council (CCC), predecessor of the WCO, the CCC Convention of 1961 covering goods for display at exhibitions and similar events, the CCC Convention of 1961 covering professional equipment and the GATT Convention of 1952 covering advertising material and commercial samples.

Items covered by temporary admission procedures include:

· Goods for display or use at exhibitions and similar events
· A wide range of professional equipment from television cameras to archaeological instruments
· Commercial samples
· Containers, pallets and packings
· Testing and measuring tools
· Scientific equipment
· Vehicles and aircraft
· Live animals

The temporary admission procedure is backed by international guarantee chains providing reciprocal assurances to customs administrations that they will receive payment of sums due, should import duties and taxes become payable as a result of misuse of the carnet.

The operational basis is the carnet, an international customs document secured by this international guarantee system, containing a number of sheets, for submission to customs controls. Each sheet gives customs the information needed to verify the clearance of the goods at each checkpoint in the countries of temporary exportation and importation as well as in transit countries.

Carnets are commonly utilized by business travellers to cover samples during sales or demonstration tours, and by professional people, including educationalists, television or film crews, engineers or entertainers, using their equipment to fulfil foreign engagements.

ATA Carnets (Admission Temporaire/Temporary Admission) cover goods and are normally valid for up to one year. CPD Carnets (Carnet de Passages en Douane) cover means of transport and are usually valid for six months.

Both carnets allow for multiple visits to countries operating the systems and are issued and guaranteed by national organizations, approved by their customs authorities and affiliated to an international guarantee chain.

The ATA and Istanbul Conventions are administered by the WCO, while ICC's World Chambers Federation (WCF) and its subsidiary body, the World ATA Carnet Council (WATAC), are responsible for the ATA Carnet system and its international guaranteeing chain. WATAC consists of the 58 national guaranteeing organizations managing the system in their respective countries.

States are recommended to adopt the WCO Istanbul Convention, since it is designed to replace all the existing international facilities on temporary admission and also benefits from the practical experience gained from applying these earlier instruments.

Governments gain a number of important economic and commercial advantages by implementing this well-defined international customs procedure, which can do much to promote their economies as business-friendly locations for exhibitions, conventions and related activities.

Carnet users attending and adding to the attraction of such events swell tourist receipts from expenditure on hotels, restaurants and exhibition fees. Their own governments benefit because possibly scarce foreign currency resources are not held up as deposits against duties and taxes in countries of importation.

Government also reap the social advantages of free international movement of educational, scientific and cultural material and the resulting enrichment of information exchanges.

Benefits for Business are well demonstrated by the number and value of carnets issued annually, (200,000 and US$ 12bn. at the turn of the millennium).

Trade is much facilitated when a single international customs document can cover the easy movement of professional equipment, items for display at exhibitions and samples of new products for demonstration and sales promotion, all without payment of normally applicable import duties and taxes.

Carnets simplify customs border crossings, cut red tape and save costs in clearing goods at each Customs checkpoint. They enable exporters to save both time and money, crucial factors in international competition.

Customs benefit in several ways from these very effective, risk-free procedures, tested during four decades of international use, and ensuring full protection of the revenue through a recognized international system of reciprocal guarantees.

Carnets help these administrations improve staff deployment and performance by reducing the number of documents processed, centralizing collection of duties and taxes and reducing the number of cash transactions and attendant difficulties.

Guideline 9 - Advance Entry

A large and constantly increasing proportion of international trade is based on, finely adjusted logistical calculations designed to support "just in time" supply, production and distribution systems in the hands of multinational industries.

Customs intervention, particularly at import, can offer a serious potential interruption to an ideally smooth flow of goods and materials within such demanding logistical systems.

Such intervention, when insensitive to commercial needs, poses a serious problem for all time-sensitive delivery services, but has special significance for airfreight, which is obliged to offset higher costs and charges by reflecting superior speed through the air in proportionately rapid origin-destination movements.

Modern customs services adjust their operational systems to minimise incidental delays to legitimate consignments. They meet airfreight requirements by accepting and processing essential control data prior to the arrival of the goods in question. The most advanced administrations are able to give carriers and traders advance notice of their intention to release designated consignments immediately on arrival, subject, of course, to the basic right of customs to stop and inspect goods at any time in the control process.

Others, with less up-to-date legislation are unable to give such advice until the cargo actually arrives. This restricts carriers, agents and traders in exercising the important operational opportunity for timely planning of onward surface movements.

It is important to recognise that customs cannot be expected to offer pre-arrival processing systems unless specified data are provided, from reliable, audited automated information systems, at designated periods in advance of the physical arrival of the goods in question.

These factors are fully reflected in the World Customs Organization Immediate Release procedure.

It is interesting to note that, some advanced customs services, with developed risk assessment systems, routine electronic entries and responsible trading communities, offer even more relaxed procedures, such as the UK practice of local clearance, which allows carriers, themselves, to clear low value, small packages and parcels, which are, very often, by far the largest single entry sector.

The use of pre-arrival entry and immediate release procedures to process key control and security data is almost always associated with equally efficient and facilitating arrangements for handling fiscal controls and payments by periodical returns, supported by systems of post entry audit of usually automated commercial records, as outlined in Guideline 19.

Governments, in states where customs are able to offer business such modern operational facilities, get the full economic benefits of a delivery market in which many specialized operators are able to offer the commercial community a range of innovative services. This offers consequent tangible advantages in optimal use of Customs staff and national transport resources and airport facilities.

The advance processing of pre-arrival information is already seen as a major security advantage.

Business benefits because carriers are able to operate and offer the highest quality delivery services at the lowest possible prices. Traders, themselves, can devise and manage state-of-the-art "just in time" systems, with minimal inventory costs and associated customer satisfaction.

Customs have an enhanced opportunity to spread the workload of processing urgent consignments efficiently over available staff resources. Advance, reliable data provide a degree of control for security and other enforcement purposes well in excess of that which could be expected in clearing the same consignments on the basis of information not available until the time of importation. this guideline presents a powerful example of ways in which truly modern customs processing integrates enhanced facilitation with improved control.

Guideline 10 - Electronic Entries

The ability of modern Customs services, to offer rapid reliable reception and processing of entry information, has acquired extra impetus and importance with the development of electronic data interchange (EDI) techniques. The established benefits of such facilities are being exponentially increased by the new communication possibilities inherent offered by the Internet.

The reference, in this guideline, to the extra possible convenience of being able to separate the place of the entry procedure from the goods to which it relates, is a logical extension of the electronic option so rapidly replacing traditional paper entries.

In customs systems relying on manual procedures and paper documents it makes sense to arrange for all relevant fiscal and control data to be set out on a single form and to apply all requirements simultaneously. The declarant knows that release of the goods also carries customs clearance - that is the accomplishment of all customs requirements related to that consignment. Customs, for their part, can relate entry information easily to the goods. The carrier, trader or agent, will normally be present to deal with any supplementary enquiries.

This method of striking an acceptable balance between facilitation and control was found to be incompatible with container traffic and the sharp limits this sets to physical inspection. Other new trading and transport practices, including the development of express delivery services put an unprecedented premium on rapid release of goods. Customs discovered that they could obtain improved control and offer improved facilitation by deploying and operating high-performance automated data processing systems, together with selective risk-assessment (Guideline 14) and pre-arrival entry/post entry audit (Guideline 9).

Most modern customs administrations accept a declaration at any designated customs office, as this information can be redirected to any other point at which requisite formalities would normally be completed or where the goods may be thought to require examination. This flexibility fits well with pre-arrival entry and post entry audit.

Governments enjoying the advantages of a modern customs service are able to exploit the full staffing and infrastructural economies of an integrated administration. Any automated system, which has to process and manage key customs functions at many different locations, as required for this guideline, must develop and apply nationally uniform practices. The consequence, automatic standardization of practice and procedure carri es obvious benefits for revenue collection and other administrative functions.

Rapid release of consignments is an important factor in ensuring optimal use of national transport resources and sound returns on investment in port, border-crossing and airport facilities. Security is much assisted by rapid, efficient information processing.

Business, in countries adopting this guideline, is liberated from the logistical distortions and costs imposed by an obligation to present information and/or consignments to specific customs offices in what may often be commercially inconvenient locations.

Documentary customs declaration procedures always include stipulations on time and place of submission that can enforce unwelcome and restrictive rigidities in commercial operations. Demands for multiple copies and penalties for even accidental errors or innocent erasures are commonplace. The normal customs requirements for electronic equivalents can be developed, with greatly enhanced convenience and cost savings, as a periodical input from audited business computer systems.

Customs can rid their information systems of the errors and unintentional degradations inherent in paper-based declarations. They can move to arrangements, which enable them to secure data directly from the safest of all sources - the major, high-quality computerized management systems on which modern traders depend for their own operational efficiency.

Uncoupling consignments from necessary physical correlation with the lodging of relevant control information gives valuable flexibility in deploying staff and in siting and maintaining customs offices.

The entire operational interface with legitimate traders is enhanced and attention can be refocused on suspect transactions.

Guideline 11 - De Minimis

The recent rapid world-wide growth of airfreight, both in terms of value and volume, and within that growth an explosive expansion of small express shipments, has set customs acute handling and staffing problems at major airports and other points of entry.

In several countries, Customs services have found relief, without prejudice to their revenue or control capabilities, in the establishment of a valuation (de minimis) ceiling for certain goods, including documents and trade samples, below which no duty or tax is charged and clearance procedures, including data requirements, are minimal.

This principle, given powerful support by a transitional standard in the revized Kyoto Convention, has also been reflected in the WCO Guidelines for the Immediate Release of Express Consignments. Customs using these guidelines offer immediate release in return for the submission, by the declarant, at a time sufficiently in advance of the goods' arrival, of high-quality data to enable them to examine or screen in order to determine whether they should proceed to physical inspection. the guidelines include de minimis provisions within a structured set of data requirements, related to varying value categories.

Documents and non-dutiable articles can be released and cleared on the basis of a very reduced set of control data. For other dutiable consignments the WCO Guidelines provide the possibility of immediate release on much the same terms, with a later submission of additional data to secure final clearance.

Such applications of a de minimis regime are not only a practical solution to the problem experienced by so many resource-stretched customs services today, of handling high volumes of low-value, express consignments but are also a means of eliminating, as far as possible, those uneconomic situations where customs' collection and administrative costs exceed the relevant revenue receipts.

For this latter reason, it is imperative that established de minimis levels are reviewed regularly, to take account of such factors as inflation. In looking at the full economic picture, account must also be taken of what may be disproportionately large additional costs, incurred by traders and carriers, in processing and collecting taxes and duties on small, low value items. Such on-costs can distort the overall costs of these important delivery facilities.

Governments improve relations with the trading community by recognising a common-sense relationship between duty collected and costs of supplying and collecting relevant information. Scarce customs resources can be deployed more efficiently and effectively, by concentrating controls on high risk and high-value, dutiable consignments.

Business realises considerable benefits from speedier movement of goods across frontiers, lower delivery and recording costs, and increased customer satisfaction. Delivery services avoid the sterile, in total very substantial, on-costs of tax and duty charges, which they are obliged to pay to customs, but which, for a variety of reasons, they are often unable to collect from consignees.

It has to be accepted, however, that the rapid, and easy release regimes associated with de minimis shipments are bound to be seen by smugglers and fraudsters as favourable opening for criminal activity. This is not an insuperable obstacle to the provision and maintenance of such systems, but it points up a special need for traders and carriers who benefit from these procedures, to redouble their efforts to assist customs to exercise all practicable measures of control.

Customs, who receive full co-operation from traders and carriers, should be able to introduce important new control measures, for de minimis and other low value consignments, which can then be extended to improve controls on high-risk shipments, with increased seizures and detections of fraudulent activity. They can reduce administrative costs by eliminating the need to calculate and verify small amounts of duties and taxes for numerous low-value, express shipments. Facilitating the movement of such shipments leads to easier customs processing of goods in temporary storage areas, and improved throughput rates at airports and ports, as well as an easier working relationship with the trade.

De minimis measur es, in combination with automated risk-assessment (Guideline 14) and pre-arrival entry and post entry audit procedures (Guidelines 9 and 19) can help customs managers deploy scarce staff resources to meet urgent enforcement and security needs.

Guideline 12 - Use Of Agents

The use of agents to stand in the shoes of the consignor/consignee, for certain customs purposes, springs from a variety of official and commercial needs and has a wide range of practical consequences.

In many, if not most, small firms the same person may be responsible for several key management tasks - sales, finance and even production. Some developing countries still rely on manual customs procedures, based on paper documents. Pushing consignments through such control systems can require prolonged personal presence at the customs office. It may be necessary to clear goods at a number of points of entry other than that most accessible to the declarant trader, who has no possible means of extending company resources to cover all these possibilities.

On the other hand, despite the very different circumstances encountered in countries where advanced customs services, meet their fiscal responsibilities by the sort of automated post-entry audit methods referred to in Guideline 19, even large companies may still find it convenient to delegate compliance with physical, frontier controls to specialist agents.

Innovative and enterprising agents have long shifted their operational focus from the narrow, now patently short-term, activity of coping with paperwork to a large repertoire of added-value services. Some have diversified into multimodal transport operation. Others have acquired logistical expertise and there are examples of such agencies, which have become encapsulated within major manufacturers as a functioning part of their overall international trade management.

The scope and cost of agents can vary substantially with their legal status. There are two main models, the open-door approach, favoured, for example, in the UK, where it is only necessary for the trader to nominate an agent, and the very different regulatory obligation, characteristic of the USA, on the other, under which, if a trader wishes to delegate his customs entry functions he can only do so to a licensed broker.

While the licensed broker concept may offer customs useful control over the efficiency and integrity of delegated functions and free clients from often distracting administrative detail, it can distance shippers from beneficial direct contact with customs processes. The role of the broker may need to be re-examined in the light of the increasing capacity for reliable release and clearance on the basis of direct inter-communication between automated systems in the hands of customs and traders.
.
It may, also, be difficult to sustain the principle of the obligatory broker in the face of rapid growth in cross-frontier retail sales on the I nternet. Private citizens will find it difficult to assimilate any associated compulsory third-party services in an otherwise very simple commercial operation.

The comprehensive Cecchini Report, designed to demonstrate frontier-crossing costs in the European Union prior to the arrival of the Single Market, showed agency costs in Italy, which then favoured obligatory licensed agents, at four times those in Belgium where traders had a free choice situation.

It follows that the cost/benefits of these intermediary and advisory services to customs and commercial principals may vary according to the degree of commercial freedom inherent in the agency function. This note deals only with those benefits of agent services available under "free choice" regimes.

Governments benefit from entrepreneurial agents, seeking to gain business from customer satisfaction. There are excellent public interest reasons to justify customs interventions in the international trade transaction but it is also essential, for optimal economic performance of any trading community, that such extensive and complex regulatory powers are exercized with a minimum of cost and complication. Agents competing freely for business can do much to adjust compliance with customs requirements to meet and match clients working practices.

Every modern government seeks to help business exploit the full potentialities of electronic commerce. Classical customs procedures, with professional importers and exporters managing a joint transaction, offer no useful pattern or precedent for Internet purchases by individual citizens. Agency services, particularly those already deployed, in-house, by express delivery operators, can develop new, very flexible methods of reconciling essential customs controls with the reasonable public expectations of easy Internet shopping.

Business, at all levels of size and sophistication, gets significant advantages from a competitive open market in customs agent services. Small companies, especially in developing countries, can be freed from a range of unprofitable, but unavoidable routine tasks to concentrate on key commercial activities. Large firms can ensure that they are getting the best, because most competitive, management of a wide range of mutually supporting specialist activities at the very important customs interface. Agents providing such a spread of services ought to be able to reduce charges for basic customs representation.

In developing countries the urgent task of shifting customs and other official border controls to easily managed computer-to-computer routines will be much accelerated and facilitated where agents are able to provide clients with central advisory and information services and associated software and equipment facilities, pending the spread of such resources to the general body of traders.

Customs gain many advantages from an open agency market. This is particularly applicable to low-value package and parcel consignments where full, direct customs control can distract and divert a high proportion of available staff from more important interdiction and revenue collection duties.

In developing countries, where customs requirements may be complex and commercial ability to meet them restricted, active co-operation with the agent community, especially if working within a sound consultative mechanism, such as that suggested in Guideline 29 can be of exceptional value to customs. Good agents will minimise disputes, facilitate customs/trade co-operation and so help customs to appear to full public and political advantage.

Guideline 13 - Compulsory Warehousing

Some countries require carriers to deliver goods to designated public or private warehouses, as a pre-condition for customs processing and release.

Various reasons have been cited for this guideline. In some countries compulsory warehousing is one of a number of ways of using non-tariff barriers to protect local industries. Other considerations could be the additional revenue derived from public warehouses or the difficulty of ending long-standing arrangements between for example, an airport or port authority and the relevant customs administration. Some of these could have made sense when all general merchandise moved in open or individually packed consignments, which needed shelter for possible customs inspection, but they are completely inapplicable to goods moved, multimodally, in secure unit loads and sealed containers.

Such requirements, unnecessary and objectionable, in themselves, carry extra handicaps for traders by frustrating such useful customs Guidelines as pre arrival entry (Guideline 9), and by limiting the benefits of others including de minimis regimes (Guideline 11) and customs performance standards (Guideline 18).

Governments are under increasing scrutiny, in the World Trade Organization and elsewhere, to identify and correct illegitimate use of non-tariff barriers. Obligatory, unnecessary warehousing should not escape notice.

Rent returns from compulsory warehouses should be set against the resulting extra costs of imports to industry and the citizen, and the associated sub-optimal use of scarce airport or port facilities.

Traders were able to sustain a degree of compulsory delay in the now historic environment of leisurely maritime movements with prolonged loading and unloading schedules. Today, however, containerization and other unit load, through-movement transport systems, together with the growth of conventional and express airfreight, have given rise to global trade operations which are extremely sensitive to even minor interruptions to smooth origin-destination delivery.

Countries that impose, regular, serious handicaps on essential delivery systems pose obvious problems for potential inward investors, many of whom cannot carry on their international trading activities effectively without such facilities, free to operate at the highest level of potential efficiency.

Compulsory w arehousing is a patent bottleneck and traffic block for such services and expensively out of tune with modern business and customs practice.

Business needs unimpeded movement of goods - raw materials, components and products - over national frontiers. Carriers, domestic and foreign, need the maximum return on means of transport and infrastructures.

Ports and airports want to make the best, most remunerative use from their land and buildings. Their primary business is to move goods, not halt them. Any temporary income they may derive from enforced warehousing charges will show up badly against a longer-term loss of competitive ability and customer good will.

Customs should not be burdened with the frictional trade-relationships associated with compulsory warehousing. They may be blamed by the business community for such impositions, regardless of the legal background.

They need business' good will and confidence to build up the reliable compliance and integrity background implicit in Memoranda of Understanding programmes (Guideline 30) without which they can never achieve the economies and efficiencies of post-entry audit procedures (Guideline 19) or risk-assessment as a basis for selective targeting of suspect persons and consignments(Guideline 14).

Compulsory warehousing is a serious obstacle to basic customs-trade understanding and co-operation.

Guideline 14 - Selective Examination

Physical inspection is a costly and complicating procedure for both customs and trader. This is particularly true for containerized traffic and intensive road transport operations.

In some countries, often with strong security concerns, there is a system of so-called "comprehensive inspection". This cannot consist of thorough examination of all containers and road vehicles, otherwise the ordinary movement of goods across land borders and through ports would be paralysed. Instead a ritualistic inspection is carried out, breaking the seal, and so the integrity of the entire container operation, taking out a few packages, inspecting these and trying, sometimes unsuccessfully, to replace them in what, in modern practice, is usually a very skilfully packed container or truck. This process exposes consignments to serious extra risks of pilferage and damage, with associated insurance costs and diminished customer satisfaction.

This practice also imposes substantial sterile costs on port managers. They may have to set aside large, covered areas for customs inspection purposes and move containers from, and back to, their normal positions in the port for commercial and transport purposes. Such movements add substantial extra complications and costs to an already sufficiently difficult task of port logistics.

In countries where Customs have developed modern and effective control techniques, any contai ner or truck designated for inspection is completely emptied, and submitted, in addition, to a rigorous structural examination. Such a practice is only possible when such inspections are limited to a very small percentage of container movements.

In other countries Customs rely on the deterrent effects of thorough examinations on the basis of random choices, sometimes as a standard practice, sometimes as an interim expedient when moving from comprehensive "inspection" to selectivity based on automated risk-management.

Governments find that selective inspection regimes provide a sensitive and effective response to the operational needs of legitimate traders by concentrating customs attention on suspect consignments and persons. They also meet three important political objectives by under-pinning, while helping maintain optimal economic performance and protecting the revenue and other public interests. Ports and airports, which, in developing countries, are often dependent on state finance, can operate with substantially reduced cost when free from obligations to service customs inspection operations.

Business has the benefit of knowing that it can conduct its normal activities with minimal delay and damage to consignments from customs examinations. Carefully adjusted logistical programmes can be implemented with necessary confidence, and customer satisfaction can be sustained. Carriers moving consignments across borders at which customs practice selective inspections know that their reputable customers have every chance of receiving their goods with all the advantages of a fully secure and uninterrupted end-to-end movement.

Customs relying on selectivity can develop investigative and intelligence techniques in place of undiscriminating inspection routines. A much smaller staff section can develop expert and radical inspection skills to deal with selected and suspect consignments. Relations with port managers, traders, carriers and agents are improved and this makes it easier to market and manage co-operative systems based on Memoranda of Understanding (Guideline 30).

Selective inspection regimes based on automated risk-assessment (Guideline 14) fed by pre-arrival data (Guideline 9), within customs mutual assistance arrangements (Guideline 50) are key elements in modern security policy.

Guideline 15 - Bonding and Duty Deferral

this guideline extends and exemplifies the general principle of separation of physical and administrative controls set out in Guideline 9 and provides prudent measures to protect the revenue in situations where customs feel unable to move immediately to the post entry audit facilities referred to in Guideline 19.

A corporate surety bonding system, enabling customs to release consignments without recourse to cash paym ents, is particularly valuable in administrations where these might present special temptations to the offer of, or request for, irregular payments to secure some improper commercial advantage. Traders and agents are freed from the risks of having to carry what may often be large amounts of money to meet duty and tax liabilities. Successful experience of such arrangements, with individual traders, over a period, can provide customs with useful information in establishing related risk-assessment criteria.

Duty and tax deferral will be preferred by most declarants, in order to avoid what can often be substantial bank charges for bonding or guarantee cover. Customs in countries where import duties and taxes form a major element in national revenue, however, may favour the latter arrangements, on the grounds that these can be applied so as to minimise delays in payment.

Governments providing and applying relevant legislation will meet legitimate commercial requirements for convenience without any sacrifice of fiscal security. Customs malpractices will be less likely than in an operational environment where cash payments of duties and taxes are obligatory.

Business will gain because traders and agents, enjoying these facilities, can avoid the obvious risks of loss and error associated with cash settlements and can install, operate and rely on much more orderly accounting systems. Their employees and agents are less likely to be parties to irregular payments, for which they, themselves, may be held responsible as principals. Bonding, guarantee and deferral arrangements can also help optimise cash flows for other, more positive, business purposes.

Customs will find this guideline a valuable element in improving staff integrity. In offices where cash flows continuously across the customs counter and salaries and cultural imperatives are sub-standard, the subversion of a few officers and associated openings for commercial malpractice can easily spread into a general engrained habit of systematic subvention. Eliminating cash payments may not abolish such practices, but will, at any rate, cut away some of the most obvious and frequent opportunities.

Guideline 16 - Reasonable Time Limits

The separation of initial and fiscal controls - substantially, of release and clearance procedures - is noted in Guideline 9 as a major convenience to traders and customs.

In traditional documentary systems there is, usually, some formal mechanism, for example the return of a receipted copy of the principal declaration form, to mark the end of obligations to customs arising from the transaction in question. In automated systems, however, once release is granted, the exact point in time at which clearance occurs may depend on a wide range of possibilities associated with relatively complex post-entry audit operations. There may be no provision at all for a formal notification of clearance by customs.

In these circumstances declarants need reasonable certainty in respect of duty and tax obligations and freedom to dispose of the goods. This is impossible if customs can call for additional payments or re-presentation of goods without any time limit.

In fixing necessary limits customs will usually differentiate between duty payments and re-presentation. In modern industrial and commercial practice, traders and carriers seek to reduce inventory levels and distribution cycles to an economic minimum. Returning goods to customs may be virtually impossible after a very short time following release. Different considerations - and so reasonable time limits - could apply to arrangements in temporary importation regimes where customs might, quite justifiably, require retention of trimmings and other forms of permissible wastage for periodical inspection.

Carriers, who, to meet the convenience of both clients and customs, often act as agents for the purpose of making necessary declaration to secure release of the goods, are often in physical possession of consignments for relatively short periods and have particular need of the facilities covered by this guideline in respect of time-limits for re-presentation.

Governments need to ensure a reasonable balance between effective application of customs controls and the practical, operational and commercial requirements of honest traders. this guideline, properly implemented through reasonable time-limits, will help set and achieve this.

Business has to move goods and payments in a timely, orderly fashion through manufacturing and distribution systems. These processes can be subject to serious contingent risks if they are subject to lengthy uncertainties about possible customs requirements. Reasonable time-limits for customs intervention, after release and routine tax and duty payment, are patently necessary.

Customs need these time-limits to define and systematise their own operational routines. Any aspect of customs procedure that is imprecise and requires ad hoc interpretation opens up special opportunities for irregular payments and can, even when administered honestly, become a focus for friction and dissatisfaction in relations with traders, agents and carriers.

Settlement and operation of reasonable time-limits will be a very suitable subject for discussion within the sort of consultative mechanisms referred to in Guideline 29.

Guideline 17 - Non-intrusive Inspection

Some helpful principles for customs practice in managing physical inspection of consignments are mentioned in Guideline14.

A major and acute problem for customs is the difficulty of locating any inclusions of illicit items in what may be, in all other respects, completely innocent consignments.

Packaged consignments, which may themselves contain individual tins or cartons, cannot be given more than sample inspection. Standard containers add a third and formidable dimension of potential concealment. At the other end of the size scale many customs no w face very large, and constantly increasing, numbers of documents, mail, small packages and parcels, that, while of minimal tax and duty interest, may well require examination for other enforcement purposes.

Where physical inspection is simple, and incurs no adverse effects on the goods, it may represent little more than a minor delay factor. Radical inspection of containerized shipments, however, can entail structural damage to the container itself, as well as substantial degradation of secondary packing and individual goods items. The consequent costs to the innocent carrier and cargo owner, normally, impossible to recover from customs, are considerable. Furthermore, once the integrity of the container is broached, extra pilferage and damage risks are incurred for all remaining movement stages.

The most important and comprehensive means of minimising inconvenience and expense to the legitimate trader, while giving customs reliable means of targeting likely suspect cargoes and persons, is the uses of selective examination (Guideline 14) based on modern, well-managed enforcement techniques (Guideline 36).

Such arrangements enable customs to give routine release, normally without inspection, to profiled carriers and traders, especially in respect of certain repetitive consignment flows. A further high proportion of consignments can be released after the minor inconvenience of an examination of documents required to support the formal or informal entry.

Where inspection of the consignment itself is eventually deemed necessary, it is generally beneficial if this can be achieved by x-ray, sniffer dogs or other methods that have no damaging effects on the goods, packing or means of transport.

Modern methods of electronic detection provide such possibilities for all types of consignment from full container loads to individual parcels.

Governments are now well aware of the dependence of international trade and so national economic, performance on efficient multimodal, including containerized, transport services.

Ministers responsible for port and airport operations are fully aware of the many handicaps which could be cast on the competitive status and charging structures of these facilities if customs load traders and carriers with the sterile costs and consequences of frequent intrusive inspection. Modern commercial and customs practice place a practical limit on the incidence of radical container inspections. This tends to settle out at about 5% of the containers presented to customs.

Business is often already at a sufficient trading and transport disadvantage in many developing countries. Unfortunately it is in just such economies that customs inspection practices may be most oppressive and risk-assessment techniques least developed or reliable.

Under such conditions, the frequent alternative, namely routine partial inspection, particularly of containerized cargo, is almost always more of a ritual than a serious control measure.

In some countries strict security precautions are intensified by absolute prohibition of alcohol as well as the normal concern for illicit drug interdiction. Here non-intrusive inspection techniques are particularly desirable as the alternative is likely to be total, comprehensive and exceptionally costly inspection regimes.

In all these situations traders and carriers should maintain strong pressures on responsible ministers to empower and encourage customs to apply all appropriate and reasonably available non-intrusive inspection techniques. Such possibilities are a very appropriate subject for organized customs/trade consultation (Guideline 29).

Customs, in countries where customs maintain ineffective "comprehensive" container inspection practices, need to stand back and make a searching, critical examination of the cost-benefits of such operations. They should, in particular, consider, whether, if it is shown, by untoward events, that such methods have failed to avert a serious risk to security, the revenue, or public