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Customs Reform and Modernization Initiatives

Customs Reform and Modernization Initiatives

  • The “Customs in the 21st Century” strategy document vividly describes the role of Customs as: “… control the movement of goods and thereby secure the state’s interests and safeguard revenue collection. 
  • The key aims have been to ensure compliance with state policies and laws applicable to the cross-border movement of goods, to combat smuggling, and to secure borders, whilst ensuring the facilitation of legitimate trade”. 
  • This means that the role of Customs has continued to evolve, from the traditional role of revenue collection towards more complex roles.
  • Customs mandate, like that of many Customs Administrations globally, includes trade facilitation; revenue collection; protection of society; and collection of national statistics. In order to fulfil its mandate effectively and efficiently, levering on technology.

Factors that Necessitate Automation of Customs Management Systems

    • Collection of all revenues due to the State 
      • Customs Administrations help countries to realize these goals by ensuring compliance with the laws governing international trade.
    • Growing international trade volumes 
      • Growth in trade volumes means that Customs have to process more transactions and the workload is increasing, usually with the same or less resources, especially in times of fiscal austerity. 
    • New trade rules 
      • The WTO Trade Facilitation Agreement (TFA) requires that Member countries implement reforms and modernization initiatives in order to comply with the various TFA measures. 
    • Proliferation of Regional Trade Agreements (RTAs) 
      • The proliferation of RTAs means that trade is subject to complex preferential rules of origin in addition to rules that are already administered by Customs. 
  • New logistics and supply chain models 
    • The needs of modern international business exert pressure on Customs administrations to process goods effectively and efficiently and to minimize delays.  
  • Emergence of transnational organized crime and terrorist networks 
    • Transnational organized crime and terrorism facilitate many of the serious threats to international peace and security.. Customs administrations have a responsibility to stop illicit trade.
  • Growing concerns regarding public health and the environment 
    • The international community has adopted a number of international instruments aimed at controlling the international movement of harmful and dangerous goods. These international instruments are implemented by Customs administrations at national borders
  • Traditional trade patterns are changing, and participants are increasing 
    • The share of developing countries in world merchandise trade is increasing. This changing structure impacts on the types of transactions handled by many Customs Administrations.

Challenges Driving Customs Reforms

  • Inconsistent procedures across Customs stations;
  • Inaccurate trade statistics and management reports; 
  • Poor  workload management; 
  • Congestion at the port, ICD and Customs offices;
  • Long queues at border stations;
  • Uncoordinated border management among government border agencies; 
  • High cost of administration and high cost of doing business; 
  • Expanding scope and complexity of work;
  • Challenges in management of tons of paper records and documents generated annually; and
  • Inefficient risk management system that made compliant traders to be treated the same as non-compliant traders.

Reforms and Modernization Journey

Benefits of Reforms and Modernization Initiatives

  • The reform and modernization initiatives have made it possible for:
    • Efficient Customs operations that consume less time and minimize transaction & compliance costs
    • Significant growth in revenue collection
    • Reduced complexity to Customs that fosters voluntary compliance
    • Increased security of the supply chain – Improved risk management