Cutting Through the Red Tape
Facilitating the Movement of Goods across National Borders
Content Copy: "Goods awaiting clearance." It is a phrase that's became painfully familiar to importers. Each day business transactions are slowed down and costs are increased as a result of cumbersome bureaucratic procedures. The impact on consumers, and the cumulative effect on the global economy, is considerable.
Of course some costs and delays are inevitable, as governments are charged with protecting both people and markets against threats to security, health and safety. However, to the extent possible, globalization means that the flow of goods and services across national boundaries should be smooth, quick and efficient. Those that improve will be more competitive in a global trading environment, and both consumers and economies will benefit.
Since 1994, the APEC Sub-Committee on Customs Procedures (SCCP) has been developing proposals aimed at simplifying customs and excise processes and systems in APEC economies; in other words cutting through red tape. The SCCP is also, where appropriate, promoting the standardization of customs requirements and making information more accessible. The SCCP's guiding principles can be summarized by the acronym, FACTS - Facilitation, Accountability, Consistency, Transparency and Simplification.
According to Gordon Chu of TSI Terminal Systems Inc, Canada, "Customs procedures should conform to a set of common international rules and regulations, which are clear, harmonized and easy to comply with. The information should be transparent, easily accessible to the public and user friendly in order to facilitate international trade. Such practice will also enhance security, reduce transactions costs and encourage compliance".
Chavalit Sethameteekuk, Director General of the Thai Customs Department, summarized and praised APEC's customs initiatives as trying to "reconcile two diverse elements, border control and trade facilitation".
The SCCP's aims can be divided into four general areas; improving efficiency, providing information, promoting integrity, and maintaining security.
The SCCP's principal trade facilitation objective is to improve efficiency and reduce delays, thereby reducing the costs of transportation for exporters and importers alike. This goal is embodied in the Revised Kyoto Convention, which includes recommendations to standardize tariff structures and simplify customs and excise processes. Such changes allow companies to calculate duties in advance of importation and possibly free express consignments from many routine administrative hurdles. Advances in electronic technology, where economies adopt them, are allowing major innovations in customs processing: accelerating processing, streamlining administrative procedures, eliminating much of the paperwork and reducing costs.
A few APEC economies are trialing new single window systems, which will dramatically simplify the processing for goods crossing borders. The idea behind such systems is that businesses file only a single form to submit all of the information required by the numerous government agencies interested in goods coming and going. Single window systems represent a huge improvement for business, but they are challenging for long-established bureaucracies and reflect the seriousness and determination with which APEC officials are approaching trade facilitation.
A second key area reviewed by the SCCP is the accessibility of information, is it: complete, reliable, readily available, and easily understandable? One SCCP initiative to encourage communication and cooperation between customs agencies and business is the 'APEC Customs-Business Dialogue', a dynamic forum for the exchange of ideas and discussion of concerns between customs officials and business people. Another useful APEC tool is the APEC Tariff Database, available via www.apec.org.
On integrity and governance, the SCCP supports the Integrity Technical Assistance Program, designed to raise awareness of the importance of good governance and transparency in the customs profession, and provide information on ethical standards and related issues. The SCCP's core message is that an ethics infrastructure is prerequisite to reforming and improving customs services. Another example of working with business is in the SCCP's efforts to get business more involved in fighting piracy and trade in counterfeit goods.
Security and border control have always been core government responsibilities, but in the post-911 world they have taken on new urgency. The Bali and Jakarta bombings demonstrated that terrorism is a real concern in the APEC region, and that terrorism represents a threat not only to people but also to markets and economies. Without security, APEC cannot deliver free, open and prosperous economies, and other trade facilitation efforts are not sustainable. APEC's Secure Trade in the APEC Region (STAR) initiative, which includes customs as a core component, aims to develop strategies to protect cargo, ships on international voyages, international aviation and people in transit.
So how does business view customs facilitation and the tangible results from APEC's efforts? In other words, are these initiatives producing practical benefits for business?
According to Roberto Romulo, CEO of InterPharma Investments Ltd, Philippines, "As tariff and non-tariff barriers come down, transaction costs become critical in determining the final cost of a product or service... APEC's achievement in simplifying customs procedures has contributed to a lessening of the significance of the delay in releasing goods through customs as a cost factor in our business".
Noting that customs procedures and the costs of cross-border trade disproportionately affect small businesses, Andrina Lever, President of Lever Enterprises, Canada, observed "Small businesses that export are more successful and grow faster as a rule than those that only concentrate on the local market. In order for a small business to expand and take advantage of export opportunities it's critical that customs procedures are efficient and transparent. Changes need to be communicated in a timely manner with no surprises at the border. The improvements that APEC has made in bringing down costs, improving efficiency and paperless trading can be hugely beneficial to small businesses in terms of cost and time savings".
One manufacturer, reflecting support in the business community for APEC's reform efforts, said, "With customs procedures changing, we'll save money for sure. If we count the cost of all those trucks, the value of all those goods waiting for hours and hours at border crossings, that's money doing nothing".
Nic Arthur, Director of International Affairs, Australian Customs Service, offered a customs service perspective. "SCCP's objective to simplify and harmonize customs procedures is an important element in facilitating trade for APEC economies. Specifically, the Revised Kyoto Convention Pathfinder initiative is an example of SCCP working to achieve this and improve speed, accuracy and transparency of customs procedures".
John Drury, Deputy CEO of the Australian Customs Service, observed, "Better customs, faster customs, a more attractive customs means that business people do not have to worry why it is that their goods are being held up. The benefit of the reforms is that it gives business knowledge of what is going on".
The days are gone when customs services' main worries were bootleggers, counterfeiters and smugglers. The post-911 world is far more complex, and customs authorities must evolve and develop new strategies and tools to meet new challenges. On the issue of security, Robert Bonner, US Customs and Border Protection Commissioner, warned, "a terrorist attack via ships and containers would not only inflict heavy causalities and damage property, but could potentially cripple international trade".
This concern was recently echoed by Singapore Prime Minister Lee Hsien Loong, "It is almost impossible to picture the disastrous consequences that a terrorist attack would have on global freight supply systems. Borders would be closed; ships might not be allowed to enter ports. There would be complete disruption of the global supply chain with enormous consequences for the global economy".
At least for the foreseeable future, the threat of maritime terrorism is a critical vulnerability of global trade, and one that APEC is actively trying to address. APEC's STAR initiative, and the multilateral cooperation it represents, is a coordinated countermeasure aiming to protect lives and secure trade.
As perspective and to illustrate what is at stake, Michael Richardson of the Institute of South East Asian Studies, Singapore, observed, "Consider also that one quarter of the world's trade and half its oil goes through the Straits of Malacca and Singapore. It is this that keeps the economies of Japan, China and South Korea humming".
What distinguishes APEC as a multilateral forum, and is a key element of its approach to trade facilitation, is the dynamic partnership between government and business. Not only has the SCCP actively promoted dialogue on customs policy issues between business people and customs managers, but many new customs innovations in the region rely on close operational cooperation between business and officials. The emergence of Express Delivery Services such as Fedex, UPS, DHL and others is built on such cooperation, in which predictable expedited processing accompanies business' active support of customs services and their mandates.
Government's historical regulatory role remains critical in maintaining secure, orderly, predictable markets. Such effectively functioning markets support public confidence and is the basis on which businesses make rational investment and production decisions. In a competitive global economy, however, government's additional new role is to bring markets closer together and to make them work better: more efficiently, reliably and at lower cost. This is trade facilitation - one of APEC's core activities.
At home, and collectively in the SCCP, APEC customs officials are working with business to develop new innovations that reduce costs and facilitate trade across borders, even as they also improve our border control infrastructures and assure the security of regional trade.