Docstoc

What is Customs

Document Sample
What is Customs Powered By Docstoc
					        Customs Awareness Training Series




    Module I

What is Customs?
                                                       What is Customs?



               Module Overview

This module on ‘What is Customs?’ will cover the
following topics:

 Definition, Role and Activities of Customs

 Customs Organization and Actors

 Customs Documentation

 Legal Framework, Free Trade Areas and Customs Unions




                                               Customs Awareness Training Series – Module I
                                                                             What is Customs?



                        What is “Customs”?
              “Customs is the Government Service which is responsible for the administration
                 of the Customs Law and the collection of duties & taxes and which also has
                 the responsibility for the application of other laws and regulations relating to
                 the importation, exportation movement or storage of goods.”

                               -   General Annex, Chapter 2 of the Revised Kyoto Convention



•Usually located within the Ministry of Finance, with strong
                                                                          ??? Did you know the first
relationship to enforcement agencies (police, military, etc.)
                                                                          historical evidence
                                                                          proving the existence of
•Reflection of the authority in a country, region or location             customs appear on the
                                                                          Stele of King Necho of
                                                                          Egypt in 609 B.C. ???
•Either structured (in organized countries) or unstructured (in
failed states)

•For most countries, no other single body fulfils role of
collecting revenue while protecting society.
                                                                     Customs Awareness Training Series – Module I
                                                                  What is Customs?



                     Purpose of Customs
• Ensure compliance with national and international laws and with security
requirements
• Facilitate participation in international trade
• Ensure contribution to national economy and economic competition
• Encourage investment and prevent movement of contraband



                 CONTROL
             • For Economic Reasons
      • For Health and Environmental Reasons
        • For Security and Political Reasons




                                                          Customs Awareness Training Series – Module I
                                                                     What is Customs?



                     Activities of Customs
• Collect duties and taxes          •Check for health & safety
  (revenue collection)              issues

     •Perform security checks     •Check for contraband

•Control imports & exports            •Protect society


  • To carry out their function, Customs are granted with powers that often equals
  enforcement agencies: stop and search, personnel detention, seizure of goods,
  etc.


  • However, they still need to respect the laws. No arbitrary methods should be
  allowed when interpreting the law, applying the law, acting as arbitrator of an
  appeal, ruling on forfeitures and penalties, etc.


                                                             Customs Awareness Training Series – Module I
                                                   What is Customs?



    Who’s Who - Customs

Customs Organisations     Other Organisations



Administration Officer   Junior Clerk/Clerk


Officer/Inspector        Supervisor

Senior Officer/Chief
Inspector                Departmental Manager



Surveyor/Port Director   Director of Operations



Commissioner             CEO/Board Level


                                           Customs Awareness Training Series – Module I
                                                                       What is Customs?



                        Who’s Who - Customs
    Administrative Officer
•    Takes receipt of the paperwork
•    Ensures all paperwork is together
•    Takes a look at the shipment and checks if suspicious
•    Identifies consignments that need inspection

    Officer / Inspector

• Looks at the paperwork and validates it
• Approves or rejects paperwork
• Physically looks at the goods and decides to check or seize the goods

    Senior Officer / Chief
    • Acts as point of reference in case of disagreements, queries, seizure, refusal
      to release and makes a judgement
    • Deals with questions from his own staff on dealings with certain
      consignments
                                                               Customs Awareness Training Series – Module I
                                                                      What is Customs?



                       Who’s Who - Customs
    Surveyor / Port Director

•     Sets local policy
•     Implements group directives
•     Sets budgets
•     Sets and controls Key Performance Indicators for a particular location
•     Sets profiles against historical shipments


    Commissioner

•    Is the main link at ministerial level
•    Sets strategies
•    Sets direction and policies for the country
•    Sets and controls budgets for country level



                                                              Customs Awareness Training Series – Module I
                                                                  What is Customs?



              Who’s Who - Contractors
Clearing Agents

• Act on behalf of the importer or exporter when it comes to any formality
  with the Customs authorities – classification of goods, document
  presentation, guarantee duties & taxes are paid and exemptions are
  applied

• Must normally qualify to obtain an operators’ licence from the relevant
  government authority or Customs Department

• In many countries, only officially licensed clearing agents are able to
  effect the customs clearance and obtain the release of goods

• Work on behalf of importer – important to keep good relationship with
  them, monitor their performance and update authorities of changes in
  agents

                                                          Customs Awareness Training Series – Module I
                                                                  What is Customs?



              Who’s Who - Contractors
Freight Forwarders

• Usually include the services of clearing agents but specialize in transport
  and storage services

• As with clearing agents, it is mandatory in some countries to obtain an
  official licence

• Their services are sometimes compulsory to obtain delivery and to export

• Services vary but often include: document handling, goods presentation,
  guaranteeing duty & tax payment, planning and costing of transport,
  storage, payment of freight-related fees, represent cargo interest in claims

• Some freight forwarders operate their own fleet of vehicles while others
  sub-contract

                                                          Customs Awareness Training Series – Module I
                                                                What is Customs?



             Who’s Who - Contractors
Selecting Clearing Agents and Freight Forwarders

• Important to select trustworthy and competent contractors as they
  represent the organization

• Criteria should include:
               Reputation with authorities, local population, other
                    importers
               Efficiency in clearing/moving goods
               Experience and capacity, size and presence in country
               Cost of services and facilities
               Understanding of organization’s needs and principles

• Important to keep in mind that, since operators represent organizations,
  any negative behaviour can cause consequences for the organization –
  often up to 10 years later.

                                                        Customs Awareness Training Series – Module I
                                                                What is Customs?



             Who’s Who - Contractors
Inspection Companies

• Some countries require imported goods to be certified for value and
  physical compliance before they are shipped. Inspection companies carry
  out inspections and issue those certificates.

• These companies are usually well established in the countries and
  regulated by the authorities

• Such a company is not an average agent that can be used for insurance
  purposes.

• However, sometimes, their report can be accepted by some insurance
  companies as additional evidence to support a cargo claim.




                                                        Customs Awareness Training Series – Module I
                                                                     What is Customs?



              Customs Documentation

• Needed documentation varies between countries and between goods. Some
  documents must also be certified while other do not.
• The following is a list (not exhaustive) of common documents:
                    Import Licence (used to regulate import quantities)
                    Export Licence (permission to export certain goods)
                    Certificate of Origin (usually by manufacturer and provides origin
                   proof)
                    Gift Certificate (certify goods are donated/free)
                    Fumigation Certificate (certify goods/packaging is fumigated)
                    Radiation Certificate (certify goods are free from radiation)
                    Phytosanitary Certificate (certify agricultural disease free)
                    Veterinary Health Certificate (certify certain foods are free from
                   disease)
                    Non-GMO Certificate (certify no genetically modified organisms)
                    Inspection Certificate (certify inspection done)
                    Analysis Certificate (for medical and controlled drugs)
                    Packing List (full details of commodities)
                    Dangerous Good Declaration (regulates/classifies the carriage of
                   dangerous goods for qualified people/authorities)

                                                             Customs Awareness Training Series – Module I
                                                                      What is Customs?



                      Legal Framework
General Principle

• Every state is sovereign and keeps control over
  all commodities imported, exported or placed in
  transit
• Customs implements laws related to the
  movement of goods by applying the national
  Customs Code (normally published in the form of
  an Parliamentary Act):
            Covers the implementation of the country’s, commercial and other
           economic policy measures

            Contains general rules and procedures which ensure the
           implementation of the Tariff and other measures introduced at policy
           level in connection with trade in goods between the country and other
           countries

• Tariff is a systematic list of all commodities plus the rates of duties applicable.
  It is published separately and reviewed regularly.
                                                              Customs Awareness Training Series – Module I
                                                                    What is Customs?



                     Legal Framework
International Customs Regulations

• All countries apply regulations on goods imported, exported or in transit
  and some of these are international norms (i.e. treaties, protocols, etc.)
• First international customs convention governing procedures created in
  November 1923 by the League of Nations. Governed until the Kyoto
  Convention of 1973
• Geneva Nomenclature of 1931 (revised 1937) provided original basis tariff
  classification of the Harmonized System of today (21 sections, 97 chapters)
  – developed and maintained by the World Customs Organization
• In the last 50 years we have seen:
              •    Creation of the World Customs Organization
              •    Nairobi Convention, 1980
              •    Conv. on the Harmonized Commodity Description/Coding, 1988
              •    Convention on Temporary Admission, Istanbul Conv., 1993
              •    Customs Convention on Containers, 1975
              •    International Conv. On the Simplification and Harmonization of
                   Customs Procedures (Kyoto Convention), Revised 1999
                                                            Customs Awareness Training Series – Module I
                                                                  What is Customs?



                      Legal Framework
Free Trade Areas and Customs Unions

• Countries are sovereign to control all commodities in and out of their
  territory.

• But, in the last decades, international trade treaties have been agreed
  and signed, in which countries have renounced/given up a part of their
  original competences when it comes to tariffs and quotas decisions,
  among others. For example:
          - GATT (currently WTO)
          - Free Trade Areas (e.g. EU, EFTA, NAFTA)
          - Customs Unions (e.g. EU, COMESA [in process])




                                                          Customs Awareness Training Series – Module I
                           What is Customs?

Free Trade Area – Customs Union




                   Customs Awareness Training Series – Module I
                                                                What is Customs?



     Free Trade Area – Customs Union

•    Free trade areas and customs unions are essential components towards
    economic integration – a term used to describe how different aspects
    between economies are integrated – of nation states. As integration
    increases, barriers to trade decrease. The most integrated economy
    today is the EU.
•   The degree of economic integration can be categorized into six stages,
    with a free trade are and a customs union as two of the earlier stages:
    i.    Preferential trading area
    ii.   Free trade area
    iii. Customs union
    iv. Common market
    v. Economic and monetary union
    vi. Complete economic integration

                                                        Customs Awareness Training Series – Module I
                                                                    What is Customs?



                     Customs Unions
Example: European Economic Community

• European integration process began with a Customs
  Union and the goal was to create a common market
  whereby there was a free trade area, developing in two
  directions:

                 Externally: eliminate all duties among
                  member states and introduce a
                  Common Customs Tariff (CCT) and a
                  Common Commercial Policy (CCP)

                 Internally: create a frontier-free area
                  whereby people, goods, services and
                  money (four-fold) can move freely



                                                            Customs Awareness Training Series – Module I
                                                                    What is Customs?



                        Customs Unions
Development of a Customs Union (European)

 Step 1: Elimination of all customs duties and restrictions among member states

• Started with the creation of a tariff union (1968) to abolish all customs duties
  on trade between member states

• Common customs legislation (code) created (1992) to ensure goods are
  subject to the same provisions. This includes a common declaration form –
  SAD (Single Administrative Document)

• Additional trade laws needed to consolidate different legislations of member
  states and make them uniform




                                                            Customs Awareness Training Series – Module I
                                                               What is Customs?



                      Customs Unions
Development of a Customs Union (European)

 Step 2: Create a Common Customs Tariff and Common Commercial Policy

• Common Customs Tariff (CCT) is the external aspect of a union whereby the
  same rates apply to the same goods, regardless of the external border point
  of the Customs Union.
               It is common to all members of the Union and depend on the
                  economic sensitivity of products

• Common Commercial Policy (CCP) implies uniform conduct of trade relations
  with third countries.




                                                       Customs Awareness Training Series – Module I
                                                            What is Customs?



           Matching Customs Terms

• Customs Nomenclature   a) Systematic list of all commodities plus rates of
                            duty applicable
• Harmonized System      b) Standardized system of names and numbers for
                            classifying products

• Combined               c) Indicating the customs procedure to be applied
  Nomenclature              to goods and declaring particulars as required
                         d) Statement or action giving information required
                            by customs
• Tariff
                         e) EEC customs nomenclature with 21 sections, 98
                            chapters and 8 digit code
• Customs Declaration
                         f)   Customs nomenclature, with 21 sections, 97
                              chapters and a 6 digit code, maintained by the
• Goods Declaration           World Customs Organization
                         g) Treatment applied by customs to goods (incl.
• Customs Procedure         transport) which are subject to control



                                                    Customs Awareness Training Series – Module I
                                                                  What is Customs?



    Matching Customs Terms - Answers
• Customs Nomenclature   b) Standardized system of names and numbers for
                             classifying products

• Harmonized System      f) Customs nomenclature, with 21 sections, 97
                             chapters and a 6 digit code, maintained by the
                             World Customs Organization
• Combined               e) EEC customs nomenclature with 21
  Nomenclature               sections, 98 chapters and 8 digit code

• Tariff                 a) Systematic list of all commodities plus rates of
                             duty applicable

• Customs Declaration    d) Statement or action giving information
                             required by customs

• Goods Declaration      c) Statement indicating the customs procedure to be
                             applied to goods and declaring particulars as required

• Customs Procedure      g) Treatment applied by customs to goods (incl.
                              transport) which are subject to control


                                                          Customs Awareness Training Series – Module I

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:5
posted:6/26/2012
language:simple
pages:23