WTO Workshop on Technical Assistance and Capacity Building in Trade Facilitation

10-11 May 2001, Geneva

Overview of Technical Assistance Activities by Japan Customs

Kunio Mikuriya

Director, International Affairs and Research, Customs and Tariff Bureau,

Ministry of Finance, Japan

Objectives

• Assistance in modernization of customs administrations to fulfill their three main missions at national borders - Collection of revenue - Trade facilitation to promote trade & industry - Protection of society from the inflow and outflow of hazardous goods

Collection of revenue

• Secure the national revenue -- Important source of national revenue in the developing countries

-- Example of US Customs; Predominance in the national revenue (1789-1914) before the introduction of income tax

• Trade policy tool - Protection of domestic industry

Attention of Trade CommunityHas Been Shifted to Trade Facilitation

• Lowering of tariffs across the globe (WTO tariff negotiations)

• Cost of complying customs formalities

• Cost of duties to be paid

exceeds

3481kg 2019kg

290kg

Cannabis

Opium, Heroin, Cocaine

Methamphetamine

74.7%

79.0%

71.6%

Border control is the most efficient tool toprotect the society from the drug trafficking -Seizure at national borders in Japan (95-99)

Sharing Japan’s experience on modern customs techniques

• Risk management to strike a balance between the facilitation and border control requirements

• Post-clearance audit• Pre-arrival declaration• Paperless trade and one-stop service• Mutual customs cooperation including

information exchange

Customs procedures based on Risk Management

InterdictionInterdiction•Commercial FraudCommercial Fraud•Illicit drugs, FirearmsIllicit drugs, Firearms•IPR, Endangered wildlifeIPR, Endangered wildlife•Other Controlled ItemsOther Controlled Items

Trade FacilitationTrade Facilitation

Risk AnalysisRisk Analysis

Appropriate Border ControlAppropriate Border Control Protection of Communities from:Protection of Communities from:

Cross-Border Movement ofCross-Border Movement of•GoodsGoods•PeoplePeople

Legitimate trade

Control method

• Change from all documentary and physical inspection to selected inspection based on risk management

• Importance of information gathering and intelligence

Post-clearance Audit

Useful instrument for valuation while avoiding a delay in customs clearance

Correctness of the value of goods declared by importers

On-the-spot controlof contract, invoices,accounting books etc.

Additional Collection of Duties byPost-entry Examination (1997)

67 billion yen from 2582 importersout of 4000 audited

15%19%

26%

8%32%

Invoice errror

Other payment

Ommission ofmaterial priceOmmission ofroyality Otherimproriety

Other paym

Automation of customs procedures

• Sharing experience on automation towards paperless trade in collaboration with the private sector

• Automated risk management and building-up of database

• Pre-arrival declaration• Coordination with other government

agencies

Warehouse

Declaration

Documentary Examination Physical

Inspection of cargo

Release

Vessel

Airplane

Procedures covered by computerization

(from arrival to release of cargo)

Quarantine etc.Duty payment

Cargo

Physical Inspection

Documentary Examination

Immediate Release

Cargo SelectivityCriteria

HighRisk

LowRisk

PhysicalInspection

DocumentExamination

Immediaterelease

Automated Risk Assessment

Customs Intelligence Database (CIS)

• Information on importers, their record, customs examination record and other relevant information

• Support selectivity criteria, post-clearance audit, customs investigation

CustomsComputer

SelectivitycriteriaData and

information

CIS

Cargo Documentary Releaseexamination examination

Result

analysisassessmentof risks

Declaration data

Importer

Customs

Input

Pre-arrival declaration

• Advanced examination based on pre-arrival declaration

• Immediate release upon arrival of cargo

• Further acceleration of trade flow

Inspection of imported foods

NACCS

Plant quarantineAnimal quarantine

Efforts toward the one-stop service -Interface of computer system with other agencies

Licensing

Port authoritiesCustomscomputer

(future plan)

Air cargo 2.3 hours (1991)

0.7 hour (1998)

Sea cargo 26.1 hours (1991)

5.6 hours (1998)

The time needed from import declaration to permit in J apan

Air cargo 2.3 hours (1991)

0.7 hour (1998)

Sea cargo 26.1 hours (1991)

5.6 hours (1998)

The time needed from import declaration to permit in J apan

The time needed from arrival of cargo to file an import declaration

Sea cargo142.1 hours

(1991)

81.1 hours(1998)

Air cargo50.3 hours

(1991)

30.8 hours(1998)

Information exchange between customs

• Key to speed up customs control for revenue purpose (commercial fraud) and protection of society (drug trafficking etc.)

• Bilateral basis – Customs Mutual Assistance Agreement or Memoranda of Understanding

• Regional basis – Regional Intelligence Liaison Office (RILO)

RILORILO

RILO Monthly Bulletin (Seizure Report)RILO Monthly Bulletin (Seizure Report)

Analysis of Customs Seizure InformationAnalysis of Customs Seizure Information

Administration of Network & DatabaseAdministration of Network & Database

<<Regional Intelligence Liaison Office>Regional Intelligence Liaison Office>

Asia-pacific RILO covers24 WCO regional members(Tokyo Customs).

JapanKoreaIran

BangladeshPakistan

India

Sri Lanka

Maldives

Nepal

Mongolia

China

Myanmar

Thai

Hong Kong

Macao

Viet Nam Philippines

Malaysia

Singapore

Indonesia

Australia

New Zealand

Fiji

Brunei

Asia/Pacific RILO: 24 Member Administrations

Working hand in hand

WCO - RILO NETWORK

CaribbeanSan Juan (Puerto Rico)

South AmericaValparaiso (Chile)

Eastern & Central Europe　Warsaw (Poland)

WCOBrussels (Belgium)

North AfricaCasablanca (Morocco)

West AfricaDakar (Senegal)

East & Southern AfricaNairobi (Kenya)

Central AfricaDouala (Cameroon)

Middle EastRiyadh (Saudi Arabia)

Asia/PacificTokyo (Japan)

Western EuropeCologne (Germany)

Integration of the customs procedures into the international standards

• WTO Valuation

• HS Nomenclature

• Kyoto Convention (simplification and harmonization of customs procedures)

• TRIPs

• Rules of Origin, etc.

• ¶Ž š‚ Ì‹ L“ üStandards

WTO Valuation Agreement (1995)

• Acceptance obligatory for WTO members - Acceptance of GATT Valuation Agreement was optional before the establishment of WTO

• Implementation for developing countries

Need for preparation including introduction of post-entry examination

Principles adopted by the revised Kyoto Convention

• Automation and use of information technology• Risk assessment and selectivity of control• Pre-arrival information• Audit based control• Coordination with other agencies• Transparency of customs regulations• Partnership approach between customs and trade

The Revised Kyoto Convention

• Adopted in June 1999 at WCO Council

• A new instrument adapted to the challenge of trade facilitation

• Need an early ratification by the existing Members to put in force

Technical assistance strategy

• Asia Pacific Region

• WCO member countries based on regional approach

• Needs oriented

Training courses in Japan (6-8 weeks)

1199 participants from 83 economies since 1970• Customs clearance (including automation and

Kyoto Convention)• HS classification• Valuation & post-clearance audit• Enforcement & intelligence analysis• Executive seminar• Chemical analysis• Information technology, etc.

Expert missions

• Long term experts specialized in training, post-clearance audit (ASEAN) and computerization etc.

• Short term experts in chemical analysis (customs laboratory), conducting seminars in various areas

Cooperation with international organizations

• Financial contribution to WCO Customs Cooperation Fund (JPY130 million in 2001)

• Human contribution (dispatching experts) to WCO CCF seminars

APEC Trade and Investment Liberalization and Facilitation

• TILF special account; Japan’s annual contribution of JPY500 million

• Capacity Building to implement WTO agreements (2001-2005)

• Regional seminars & national workshops in valuation, TRIPs and Rules of Origin

Number of courses (participants) in Japan over the last 3 years

1998 1999 2000

Group training

14(149) 16(163) 22(196)

WCO fellowship

2(9) 2(9) 2(9)

WCO Scholarship

(2) (4) (4)

Number of expert missions (experts) over the last 3 years

1998 1999 2000

Long term experts

(3) (3) (4)

Short term experts

6(6) 7(12) 12(23)

WCO 9(13) 22(32) 20(24)

APEC 5(7) 7(9) 7(13)

Needs inventory & planning

• Needs inventory to Asia-Pacific WCO members in September by WCO regional training coordinator (Japan)

• Evaluation & follow-up missions• Plan training courses in April (Japan’s FY: April-

March)• Consultation with WCO in June (FY: July-June)• Avoid overlap of technical assistance

Asia-Pacific Customs Training Needs Inventory

• International Training / Technical Co-operation Activities in 1999/2000 (Table 1)

• Training Needs in 1999 (Table 2)

• International Training / Technical Co-operation Activities Projected (Table 3)

• Training Needs in 2000 (Table 4)

TRAINING ACTIVITIES (1999/2000)

Clearance9%HRD

11%

Other8%

Valuation26%

Customs Area0%

HS13%

Enforcement25%

IPR3%

Rules ofOrigin

2%

ChemicalAnalysis

3%

Clearance14%

Valuation26%

HRD12%

Other4%

Rules ofOrigin

3%

HS8%

Enforcement22%

Customs Area2%

IPR6%

ChemicalAnalysis

3%

TRAINING NEEDS (As of Sep. 1999)TRAINING NEEDS (As of Sep. 1999)

4

12

22

2

26

3

3

14

8

6

0

8

11

25

26

3

2

3

13

9

0 10 20 30 40 50 60

Other

HRD

Enforcement

Customs Area

Valuation

IPR

Rules of Origin

Chemical Analysis

HS

ClearanceTraining Needs

Training Activities

(%)

COMPARISON BETWEEN TRAINING NEEDSAND TRAINING ACTIVITIES

COMPARISON BETWEEN TRAINING NEEDSAND TRAINING ACTIVITIES

Valuation25%

HRD12%

Other3%

Rules ofOrigin

3%

HS7%

Clearance15%

Customs Area2%

Enforcement22%

IPR7%

ChemicalAnalysis

4%

TRAINING NEEDS (As of Sep. 2000)TRAINING NEEDS (As of Sep. 2000)

Success & failure

• Focus on practical application of agreement rather than its theoretical explanation

• Selection of participants

• Usefulness of regional seminar for exchange of information/experience

• Human network

Challenges in the coming years

• Needs for WTO/WCO instruments related training in a practical manner

• Information technology

• Exchange of information

• Human resources development

• Integrity

Maintenance & monitoring of projects

• Evaluation after each training course to improve the service

• Follow-up missions to 6-8 countries annually (interview with former participants & senior management)

Coordination between bilateral donors & international organizations

• Avoid duplication for recipients

• Efficient use of limited human resources

• Coherence and synergy desirable from the planning stage

• More information sharing on technical assistance