Outline of Japan Customs Administration May 2012 Customs Training Institute Ministry of Finance, JAPAN

Contents Ministry of Finance Customs (9 Regional Headquarters) Three Missions of Japan Customs Measures to Realize Three missions Customs clearance procedures (Basic procedures, trade facilitation methods)

Contents Ministry of Finance Customs (9 Regional Headquarters) Three Missions of Japan Customs Measures to Realize Three missions Customs clearance procedures (Basic procedures, trade facilitation methods)

Organization of the Government of Japan Ministry of Internal Affairs and Communications Ministry of Justice Ministry of Foreign Affairs Ministry of Finance Ministry of Education, Culture, Sports, Science and Technology Ministry of Health, Labor and Welfare Ministry of Agriculture, Forestry and Fishery Ministry of Economy, Trade and Industry Ministry of land, Infrastructure, Transport and Tourism Ministry of Environment Ministry of Defense

Organization of Ministry of Finance Customs (9) Local Branch offices Customs Training Institute Central Customs Laboratory Facilities Local Finance Bureau (10+1) Policy Research Institute Accounting Center National Tax Agency Ministry of Finance

Organization of Ministry of Finance (Internal sub-divisions) Finance Bureau International Bureau Customs and Tariff Bureau Budget Bureau Tax Bureau Minister’s Secretariat

Organization of “Japan Customs” Hakodate Customs Ministry of Finance (Customs and Tariff Bureau) Tokyo Customs Yokohama Customs Nagoya Customs Osaka Customs Kobe Customs Moji Customs Nagasaki Customs Okinawa Customs Customs Training Institute Central Customs Laboratory

Customs & Tariff Bureau （ CTB ） Deputy D.G. (Domestic) Deputy D.G. (Int’l) Coordination Division Personnel Division Tariff Policy & Legal Division Enforcement Division Customs Clearance Division Post Clearance Audit, Investigation and Intelligence Division Counselor (Int’l Affairs and Cooperation) Counselor (Int’l Affairs and Research) Director-General

Main tasks of CTB Personnel Division Information Management Office Coordination Division Office of Inspection of the Customs-Houses -General policy concerning tariff etc. - Matters relating to the organization, Staffing, and budget of CTB and Customs - General coordination of CTB - Administration of the NACCS Inc. -Research, planning and coordination of automated data processing related to Customs - Matters relating to personnel management of Customs, education and training of Customs officials -Comprehensive inspection concerning the management and staff duties of the Customs administration

Counselor for Int’l Affairs and Cooperation Tariff Policy and Legal Division Customs Administration Research Office -Research, planning and drafting relating to the tariff system -Research and study of basic matters relating to tariff policy -Matters relating to Council on Customs, Tariff, Foreign Exchange and Other Transactions -Tariff matters involving international organizations concerned with economic cooperation and development -Tariff matters involving international organizations concerned with regional cooperation -Matters relating to the CCC (WCO) -Research, planning and drafting relating to multilateral and bilateral agreements and policy administrative tasks -Matters relating to the WTO -Research and study of the tariff systems in foreign countries -Research concerning international trade -Research and study of matters that are the basis of the Customs administration Counselor for Int’l Affairs and Research Office of Economic Partnership -Planning and drafting relating to bilateral economic partnerships Office of Trade Remedy Affairs Main tasks of CTB -Research relating to trade remedy affairs Director for Rules of Origin Director for Technical Cooperation Director for Tariff Policy and Legal Affairs Director for International Affairs

Enforcement Division -Matters relating to surveillance and control of exported/imported cargo, vessels, aircrafts and passengers according to the Customs law -Matters relating to permission and collection of duties with respect to the exportation and importation of personal effects, etc. of passengers and crews -Matters relating to customs seaports and airports -Matters relating to customs bonded area -Matters relating to the collection of customs duties, etc -Matters relating to HS classification -Matters relating to customs valuation -Matters relating to permission and approval of importation and exportation -Matters relating to analysis of goods of importation and exportation -Matters relating to exportation and importation of postal cargo -Matters relating to the authorization of customhouse brokers, control of their activities, and examination of registered customs specialists -Matters relating to the Customs Dissatisfaction Review Committee Customs Clearance Division Main tasks of CTB Office of Intellectual Property Rights Special Officer for Research on Customs Area Director for Customs Surveillance and Control Director for Research on Customs & Tariff Classification Director for Customs Valuation Director for Authorized Economic Operator Program

-Research and enquires concerning values, freight, insurance charges, etc. of imported goods for the tariff application -Matters relating to the investigation and disposition of violations of the Customs law, other related laws and regulations, and the collection and analysis of information concerning such violation -Contact and coordination with customs administrations of foreign countries on information concerning violation of the Customs law, etc. -Compilation and publication of foreign trade statistics and other customs statistics Post Clearance Audit, Investigation and Intelligence Division Main tasks of CTB Director for Intelligence

Contents Ministry of Finance Customs (9 Regional Headquarters) Three Missions of Japan Customs Measures to Realize Three missions Customs clearance procedures (Basic procedures, trade facilitation methods)

HAKODATE CUSTOMS YOKOHAMA CUSTOMS TOKYO CUSTOMS NAGOYA CUSTOMS OKINAWA REGIONAL CUSTOMS OSAKA CUSTOMS KOBE CUSTOMS MOJI CUSTOMS NAGASAKI CUSTOMS Customs Training Institute Jurisdiction of Customs - 9 Regional Customs (Regional HQ) Customs offices - 8,799 Customs officers 120 Customs Seaports 29 Customs Airports

Sub-branch offices Customs Clearance Division D.G. of Customs (Regional Headquarters) Coordination Division Enforcement Division Organizations of Regional Customs Post Clearance Audit, Investigation and Intelligence Division Branch offices Customs guard posts

Customs & Tariff Bureau, Ministry of Finance Customs (Regional Headquarter) Coordination Division Personnel Division Enforcement Division Customs Clearance Division Post Clearance Audit, Investigation and Intelligence Division Post Clearance Audit, Investigation and Intelligence Division Comparison chart of Organizations

Coordination Division - Comprehensive coordination of administrative work of the Customs, budget, personnel, public relations etc. Enforcement Division - Enforcement of ships & aircrafts - Enforcement, inspection and collection of duties/taxes on personal effects, etc. of passengers and crews - Inspection on export/import cargo - Permission, approval and enforcement of Customs areas Main Tasks of Each Division of Customs

Customs Clearance Division - Examination, permission and approval on export/import cargo -Application, determination and collection of Customs duties/taxes on import cargo - Analysis and assessing of export/import cargo - Inspection and collection of duties/taxes on overseas mail - Administrative work on permit for Customs broker, supervision of Customs brokers and tests for registered Customs specialists Post Clearance Audit, Investigation and Intelligence Division - Research of prices on exported/imported cargo and post-clearance audit - Investigation and disposition of violation of Customs law, other laws and regulations - Management and analysis on intelligence - Compilation of trade statistics Main Tasks of Each Division of Customs

D.G of Tokyo Customs Coordination Division Enforcement DivisionCustoms Clearance Division Organizations of Tokyo Customs & national centers Post Clearance Audit, Investigation and Intelligence Division Customs and Tariff Bureau, Ministry of Finance AEO Centre Rules of Origin Centre IPR Centre Customs Valuation Centre HS Classification Centre Regional Customs National Intelligence and Targeting Center

Contents Ministry of Finance Customs (9 Regional Headquarters) Three Missions of Japan Customs Measures to Realize Three missions Customs clearance procedures (Basic procedures, trade facilitation methods)

Missions of Japan Customs Goal : Customs at the Leading Edge of the World Japan Customs aims to be a leading agency of the world to realize sound development of trade and a safe and secure society.

Three Missions of Japan Customs Realizing a Safe and Secure Society Collecting Customs Duties and import- relating Domestic Consumption Taxes appropriately and fairly Further Facilitating Trade Procedures

Three Missions of Japan Customs Realizing a Safe and Secure Society Collecting Customs Duties and import- relating Domestic Consumption Taxes appropriately and fairly Further Facilitating Trade Procedures

Border Dealers (Wholesale Level’s Distributors) Dealers (Retail Level’s Distributors) Drug Abusers Seizure by Local Police Seizure by other agencies Seizure by Customs Domestic Market Safe and Secure Society

Drug Seizures by Japan Customs CategoryYear Methamphetamine /Amphetamine Case Kg Herbal cannabis Case Kg Cannabis resin Case Kg Heroin Case44446 Kg11113 Cocaine Case Kg Opium Case6-422 Kg MDMA Case tabs 1, Psychotropic Case tabs Safe and Secure Society

- Anti-terrorism and anti-WMDs measures - Towards an Intellectual Property-Based Nation etc. Safe and Secure Society

Three Missions of Japan Customs Realizing a Safe and Secure Society Collecting Customs Duties and import- relating Domestic Consumption Taxes appropriately and fairly Further Facilitating Trade Procedures

Revenue collection (FY2010) - Customs duty 786 bn. JPY - Consumption tax/Local Consumption tax 3,122 bn. JPY - Other taxes 1,055 bn. JPY ・ Tonnage duty, etc. ・ Liquor tax ・ Tobacco excise tax / Tobacco special tax ・ Gasoline tax ・ Petroleum and coal tax, etc. Total Amount of levy by Customs 4.96 trillion JPY 11.4 ％ of total national tax revenue

For Appropriate and Fair collection of Duties and Taxes Under the Self-Assessment System: - Advance Ruling - Post Clearance Audit - Investigation Shortage of duty/tax payment + additional duty/tax based upon discrepancies found in PCA (from July 2010to June 2011) 13.6 bn. JPY Revenue collection Self-Assessment System was introduced in 1966

Post Clearance Audit (PCA) Verifying all at the point of entry PCA for duty/tax matters after release - For appropriate and fair collection of duties and taxes under the Self-Assessment System. - More emphasis on security matters etc. at the time of “physical” clearance control. Since 1968

Administrative year ( from July to June ) Audited Importers X5,5485,8656,0806,2046,031 Importers conduct against regulations (undeclared Importers, etc) Y 3,8364,0994,1884,3564,226 Ratio of conduct against regulations (undeclared, etc) Y/X 69.1％69.9%68.9%70.2%70.1% Conduct against regulations in Customs Value (in million Yen) 155, , , , , Additional collection /Back tax (in million Yen) Customs duty2, , , , , Consumption tax8, , , , , Total11, , , , , Japan Customs PCA in recent years (from July to June) Post Clearance Audit (PCA)

Three Missions of Japan Customs Realizing a Safe and Secure Society Collecting Customs Duties and import- relating Domestic Consumption Taxes appropriately and fairly Further Facilitating Trade Procedures

Contents Ministry of Finance Customs (9 Regional Headquarters) Three Missions of Japan Customs Measures to Realize Three missions Customs clearance procedures (Basic procedures, trade facilitation methods)

Measures to realize Three Missions Further application of ICT Installing state-of-the-art inspection equipment Human resources development Cooperation with other government agencies Cooperation with foreign Customs authorities Cooperation with private enterprises

Measures to realize Three Missions Further application of ICT Installing state-of-the-art inspection equipment Human resources development Cooperation with other government agencies Cooperation with foreign Customs authorities Cooperation with private enterprises

Further Application of ICT More Efficient Clearance and other Customs Formalities with ICT NACCS (Nippon Automated Cargo and Port Consolidated System) → System for processing Customs formalities CIS (Customs Intelligence database System) → Data base for assisting Customs officers

Users of NACCS Sea Cargo Shipping Company Agent of Shipping Company NVOCC Forwarding Agency Terminal Operator Warehouse Operator Customs Broker Importer / Exporter Bank Airline Company Air Cargo Agent of Airline Company Flight caterer & supplier Forwarding Agency Warehouse Operator Customs Broker Importer / Exporter Bank Customs, Immigration, Quarantine, Harbor Master, Port Manager Animal / plant Quarantine, Food Sanitation Import / Export Control (METI) General Declaration, Manifest, C/L, P/L Consignment info. permission declaration permission Invoice accounts General Declaration, Manifest, C/L, P/L Consignment info. permission Consignment info. declaration permissionInvoice accounts Declaration, report Oversea ASP Trade related info

Export & Import Data CIS (Customs Intelligence database System) file transfer Selectivity Criteria NACCS Investigation Sections PCA Sections Clearance Sections C I S Enforcement Sections Operational Analysis Staff Investigation Sections

Measures to realize Three Missions Further application of ICT Installing state-of-the-art inspection equipment Human resources development Cooperation with other government agencies Cooperation with foreign Customs authorities Cooperation with private enterprises

Installing state-of-the-art inspection equipment X-ray Machines Drug detector dogs Customs boats

Large X-ray Machines for Whole Container Video Monitoring System Large Surveillance Boats Installing state-of-the-art inspection equipment

Measures to realize Three Missions Further application of ICT Installing state-of-the-art inspection equipment Human resources development Cooperation with other government agencies Cooperation with foreign Customs authorities Cooperation with private enterprises

43 CTI is in charge of Training Management of Japan Customs. Providing a variety of training courses for customs officials. Established as the institution under the Ministry of Finance in Headquarters’ premises located in Kashiwa City, 30km northeast of Tokyo, since With 9 branch offices, one for each Regional Customs. Customs Training Institute (CTI) Human resources development

Organization of CTI Central office Regional office Training Div Int’l Training DivCoordination Div President (D.G. of CTB) Deputy Head (Deputy D.G. of Customs) Director (D.G. of Customs) Training and Research Department Managing Director Trainers Human resources development

Measures to realize Three Missions Further application of ICT Installing state-of-the-art inspection equipment Human resources development Cooperation with other government agencies Cooperation with foreign Customs authorities Cooperation with private enterprises

CTB Customs Police Coast guard Regional Narcotic Control Office Immigration office Cooperation with other government agencies

Measures to realize Three Missions Further application of ICT Installing state-of-the-art inspection equipment Human resources development Cooperation with other government agencies Cooperation with foreign Customs authorities Cooperation with private enterprises

Cooperation with foreign Customs authorities International relations WTO : Trade policy, Tariff rates, Trade facilitation ＜ Trade negotiations ＞ WCO : Issues on cooperation among Customs, including Capacity Building Customs Co-operation Fund (CCF) APEC, ASEM, etc. ： Discussion on Customs procedure, enforcement, etc. EPA : Customs cooperation provisions for mutual co-operation to facilitate bilateral trade with EPA partners. EPA=Economic Partnership Agreement

Advancing Cooperation and Collaboration with countries around the world CMAAs: Customs Mutual Assistance Agreement C S I : Container Security Initiative Customs cooperation meetings with foreign Customs administrations Cooperation with foreign Customs authorities

Measures to realize Three Missions Further application of ICT Installing state-of-the-art inspection equipment Human resources development Cooperation with other government agencies Cooperation with foreign Customs authorities Cooperation with private enterprises

ＣＴＢ Customs Japan Aircargo Forwarders Association Japan Customs Brokers Association Japanese Ship-owners Association Scheduled Airlines Association of Japan Memorandum of Understanding (MOU) Japan Fisheries Association Japan Foreign Steamship Association Cooperation with private enterprises

Contents Ministry of Finance Customs (9 Regional Headquarters) Three Missions of Japan Customs Measures to Realize Three missions Customs clearance procedures (Basic procedures, trade facilitation methods)

Customs Clearance Procedures (Basic procedures for export/import clearance of commercial cargoes)

Customs Area system (Hozei area) In principle, foreign goods cannot be stored at places other than the Customs Areas, and export and import procedures can only be made after the goods for export and import are brought into the Customs Areas. *Export declaration can be lodged before carrying the cargo into Customs Areas (since Oct. 2011) As for foreign cargoes which the DG of Customs deems difficult or inappropriate to be stored at Customs Areas, storage at other places is permitted upon the individual approval of the DG of Customs. Foreign cargoes can be transported, with the approval of the DG of Customs, to and from open ports, Customs airports, Customs Areas, Customs offices or other places which are approved by the DG of Customs as storage places.

Types of Customs Areas  Designated Customs area (port facility etc., designated by the Minister of Finance)  Customs warehouse (private warehouse etc.)  Customs manufacturing warehouse  Customs display area  Integrated Customs area

Sub-branch offices Customs Clearance Division D.G. of Customs (Regional Headquarters) Coordination Division Enforcement Division Clearance Sections PCA, Investigation and Intelligence Division Branch offices Customs guard posts Clearance Section(s) Clearance Section(s) Clearance Section(s) (Clearance staff)

Arrival of Goods Carry into Customs Area Import and Customs Duty Declaration Examination (Document, Physical ) Payment of Duty Import Permission Release of goods (free circulation) Flow of Import Clearance

Flow of Import Declarations through NACCS Data Entry Currency Conversion Duty Calculations Declaration Selectivity Criteria Immediate release Documentary examination Physical examination Examination (Document / physical) Completion of examination Duty free / Duty exempted Debit from bank account Extension of Payment （ deposit security ） Direct payment to Banks Import permission Dutiable Customs Intelligence database System Operational Analysis Staff (OAS) Risk management Category 1 Category 2 Category 3

Documentary & Physical Examination The goods declaration is correctly made Further examination especially in view of: not import-prohibited items listed on Customs law fulfilling all requirements for control of foreign exchange and other regulations Indication of origin Duty collection (tariff classification, value etc.) Customs check… Conduct physical inspection of goods if necessary *Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods (Apr. 14, 1891)

Legally lodged import declaration fulfills below The declaration is correctly made No offence has been found (Cargo is not import-prohibited items) Import license or any other documents required / all permits or approval to the concerned have been acquired No false label of origin Duty and excise taxes have been paid (or collection has been secured) Import Permission

Heroin, cocaine, MDMA, opium, cannabis, stimulants, psychotropic substances, and other narcotic drugs (excluding those designated by Ministry of Health, Labour and Welfare Ordinance); Firearms (pistols, etc.), ammunition (bullets) thereof, and pistol parts; Explosives (dynamite, gunpowder, etc.) ; Precursor materials for chemical weapons; Germs which are likely to be used for bio-terrorism; Counterfeit, altered, or imitation coins, paper money, bank notes, or securities, and forged credit cards; Books, drawings, carvings, and any other article which may harm public safety or morals (obscene or immoral materials, e.g., pornography); Child pornography; and Articles which infringe upon intellectual property rights Items prohibited by Customs law:

Flow of Export Clearance Carry into Customs Area Export Declaration Export Permission Loading Departure Examination (Document, Physical) 6

Legally lodged export declaration fulfills below The declaration is correctly made No offence has been found (Cargo is not export-prohibited items) Export license or any other documents required / all permits or approval to the concerned have been acquired Export Permission

Customs Clearance Procedures (Trade facilitation methods)

Exception of the principle, import procedures should be done only after the goods to be imported are carried into the Customs Area. Import permission may be granted immediately after formal declaration is lodged, unless further examination is required. Can be applied for any types of cargoes by sea or air. Preliminary Examination System (practical measures)

Payment of Duty, taxes Arrival of Goods Carry into Customs Area Import and Customs Duty Declaration Examination (Document, Physical ) Release of goods Import Permission (Preliminary declaration) Preliminary Examination System (practical measures)

Exception of the principle “No cargo is allowed to be released without permission.” When it takes time to determine the Customs value or classification, importers may lose business opportunities if the goods are stored in the Customs area for an extended period. (e.g. perishable items) Importers shall deposit security equivalent to the duty on the importing goods and obtain approval from Customs. Customs may approve the importer to release the goods before import permission when the conditions are fulfilled. Approval of Release of Goods before Permission

Arrival of Goods Carry into Customs Area Import and Customs Duty Declaration Examination (Document, Physical ) Import Permission Payment of Duty Release of goods Approval of Release of Goods before Permission

AEO (Authorized Economic Operator) Program - Requirements Compliance, Commercial records, Cooperation, Financial viability - Scope All parties related to import/export - Benefits Compliance-reflected examinations and inspections Reduce fees and other charges Further Facilitating Trade procedures

Authorized Importers’ Program - 78 Authorized Exporters’ Program Authorized Warehouses Operators’ Program - 95 Authorized Customs Brokers’ Program - 42 Authorized Logistics Operators’ Program - 3 Authorized Manufactures’ Program – (as of January 1, 2012) AEO Programs in Japan

Examination (Compliance reflected) Import Permission Arrival of Goods = Release of goods Payment of Duty, taxes (Periodical) Pre-arrival Lodgement of Import and Duty Declaration ● Benefits (AEO Importers) 1 (No obligation of carrying into Customs Area)

Export Declaration Export Permission Loading Departure ● Benefits (AEO Exporters) Examination (Compliance reflected) (No obligation of carrying into Customs Area) Premises of Exporters etc. 2

DischargingStorage Declaration Source: Customs and Tariff Bureau, Ministry of Finance Hours Permission (Before NACCS) Total hours(=Days) Time Release Study on Imported Sea-Cargo

DischargingStorage Declaration Permission Total hours(=Days) - Time Release Study on Imported Air-Cargo Source: Customs and Tariff Bureau, Ministry of Finance Hours

Thank you for your attention.