RAISING THE PORTCULLIS A Presentation to the WCO Conference on Developing the Relationship between WCO, Universities and Research Establishments Brussels - March 2006 Prof. David Widdowson CEO, Centre for Customs & Excise Studies University of Canberra, Australia

Portcullis The traditional symbol of Customs Symbolises a nation’s ports - the gates through which international trade must pass Customs is the gatekeeper ‘Gatekeeper’ approach traditionally implies intervention simply for the sake of intervention

Portcullis Customs must raise the portcullis to achieve an effective balance between trade facilitation and regulatory intervention Intervention by Exception Intervention when there is a legitimate need to do so Intervention based on identified risk

Facilitation/Control Change in approach: From ‘Gatekeeper’ strategies To a balance between trade facilitation and regulatory control BALANCE

Facilitation/Control The means of achieving the desired balance between trade facilitation and regulatory control is through the use of risk management BALANCE

Facilitation/Control High Low RED TAPE APPROACH BALANCED APPROACH CRISIS MANAGEMENT LAISSEZ-FAIRE APPROACH C O N T R L FACILITATION

Facilitation/Control

Revised Kyoto Convention Simplification and Harmonisation of Customs Procedures Contracting parties must integrate the principles of risk management into all Customs control programs

Compliance Assessment © David Widdowson 2004 Client Service Legislative Base Compliance Assessment Recognition Rewards Formal Warning Persuasion Penalty Enforcement RISK-BASED COMPLIANCE MANAGEMENT PYRAMID

Assessment of Compliance Levels Enforcement/ Recognition Client Service Legal Base Assessment of Compliance Levels Enforcement/ Recognition Statutory Provisions Relevant Laws Regulations etc.

Assessment of Compliance Levels Enforcement/ Recognition Clear Administrative Guidelines Formal Rulings Education & Awareness Technical assistance, advice Client Service Legal Base Assessment of Compliance Levels Enforcement/ Recognition

Assessment of Compliance Levels Enforcement/ Recognition Risk-based Procedures: Pre-arrival clearance Physical Examination Documentary Check Trader-focused audit Investigation Client Service Legal Base Assessment of Compliance Levels Enforcement/ Recognition

Assessment of Compliance Levels Enforcement/ Recognition Client Service Legal Base Assessment of Compliance Levels Enforcement/ Recognition Punish Non-Compliance Reward Compliance

Assessment of Compliance Levels Enforcement/ Recognition Client Service Legal Base Assessment of Compliance Levels Enforcement/ Recognition Punish Non-Compliance Reward Compliance Reduced regulatory scrutiny Periodic payment arrangements Increased self-assessment Less onerous reporting Intervention by exception

Assessment of Compliance Levels Enforcement/ Recognition Client Service Legal Base Assessment of Compliance Levels Enforcement/ Recognition Punish Non-Compliance Reward Compliance Penalty Formal Warning Persuasion Penalty Formal Warning Persuasion

Gatekeepers Risk Managers “One size fits all” compliance strategy Enforcement focus Strategy dependent upon level of risk Dual enforcement/ client service focus

Gatekeepers Risk Managers Indiscriminate focus or 100% check Intervention in all areas Transaction focus Inflexible procedures Focus on high-risk areas Minimal intervention in low-risk areas Trader focus Administrative discretion

Gatekeepers Risk Managers Focus on real-time compliance assessment Post-arrival import clearance Physical control maintained pending revenue payment Increased focus on post-clearance compliance assessment Pre-arrival import clearance Nexus broken between physical control and revenue liability

Gatekeepers Risk Managers Seek to identify non-compliers No special benefits for compliers Seek to identify both compliers and non-compliers Rewards for compliers

Research Activities Recognised Compliers: “Authorised Economic Operators” Actual benefits v. anticipated benefits (“expectation gap”) Benefits over and above other members of the international trading community

Research Activities Supply Chain Security Initiatives: Tangible commercial benefits Commercial Benefits v. Regulatory Benefits “Win-Win” or “Win-Lose”

Emerging Issues Supply chain security initiatives: Tipping the balance in favour of regulatory intervention Unreasonably high intervention practices being erroneously “blamed” on security requirements

Emerging Issues Rules of Origin: Proliferation of FTAs Proliferation of Rules of Origin Reversing the trend of Harmonisation and Simplification Retarding the international trade facilitation agenda

Emerging Issues Role of WCO and National Administrations: Lobby for international agreements which support global trade facilitation through the ongoing harmonisation and simplification of regulatory procedures

Centre for Customs & Excise Studies Thank You Centre for Customs & Excise Studies www.customscentre.canberra.edu.au