Recommendation N 13.

 

         FACILITATION OF IDENTIFIED LEGAL PROBLEMS

              IN IMPORT CLEARANCE PROCEDURES

                  (Geneva, March 1979)

 

      adopted by the Working Party on Facilitation of

              International Trade Procedures

                       

 

            

The Working Party on Facilitation of International Trade Procedures, a

subsidiary organ of the United Nations Economic Commission for Europe, is

working on the legal problems connected with the facilitation of

international trade procedures. Identification of some of these problems

was made in 1976 (document TRADE/WP.4/GE.2/R.79 dated 21 September 1976)

and this was followed by a more comprehensive study, resulting from the

work of a small team of experts, entitled "An overview of legal problems

of trade facilitation" (document TRADE/WP.4/GE.2/R.102 dated 10 November

1977), which described some of the known problems, identified the parties

more concerned with them, and suggested ways in which the search for

solutions might be assisted and speeded up.

 

In September 1978 an informal team of experts which had been set up to

deal with "Legal Problems" - task team GE.2/TT.2, convened by the

International Chamber of Commerce - submitted a study on legal problems of

import procedures and a draft recommendation thereon to the Group of

Experts on Data Requirements and Documentation for discussion at its

nineteenth session. The Group of Experts forwarded the text to the Working

Party which adopted it at its ninth session in March 1979.

 

Recommendation

 

The Working Party on Facilitation of International Trade Procedures,

 

Being aware that the Customs Co-operation Council has sought in the

annexes to the International Convention on the Simplification and

Harmonization of Customs Procedures (Kyoto Convention), and especially in

Annex B.1, to encourage Customs authorities to grant special facilities

for the expeditious clearance of goods;

 

Being aware that the main concern of import authorities is the

completeness and correctness of the information submitted rather than the

form in which it is presented, and that problems often centre on the

requirements of satisfactory supporting information;

 

Recalling that in some countries special procedures have been introduced

whereby detailed physical inspection of goods and presentation of the

formal evidence at the point of importation are no longer required,

allowing approved importers to take the goods directly to their own

premises, sometimes on a deferred payment basis, on condition that:

 

     - the goods may be inspected;

     - the Import Declaration and satisfactory supporting evidence is

        made available when required;

     - such information is retained for later verification; and

     - security of payment and responsibility for the goods are assured;

 

Recalling that national rules and regulations are being developed either

to create wider definitions of the terms "document" and "signature" in

view of electronic or other automatic methods of data transfer, or to

allow for the use of such methods of data transfer under acceptable

conditions;

 

Noting that the Customs Co-operation Council has already identified many

of the problems and has already included consideration of them in its

programme of work;

 

1. Recommends to Governments to take account of the developments referred

to above with a view to the further promotion of all steps which would

facilitate international trade procedures;

 

2. Recommends to Governments to take note of the provisions contained in

the Kyoto Convention and especially in Annex B.1 concerning clearance for

home use and to examine the possibility of introducing them into their

national legislation;

 

3. Recommends to Governments to study and evaluate the possibility of

accepting data transmitting by electronic or other automatic techniques

under specific criteria;

 

4. Invites Governments to communicate their views on the enclosed study to

the Economic Commission for Europe; and

 

5. Draws the above recommendations and the attached study to the attention

of the Customs Co-operation Council and the General Agreement on Tariffs

and Trade.

 

At the ninth session of the Working Party representatives attended from:

Austria; Belgium; Bulgaria; Canada; Czechoslovakia; Denmark; Finland;

France; German Democratic Republic;Germany, Federal Republic of; Hungary;

Netherlands; Norway; Poland; Romania; Sweden; Switzerland; Turkey; Union

of Soviet Socialist Republics; United Kingdom of Great Britain and

Northern Ireland, and United States of America; and from Australia, Japan

and Kenya

 

The following specialized agencies, intergovernmental and non-governmental

organizations were also represented: United Nations Food and Agriculture

Organization (FAO); International Maritime Consultative Organization

(IMCO); General Agreement on Tariffs and Trade (GATT); European Economic

Community (EEC); Customs Co-operation Council (CCC); Central Office for

International Railway Transport (OCTI); International Chamber of Commerce

(ICC);International Road Transport Union (IRU); International Union of

Railways (UIC); International Organization for Standardization (ISO);

International Chamber of Shipping (ICS); International Railway Transport

Committee (CIT); International Federation of Freight Forwarders

Associations (FIATA) and International Cargo Handling Co-ordination

Association (ICHCA).

 

The problem area

 

1. Legal problems of trade facilitation which are related to import

procedures stem from the fact that, for reasons of national laws and

regulations, import authorities often require a variety of paper

documents, properly authorized, before goods can be released. Some of

these documents (often called shipping documents) have to be prepared and

presented at the place of export at the time of dispatch, and they may not

always be available at the place of import clearance when the goods

arrive. This can cause delay and seriously add to the costs which in the

end will have to be paid by the residents of the importing country, either

in the form of higher prices for goods, or higher taxes, or both.

Incompatibility of data content of documents, or lack of essential items,

add to the problems.

 

2. These particular problems have been specially identified in two

sections of document TRADE/WP.4/GE.2/R.102, paragraphs 35-38, which cover

import procedures, and paragraphs 90-93, which deal with documentary

requirements of a regulatory nature. The legal requirements which give

rise to these procedural and documentary demands can slow down

international trade, and it is important to study ways in which Customs

and regulatory bodies can share in the benefits of technological progress,

particularly in respect of the transmission of information by electronic

or other automatic means, within a legal framework. A quotation from an

earlier paper is worthy of repetition:

 

"Without law, there is anarchy, so that we must not sweep our regulations

away, but must modify them and bring them up to date."

 

3. The present study suggests ways in which this objective might be

achieved. It shows that the real concern of import authorities is with

identification of the goods and the commercial parties concerned,

verification of the nature and value of such goods, their origin and

correct classification and valuation for import clearance, and for health,

safety and technical standards purposes. A formal document--the Import

Declaration--has to be submitted at the point of importation by a person

who is legally responsible for import dues and the correctness of data and

goods. The demand for a declaration does not, in itself, usually pose

problems of trade facilitation. The problems centre on the requirement of

satisfactory supporting evidence, which basically can only be made

available at the point of exportation at or after the dispatch of the

goods; and with traditional documents, such evidence frequently cannot be

provided sufficiently quickly at the place where it is needed, i.e. at the

point of importation.

 

Import procedures and requirements

 

4. Import authorities concerned with the release of goods which have been

imported have many aspects to consider, and their requirements are usually

embodied in statutory form. Often, however, they are given fairly wide

powers under an act to frame detailed regulations. Such regulations

usually call for a formal document, an Import Declaration, to be given by

the importer or forwarding agent on his behalf. This declaration can take

different forms, depending upon:

 

     (i) the nature of the importation (i.e. goods for duty payment, for

     process/repaid

          and re-exportation, for deposit in warehouse, etc.);

     (ii) national requirements which may e.g. specify different forms for

     air/sea/postal traffic; or

     (iii) arrangements for groups of countries within Customs Unions or

     similar associations.

 

5. The main purposes of Customs declarations are to enable any duty, tax

or other charge payable on the goods to be assessed and collected, to

control the importation of goods with special regard to those which are

subject to national limitations, e.g. by the use of licence, quota or

other restrictions, or by outright prohibition, to control the grant of

relief from duty, and often to provide information from which trade

statistics are compiled. They also provide the basis for legal action to

be taken in cases of contravention of requirements. Because the Customs

declaration is required to fulfil so many different purposes, it often

becomes a complicated document, and it has to be accompanied by a variety

of supporting documents, such as a copy of the commercial invoice (or a

special Customs invoice), a value declaration, an import licence, a

certificate of origin or other document to support a claim for reduced

duty (or no duty). Responsibility for supplying the Customs declaration

and any necessary supporting documents rests with the importer of the

goods or his agent (Customs agent, shipping and forwarding agent, Customs

broker, etc.).

 

6. Information which is required for import declarations is collected by

the importer or his agent from a number of sources, and can be broadly

described under headings as follows:

 

(i) the goods

     - packages, description, value, quantity, origin

(ii) the parties involved

     - importer, consignor, agent

(iii) transport

     - mode and means of transport, place of loading and discharge,

     container number

(iv) special conditions

     - licence, quota, goods for warehousing

 

Some of this information can be obtained by the declarant before or

shortly after the goods have been dispatched by the exporter, from

commercial invoices, packing notes and bills of lading, particularly when

this information is transmitted as soon as it is available--for example,

commercial invoice data sent by telex, or transport document data sent by

computer link. Transport information is sometimes only available when the

goods actually arrive, and transit documents may often be carrier by the

drivers of international freight vehicles. Importers will be well aware of

special conditions once they have details of the consignment, and will be

responsible for ensuring that import licenses are available, and the

certificates of origin, health, etc., are coming forward as required. In

some cases importers are required to make provisional assessments of

charges payable.

 

Problems of supporting evidence

 

7. The requirement for an import declaration does not of itself create a

serious problem of trade facilitation, as the document can be prepared and

authenticated in the country of import for presentation at the place where

the goods are to be cleared. Naturally enough, difficulties can arise if

the document is not correctly made out. However, the regulations usually

call for additional supporting evidence to satisfy the import authorities.

The barrier to trade is more likely to be found in the added requirement

of presentation of supporting evidence, and its authentication and

verification.

 

8. Here it is possible to differentiate. Documents that travel with the

goods, such as ships' manifests or copies of transport documents, may be

inconvenient, but they do not pose major problems of facilitation. The

main documentary requirements which do pose problems are:

 

     - the commercial invoice, which often has to be signed and sometimes

     even further authenticated;

     - a Customs or a consular invoice, similarly signed and

     authenticated;

     - certificates of origin, signed and authenticated; and

     - special certificates of health, weight or other characteristics.

 

9. Much of the data content of this documentation is vital to import

authorities for efficient import clearance. It should be realized,

however, that the need is for identification, verification, classification

and evaluation purposes. The formal requirement of a paper document and

signature meets historic needs and has no doubt been fully justified, but

changing conditions demand a reappraisal of the needs. In any case, the

value of the document lies not so much in the paper itself as in the

information which it carries. The advantage of a paper document is that it

remains stable and can be a carrier of additional information without

losing its identity. Even though it may often be lacking in information or

may be partly incorrect, or even faulty, it retains its main

characteristics. The problem, however, is that a paper document does not

lend itself to speedy transfer of data.

 

Development of import procedures

 

10. In general, Customs will not release the goods at importation until

they have received the import declaration and have given their consent to

the removal of the goods. However, with recent changes in the methods of

transport of goods, roll-on/roll-off traffic, and containerized traffic,

Customs authorities have introduced various concessionary arrangements

which have been designed to speed up the removal of the goods from the

airport/port/frontier post, on presentation of simplified declarations,

with clearance of the goods taking place at inland sites when full

declarations are presented.

 

11. There has been an increasing tendency, particularly in the European

land- mass areas, to move Customs controls away from the port/frontier

post to offices inland, or indeed to the traders' own premises. The

ultimate aim of such removals is the replacement of physical controls by a

system based on the inspection of traders' accounts, subject to some

preventive checks when the goods actually arrive at the port or cross the

frontier.

 

12. The development of concessionary methods of treatment of imported

goods by Customs authorities has been extremely variable, and reflects the

different pressures to which the authorities have been subjected,

associated with aspects of natural geography, port placement and growth,

traffic flows and changes, trade requirements, and the ability of the

authority, within financial and other constraints, to redeploy resources

and adapt procedures. Allied with such changing attitudes has been an

increasing but equally variable willingness by Customs authorities to

participate in more novel methods of data and document transmission, by

computerized methods or facsimile transmission. Document

TRADE/WP.4/GE.2/R.81 (issued on 16 September 1976) exemplifies the diverse

approaches which authorities may make to a problem--in this case, the

acceptability of facsimile documents and signatures.

 

ADP considerations

 

13. Willingness on the part of Customs authorities to change from

traditional documentary procedures to electronic or other automatic

information exchange has been linked, to a certain extent, with the

problems of signatures and evidence. Two of the main requirements which

have been identified previously on the administrative or regulatory side

are:

 

(i) the need to secure the enforcement of legal requirements; and

 

(ii) the need to control the authenticity of documents.

 

The presentation of a signed declaration is a legal requirement which

embodies penalties for non-compliance, for errors of substance and for

fraudulent irregularities.

 

14. Most Customs authorities have a duty laid upon them to enforce the

legal requirements so as to protect the revenue against fraud and/or

under- declaration or under-payment of duty. In some cases, this requires

the provision of legal proof of an offense in the Court; and the absence

of a signed document has been regarded as an obstacle to a successful

prosecution. Legal opinion in some countries is now turning towards the

view that, whilst the signature of a document remains a desirable element

of evidence, its absence in other than absolute offence cases can be

compensated by other evidence.

 

15. It remains necessary, however, to ensure that, if traditional

documents give way to electronic or other automatic information exchange,

national judiciaries will admit information stored on computer in

evidence, and will accept that information stored in a computer is