International trade is the mainstay of world economic growth and development. Socio-economic ties generated through international trade guarantee our world's peace, stability and security. The role of customs administrations in creating a conducive environment for cross border movement of goods, services and people, is vital. This role however entails considerable, and at times contradictory, demands. On one hand is the need for effective security of international supply chains, and on the other, a rising demand for greater facilitation of legitimate trade of goods and services. Ambitious aspirations for trade facilitation always need to be balanced with pragmatic security concerns. World Customs Organization's selected theme for this year i.e. "A secure business environment for economic development" reflects the need for this balance.
While ensuring physical safety of the global supply chain is critical, it is the threats emanating from within the trade that pose a greater challenge. Some examples of this challenge are; terror financing through trade money, cross border movement of illicit substances which pose threat to human health and safety and monopoly practices which do not allow small and medium business entities to sustain. The term 'secure' accordingly needs to be interpreted in a much broader way than done typically and so does the custom's role. It is no more about securing borders through physical presence but pre-empting highly sophisticated ways of violating the multilateral trade rules. Organized networks engage in illegal activities such as the evasion and avoidance of duties and taxes; cross-border fiscal fraud; the smuggling of drugs, dangerous, harmful and prohibited goods; money laundering; and trade in counterfeit goods. Ways and means adopted for the execution of such frauds are often so elusive that customs administrations all over the world face an uphill task to detect and prevent them. This is due to modernization of communication and transport methods and technical innovations. Business models keep changing rapidly all over the world. Just-in-time distribution, low inventory retention and multi-modal transport are resulting in innovative methods of moving goods across borders. Fast moving information and communication technology has virtually transformed the way business transactions take place. New strategies and skills are therefore required by the customs administrations to effectively cope with these developments.
Pakistan customs recognized the need for devising new strategies and equipping its work force with new skill sets quite early. Accordingly, an aggressive drive to modernize customs procedures and train customs officers and officials in necessary skills was started about a decade ago. This resulted in end to end automation of customs operations at most customs stations including major ports and dry ports. An indigenously developed customs clearance system commonly known as WeBOC (Web based One Customs), provides the platform for almost 85 % of international trade taking place from Pakistan. This system is equipped with Risk Management System (RMS) that functions on the basis of profiling to minimize risks associated with customs clearances through automated system.
A major step forward in the journey towards achieving international standards of trade facilitation is Pakistan's commitment to implement WTO' s Electronic Single Widow Environment framework. This environment is meant to provide a single window access to users so that they can meet all regulatory requirements for conducting international trade electronically at one stop shop. Since WeBOC is envisaged as the main pillar of this system, Customs is uniquely placed to spearhead Pakistan's journey towards becoming a modern player in the international economic order.For the development of Pakistan's National Single Window Environment in a systematic and structured manner, broad based recommendations have already been framed. Foremost is to achieve political support and commitment at the highest level of the Government with effective monitoring, timelines and resource allocation. Pakistan Customs has so far been able to do that and it has been recognized as the lead agency for implementation of National Single Window in Pakistan. Federal Board of Revenue has constituted a Project Team for Single Window implementation. The alignment of legislation and risk management criteria of all regulatory agencies is also an important prerequisite. Pakistan Customs needs to adopt a proactive approach for upgradation of WeBOC system and to engage all stakeholders for the requisite business process re-engineering to build an efficient, fully-automated, transparent and predictable facility for handling country's international trade.
Another major milestone for Pakistan Customs towards ensuring a secure environment for international trade is to lay down the framework for Authorized Economic Operators (AEO).According to the World Customs Organization, an authorized economic operator is:
"a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with WCO or equivalent supply chain security standards. Authorized Economic Operators include inter alia manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses and distributors"
The introduction of the Authorized Economic Operator status will result in Customs making a distinction between two categories of goods flows i.e. goods from certified enterprises, and goods from non-certified enterprises. Customs administration can then offer specific facilities to certified enterprises. The holders of an AEO permit can have fewer physical and document inspections. They can receive priority if selected for an inspection and even examinations can be carried out at a specific address outside customs stations when the holder so requests. According to WCO guidelines, holders of a Security and safety permit or a combined Customs Simplifications and Security and safety permit can receive advance notification of inspections and will be required to submit fewer data in summary declarations. Since AEO Security and safety permits are recognized by several other countries, Pakistani exporters can also benefit from this facility. All of these are huge steps towards trade facilitation. More importantly however, the framework for Authorized Economic Operators is meant to ensure that multilateral trade channels are secure. There is therefore a need for a more focused effort by Pakistan Customs in this direction.
WCO's secretary general in his international customs day message has highlighted that economic development is only possible if a fair and equitable business environment is available to all players in the field. He states:
"By "secure," we mean an environment that is enabling, safe, fair and sustainable, all wrapped into one. Such an environment will help businesses, especially micro, small and medium-sized enterprises (MSMEs), to expand their activities and create incentives for them to participate more fully in international trade, as well as encourage them to innovate, generate employment and invest in human resources, thereby boosting economic growth and raising living standards."
Secretary general's statement is a reiteration of the fact that protection from unfair international trading practices such as the smuggling of goods, under-invoicing, origin fraud, tariff misclassification and intellectual property rights (IPR) infringements is a pre-requisite for a robust economy. In addition to its traditional role, Pakistan customs has also been at the forefront of devising strategies and policy frameworks to curb unfair practices in multilateral trade. One example of this is the creation of Directorate General of IPR for enforcement of IPR laws at the import and export stage. This directorate is the centralized contact office of FBR for IPR related national and international organizations, trade and industry. The Trade Related Aspects of Intellectual Property Rights (TRIPS) is one of the three pillars of WTO and include Copyright, Industrial designs & IC layouts, Trade Marks, Patents, Geographical indications etc. Establishment of this Directorate shows Pakistan Custom's resolve to implement international laws and best practices which ensure free and fair trading practices.
As the world celebrates international customs day, Pakistan stands at a pivotal moment in its economic history. China-Pak Economic Corridor (CPEC) and its ancillary projects bring us the means to place Pakistan prominently at the map of multilateral trade. More importantly, they provide us with an economic opportunity to eliminate poverty and forge an irreversible developmental path. Pakistan Customs celebrates the international customs day and its slogan of providing 'secure business environment for economic development' with this national vision. (The writer holds a PhD degree in international trade law from UK).
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