One of the European Government’s concerns is to facilitate trade while also securing import and export procedures. Currently, customs, Value Added Tax(VAT), and duty are all handled separately, although the data is nearly identical. Customs administration using electronic means is seldom regarded as inventive as product design or factory automation (Heijmann et al., 2020). It is mostly related to managerial operations, document filing, several data inputs on paper, and forms handled electronically. Additionally, organizations are obliged to stay current on legislation and trade agreements. Governmental efforts assist firms by improving trade procedures, streamlining technological processes, and promoting information interchange. The European Commission’s Multi-Annual Strategic Plan (MASP) gives an outline of the procedural aspects of the innovation-development process for the MASP (Heijmann et al., 2020). The e-government paradigm is among the outcomes of the European Community Treaty.
MASP’s primary mission is to communicate the vision, goals, strategic framework, and milestones for the electronic customs effort, which will include all member nations. This European electronic customs initiative’s primary objective is to develop a single, window-based system to streamline government infrastructure (Heijmann et al., 2020). This unified approach would reconcile both the disparate systems and rules. Additionally, via computerization, the export implementation procedure would be sped and input mistakes would be reduced, allowing both government and private sector entities to interact more quickly and efficiently. The governments of many European nations want to establish a standardized common electronic customs system to strengthen their infrastructure, not only for data interchange with enterprises but also for internal communication. Currently, European Union customs offices interact by telephone, email, and fax, as well as via regular meetings.
The introduction of electronic customs systems will improve trade facilitation in terms of speed and centralized clearing. Pace is becoming more important in business and trade when it comes to transactions and marketing. Time is a significant cost component that influences a business’s competitiveness (Heijmann et al., 2020). Nowadays, businesses seldom have the space to keep the hundreds of different components that comprise complicated commodities such as computers, automobiles, and airplanes. Rather than that, they use regional warehouses from which they dispatch just-in-time goods as required. When the warehouse gets a delivery order, the items may be dispatched expeditiously. Modern customs processes must be as paperless and computerized as feasible. This enables the improved organization of just-in-time delivery and a reduction in storage expenditures.
Moreover, one-stop shopping and centralized clearing would significantly ease trade: the importer would then need to contact a single central customs office to fulfill all requirements, including Value Added Tax. A collaborative platform would allow all essential agencies and stakeholders to have access to critical data in a centralized and timely manner (Heijmann et al., 2020). This would benefit small and medium-sized businesses in particular, which face significant regulatory constraints. When businesses enter new markets for the first time, having a single point of contact simplifies the process significantly. Additionally, for state authorities, one-stop customs clearance would be advantageous as it will enable rapid and accurate determination of whether all papers have been delivered.
In 1974, the World Customs Organization drafted the International Convention on the Simplification and Harmonization of Customs Procedures, referred to as the Kyoto Convention. The Kyoto Convention was signed in Kyoto, Japan, and became effective in 1975. It was revised in 1999 to take into account improvements in business speed as well as advancements in information technology (Heijmann et al., 2020). The provisions of the Convention provide signatory countries with both impetus and a master plan for their attempts to modernize their customs systems in the coming years.
Among the fundamental principles of the new Kyoto Convention and relevant to the changes is that customs laws should be made more transparent, simple, standard, and unified. There are several ways to achieve this, including the publication of customs rules and regulations online, streamlining paperwork through the use of electronic platforms, and implementing risk management tools for customs inspections to differentiate between the highest risk goods and lower risk cargo (Heijmann et al., 2020). In 2005, the World Customs Organization (WCO) confirmed the principles contained in the revised Kyoto Convention in the Framework of Standards to Secure and Facilitate Trade.
The amended Kyoto Convention includes provisions to enhance commerce by eliminating nontariff measures (NTMs) at border crossings. These advantages translate to not only fewer data requirements and shorter customs processing times but also more predictable release periods for commodities for businesses. Aside from that, signing the Convention is a useful way for nations to communicate to their trading partners that they are committed to complying with global customs standards (Heijmann et al., 2020). Additionally, greater imports and customs revenue, improved foreign direct investment, lesser trade costs, and an increase in the gross domestic product are all possible outcomes of this policy.
Many nations have sought customs reforms per the principles set in the amended Kyoto Convention. Developed nations, to be specific, have taken the lead in enacting institutional changes that minimize customs ineffectiveness, promote clarity, and diminish the potential for corruption by customs personnel. The automation of customs documentation is a critical component of institutional change. For instance, the European Parliament enacted legislation in 2008 establishing an “electronic customs initiative” to ease the online exchange of customs declarations across European Union nations (Heijmann et al., 2020). The aims of the Act included improving data flow between European Union countries, accelerating import and export activities, reducing administrative costs connected with customs procedures, shortening clearance times, and enabling the correct collection of customs duties.
To support the reform strategy’s execution, improvements will be required to computer systems, the structure and management of the customs administration, its recruiting and training policies, and the services it seeks to deliver. A concerted attempt to make major improvements in all of these areas will result in a new method for the customs administration to operate. For instance, one cannot just deploy computerization and expect the customs administration to modernize. Similarly, restructuring the organization and incorporating it into an independent revenue body would not provide the outcomes anticipated from a significant reform.
A significant change in a customs agency should be purpose-driven and phased in. It should always be borne in mind that when significant changes are planned and implemented, the administration’s usual operations must continue. A prudent technique for implementing procedural reform is, to begin with, a pilot office; this allows for testing, evaluation, and modification of the modifications before they are introduced in other customs offices. In many nations, the objective is to execute changes that have the biggest financial effect; as a result, changes are often phased in beginning with the offices that earn the most income.
References
Heijmann, F., Tan, Y. H., Rukanova, B., & Veenstra, A. (2020). The changing role of Customs: Customs aligning with supply chain and information management. World Customs Journal, 14(2), 131-142.