Customs Administration Research Articles

Customs Administration: Novation of 2019

In the World Bank’s latest “Doing Business – 2020” rating, the Russian Federation is rated again the 99th as regards the “Trading across borders” line, while in the overall rating Russia moves steadily upwards from year to year, having attained the 28th place.2 However, 2019 saw important IT-related changes in customs clearance procedures of Russia’s customs administration.

A Study on the Construction Method of HS Item Classification Decision System Based on Artificial Intelligence

Industrial Revolution means the improvement of productivity through technological innovation and has been a driving force of the whole change of economic system and social structure as the characteristic of technology as the tool of this productivity has changed. Since the first industrial revolution of the 18th century, productivity efficiency has been advanced through three industrial revolutions so far, and this fourth industrial revolution is expected to bring about another revolution of production. In this study, the demand for the introduction of artificial intelligence(AI) technology has been increasing in various business fields due to the rapid development of ICT technology, and the classification of HS(harmonized commodity description and coding system) items has been decided using artificial intelligence technology, which is the core of the fourth industrial revolution. And it is enough to construct HS classification system based on AI technology using inference and deep learning. Performing the HS item classification is not an easy task. Implementation of item classification system using artificial intelligence technology to analyze information of HS item classification which is performed manually by the current person more accurately and without any mistake, And the customs administrations, customs offices, and customs agencies, it is expected to be highly utilized in the innovation of trade practice and the customs administration innovation FTA origin agent.

CUSTOMS AFFAIRS IN THE CONDITIONS OF COVID-19

Background. The COVID-19 pandemic declared by the WHO in March 2020 have significantly affected almost all sectors of economy and life spheres, including the imple­mentation of customs affairs. Introduced changes in the trade and customs policy of count­ries of the world, legislative changes and quarantine measures have affected the activity of the customs authorities of Ukraine, which requires a separate study. Analysis of recent researches and publications has shown that the published up to date papers aren’t systematic and can’t claim to be a complete analysis of the problems and challenges related with the impact of the COVID-19 pandemic on customs affairs at the WCO level and in Ukraine. The aim of the paper is to analyze the WCO measures and the implementation of cus­toms affairs by the customs of the State Customs Service of Ukraine in the conditions of the COVID-19 pandemic. Materials and methods. General scientific methods such as the systematic approach, theo­retical generalization and comparison, analysis and synthesis have been used in the research. Results of the research. Globally, the WCO and partner organizations have develop­ped measures to achieve the balance between combating the spread of COVID-19 and ensuring continuity of supply chains. The quarantine measures introduced in the world and in Ukraine have affected the activities of the customs authorities of the State Customs Service. At the first stage, 94 checkpoints across the state border and points of control were temporarily closed, 38 of which remain closed till now. The total number of vehicles passed through the customs border of Ukraine in January-September 2020 compared with 2019 decreased by more than 2 times to 6.7 million units. The largest reductions were fixed for road, air and river transport. The total volume of customs declarations of the MD-2 form decreased by 5.7%. However, the number of other customs documents, according to which goods are sent in international postal and express shipments, has significantly increased. Conclusion. In the conditions of the COVID-19 pandemic, the WCO focused their attention of customs administrations on taking the necessary measures to protect customs personnel who in direct contact with citizens and carriers when crossing borders. The mea­sures introduced in Ukraine in connection with the spread of COVID-19 have affected the activity of the customs authorities of the State Customs Service. However, the customs officials carried out customs formalities promptly and according to the current legislation and international treaties of Ukraine.

Effectiveness and Efficiency of Artificial Intelligence in Boosting Customs Performance: A Case Study of RECTS at Uganda Customs Administration

The artificial intelligence (AI) revolution has great economic potential for customs operations. Indeed, some have already hailed AI ‘the new oil’ since it has become a resource for businesses to streamline processes. This may be an imperfect analogy, but it does capture the excitement and high expectations surrounding the AI-driven economy. AI is a sub-field of computer science that enables intelligence exhibited by machines. For example, in the East African community, the Regional Electronic Cargo Tracking System (RECTS) is used to monitor cargo in transit from Mombasa in Kenya through Uganda to Rwanda and now in the Democratic Republic of Congo (DRC). This has transformed transit cargo management through deterring of dumping and diversion of transit cargo in real time. Previously, cargo would sometimes, if not most of the time, go unaccounted for while in transit, which caused government revenue leakage and business losses. This paper examines the global standards and actions in the uptake of AI for trade facilitation in smoothing customs operations. This study looks at how the uptake of AI has affected customs administration in terms of transit management and security of cargo as well as trade facilitation, which greatly reduces the cost of doing business by the private sector. Based on the study findings, the paper offers several recommendations for policy makers, including undertaking Private Public Partnerships (PPP), integration of RECTS with other Customs systems, well-planned change management and developing a pool of AI experts in Customs.

How Can Customs Better Leverage Emerging AI Technologies for More Sustainable and Smarter Operations?

Technological innovation is happening at a faster pace than ever before, creating new opportunities as well as challenges for many industries. This research paper aims to contribute to the efforts deployed by many customs administrations to leverage artificial intelligence (AI)–driven technologies in order to support smarter operations and efficiency. It makes recommendations to identify the organisational processes that could benefit from AI and machine learning (ML)–based initiatives. The result of this paper is a set of practical frameworks coupled with technical, organisational and policy recommendations, which form a coherent business innovation kit to assist customs administrations to successfully start or scale their digital transformation journey.

Customs Capacity Building Through Partnership in Customs Academic Research and Development (PICARD): Achievements and Future Directions

This paper discusses how the World Customs Organization (WCO) has been cooperating with the academic community in the context of the WCO Partnership in Customs Academic Research and Development (PICARD) program, in order to enhance the capabilities and professionalism of customs administrations and customs experts through higher education and to better inform strategic customs decisionmaking through applied academic research. It discusses key PICARD initiatives and achievements and seeks to determine whether the PICARD program has met its objectives and fulfilled stakeholders’ expectations. It also addresses the program’s future directions and considers how it can continue to keep pace with the rapid changes affecting Customs, and how it can be further developed and enhanced for the benefit of all stakeholders.

The Changing Role of Customs: Customs Aligning With Supply Chain and Information Management

The World Customs Organization (WCO) Framework of Standards to Secure and Facilitate Global Trade (SAFE) introduced concepts of supply chain supervision and authorised operator schemes. While it has been implemented in many countries, supply chain supervision still requires further exploration and development. In this article we present a vision on how the role of Customs could change in the coming years, taking into account innovations in supply chain management and information technology. We present how the Customs Administration of The Netherlands adapts their supervision, based on these innovations. The innovations range from the data pipeline to collect extra data to cross-validate customs declarations, the use of big data and data analytics, new advances in detection technology, handheld apps to check goods and drones to support surveillance.

If Algorithms Dream of Customs, Do Customs Officials Dream of Algorithms? A Manifesto for Data Mobilisation in Customs

Governance by data is a growing global trend, supported by strong national public policies whose foundation is open data, artificial intelligence and decision-making supported by algorithms. Despite this trend and some technical advances, Customs face obstacles in deploying ambitious data use policies. This article describes these challenges through recent experience in some Customs administrations and considers the technical and ethical issues specific to all law enforcement agencies in the context of customs missions, to open paths for research and propose policy recommendations for a better use of customs data.

BURDEN OF PROOF OF CUSTOMS VALUATION DISPUTES IN INDONESIAN TAX COURT

In applying the burden of proof of customs valuation disputes in the Indonesian tax court, some judges place the burden of proof to the importers, while others distribute the burden of proof to the customs administration. So, the legal problem that occurred in this study is regarding a different interpretation in applying the burden of proof. To solve that problem, it is necessary to research how the burden of proof applies in Tax Law through a comparative legal approach and research on how customs law regulates the burden of proof through a statute approach on WTO law and Indonesian customs law. The research results lead to one conclusion that the burden of proof can be shifted to companies or taxpayers if they cannot complete the evidence and documents required by tax or customs administration. However, the provision regarding the burden of proof for customs valuation is not clearly regulated in Indonesian Customs Law. Furthermore, the different interpretation in distributing the burden of proof among the judges is caused by the doctrine of freedom of proof based on tax court procedural law.

Optimization of the customs bodies’ communications as an instrument to facilitate transport flows in the Siberian region

The purpose of this paper is to disclose the mechanism for reproducing the communication optimization model of the customs authorities of the Siberian Customs Administration, which ensures the prompt elimination of contingencies in the operation of software operated by the customs authorities, which in turn will ensure compliance with customs operations and reduce the amount of downtime (delays) of transport funds. Methods of research that will let to achieve this goal are the analysis and experiment of a model for optimizing communications. This paper presents a practical implementation of the model for optimizing communications of the customs authorities of the Siberian Customs Administration, which allows considering an effective approach to eliminating emergency situations in the operation of software and ensuring compliance with the deadlines for customs operations. In connection with the launching of the Siberian Electronic Customs, in the region of activities of which the entire declarative mass of the Siberian region will be concentrated by 2021, the process of implementing a communication model under the conditions of the creation of the Siberian Electronic Customs is being considered. The statistical data of the filed declarations of goods to the customs authorities of the Siberian region for 2016 - 2019 are analyzed. It helps determiming the share of the load for each official working with declarations of goods and contingencies.

The Impact of Internal Business Processes on Competitiveness of Hotel Accommodation Business in Rwanda

The purpose of this study was to investigate the impact of internal business process on the competitiveness of hotel accommodation segment in Rwanda. The target population was 120 with a sample size of 92 workers of Serena Hotel in Kigali. The respondents were stratified into two classes to be specific officials accountable for execution contracting and heads of offices to be specific; ICT, Human Resource Management, Finance, and Customer administration. A poll was utilized as primary instrument for information accumulation. The study utilized both essential and optional information, where surveys were utilized for information gathering. Information gathered was processed through Statistical package for Social Sciences (SPSS). Out of the 92 overviews offered out to the examined respondents, 72 examinations were done and returned. This response rate of 78.2% was viewed as high for appraisal. As shown by Baruch and Holtom (2008), 52.7% is the average level of response rate from a survey of several social science studies satisfactory for evaluation and hypothesis of the outcomes. The study recommends that for an organization to have a significant impact in its industry and gain competitive edge over its competitors, it will have to be aggressive with its internal business processes. The hotel accommodation business mainly thrives on these alongside other variables for success and the capacity to reinforce these strategies with put the organization ahead. This is also practical as many clients are retained through positive experiences with all departments in the hotel. Majority (84.6%) of the respondents indicated that their organization strives to improve quality as part of its internal business mechanisms to gain competitive advantage. Again, majority (90. 5%) of respondents indicated that the organizations certifications are trusted worldwide and as a result many customers are confident doing lodging with the hotel. Further, majority (84.3%) or respondents indicated that the organization provided quality service to its customers as part of its internal business drive to maintain its clients and gain a competitive advantage. While a lower proportion expressed confidence in the organization’s tendering process, overall, the respondents rated the organization’s internal business perspective very highly.

Identifying the value of data analytics in the context of government supervision: Insights from the customs domain

eCommerce, Brexit, new safety and security concerns are only a few examples of the challenges that government organisations, in particular customs administrations, face today when controlling goods crossing borders. To deal with the enormous volumes of trade customs administrations rely more and more on information technology (IT) and risk assessment, and are starting to explore the possibilities that data analytics (DA) can offer to support their supervision tasks. Driven by customs as our empirical domain, we explore the use of DA to support the supervision role of government. Although data analytics is considered to be a technological breakthrough, there is so far only a limited understanding of how governments can translate this potential into actual value and what are barriers and trade-offs that need to be overcome to lead to value realisation. The main question that we explore in this paper is: How to identify the value of DA in a government supervision context, and what are barriers and trade-offs to be considered and overcome in order to realise this value? Building on leading models from the information system (IS) literature, and by using case studies from the customs domain, we developed the Value of Data Analytics in Government Supervision (VDAGS) framework. The framework can help managers and policy-makers to gain a better understanding of the benefits and trade-offs of using DA when developing DA strategies or when embarking on new DA projects. Future research can examine the applicability of the VDAGS framework in other domains of government supervision.

Civil War, Institutional Change, and the Criminalization of the State: Evidence from Guatemala

The relationship between war and state formation is a central topic in the social sciences. While scholarship on interstate war posits that conflict triggers extractive processes that build the state, research findings on the effects of intrastate war are more mixed, often suggesting that civil war inhibits extraction and induces state decay. This study, however, posits that the negative relationship between civil war and revenue extraction is not underpinned by institutional destruction but by the wartime introduction of undermining rules that structure behavior in ways that subvert taxation. To illustrate this claim, it traces the evolution of undermining rules within the customs administration at the height of the Guatemalan armed conflict. As the perceived escalation of the insurgent threat created institutional ambiguity, newly empowered political-military elites implemented alternative procedures for capturing customs revenues, which systematically undermined the state’s extractive capacity. Comparing this case with one of reinforcing rules that bolster extraction, I posit that the broad or narrow nature of the rule-making coalition explains divergent paths of wartime institutional development. Overall, this study uncovers the inner workings of the counterinsurgent state and illustrates how civil war dynamics induce processes of institutional change that can have long-term effects on state performance.

FOREIGN EXPERIENCE IN THE APPLICATION OF CUSTOMS INFORMATION TECHNOLOGIES

Purpose. The aim of the article is research of foreign approaches to the formation and functioning of information technology in the field of customs. Methodology of research. The theoretical basis of the study is international regulations, scientific works of domestic and foreign scientists on the functioning of customs information technologies, official websites of customs administrations. The main results of the study are obtained through the use of a dialectical method of cognition of phenomena that have a legal and economic nature and relate to approaches to the use of information technology in the implementation of customs procedures. In addition, such research methods are used as: analysis and synthesis – when reviewing the latest trends in research; abstract and logical – to form conclusions from the study. Findings. The main advantages of the use of customs information technologies in the field of state customs are outlined. The main provisions of international normative legal and instructive acts are analysed. The example of Singapore and the United States reveals the evolution and functioning of IT systems in the activities of customs services. It is concluded that the focus of Singapore's customs information systems on the simplification of foreign economic activity, in contrast to the US Customs and Border Service, where security accents of IT systems prevail. Originality. The study of foreign experience in the formation and functioning of customs information technologies is further developed, in particular, the recommendations of the World Customs Organization in this area are analysed and the main directions of development of customs information technologies are outlined on the example of Singapore and the USA. Practical value. The obtained results of the research can be used in the practical activity of the divisions of the State Customs Service of Ukraine, the competence of which includes the issues of introduction and practical use of customs information technologies. Key words: customs service, information technologies, customs risks, TradeNet system, World Customs Organization, Kyoto Convention, security, customs procedures.

A framework for voluntary business-government information sharing

Over the last few decades, businesses have developed sophisticated information systems that allow the capture of vast amounts of data. Such data can be potentially useful for enabling government authorities to improve their processes and services. For example, access to business documents and track and trace information associated with supply chain activities is of great interest to customs administrations. Such information holds the potential to make customs risk assessment processes more efficient and effective and to enable faster clearance of goods crossing borders. Businesses, however, are often not willing to voluntarily share information with the government beyond what is strictly mandated to be shared by law (e.g. submitting customs declarations). There is only limited academic research and a general lack of understanding amongst practitioners about how voluntary business-government information sharing can be achieved. In this study, we present a framework to analyse the barriers, drivers, and enablers of voluntary business-government information sharing and the governance processes that make such voluntary information sharing possible. Our analysis shows that voluntary business-government information sharing can succeed when there are strong drivers and a government agency willing to take the lead in initiating the process.

Recasting the Bureau of Customs as a Developmental Agency

This paper estimates that 40 centavos out of every 1 peso in potential revenues is lost to corruption in the Philippine Bureau of Customs. Ending the “corruption finance” propagated through tax leakages in the BOC could be good in and of itself for the country, but international evidence and experience suggest that our customs agency has the potential to become much more relevant to the broader economic development agenda. It could very well be the vanguard of trade facilitation for the country, by simplifying and harmonizing international trade procedures, and thus also lowering the costs and the “friction” of moving goods across our borders. This paper reviews some of the governance issues surrounding customs administration; and it also discusses the possible developmental role of this agency.

The Role of Selectivity Criteria for Effective Post-clearance Audit (PCA): Bangladesh Perspectives

The Post-clearance Audit (PCA) is being used by the Customs administrations across the world to facilitate trade as well as to reduce revenue evasion. As a limited number of declarations or entities need to be audited, the selectivity criteria for identifying the riskiest ones for conducting PCA is of utmost importance for the effectiveness of audit. A wrong selection for audit will be counterproductive. That is why, this paper will examine how the selectivity criteria impacts the PCA.
 The WCO and WTO have advised the administrations to utilise the PCA mechanism to enhance cross-border trade. The Revised Kyoto Convention (RKC) of WCO and the Trade Facilitation Agreement (TFA) of WTO have focused on systematic use of PCA rather than examining every imported consignment at the ports. Therefore, the PCA assists the authorities expedite clearance of goods, while, at the same time, ensures plugging leakages and, finally, enhances collection of duties and taxes at the import stage. 
 Moreover, the PCA also creates opportunities for the authorities to catch tax evaders in future as the results of PCA may further be used for the proper implementation of Risk Management (RM) mechanism. Effective RM helps single out the risky consignments and facilitate clearance of the low risk consignments. So, if the selectivity criteria for PCA are not properly set, both the PCA and RM system will be adversely affected, ultimately paralysing the revenue administration of a country thereby reducing its economic competitiveness.
 This study will scrutinise the existing selection procedures for PCA with qualitative analysis. Due to lack of availability of reliable data, the author interviewed some of the main stakeholders and the Customs and VAT officials to analyse the mechanism for identifying the loopholes and prospects of the PCA initiative.
 Furthermore, this paper will not only help the administrations to set the selectivity criteria for PCA, but also assist the administrations to redesign their existing PCA selectivity system.

An analysis on the policy evolution of cross-border ecommerce industry in China from the perspective of sustainability

The rapid development of China’s cross-border e-commerce has largely benefited from the support of industrial policies. This paper adopts social network analysis and content analysis, builds an analytical framework from the four dimensions: policy time, policy document type, text subject, and content theme. We conduct a quantitative analysis of 81 cross-border e-commerce industry policy texts from 2008 to 2018, and systematically reveal the characteristics of China’s cross-border e-commerce industry policy system, including document structure, subject network and content theme, as well as the time trend of those characteristics. The results show that China has initially established a cross-border e-commerce industry policy system with reasonable text structure and relatively concentrated themes, which covers all business links of the cross-border e-commerce industry ecological chain. Among them, four departments, including the Ministry of Commerce, the General Administration of Customs, the Administration of Taxation and the Ministry of Finance, are at the core of the cooperation network on industrial policy issuance. Customs management, foreign exchange receipt and payment, business pattern, tax administration, credit management, inside and outside coordination are the most concerned themes of cross-border e-commerce industry policy system during 2008–2018.

Applying analytical procedures for performance audit of customs authorities

Subject. The article considers the development of a set of methods and indicators of economic analysis, which can be used for performance audit of customs authorities, using the Volga Customs Administration case. Objectives. The aim is to justify the use of analytical procedures to rank the effectiveness of customs payments for the purpose of performance audit of customs authorities. Methods. We employ general scientific methods of research, i.e. dialectical and monographic methods, logical analysis, comparison, as well as the Euclidean distance method. Results. We reviewed works by Russian and foreign scholars on the history of customs audit development and internal financial control of customs authorities, gave scientific credence to attributing the system of customs payment and performance to the indicators of economic activity of customs authorities. Due to the lack of methods for assessing the performance of customs authorities, the use of analytical procedures during the performance audit seems to be a promising area. Conclusions. When verifying the scientific hypothesis put forward in the study, we established that the introduction and development of the ranking system for the performance of customs authorities related to the collection of customs duties can contribute to effective financial audit of customs authorities in general.

Modern Trends of Customs Administrations Formation: Best European Practices and a Unified Structure

Abstract The ambiguous trends in international trade in 2019 and the forecast for 2020 enhance the functional role of the customs bodies in every country. That is because the customs system largely determines the ease of conducting international trade, the security of international supply chains and economic development of the countries. Though many developed countries have been able to form progressive customs systems, there are still countries that are in the process of reforming customs administrations and require a unified conceptual approach to build their customs systems. Given this fact the goal of our study is to analyze current trends in the development of the international customs systems and on the basis of it to identify the main and support functions of customs administration. Based on the principle of the best practices, the countries with the best customs administrations according to WTO data, i.e. France, Germany, the Netherlands, Lithuania and Poland were selected for analysis. We analyzed the positions of these countries in the leading international rankings, the key quantitative indicators of their customs activity and the peculiarities of the organizational construction of the customs authorities by functional principle. As the result, based on the use of systematic, dynamic and topologically substantive approaches and results of research, we developed a unified conceptual structure of the customs administration. In particular, the main functions (i.e. control, security and fiscal) and support functions (i.e. regulatory, administration, communication, service, information and statistical subsystems, resource support subsystem and international cooperation) were proposed. The proposed structure is intended to be used by representatives of the customs authorities in different countries throughout the world.