Customs 'must become more nimble and innovative'

Industry News | | MIC Customs Solutions |

Customs systems cannot rest on their laurels with better connectivity making the world ever-smaller, one expert has said.

Trade and the customs landscape has changed considerably over recent decades, and one expert has insisted it must continue to do so if new global challenges are to be faced and dealt with. But how is this possible at a time when the world is becoming ever-more connected and its people therefore expect seamless and near-instant interactions?

Here, we'll take a closer look at the issues customs authorities are facing and how reform might need to look going forward.

New comments on customs innovation

Speaking this month at a hearing of the European Union's Wise Persons Group on Challenges Facing the Customs Union, deputy director-general of the World Trade Organization Anabel González stated this is a time of upheaval for customs authorities.

She said that not only the COVID-19 pandemic, but also rapid technological developments, geopolitical tensions and climate change are combining to make the role of customs "increasingly complex".

As customs officials are expected to do more and more, Ms González said new practices need to be brought in that are "nimble, innovative and forward-looking" enough to face future obstacles, with a key focus on better coordination with other agencies, improved use of technology and more cooperating with developing nations.

Finally, she highlighted the WTO Agreement on Trade Facilitation as a useful framework when it comes to modernizing customs in future.

EU takes steps towards reform

Although it is seen as one of the most advanced customs unions in the world, the European Union is currently taking steps towards reform with the afore-mentioned 'Wise Persons Group'. This was created in September 2021 and consists of 12 members tasked with developing innovative ideas to drive growth in trade.

It is hoped that it will be able to advise member states on how to better manage agile and robust customs processes when it delivers its report later this year, with key areas likely to include e-commerce, risk management, the growing range of non-financial tasks and future governance structure.

Given that many nations are facing similar challenges, it is hoped that this in turn will provide ideas on reform for other customs unions.

Why reform?

Traditionally, customs has been seen as a process that simply facilitates the flow of goods and services across borders and collects duties and taxes. However, its administrators are increasingly being required to carry out a greater range of activities.

As mentioned above, the globalization of supply chains, a move to just-in-time manufacturing and the enormous boom in e-commerce have all meant customs authorities have to expand to become faster and more efficient if they are to avoid slowing down transactions and holding up global trade.

There are also more free trade agreements in place than ever that affect the movement of goods, as well as greater concern for the environment that may result in new environmental treaties with an impact on customs in future.

And that's not to mention the ongoing effects of the pandemic, which shone a spotlight on the importance of being able to move essential medical, IT and food supplies across borders in an emergency.

Clearly, trade facilitation is going to be critical to continue to weed out outdated customs procedures, inadequate legislation and poor cooperation between nations in an 'always-on' society.

As the World Bank points out, simplifying, modernizing and harmonizing export and import processes could also be key in helping countries "build back better" from COVID-19 and ensure they have what's necessary to battle any future upheaval.

Past successes

Customs reforms are not a new idea, with a host of countries having undertaken them over the years to varying degrees of success.

The Kyoto Convention was established in 1974 as a way of simplifying customs procedures, for example, and was overhauled in 1999 to better reflect the growing speed of e-commerce and IT development.

Another big change came in 2008, when the European Parliament passed legislation on an electronic customs initiative to allow customs documents to be transferred online. Customs reforms have resulted in improvements such as online single window systems, 'trusted trader' programs, risk management tools, electronic platforms for customs filing and many more aspects of modern trade management that we take for granted today.

Even the most advanced customs unions accept that customs is a continuous process that must constantly change to work with the tools it has and the circumstances with which it is faced.

However, this has arguably been never more so than in the 21st century as we emerge from a pandemic that has changed our world forever.

As the World Customs Organization states: "It's no longer business as usual.  Now, more than ever before, there is a need for customs administrations to be more responsive. The new and emerging challenges demand a more proactive and action-oriented approach and support for the development of modern customs in partnership with all stakeholders." 

More work will undoubtedly need to be done to determine how this will translate for customs administrations around the globe, and how the customs reforms the WTO hopes to see can continue to be successfully carried out going forward.