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Coordinated border management: An inclusive approach

The Word Customs Organisation (WCO) has given the theme of ‘Coordinated Border Management’ (CBM) to the customs organisations world over for adopting this practice area during the year 2015. Current year’s focus is to initiate a commitment for improving trade facilitation between bordering countries.

By resorting to CBM, individual countries can easily move towards: (i) simplification of procedures; (ii) diversification of the resources for trade development; (iii) helping small and medium size enterprises; and (iv) identifying compliant traders. These efforts can effectively be directed to improve the existing environment of trade and investment in order to attract more investments from cross-border countries to increase the pace of economic development. This paper thus makes an effort to unfold the meaning of the theme in order to effectively contribute towards integrated trade facilitation efforts.

The term Coordinated Border Management (CBM) refers to a co-operative approach by border control agencies, both at the national and international level, in the context of seeking greater efficiencies over managing trade and travel flows, while maintaining a balance with compliance requirements.

Integrated border management is generally based on three pillars: intra-agency co-operation and co-ordination, interagency co-operation and co-ordination, and international co-operation and coordination.1 It can be made possible by developing (i) multiple agreements between the bordering countries by encompassing desirable integrated customs controls: and (ii) the automation of customs and other trade related documentation with mutual sharing of information via electronic transmission.

MANAGEMENT STRATEGY The laws fall into two categories: primary legislation, which refers to the Pakistan Customs Act, 1969 and secondary legislation, comprising of rules and procedures made within the framework of Customs law. In addition to the domestic laws, there are international conventions on customs.2 The customs service carries out specified activities related to border management.

The government and private agencies that originally engaged in border activities included the Customs Department,3 Rangers,4 Health Services,5 Veterinary Service,6 Provincial transport authorities,7 customs brokers; cargo carriers; and insurance companies.

The customs service retains many important functions, such as customs supervision and control; implementation of trade policy measures; insertion of appropriate records into travel documents; identification of movement of currency and other securities subject to monitoring; implementation of border measures connected with intellectual property rights; and sanitary laws. Customs control takes several forms: documentary checks, interviews, video monitoring, examination, laboratory tests, and post-audit activities.

An important task is that of human resources management and training since progress towards efficiency and integrity cannot be sustained without competent personnel. The ladder of integration on the continuum, from least to most integrated, has eight levels.8

1. Autonomous decisions taken by actors working on policy problems but on parallel and distinct tracks, information sharing and ‘letting one know what is being done?9

2. Systematic and mandated information sharing among multiple agencies.

3. The loosely coupled co-ordination of agency policies on a voluntary or semi-mandated basis.

4. Strengthening of operational co-operation among multiple agencies.10

5. The harmonisation of goals, standards and policies among different agencies.

6. To achieve common goals under a unified organisational management structure consisting of multiple organisations and actors.

7. Creation of organisational structure for facilitating the organisation on a common internal and external governance system, staffed by delegated officials from other agencies.

8. Autonomous organisations which are staffed by independently hired personnel which have the executive authority to carry out the given tasks.

These conceptions of integration raise the question, “what policy domains and tasks can and need to be integrated”. “What areas of activity have to be brought into a common framework for working together?”

Integration may focus on co-ordination of operations and tactics; to building inter-agency co-operation and co-ordination; common forms of capacity building, such as training or joint exercises; combining databases and developing the needed software and hardware; agreements in risk and intelligence assessments on what threats and vulnerabilities need to be assessed through a common methodology and seriousness scale; and integrity and accountability measures and policies.

Different tasks and policy domains may be harder or easier to integrate. For example, combining databases is largely a question mark, for that political agreement has to be reached, it then becomes easy, technical skills are to be improved and for that we need finances. Inter-agency co-operation requires a far more extensive set of reforms, such as changes in organisational cultures and administrative dynamics and practices.11

Plan implementationIn order to achieve these objectives many countries have entered into bilateral arrangements on joint use of border crossing points, on the use of specified land crossing stations, on alignment of passengers, vehicles and goods including the agreement on working hours at land customs crossing points, and on the details for electronic data exchange in respect of movement of passengers, goods and vehicles.12 These agreements facilitate the joint use of border crossing points, although these arrangements do not guarantee that border crossing will go smoothly for everyone.

In order to understand the emerging scene of mutual working, the process would work like this: “At the customs control zone of the country of exit, passport information and license-plate records are entered into a database system. Exit formalities involving drivers and passengers are conducted using this system, and information is recorded in their passports if necessary. There are customs formalities such as the presentation of a summary declaration and/or other documents or information related to the exit from the country. The data obtained through these formalities are also entered into the system. All the data collected by the country of exit are then transferred to the country of entry. Thus the co-ordination of Border Management between two countries leads us to an inclusive approach for connecting the shareholders”.

It is evident that role of automation is critical to the success of joint border management, because elimination, duplication and increased efficiency are dependent on effective automation. How it happens, it happens through the constant flow of electronic data in advance of the arrival of containers and vehicles, advance exchange of electronic data, and its mutual sharing. These arrangements result in : (i) effective service delivery, (ii) less duplication, (iii) const-savings through economies of scale, (iv) enhanced risk management, with fewer but better targeted interventions, (v) cheaper transport costs, (vi) less waiting times, (vii) lower infrastructure improvement costs, (viii) wider sharing of information, (ix) intelligence sharing, and (x) connectivity between stakeholders.13

These mutual arrangements at the shared borders are the outcome of a legal foundation and implemented through automation. The combination of technology with International co-operation produces amazing results.

Risk ManagementRisk management in customs is an important task for CBM, it is a systematic method of identifying, monitoring, analysing, and responding to risks involved in the customs clearance process to improve the effectiveness of border controls.

Different risk management systems are at work and there are global standards for the launching of such programs. In some countries they use authorised economic operators for the movements of people and goods. These authorised economic operators enjoy the benefit of using simplified customs procedures when sending their shipments: they can have their goods cleared by customs at border crossing points, defer their payments of fees, and use electronic versions of supporting documents.

To be eligible to become an economic operator, one must be law-abiding and have good tax histories. Specifically, such an applicants must be an enrolled value-added-tax payer, have imported goods having specified monetary value per year, have paid at least specified amount in customs duties or may have made 100 customs declarations per year, and have no record of serious customs offenses during a specified period.14

The approved operators are entitled to undergo simplified customs procedures when sending shipments: they can have their goods cleared by customs at border crossing points, defer their payments of fees, and use electronic versions of supporting documents. The privileges of this membership can serve as an incentive for more companies to obey laws and regulations in order to qualify. This, in turn, helps to reduce or eliminate commercial crime, and contributes to more effective risk management.

Another important component of risk management is development and implementation of a computerised customs system, which may help to calculate risk by: (i) identifying sources of risks, such as high duties, quantity controls, the demand for prohibited goods, and traffic; (ii) using existing databases and records on commodity and trader histories, and (iii) reviewing current procedures to identify weaknesses. The risk can thus be evaluated on the basis of degree of certainty of the risk and on the likely consequences.

Based on this information, customs agents can earmark specific consignments of goods for physical inspection. In many countries customs officers can conduct inspections at their own discretion, either because they suspect illicit activity or are conducting searches by random selection.

There are two main concerns for the business community: reforms of border-crossing infrastructure and improvement in regulations including efforts to stamp out corruption. Hence we need a regional approach to trade facilitation, with an integrated tariff policy and joint border management.

This process comprises of three phases namely, eradication of corruption, simplification of documentation and procedures, and extensive government investments for the radical improvement of country’s border and customs infrastructure.

Each of the three main areas of reform namely, corruption, border-crossing procedures, and development of infrastructure are interrelated. For example, strict border-crossing procedures and regulations are the source of many complaints from businesses, and are directly related to deficiencies in our borders related infrastructure:

Reforms are required to be made to make it possible for truck drivers, manufacturers, and customers to get their goods into and out of borders faster and more easily. These reforms are important for small and medium sized businesses. Large enterprises never worry about customs and border-crossing infrastructure, because they do not have to confront them directly on a personal level. But small and medium-sized businesses, which take care of their own transport, waste a lot of time in long queues at border crossing points.

These problems mainly concern trade policy, because one has to have free-trade arrangements with all its neighbours, although domestic producers may complain about unfair competition from imports. It may be remembered that prevalent restrictive practices in many countries may be categorised as informal trade barriers. The policymakers are requested to look into these restrictive trade practices. Apart from the border problems, transportation is even more problematic. Unfortunately there is very little communication among the transport authorities of our neighbouring countries.

It will be much easier for us to work with our major trading partners if we view the whole of Central Asia and the South Caucasus as an important economic corridor for our trade interests. After all, no matter how well the borders are managed, if there is no integrated tariff policy throughout the region, there will be no real development. Therefore, an integrated tariff system requires further investments in infrastructure by the governments of the region.

There should also be a greater emphasis on joint border management, as many countries have achieved it already. Indeed, there should be a joint approach to border issues in general, given the fact that joint border management already exists in other regions such as European Union and ASEAN.

Private sector PerspectiveAn important area in this regards is warehousing. Thus the regulations on operating a customs bonded warehouse for businesses are to be simplified. For example, there are many countries where individual business companies have their own customs bonded-warehouse. The same is true about Pakistan, but in other countries, the procedural simplicity is remarkable, for example, in some countries, when a cargo-loaded truck arrives at its warehouse, the company can make a report to customs and obtain clearance by computer.

After just a click, the customs website responds with a light. If it is a green light, the truck can be unloaded immediately; if it is red, the company has to wait for a visit by customs officials, who typically look at the newly arrived cargo and then authorise clearance. It is a boon to business that customs matters can be handled so easily and we have to proceed in that direction.

We have also to review the situation of the region’s train systems. The railways are very important because they are the future of transport system. Trucking is expensive, especially for example to Central Asia, so the railways will be the solution. But rail transport is not ready to take over the mantle just yet. There is a lack of connections between rail lines and other infrastructure; but, again, the biggest problem with railways is the lack of communication and co-ordination among countries in the region.

There are other considerations too, for example, employing modern information and communication technologies and of building appropriate infrastructure; including the merits of adopting advanced risk management techniques.

CONCLUSIONS We can find many examples of the benefits of interagency and cross-border co-operation, including increased movement of goods and services. The simplification of border procedures can certainly accelerate the government’s anti-corruption efforts, but in order to further reduce the malpractices, emphasis should be to conform to the Revised Kyoto Convention.

Reforms and changes require political will, and the political will helps in making investments in the modernisation of different customs services, and to introduce new and effective methods to extend support to businesses. Better results can be achieved by introducing comprehensive package of economic reforms, which can contribute to control corruption; improve tax collections; provide easy ways for doing business and contribute towards economic development.

Thus the government’s long-term macroeconomic objective should include:

1. A stable macroeconomic environment, backed by prudent fiscal, monetary, and financial policies;

2. The implementation of successful reforms, while building on existing success stories and accomplishments;

3. Fostering free and fair competition so as to establish a true level playing field for all businesses operating in the country;

4. Ensuring the greatest possible transparency and accountability in the public sector; and

5. Strengthening the social safety net to enhance the purchasing power of citizens.

(The writer is an advocate and is currently working as an associate with Azim-ud-Din Law Associates Karachi)

1 Mariya Polner, “Coordinated Border Management: From Theory to Practice,” World Customs Journal 5 (September 2011): 3. According to this source, “integrated border management” is the term favoured by the European Union, as opposed to “co-ordinated border management” (World Customs Organisation), “collaborative border management” (sometimes used by the World Bank), and “comprehensive border management” (Organisation for Security and Co-operation in Europe [OSCE]). The source notes that there are subtle differences in meaning without specifying what those are, but then says that they refer essentially to the same concept. OSCE, National Strategy on Integrated Border Management (Tirana: OSCE, 2006), 5. This OSCE document refers to integrated border management as “the co-ordination and co-operation among all the relevant authorities and agencies involved in border security and trade facilitation to establish effective, efficient and integrated border management systems, in order to reach the common goal of open, but controlled and secure borders.”.

2 International Convention on Harmonised Commodity Description and Coding Systems (HS Convention), 2009; Customs Convention on Containers, 1999; International Convention on Mutual Administrative Assistance for the Prevention, Investigation and Repression of Customs Offences (Nairobi Convention), 2009; International Convention on the Harmonisation of Frontier Controls of Goods, 1999; Convention on International Transport of Goods under Cover of TIR Carnet (TIR Convention), 1994; Convention on the Contract for the International Carriage of Goods by Road (CMR Convention), 1999; and the Istanbul Convention on the Temporary Admission of Goods, 2010.

3 Controlled by the Ministry of Finance

4 Controlled by the Ministry of interior

5 Controlled by the Ministry of Health

6 Controlled by the Ministry of Agriculture

7 Controlled by the Provincial Governments

8Otwin Marenin, Challenges for Integrated Border Management in the European Union, Geneva Centre for the Democratic Control of Armed Forces (DCAF), (2010).

9 Through quite frequently arranged informal meetings.

10Such co-operation be encouraged and on bilateral basis integration should take place for working together.

11 The steps relate to recruitment, training and career development.

12 For example such arrangements already exist between Georgia and Turkey, see CAREC document, “At the Border and Behind the Border “(2014)

13 See the statement of WCO’S Secretary General, Kunio Mikuriya, dated November 25, 2014; he announced that 2015 will be dedicated to promoting co-ordinated border management.14 Id.

Zafar Azeem, "Coordinated border management: An inclusive approach," Business recorder. 2015-01-22.
Keywords: Economics , Economic aspects , Economic issues , Economic policy , Economic planning , Economic reforms , Human resources , Customs law , Tariff policy , Foreign investment , Macroeconomics , Taxpayers , ASEAN , OSCE , WCO