Maintaining commitments to customs integrity in the supply chain during the Covid-19 pandemic
A keynote speech given to the World Customs Organization Integrity Sub-Committee by John Bescec, Chair of the ICC Global Customs and Trade Facilitation Commission
Thank you, Mr Djeuwo, and thank you for the invitation to address the Integrity Sub-Committee today.
As the world’s largest business organisation that represents more than 45 million companies in over 100 countries, the core mission of the International Chamber of Commerce, ICC, is to make business work for everyone, every day, and everywhere – even during a global pandemic.
ICC values its longstanding cooperation and partnership with the World Customs Organization and as Chair of the ICC Global Customs and Trade Facilitation Commission, it is a great honour for me to address this Sub-Committee today.
I have been asked to speak about how Customs Integrity in the Supply Chain can be maintained during sustained emergencies, such as the global health crisis we have been living through these past years.
I will focus my remarks around three priorities.
Clearly, the Covid-19 pandemic has caused massive disruptions.
To operations, regulations, human resources and – of course – supply chains.
In times of big uncertainty and with sometimes improvised processes during a crisis, there is an increased risk for illicit practices and corruption.
That is why, in 2020, ICC issued the Guidance on Integrity for a resilient response and rebuild after Covid-19.
It pointed out that with major customs delays, there is an increased risk for corruption and that maintaining the integrity of supply chains should be a priority for all.
We are, unfortunately, clearly not past Covid-19 and we need to think about how to protect the integrity of supply chains in the long-term.
This pandemic has transformed the way business keeps goods and services flowing – and probably for the long-term.
Building resilient global supply chains is what will help maintain customs integrity, even during times of crisis.
So, how do we achieve that effectively? I want to give you three priority areas.
The first principle should be trust. It takes two hands to clap. We need strengthened cooperation between the public and private sector.
To ensure the integrity of customs, both, the public and the private sector need to work together.
We have seen many companies and customs authorities work together closely during the height of the pandemic.
For instance, the fluctuating volumes of shipments made it difficult for customs authorities to plan ahead properly in terms of having the right number of staff available.
So, some companies shared their forecasts with customs authorities and that helped them significantly to better prepare and avoid further backlogs.
There are many cases in which companies have worked together with customs authorities to simplify processes and also short-term solutions such as reduced inspection levels.
That is why ICC considers Authorized Economic Operator programmes very valuable.
They encourage customs authorities and companies to work together.
By being a compliant AEO, companies can establish trust with customs authorities and ideally, they should also receive trade facilitation benefits from being part of the programme.
We have recently submitted an ICC input to the SAFE FoS review, focusing on how to make AEO programmes work better – by building on the trust that has been established when becoming part of AEO programmes.
Secondly, a priority we should focus on, that will help ensure customs integrity is – digitisation.
Transparent digital procedures have the potential to increase effectiveness, but not only that, digitisation also helps to remove human error as well as reduce discretionary power.
Enabling paperless trade is one core ICC priority and we have established the Digital Standards Initiative to drive it forward.
Through the DSI, we are promoting policy coherence and the harmonisation of digital trading standards for the benefit of businesses, governments, and people everywhere.
To achieve this priority, we need to create legal frameworks that allow for meaningful digitisation of paper-based processes and documents.
One solution is the widespread adoption of the UNCITRAL Model Law on Electronic Transferable Records (MLETR) that ICC is actively advocating for.
We are only at seven countries that have adopted this model law that could enable the use of electronic records and documents for domestic and cross-border use.
If we want to help customs maintain integrity during times of crisis, we need governments to take action and create enabling legal business environments.
Third: we need to improve harmonisation and the coherent implementation of standards and guidelines.
That is why we see the WCO as a crucial partner – your core mission is to enhance the effectiveness and efficiency of Customs administrations worldwide.
And this has to go hand in hand with customs digitisation.
We have the WTO Trade Facilitation Agreement that could unlock substantive economic growth for countries that implement it.
It is estimated that a complete implementation of trade facilitation measures arising from the WTO TFA could reduce trade costs by 16.5% for low-income countries, by 17.4% for lower middle income countries, by 14.6% for upper middle income countries, and by 11.8% for OECD countries.
And this is just one example, in times of crisis, the WCO has the Guidelines to Chapter 5 of the Specific Annex J of the Revised Kyoto Convention as well as other instruments that if implemented effectively, the effective functioning of customs offices can be ensured and moreover it would help maintain the integrity of Customs offices that are the connectors of global supply chains.
The quick reaction of the WCO during the crisis, for instance by creating the Harmonized System (HS) Classification reference for COVID-19 medical supplies helped ensure that cross-border trade and more importantly the shipment of medically essential goods could be secured.
To wrap up:
The WCO is integral to help maintain customs integrity in times of crisis and ICC is committed to continue the engagement with this Sub-Committee as well as others that help keeping cross-border trade flowing even during emergencies.
We are also working closely in other related fora, such as the WTO, to drive these priorities forward.
Business has a commitment towards integrity, and we couldn’t be more honored to address this Sub-Committee today to underline our commitment.