IMPROVEMENT OF CUSTOMS REGULATION: FORMATION OF THEORETICAL FOUNDATIONS OF THE DIGITAL CUSTOMS INSTITUTE BASED ON APPROACHES OF THE WORLD CUSTOMS ORGANIZATION

Sergei Mozer

РУССКИЙ

Sergei MozerPh.D. at law

Deputy Head of Division of Advanced Customs Technologies, Department of Customs Legislation of the Eurasian Economic CommissionContact Person for Communication with the World Customs Organization.

Senior Researcher in the Research Institute of the Russian Customs Academy.

e-mail: moser@teloneum.net

Webhttp://customs-academy.net/?page_id=10398

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Published: Problems of Economics and Legal Practice. — № 4 (August). — 2019. — pages 182-191. © S.V. Mozer, 2019

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Abstract

Purpose

Investigate the existing approaches of the World Customs Organization (WCO) to improve customs regulations to form the theoretical foundations of the legal institution of digital customs.

Design/methodology/approach

The presented article reveals the current issues of the development of the digital customs institution in the WCO. Based on a study of the working materials of the 2015 WCO Policy Commission, the author classifies proposals and visions for the creation of digital customs. This classification is recommended as groundwork for the subsequent creation of the theoretical foundations of the analyzed institution of customs law.

Practical meaning

The classification given in the article of topical issues of digital customs formation, as well as corresponding explanations, are a matter of interest to the work currently underway at the Eurasian Economic Commission to create a legal concept for digital customs in Eurasian Economic Union (EEU) Member states.

Social implications

The introduction of the digital customs institution into the law of the EEU and customs regulation in general is aimed at optimizing customs operations and simplification of trade procedures.

Originality/value

The research material is based on an analysis of the practical aspects of the WCO activities and is one of the first publications in the EEU on digital customs issues within the framework of the WCO activities.

Keywords: The World Customs Organization, the WCO, the Eurasian Economic Union, EEU, the Eurasian Economic Commission, EEC, WCO Policy Commission,  e-Customs, digital Customs,  customs regulation, customs administration, international customs law, customs.

         Today there are no fundamental theoretical studies that formalize, disclose, characterize the institution of electronic or digital customs in the framework of customs regulation in the theory of international, administrative and customs law. In order to organize the work of the Eurasian Economic Commission Expert Group on the Preparation of the Initial Document «On the development of approaches to the formation of digital customs» we have studied a significant array of scientific publications on the development of the electronic customs institution. If we take the Russian segment of science in the field of customs, then, as a rule, such studies are carried out in the fairway of the normative regulation of the Federal Customs Service, and the conclusions and recommendations, with rare exceptions, do not appeal to the foreign experience of customs administration or the legal instruments and tools of the World Customs Organization in this area. In turn, the scientific developments of the digital customs institute are practically absent.

         We do not argue categorically that external approaches and proposals for the development of the institution of electronic or digital customs are necessarily ideal. We proceed from the thesis that for the formation and modernization of this institution, it is necessary to refer to the existing variety of legal instruments, approaches, opinions, positions, options that are offered by the international customs community in the analyzed area. And with this in mind a man can form own standard, model, including a regional model, concept, program of measures for the development of the institute of digital or electronic customs. It should be emphasized that the Member States of the Eurasian Economic Union (hereinafter — the EEU), as part of the improvement of customs administration, are developing the institution of electronic customs, but not digital. Other things do not follow from the analysis of regulatory legal acts of the Customs Administrations of our countries, the working materials of the EEC, as well as analytics in the media.

         Despite this circumstance, at the expert level, there is an understanding that electronic customs is an evolutionary stage preceding digital customs, smart

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customs. Moreover, each of the stages is characterized by a set of features, characteristics, decisions — legal, organizational, technical, technological. In this context, a number of questions arise. For example, in the Strategy for the Development of Russian Customs until 2030, should we talk about «electronic» or «digital customs»? It may be convenient not to notice the separation of the mentioned evolutionary stages and to put forward the thesis that electronic and digital customs are one and the same phenomenon. For otherwise, serious work will be required to introduce appropriate changes, at least at the regulatory level. And, maybe, that the «play of words» is simply not costly, despite the fact that back in 2014 еhe World Customs Organization (hereinafter referred to as the WCO) raised the issue of creating a digital customs institution.[1] In our opinion, most of the issues could be resolved if there were fundamental theoretical developments, a theory of law, where the legal institute of electronic and digital customs is considered. Unfortunately, such complex theoretical and practical studies are absent with some exceptions.[2]

         These circumstances determine the relevance of this article.

         In a previously published research material[3] we have classified topical issues of the Digital Customs Institute in the WCO. We need to remind that the issues raised to improve customs regulation were considered at the level of the WCO Policy Commission (hereinafter — PC) on December 7- 9, 2015 in Punta Cana (74th meeting). The mentioned classification is a group formed by the author (21 points) of opinions, approaches, and visions of high-level experts at a PC meeting on specific topics as part of a study of the formation of a digital customs institution in the WCO Member States. Among them are the problems of the conceptual apparatus, the digitalization of customs, as a result of the digital revolution, as a phenomenon and process; customs and digital customs; practical aspects of the implementation of the digital customs institute; management mechanism, customs administration in the context of the development of digital customs; Customs operations (business processes) within the framework of digital customs; risk management system (RMS) and digital customs; subject composition of legal relations within the framework of digital customs, etc.

         In order to develop the theoretical foundations of the digital customs institute, which is an important instrument for improving customs regulation in the EEU Member States, let us examine in detail each of the selected elements in the complex.

  1. Conceptual apparatus. Analysis of the materials of the sessions of the Policy Commission allows to conclude about the approaches to the formation of the conceptual apparatus of digital customs.

We need to note that the conceptual apparatus is a logically built system of special terms, which makes it possible to uniformly interpret and understand the interrelationships and processes formed in science.[4] In any study, in our opinion, it is important to determine the exact interpretation of any term that carries a clear, fixed meaning.[5] The concept is one of the basic forms of human thinking, which reflects in general the essence of the phenomena and objects of the real world around us, distinguishing among them both general and specific features, and reinforcing the experience gained in definitions.[6] In our case, this term is «digital customs». We believe that before holding discussions on topics that reveal the content of digital customs, the definition of «digital customs», which contains a clear fixed meaning of this phenomenon, is crucial. Despite the fact that this question was not touched on deeply at the meeting of the Policy Commission, we selected the following approach from the entire abundance of materials, which somewhat later will allow us to form definition variants:

Digital Customs is a comprehensive enabler that helps bring together various key and emerging customs issues on the WCO agenda, such as e-commerce, performance evaluation and information exchange[7].

Let’s note that for this case, digital customs is a means that actually combines the current issues of customs administration, which are on the WCO agenda. For example, if we appeal to the words of the WCO Secretary General, voiced at the 74th meeting of the Policy Commission, the term «digital customs» can be interpreted as a means that among other things concerns (1) change management, (2) administrative-legal (organizational) issues the functioning of modern customs, and (3) the use of digital technologies.

It is also important to understand that digital customs is not 100% identified with information communication technologies as well as with the instruments and tools developed by the international customs community in the area of ICT. At the same time, in a conceptual context, there are no answers to the question of digital customs as a system, and what elements form it. Thus, it goes on formation of approaches to the formation of the conceptual apparatus of digital customs in the context of the functioning of various WCO working bodies.

  1. Customs digitization. The delegates of the Policy Commission having discussed the problems of digitalization of modern customs raised the issue of interconnectedness and ways to bridge the digital divide. In their opinion, digitalization should be considered as part of an «integrated customs» system. At the same time, Digital Customs constituted a means, rather than an end in itself, and the aim should not be to digitalize the existing bureaucratic processes, but to review them first in order to achieve the best possible result.[8] In other words, we

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are talking about the optimization (reengineering) of business processes of modern customs.

In management theory, the term digitalization is used in different meanings. According to T. Serykh, digitalization is the use of breakthrough technologies that transform operational processes and business models by replacing or supplementing a person based on the use of advanced analytics, artificial intelligence, mobile and wearable devices, robotization and integration technology platforms.[9] The same author believes that digitalization involves a continuous process of improvement and transformation of the business (in our case, customs regulation — author’s note) through the search, piloting and implementation of new breakthrough solutions.

  1. Borovkov divides three main terms: automatization, digitalization and digital transformation of business. According to him, (1) automation is the transfer of «as it is» processes existing in the business to the base of computer calculations, electronic storage and data exchange. In turn, (2) digitization is a change in the company’s business processes «as it should be» in such a way that they more closely match the new tools and technologies of the digital economy. Finally, under (3) the digital transformation of business should be understood as changing the entire business model: strategy, processes, organizational structure, finance, sales, and logistics in order to make the most effective use of the opportunities of the digital economy.[10]
  2. Tarasov points out that digital transformation means, above all, new business processes, organizational structures, regulations, regulations, new responsibility for data, new role models. He believes that the key process of digital transformation is strategic data management.[11]

A decision is considered to be digital if it is based on one of the following technology groups:

  1. Advanced analytics (advanced analytics and big data).
  2. Artificial intelligence (for example, computer vision, speech interface).
  3. Robotization (robots and drones).
  4. Mobile and wearable devices (mobile solutions, wearable technologies, for example, electronic customs seals).
  5. Integration technology platforms (industrial Internet of things, cloud technologies, electronic interaction and social networks, accelerated / quantum computing, blockchain.[12] Let’s pay attention that the resulted technologies can, both supplement the person, and to replace him. The first relates to advanced analytics technologies as well as mobile and wearable devices, and the second is related to artificial intelligence and robotization.[13]

If this is transferred to the customs administration language, then the process of digitization of customs, and even more, the creation of a model of digital customs, requires the study of the following elements in one coordinate system:

  • Application of breakthrough (digital) technologies.
  • Transformation of operational processes (customs operations).
  • Optimization of business processes (customs operations).
  • Business models.
  • Advanced analytics.
  • Artificial Intelligence.
  • Mobile and wearable devices.
  • Integration technology platforms.
  • Model of digital customs and its variants.

We believe that the approaches outlined in the presentation of T. Serykh on digitalization should be interpreted through the prism of the formation of the institution of digital customs. In particular, it is possible to single out the following success factors in digitalization for customs:

  1. Building a flexible and efficient management system in customs according to the methodology of flexible management of digital projects.
  2. Effective involvement of customs officials who work directly «on the ground (land)» and the spread of innovative culture within the customs.
  3. Development of a digital ecosystem in the customs service: building a system of work with various ecosystem participants within the framework of customs legal relations.

Note: the terms «ecosystem» and «platform» are united by the general term «technological habitat», in which the user can create for himself a friendly environment (technological, instrumental, methodical, documentary, partnership, etc.) for himself, to solve classes of tasks.[14]

  1. Development of new competencies in the field of modern (breakthrough) digital technologies:
  • Advanced analytics.
  • Artificial Intelligence.
  • Mobile and wearable devices.
  • Integration and technology platforms.[15]
  1. Application of new organizational and management approaches:
  • Create a dedicated organizational unit for managing digital transformation.
  • Design thinking.
  • Flexible integration approaches to project implementation.
  • New approaches to the development and support of solutions.
  1. Attraction, retention, motivation and development of digital talents (creation of values and culture aimed at attracting, retaining and motivating other types of customs officers).
  2. Generalization of ideas, development and implementation of initiatives:[16] the creation of a working group (advisory body) at Customs administration on issues of its digitalization.

 

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  1. Customs (customs administration) and digital customs. The delegates who participated in the session of the Policy Commission reviewed the use of new technologies, including from the point of view of customs, and not from the point of view of IT. For this case, we are talking about the management system in customs and personnel matters.[17] Nevertheless, this circumstance gives grounds to single out the customs (customs administration, customs business) as a separate group of issues within the framework of the formation of the digital customs institute.

For reference, we note that in a narrow sense, customs administration means a set of methods and means of ensuring compliance with the measures of customs and tariff regulation and the prohibitions and restrictions associated with the movement of goods and vehicles across the customs border.[18] Today this term[19] is not used in the law of the Eurasian Economic Union. However, in the studied context (without going into scientific discussions) for this case, we combine this term, including with the activities of the Customs authorities in the field of customs regulation, which includes establishing the procedure and conditions for the movement of goods across the Union’s customs border, their location and use in the customs territory of the Union or outside its borders, the procedure for performing customs operations related to the arrival of goods into the customs territory of the Union, their departure from the customs territory of the Union, temporary storage of goods, their customs declaration and release, other customs operations, the procedure for making customs payments, special, anti-dumping, countervailing duties and customs control as well as the regulation of power relations between Customs authorities and persons exercising the rights of possession, use and (or) disposal goods in the customs territory of the Union or beyond.[20]

The next important issue that concerns customs (customs administration) is the need to develop a methodology for evaluating the effectiveness and, accordingly, indicators of the effective operation of digital customs. This topic was indirectly addressed at the 74th meeting of the Policy Commission in the framework of the discussions of delegates.

In other words, the recommendations of the international customs community are a matter of interest, for example, in terms of organizing customs management through the prism of the digital customs institution as well as relevant indicators that characterize it.

To date, there are no methodological, scientific and practical developments of international experts in the analyzed field. And we believe that work in this direction should be intensified at least through the WCO Information Management Subcommittee, followed by communicating the results of work to the Permanent Technical Committee, the Policy Commission and the WCO Council.

  1. Management mechanism, customs administration in the context of the development of digital customs. A separate set of issues that drew the attention of delegates to the 74th meeting of the Political Commission is the governance mechanisms in the context of the formation of the digital customs institution. In publications on the digitalization of the organization, first of all, they recommend conducting a comprehensive study. The manager needs to possess information about the impact of new conceptual approaches and technologies on business processes in the framework of digitalization. You need to know the current capacity and capabilities, the results of work that require changes as well as the target state of the organization at which the desired results can be achieved.[21] The gap between current capabilities and the target state is transformed into a «road map» that can be realized based on business and operating priorities.

According to R. Sivaraman, a number of questions arise in the process of digitalization:

  • the subjects that initiate the digital transformation;
  • what can be achieved through organization digitalization;
  • digitalization goals; digitization of business processes is a digital project or something more;
  • where to start; those responsible for conceptualization and implementation;
  • where is the organization today in terms of opportunities;
  • what can be done independently, and in what cases the involvement of external specialists is required;
  • how to ensure the flexibility of large ecosystems;
  • how to take advantage of the technological evolution associated with the layers of technical architectures, while avoiding the trap of proprietaryity?[22]

Since customs is an organization with its own management mechanisms, the listed topics, in our opinion, can be viewed through the prism of the organization of its activities. Returning to the meeting of the Policy Commission, we list some interesting theses on this area of customs digitization:

With the formation of the digital customs institute, the WCO Member countries will be able to revise the customs development strategy in the organizational and operational plan.

Customs administrations should develop in the direction of digital customs, and in terms of automation, customs should keep pace with economic operators.

The introduction of the digital customs institute contributes to the rapid customs clearance of goods as well as the prompt resolution of issues related to the law enforcement activities of the Customs authorities.

In addressing the development of digital customs, all issues related to the use of advanced technologies need to be addressed with the active participation of customs officers and individuals who are responsible for the organization’s policy issues, not just IT specialists.

The management of the digital customs development process should be carried out not by an IT specialist, but by an executive who has experience in the customs field.[23]

The creation of digital customs involves the study of government experience in the use of technology when interacting with economic operators.

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As part of the formation of the digital customs institute, the issue of public-private partnership should be considered to address the problem of ICT acquisition (with limited financial resources).

Customs administrations need to consider developing new business continuity plans.

The Global Customs Network (GNC) plays an important role in the development of the digital customs institution. It allowed the development of global standards that facilitate the creation of digital customs.

An important aspect of the formation of the digital customs institution is change management. For reference: in the theory of management, «change management» means the ability to conduct them in adequate time, achieve goals, reduce resistance to change, increase the adaptation of workers to them. In a strategic context, «change management» means the inclusion of permanent changes in management practices so that they become familiar and expected for all organization staff, and their temporary absence would be alarming and disturbing.

  1. Customs operations (business processes) in the framework of digital customs. We call the positions of the delegates of the Policy Commission for the modernization of customs operations (business processes) in the framework of the development of digital customs as no less interesting and important block. Among them are the following:

         It is necessary to revise customs operations in view of the development of advanced information technologies.

         The technology should not be considered as the only solution to the problems of customs administration.[24]

         Before automating existing customs operations (business processes), an analysis is required of whether this process is really needed in its current form, or it can be simplified, or be abandoned altogether. In our opinion, this thesis is successfully matched with the concept of optimizing (reengineering) business processes as part of building a «single window» mechanism.

         The formation of the digital customs institute involves the optimization of customs operations (business processes).

         Customs administrations have different goals when introducing automation or information technology.

         In modern conditions of development of customs regulation, the harmonization of customs operations within the framework of customs digitization is an important direction in the development of customs affairs.

         The high costs and complexity of providing funding for upgrading systems and automated customs operations (business processes) are one of the challenges for the development of the digital customs institution.

         Effective automation of customs operations (business processes), includes «single window», Time Release Study, risk management and information exchange.

         Creating a digital customs involves the formation of a long-term vision of an automated electronic design system.

         Improving customs administration in the framework of the development of the digital customs institute provides for the use of Data mining to determine the objects of control.

         The improvement of customs operations (business processes) within the framework of customs digitization should take into account the development of the institution of electronic payments and digital signatures.

         When performing customs operations using ICT, it is important to pay attention to flexibility and individual approach in the provision of services.

  1. Risk Management System and digital customs.

The risk management system along with the «single window» mechanism is associated with automation (customs operations).

For risk management purposes, you must use big data. In this context, the issues of information management and its optimization are relevant.

  1. Subject composition of legal relations within the framework of digital customs. To understand digital customs as an integrated legal phenomenon, it is very important to determine its scope, which includes, among other things, the composition of the subject. In our opinion, digital customs is not just ICT. The analysis of the WCO materials leads to the conclusion that it is also a mechanism, an environment, an administrative regime in which various participants in customs legal relations are covered as well as spheres of state regulation in the context of customs administration. Accordingly, to build a digital customs model, it is necessary, as noted above, to determine its scope. Among the positions voiced by the delegates of the Policy Commission on the subject of the composition of the subject, we highlight the following:

The creation of digital customs involves interaction with government and foreign trade operators, especially when it comes to single-window projects.

The existence of interconnection and exchange of information between the Customs administrations concerned is an important element in the construction of digital customs.

 Interaction with operators and public authorities can be carried out through mobile technologies.

There should be no legal restrictions on the transfer of data by other government agencies, such as tax authorities.

Speaking about the scope of digital customs, one cannot turn to the experience of the Eurasian Economic Union as well as the customs bloc of the Eurasian Economic Commission, whose experts, with the active participation of the EEU Member states, have developed a reference model for a «single window». So, in 2015 An Action Plan was prepared for the implementation of the Main directions of the development of the «single window» mechanism in the system of regulation of foreign economic activity. This document defines the scope of the reference model.[25]

 

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The reference model of the national «single window» mechanism (hereinafter — «reference model») is a tool to simplify international trade procedures in order to optimize public procedures related to foreign economic activity, and to create  conditions  for  carrying  out  electronic  transactions  and e-commerce. The reference model is intended to ensure the transition to a qualitatively new level of development of the national «Single Window» mechanisms to create conditions to reduce the transaction costs of persons engaged in foreign economic activity and providing services in this area and to reduce administrative costs in the work of state authorities of the Member States regulating foreign economic activity.[26]

The reference model applies to:

1) spheres of state regulation: the sphere of customs, foreign exchange, tax, customs and tariff, non-tariff and technical regulation, the sphere of application of sanitary, veterinary and sanitary, phytosanitary quarantine measures, the sphere of regulation of financial services (banking, insurance), transport and transportation, safety and protection of intellectual property rights;

2) types of activities: foreign trade, activities for the provision of transportation and logistics services, financial services (banking, insurance) as well as activities in the field of customs affairs;

3) subjects:

state authorities of the Member States: in the field of customs, taxation, customs and tariff and non-tariff regulation; state authorities of the Member States:

issuing permits related to foreign economic activity, transport control, sanitary, veterinary and sanitary, phytosanitary quarantine control (supervision), control (supervision) over compliance of technical regulations, export, radiation, foreign exchange and other forms of state control;[27]

organizations authorized to issue permits, including chambers of commerce, certification bodies and testing laboratories (centers) performing the work in the field of assessment (confirmation) of compliance with technical regulations of the Union;

interested persons: legal entities and individual entrepreneurs engaged in foreign economic activity; persons carrying out activities in the field of customs affairs (customs agents (brokers), customs carriers, owners of temporary storage warehouses, owners of customs warehouses, owners of free warehouses, owners of duty free shops); Authorized Economic Operators; freight forwarders, logistics companies, carriers, express carriers; administrations of air ports, road and rail border crossing points; banks and insurance companies; patent organizations (patent attorneys), postal operators and other organizations.[28]

As it can be seen, the definition of the scope allowed the EEC experts to clearly identify the circle of subjects and legal relations with their participation, the spheres of state regulation as well as the types of activities. We believe that a similar approach can be indicated either in the Digital Customs Concept.

  1. Instruments used to support digital customs. According to the Ozhegov Explanatory Dictionary, an instrument is a tool, a method used to achieve something.[29] In our case, by instruments we mean the means used to ensure the functioning of digital customs or, in a different way, the realization of the concept of digital customs development.

Among the instruments that were announced at the 74th meeting of the WCO Policy Commission in the context of digital customs, we single out a «single window» (at the national and regional level), Data model, Big data, Data mining, Cloud storage, Risk management system, Mobile phones. To the instruments used to ensure the functioning of digital customs, we certainly include breakthrough information and communication technologies.

  1. Technologies promoting development of digital customs in the system of customs administration. By information technologies we understand the processes, methods of searching, collecting, storing, processing, providing, distributing information and ways of implementing such processes and methods.[30] Accordingly, under the customs information technology should be understood the same elements (phenomena) in the framework of customs relations. It should be noted that customs operations can be performed using information systems and information technologies of customs authorities, declarants and other interested parties as well as information systems of state bodies of Member states in the framework of information interaction.[31] We add that the information systems of the customs authorities contain an ordered set of documented information (databases, other arrays of information), which is called the information resources of the customs authorities.

Among the abstracts positioned by the delegates of the WCO Policy Commission on the use of perspective information technologies within the framework of the Digital customs institute, we highlight the following:

             WCO Member countries do not have the same level of development or equal access to information technologies.

             Digital technologies and instruments are now part of the working life of people and their social life.

             The technology cannot be considered as the only solution to the problems of customs administration (regulation).[32]

             New technologies are both an opportunity and a problem in terms of interconnectedness.

             Mobile technologies (and their applications) in the field of customs administration should provide access to the whole range of services; among their

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characteristics — great flexibility and individual approach to the user, the ability to quickly interact with the customs networks.

The purpose of mobile technologies is to ensure the convergence of Customs authorities with economic operators and government authorities that control foreign trade operations.

The WCO delegates identified hot issues of digital customs within the framework of information customs technologies.

(1) the use of analytics and artificial intelligence;

(2) development of the «single window» mechanism;

(3) automation of customs operations;

(4) remote data processing at the border;

(5) remote control;

(6) interoperability of technology;

(7) the use of mobile ICT applications to connect customs departments on customs administration issues through mobile phones;

(8) the use of laptops by border officials;

(9) the use of seals, tracking device to detect and track goods being moved;

(10) scanners;

(11) unmanned aerial vehicles;

(12) biometrics and face recognition technology;

(13) new technologies in the field of customs administration related to security.

Information customs technologies should be introduced into the system of customs administration, primarily from the point of view of the organization of customs, and not from the point of view of IT.

The organization of work (management) in customs on the application of ICT should be an executive who has experience in the customs field, and not in the field of information technology.[33] It follows that information customs technologies are derived from the control mechanisms at the customs, the tasks assigned to the customs service as well as customs operations (business processes) administered by the customs.

When developing information technologies (for customs purposes) it is necessary to hold consultations with large IT companies on how technologies can be used in solving various customs tasks. It is very important to combine knowledge and know-how.

  1. Single window and digital customs, their relationship and correlation in the field of customs regulation. In the framework of the 74th session of the Policy Commission, the issue of applying the «single window» mechanism in the context of the formation of the digital customs institution was raised. Until now, there are no scientific and practical judgments about the ratio of digital customs and single window in the system of regulation of foreign economic activity. For example, matters of interest are the answers to the questions: what comes first, and what comes second (digital, electronic customs or the «single window» mechanism)? Is digital customs a «single window» mechanism, but only within the framework of customs legal relations? If yes, then why they limit the understanding of digital customs (as a complex phenomenon) by means of its relation to ICT? Turning to the practical aspects of the meeting of the Policy Commission, let us list the delegates’ theses on the analyzed issue :

         The «single window» is an important project in the context of the formation of the digital customs institute.

         The «single window» is a technology that already exists and is available to many Customs administrations of the WCO Member states. It is important to create a «single window» environment at both the national and regional levels.

         Today, areas that use effective automation include «single window», risk management and information exchange.

         Regional integration, including the adoption of a regional «single window», may not be suitable for all WCO Member countries or all regions.

         When forming the institution of digital customs, developers may face a lack of political will and financial constraints (the «single window» precedent).

  1. Supply Chain Security of goods and the institution of authorized economic operator. One of the important problems which was paid attention to at the meetings of practically all working bodies of the WCO is the Supply chain security of goods. The session of the Policy Commission was not an exception. Discussing the development of digital customs, delegates called on the international customs community to focus on digital trade at a broader level, covering the entire supply chain of goods. As part of the discussions, the issue of the development of the institution of an authorized economic operator was raised. Among other things, the question was raised of the general relationship between the Trusted Operators (AEO) programs, the exchange of information and the necessary support for capacity building development.
  2. Regional integration and digital customs. The subject of creation of digital customs touched upon the issue of regional integration. In particular, the delegates of the Policy Commission stressed that in the context of the Global Customs Network (GNC) it is important to develop a strategy that would allow all Members of the region to participate in regional integration. As noted above, GNC plays an important role in the development of the digital customs institution and allows for the development of global standards that facilitate the creation of digital customs. In addition, representatives of the WCO drew attention to the harmonization of data at the regional level, and also discussed the development of the «single window» mechanism at the regional level.
  3. Legal issues of the organization of the functioning of digital customs. Formation of the digital customs institution along with the presence of political will and financial resources requires a serious legal basis. This topic is also relevant for regional associations. This issue was analyzed by the WCO delegates. With regard to digital customs, there should be no legal restrictions on the transfer of data by other government agencies such as tax authorities. According to experts, some developments, such as electronic signatures and electronic bills of lading, do not create problems from a technological point of view, but sometimes problems arise when it comes to their legal acceptability.
  4. Capacity building, personnel issues. Conducting an effective personnel policy is an important aspect of the functioning of modern customs. In this context, the issue of capacity building is not remained aloof. At the 74th meeting of the Policy Commission, these issues were considered as part of the formation of the

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digital customs institute. This group (thematic issue) included the following delegate positions:

In the light of the creation of digital customs, the potential for training customs officers of tomorrow should be increased.

Issues related to the use of new information technologies in customs should be addressed directly to staff, not just information technology specialists. For Customs administrations, it may be useful to introduce a position of Chief Data Officer or Chief Technology Officer, to see how new technologies can be used, but from a customs point of view, and not from an IT point of view.

The work in the field of information technology in customs should be managed by a person who has experience in the customs field, and not IT.[34]

To ensure the development of the digital customs institute, it is necessary to introduce a highly specialized personnel position — data analyst. In addition, it is recommended the introduction of the post of targeted experts.

Human resources and staff development for further education are another key factor that requires considerable effort on the part of Customs administrations.[35]

  1. Problematic issues of implementation of the digital customs institute. The analysis of the problematic issues of development of the digital customs institution at the time of the 74th session of the WCO Policy Commission allowed to form the following vision:
  • Lack of appropriate legal framework to support digital customs.
  • ICTs are costly in terms of both the acquisition and maintenance of equipment.
  • High costs and availability of automated processes (for customs operations, business processes).
  • The presence of a «digital divide» and, therefore, problems of information systems compatibility.
  • The problem of cybersecurity (data security, confidentiality), data integrity, reducing the time (period) between the request for data and their actual receipt. Data analytics, among other things, acts as a key solution to emerging problems.
  • Potential security threat posed by Сloud storage.
  • The Customs administrations of the WCO Member states have different levels of implementation, application and ownership of new information technologies.
  • The issue of data harmonization at the regional level, especially in the context of the «single window». Along with this, it is necessary to ensure high quality data, their timely receipt.
  1. Additional themes for the digital customs concept. The delegates of the Policy Commission proposed to include the following topics (themes) in the concept of digital customs:

Customs dematerialization (to include in the subject of «reform and modernization»).

Change management and fraud in commerce.

Interoperability of technology.

Security issues and e-commerce.

Digital trade and secure supply chain.

Increase of trust in the framework of the theme «Modernization and reform».

  1. The role of the World Customs Organization in the formation of the institution of digital customs. According to the Policy Commission delegates opinion the WCO should perform the monitoring function as well as disseminate best practices.

In conclusion, we note that the systematization of the approaches of the WCO Policy Commission in 2015 to the creation of a digital customs institution can become the basis for both the practical aspects of the formation of the Digital Customs Concept in the EEU Member States and the development of the theoretical foundations of digital customs. In any case, this analysis brings us closer to understanding digital customs as a complex legal phenomenon, and the WCO experience is subject to further research for the purpose of improving customs regulation in the EEU.

 

OTHER PUBLICATIONS

 

LIST OF SOURCED USED

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  3. Mozer Sergei. Improvement of customs regulation: on the strategic concept of digital customs of the World Customs Organization // Gaps in Russian legislation. – № 4. – 2019. URL: http://customs-academy.net/?p=12772 (date of the request: 29.06.2019).
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  5. Tatyana Serykh. Accenture. Digitization. III Conference «Technologies in the field of oil exploration and production», 2017. URL: http://techneft.ru/images/doc/sekcii/06_informatizaciya/8_accenture.pdf (date of the request: 19.03.2018).
  6. Tarasov Alexander. What is digitalization? December 21, 2018. URL: http://platforum.online/poleznoe/articles/chto-takoe-czifrovizacziya/ (date of the request: 19.03.2018).
  7. Khalin V.G., Chernova G.V. Digitization and its impact on the Russian economy and society: advantages, challenges, threats and risks // Power and Economy № 10, 2018. URL: https://sziu.ranepa.ru/images/nauka/UK_DOI/10_18/Khalin_10_18.pdf (date of the request: 18.03.2019).
  8. Kadyrkulov M.A., Mozer S.V. Improvement of instruments of customs administration: international and legal aspect (The Revised Kyoto Convention Management Committee): monograph / MA. Kadyrkulov,S.V. Mozer. Moscow: Publishing House of the Russian Customs Academy, 2018. URL: http://customs-academy.net/wp-content/uploads/2018/11/Kadyrkulov-Mozer_Kyoto.pdf (date of the request: 18.03.2019).
  9. Mozer Sergei. Digital Customs. WCO Experience: monograph /S.V. Mozer. Moscow: Publishing House of the Russian Customs Academy, 2019. URL: http://customs-academy.net/?p=12502 (date of the request: 24.06.2019).
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  17. Action Plan on implementation the Main Directions for Development of the «Single Window» Mechanism in the System of Regulation of Foreign Economic Activity. Approved by the Decision № 19 of the Supreme Eurasian Economic Council of May 8, 2015// Collection of regulatory legal acts to implement and develop the «single window» mechanism in the member states of the Eurasian Economic Union for 2014-2015. URL: URL:

http://www.eurasiancommission.org/ru/act/tam_sotr/edinoe_okno/Documents/Сборник_НПА_англ_All_2.pdf (date of the request: 20.03.2019).

  1. Federal Law of July 27, 2006 №. 149-ФЗ № «On Information, Information Technologies and Information Protection» (with amendments and additions) // Legal Information Portal Garant. URL: https://base.garant.ru/12148555/ (date of the request: 20.03.2019).
  2. Dictionary Academician. URL: https://dic.academic.ru/dic.nsf/ruwiki/1108255 (legislation. – № 4. – 2019. http://customs-academy.net/?page_id=10398 (date: 19.03.2018).
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[1] See Mozer Sergei. Improvement of customs regulation: on the strategic concept of digital customs of the World Customs Organization // Gaps in Russian legislation. – № 4. – 2019. URL: http://customs-academy.net/?p=12772 (date of the request: 29.06.2019).

[2] См. Mozer Sergei. Digital Customs. WCO Experience: monograph /S.V. Mozer. Moscow: Publishing House of the Russian Customs Academy, 2019. URL: http://customs-academy.net/?p=12502 (дата обращения: 24.06.2019).

[3] См. 2.  Mozer Sergei. Classification of topical issues of the digital customs institution at the World Customs Organization // Social and political sciences. – № 3 (June). – 2019. URL: http://customs-academy.net/?p=12734  (date of the request: 29.06.2018).

[4] What is the conceptual apparatus? URL: http://fb.ru/article/379693/chto-takoe-ponyatiynyiy-apparat (date of the request: 19.03.2019).

[5] What is the definition? URL: https://vchemraznica.ru/chem-otlichaetsya-ponyatie-ot-opredeleniya/ (date of the request: 19.03.2019).

[6] What is the term.URL: https://vchemraznica.ru/chem-otlichaetsya-ponyatie-ot-opredeleniya/ (date of the request: 19.03.2019).

[7] Item 251. Report to the Policy Commission.  Policy Commission, 74th Session.  Punta Cana, 7-9 December 2015. Doc. SP0550E1a. Brussels, 27 January 2016. – P. 50.

[8] Item 235. Ibid.

[9] Tatyana Serykh. Accenture. Digitization. III Conference «Technologies in the field of oil exploration and production», 2017. — Slide 11. URL: http://techneft.ru/images/doc/sekcii/06_informatizaciya/8_accenture.pdf  (date of the request: 19.03.2018).

[10] Pavel Borovkov. What is digitalization? December 21, 2018. URL: http://platforum.online/poleznoe/articles/chto-takoe-czifrovizacziya/ (date of the request: 19.03.2018).

[11] Alexander Tarasov. What is digitalization? December 21, 2018. URL: http://platforum.online/poleznoe/articles/chto-takoe-czifrovizacziya/ (date of the request: 19.03.2018).

[12] Tatyana Serykh. Accenture. Digitization. III Conference «Technologies in the field of oil exploration and production», 2017. — Slide 12. URL: http://techneft.ru/images/doc/sekcii/06_informatizaciya/8_accenture.pdf  (date of the request: 19.03.2018).

[13] Ibid.

[14] See. Khalin V.G., Chernova G.V. Digitization and its impact on the Russian economy and society: advantages, challenges, threats and risks // Power and Economy № 10, 2018. – P.47. URL: https://sziu.ranepa.ru/images/nauka/UK_DOI/10_18/Khalin_10_18.pdf (date of the request: 18.03.2019).

[15] See presentation of Tatyana Serykh. Accenture. Digitization. III Conference «Technologies in the field of oil exploration and production», 2017. — Slide 22. URL: http://techneft.ru/images/doc/sekcii/06_informatizaciya/8_accenture.pdf  (date of the request: 19.03.2018).

[16] Ibid.

[17] To introduce the position (appoint) of the data manager or technology manager.3

[18] Customs (customs business). URL:  https://ru.wikipedia.org/Таможенное_дело (date of the request: 19.03.2019).

[19] Customs administration, customs business.

[20] Item 1 of Article 1 of the Customs Code of the Eurasian Economic Union. Annex 1 to the Treaty on the Customs Code of the Eurasian Economic Union. Legal portal of the Eurasian Economic Union. URL: http://docs.eaeunion.org/docs/ru-ru/01413569/itia_12042017 (date of the request: 19.03.2018).

[21] Rajiv Sivaraman. What is the «digitalization» of the enterprise? URL: http://ua.automation.com/content/chto-takoe-cifrovizacija-predprijatija (date of the request: 19.03.2018).

[22] Proprietary, private or proprietary software (proprietary software) — software that is the private property of the authors or rightholders and does not meet the criteria for software freedom (it’s about freedom, not just software openness) // Dictionary Academician.  URL: https://dic.academic.ru/dic.nsf/ruwiki/1108255 (date of the request: 19.03.2018).

[23] Item 247. Report to the Policy Commission.  Policy Commission, 74th Session.  Punta Cana, 7-9 December 2015. Doc. SP0550E1a. Brussels, 27 January 2016. – P.49.

[24] Item 248. Ibid.

[25] Kadyrkulov   M.A., Mozer S.V. Improvement of instruments of customs administration: international and legal aspect (The Revised Kyoto Convention Management Committee): monograph / MA. Kadyrkulov,S.V. Mozer. Moscow: Publishing House of the Russian Customs Academy, 2018. – P.170. URL: http://customs-academy.net/wp-content/uploads/2018/11/Kadyrkulov-Mozer_Kyoto.pdf (date of the request: 19.03.2018).

[26] Chapter 5 of Action Plan on implementation the Main Directions for Development of the «Single Window» Mechanism in the System of Regulation of Foreign Economic Activity. Approved by the Decision № 19 of the Supreme Eurasian Economic Council of May 8, 2015// Collection of regulatory legal acts  to implement and develop the «single window» mechanism in the member states of the Eurasian Economic Union for 2014-2015​​. URL: http://www.eurasiancommission.org/ru/act/tam_sotr/edinoe_okno/Documents/%D0%A1%D0%B1%D0%BE%D1%80%D0%BD%D0%B8%D0%BA_%D0%9D%D0%9F%D0%90_%D0%B0%D0%BD%D0%B3%D0%BB_All_2.pdf (date of the request: 19.03.2018).

[27] Kadyrkulov   M.A., Mozer S.V. Improvement of instruments of customs administration: international and legal aspect (The Revised Kyoto Convention Management Committee): monograph / MA. Kadyrkulov,S.V. Mozer. Moscow: Publishing House of the Russian Customs Academy, 2018. – P.172. URL: http://customs-academy.net/wp-content/uploads/2018/11/Kadyrkulov-Mozer_Kyoto.pdf (date of the request: 19.03.2018).

[28] Scope of the reference model. Chapter 5 of Action Plan on implementation the Main Directions for Development of the «single window» Mechanism in the System of Regulation of Foreign Economic Activity. Approved by the Decision № 19 of the Supreme Eurasian Economic Council dated May 8, 2015 // Collection of regulatory legal acts  to implement and develop the «Single Window» mechanism in the member states of the Eurasian Economic Union for 2014-2015. – P. 34-35. URL: http://www.eurasiancommission.org/ru/act/tam_sotr/edinoe_okno/Documents/%D0%A1%D0%B1%D0%BE%D1%80%D0%BD%D0%B8%D0%BA_%D0%9D%D0%9F%D0%90_%D0%B0%D0%BD%D0%B3%D0%BB_All_2.pdf (date of the request: 19.03.2018).

[29] Dictionary of Ozhegov. Academician.URL:  https://dic.academic.ru/dic.nsf/ogegova/74770 (date of the request: 21.03.2019).

[30] Item  2 of Article 2 of the Federal Law of July 27, 2006 №. 149-ФЗ № «On Information, Information Technologies and Information Protection» (with amendments and additions) // Legal Information Portal Garant. URL: https://base.garant.ru/12148555/ (date of the request: 20.03.2019).

[31] Item 1 of Art. 365 of the Customs Code of the Eurasian Economic Union. Annex 1 to the Treaty on the Customs Code of the Eurasian Economic Union. Legal portal of the Eurasian Economic Union. URL: http://docs.eaeunion.org/docs/ru-ru/01413569/itia_12042017 (date of the request: 21.03.2019).

[32] Item 248. Report to the Policy Commission.  Policy Commission, 74th Session.  Punta Cana, 7-9 December 2015. Doc. SP0550E1a. Brussels, 27 January 2016. – P. 49.

[33] Item 247. Ibid.

[34] Item 247. Ibid.

[35] Item 253. Ibid.