PROSPECTS FOR DEVELOPMENT OF CUSTOMS BLUEPRINTS IN THE EURASIAN ECONOMIC UNION ⋆ Таможенная академия: НАУКА

Sergei Mozer

Published: Lawyer in Foreign Economic Activity. № 2. – 2023. – pages 64-86.

When using the article referance is required

Abstract. This article examines the prospects for developing an international legal instrument – a set of customs standards of the Eurasian Economic Union. The approaches of the World Customs Organization to defining the concepts of «international standard» are analyzed, and the experience of the European Union (EU) in creating a set of customs standards (Customs blueprints) is examined. The classification of EU customs standards, objectives and implementation indicators are presented. Research materials in the field of forming a unified standard for customs operations are analyzed, and conclusions are drawn.

Key words: international customs standard, set of customs standards, Customs blueprints, EAEU, World Customs Organization, WCO, Eurasian Economic Commission, EEC, customs regulation, legal instruments and tools.

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Introduction. The Strategic directions for the development of Eurasian economic integration until 2025 in direction 3 «Improving customs regulation within the Union» define «ensuring a single standard for customs operations, customs control, information exchange, unification and implementation of risk management systems in the Union» [1; paragraph 3.2.].

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To date an action plan is being developed to implement the Declaration on the further development of economic processes within the Eurasian Economic Union until 2030 and for the period until 2045, the «Eurasian Economic Path» [2] (hereinafter referred to as the plan, declaration 2030-2045).

The draft plan already considers an event with a deadline of 2030, which is associated with the preparation of proposals for defining in Union law the concept and components of a single standard for carrying out customs operations and customs control.

In preparing the research article, the author set the following tasks:

to define the concepts of «standard», «standard for performing customs operations», «international customs standard» taking into account global practices and recommendations of the World Customs Organization (hereinafter referred to as the WCO);

to analyze international experience in creating uniform standards in the field of customs administration;

prepare proposals for the implementation of the plan’s activities associated with the creation of a unified standard for carrying out customs operations.

The concept of an international standard

In WCO law there are no definitions of the concept of «international standard» in the sphere of customs regulation or «international customs standard». However,

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within the framework of the functioning of the WCO working bodies, such concepts are used when creating its legal instruments and tools. The following references to the term «standards» are found in WCO materials:

«The WCO’s work can be categorized into five main areas, including setting standards for a number of diverse but interlinked Customs procedures» is one of the main areas of the WCO work.

WCO develops and maintains standards and guidelines to protect society;

The WCO, as the global centre of Customs expertise, plays a central role in the development, promotion and implementation of modern Customs standards, procedures and systems and has positioned itself as an international leader in Capacity Building policy development and delivery;[1]

The WCO Secretary General provides leadership and executive management for the global Customs community’s priorities, including developing global Customs instruments, standards and tools; securing and facilitating global trade;[2]

The WCO Secretariat’s Procedures and Facilitation Sub-Directorate, working closely with the WCO Members, develops international standards covering all aspects of trade. The main instrument in this domain is the Revised Kyoto Convention – the International Convention on Simplification and Harmonization of Customs Procedures and the SAFE Framework of Standards to Secure and Facilitate Global Trade;[3]

The Sub-Directorate develops international standards and recommendations by working with WCO Members and representatives of other international organizations at various committees[4] [3; 17].

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According to the Memorandum of Understanding between the EEC and the WCO, 17.06.2016 the EEC and the WCO agree to cooperate in such areas as Improvement of Customs, based on international standards, Elaboration of effective and modern standards in the Customs sphere [4].

The concepts of «customs standards» and «international standards» are identified with the WCO legal instruments and tools, which it develops [5; 121].

The Revised Kyoto Convention uses the concepts of «standards of Customs control» and «international standards» (see preamble).[5]

For the purposes of this convention, two concepts are used:

«Standard» means a provision the implementation of which is recognized as necessary for the achievement of harmonization and simplification of Customs procedures and practices;[6]

«Transitional standard» means a Standard in the General Annex for which a longer period for implementation is permitted [6; paragraphs «a» and «b» of Article 1].

Article 2 of the Kyoto Convention sets out the provision that «Each Contracting Party undertakes to promote the simplification and harmonization of Customs procedures and, to that end, to conform, in accordance with the provisions of this Convention, to the Standards, Transitional Standards and Recommended Practices in the Annexes to this Convention» [6; Art. 2].

When developing standards in the field of trade facilitation and improvement of customs regulation, the term «standardization» is used along with the term «standard».

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The United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) defines standardization as «Development of standards whose purpose is to align formalities, procedures, documents, information, and operations» [7].

There is an opinion that «customs affairs in relation to international customs regulation act as an indicator of the implementation of customs standards, rules and recommendations adopted by subjects of international customs relations: by states and international organizations» [8; 54]. We believe that international customs standards are developed in the WCO and exist, in principle, regardless of their implementation in national customs legislation or the law of a customs or economic union. At the same time, the level of harmonization and simplification of customs procedures, as well as trade procedures in the world depends on the implementation of the developed WCO customs standards by WCO Member States, customs or economic unions [5; 122].

Thus, an international customs standard is a provision, the implementation of which is recognized as necessary to achieve harmonization and simplification of customs procedures and practices, formalized in the WCO legal instruments and tools, as well as in the acts of integration associations (unions).

The European Union’s experience in creating uniform standards

The European Union (hereinafter referred to as the EU) has developed a legal instrument – «Customs blueprints. Pathways to better customs» [9]. Customs standards

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(Customs Blueprints are the latest version of a document by the European Commission first published in 1998 as part of its pre-accession strategy. Clear preparation of customs and tax administration was identified as a priority for candidate countries. The standards are a tool designed to help customs administrations improve their performance. According to the EU, the standards will help customs services assess their strengths and weaknesses, conduct a «gap and needs analysis» and identify development needs. The projects are based on the experiences and best practices of EU Member States.[7]

Standards are practical guidelines based on EU practice. They represent a benchmark for use by customs administrations to assess their performance and organise their own path to better customs [9; 3]. Customs standards are designed to help improve and develop the operational and administrative capabilities of customs services by setting standards for achievement defined in 19 key areas [9; 6]. For each objective, the standards define measurable indicators to avoid any ambiguity in determining its achievement. A methodology for conducting a gap and needs analysis in customs authorities is also provided [9].

The standards under consideration provide very concise definitions of goals, strategic objectives, tasks and indicators.

An objective is a general definition of what is to be achieved, drawn up
in terms of expected results. It is formulated in such a way as to coordinate a specific function of the customs administration, to assist it in defining strategic objectives (see below) and to show the overall level of performance that must be achieved [9; 7].

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Objectives are minimum standards. They describe the approaches, systems, procedures, etc. that need to be implemented to achieve the goal and strategic objectives. They express strategic objectives in more detail and are guided by the same criteria.^[8]

Strategic objectives are definitions that lead to the goal and provide a more detailed description of what needs to be achieved, showing the level and quality of the final result.^[9]

Indicators are specific performance and evaluation characteristics that should be used to determine whether the relevant objective has been achieved. There is at least one indicator for each objective. An indicator is focused, clear and unambiguous. An indicator gives a fairly good indication of what is required, but does not determine the level of achievement. When working with a set of customs standards, the customs administration may decide to include additional indicators.^[10]

The EU Customs blueprints identifies standards, each of which has its own purpose, strategic objectives, tasks and indicators:

Legislation;
organization and management;
human resource management;
customs ethics;
training;
public relations and communication customs obligations;
trade facilitation and relations with business;
supply chain security;
risk management;
border and inland control;
investigation and enforcement;
transit and movement of goods;
post-clearance control and audit;
Customs Enforcement on Intellectual Property Rights (IPRs;)
information and communication technologies;
infrastructure and equipment;
customs laboratory;
internal audit [9; 137].

For example, the set of standards defines standard 10 «Risk Management». Its purpose is to develop policies, systems, procedures and legal instruments to create an

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effective risk management system (hereinafter referred to as RMS) capable of ensuring a balance between trade facilitation and control functions.

The strategic objectives set for this standard are as follows:

creation of an appropriate legal framework capable of ensuring the development, implementation and proper functioning of the RMS;

creation of an appropriate organizational structure for the administration and implementation of risk management;

development and implementation of risk management that ensures that risks are identified, analysed, assessed, managed and appropriately responded to;

developing effective cooperation both within Customs itself and with other competent authorities, including law enforcement and security agencies, the business community and international partners who can provide valuable information to the risk analysis process;

creation of the necessary material base, including the IT structure and databases, personnel selection and training systems [9; 46].

This standard covers the following broad elements (tasks) :

legal basis;

organization;

risk management;

cooperation;

material base, IT and training.

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Thus, for the element (task) «risk management», 8 tasks are allocated, for each of which indicators and cross-references to other standards of the set are established:

10.3. Developing and implementing a risk management system to ensure that selection for customs intervention is based on a proper analysis of the risks involved.

10.4. Development of risk profiles. Determination of priority areas of control for a pre-determined period of time.

10.5. In addition to general risk profiles, ensuring that risk profiles take into account all regional and local specificities.

10.6. Continuous revision of risk indicators based on information from previously conducted inspections and the results of investigative activities.

10.7. Inclusion in the selection criteria of the element of randomness as a component of the risk management system and process.

10.8. Ensuring the ability to respond quickly in case of crisis situations.

10.9 Regularly assess the effectiveness of customs controls by management support programs and take corrective measures as necessary.

10.10 Taking into account the political, legal, cultural, economic and social situation in the country in the risk management process. Conducting an analysis of all available information, assessing and weighing it by applying various methods of calculation and selection in order to identify risks and develop profiles [9].

In turn, 4 standards have been established for the «cooperation» element:

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10.11. Ensure regular exchange of information between the national risk analysis unit and other units to ensure effective and efficient use of information.

10.12. Exchange of information and experience with other Customs administrations and other relevant international organizations as necessary.

10.13. Exchange of information and experience with other relevant national government bodies as appropriate.

10.14 Regular and close cooperation with business and trade organizations to identify and counter potential risks, where possible formalized through memoranda of understanding.

As an example of the use of indicators and cross-references to other standards of the EU Customs blueprints, reference can be made to task «10.4. Development of risk profiles. Determination of priority control areas for a pre-determined period of time».

The following indicators have been defined for its implementation:

 Priority areas of control have been identified.

 Risk profiles are created, regularly analyzed and updated.

 Customs inspections are carried out based on risk profiles.

At the same time, information and communication technologies, infrastructure and equipment, training, as well as border and inland control are indicated as cross-standards.

The WCO and EU approaches to assessing customs activities of Customs Administrations is that the EU mentioned indicators are not based on mathematical assessment methods. Instead, a «yes» and «no» answer system is used for each indicator.

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For example, for standard 9 «Supply chain security» (legal basis) in the part of the task «9.3. Ensuring the application of international standards (e.g. the WCO Framework of Standards to Secure and Facilitate Global Trade (SAFE)» the option (answer) «The legislation complies with international standards» is highlighted. When filling out the questionnaire, the operator can give an assessment (selection by putting a «tick») on the compliance («yes») or non-compliance («no») of the national legislation with the framework standards.

As for the WCO analysis methodology, the calculation method is established in the created system of indicators. In the case of a quantitative indicator, the approved formula/scale and unit of measurement are given [10].

Ensuring a unified standard in the EAEU

For the first time, the issue of developing a standard for carrying out customs operations in the EAEU within the framework of the implementation and paragraph 3.2. Strategic Directions was studied in the works of R.V. Davydov in 2020. In his opinion, the unresolved problem of determining the standard and those indicators of customs administration (carrying out customs operations and conducting customs control) that could objectively characterize the state of affairs in the Member States does not allow the work on equalizing the conditions for conducting foreign and mutual trade in the EAEU states to be translated into practice [11; 195].

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In particular, it was proposed that the application of the Standard in the EAEU should mean: «… during customs control, customs authorities, regardless of nationality, should implement a unified set of measures and activities regulated in accordance with the risk management system… in such a way as to ensure an equal « reference (control) load» when checking consignments of goods of the same risk level. For bona fide participants in foreign economic activity, ensuring reliable goods declaration being moved, this should lead to the minimization of time and financial costs, predictability of the terms of movement of goods and the actions of regulatory authorities».[11]

In addition, a system of indicators for assessing the achievement of the Standard is proposed:

– the timeframes for completing customs operations at checkpoints and the share of customs operations in the total time for completing all control measures at the checkpoint;

– the timeframes for completing customs operations when placing goods under the customs procedure of release for domestic consumption and export, with the allocation of time for completing customs operations in a fully automatic mode;

– the percentage of consignments of goods in respect of which actual state control was carried out, in the total volume of consignments of goods, broken down by types of state control and the forms of such control applied;

– the amount of financial costs of participants in foreign economic activity for passing customs procedures, determined in cooperation with business associations and individual representatives of the business community;

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– the share of cases of request for documents and information by the customs authority as part of the verification of a customs declaration in the total volume of customs declarations, broken down by customs procedures;

– the share of customs declarations issued within four hours in the total volume of customs declarations;

– the share of customs inspection reports drawn up with errors in the total number of customs inspection reports drawn up.[12]

Upon further consideration of the definition, specific content and indicators characterizing the achievement of the standard, it was proposed to proceed from the need to link them with the system of indicators of the activities of the Customs administrations of the EAEU, characterizing the state and quality of customs administration [11; 196].

In particular, it was proposed, based on the WCO target settings, to group key indicators for assessing the effectiveness and quality of customs administration into four main areas:

– simplification and harmonization of customs procedures aimed at promoting the development of legitimate and fair international trade;

– ensuring the fiscal function of the state (full, timely and lawful collection of customs duties to the state budget);

– protection of society and citizens, protection of the environment (the most important role of customs authorities is in preventing the entry into the market of unsafe goods that can harm the health of citizens and the well-being of animals and plants);

– own (institutional) development of the customs system.[13]

Note: seven indicators for assessing the standard are given in 2020 in the research article by R.V. Davydov [12; 4].

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In his opinion, «the standard» is understood as the unity of customs operations and customs control, which will allow bona fide participants in foreign economic activity to undergo control procedures quickly and painlessly, and all the force of control will be directed at those who try to violate customs regulations» [13].

In the context of comparative analysis, it is worth noting that according to the EU Customs blueprints, «standards» are practical instructions based on EU practice. They represent a reference for use by Customs administrations to assess their performance and organize their own path to better customs [9; 3].

It seems that the term «reference» (эталон) is an acceptable concept for defining a «single standard».

Note: in Union law, the concept of «standard» is used in relation to the «single window» mechanism in the foreign economic activity regulation system.

Thus, by the decision of the Supreme Council of the EAEU dated 08.05.2015 № 19 [14], the following interpretation of this concept was defined:

Reference model of the national «single window» mechanism
(hereinafter referred to as the reference model) is a tool for simplifying international trade procedures in order to optimize government procedures related to foreign economic activity and create conditions for the implementation of electronic transactions and electronic commerce. The reference model is designed to ensure the transition to a qualitatively new level of development of national «single window» mechanisms, the creation of conditions for reducing transaction costs for persons engaged in foreign economic activity and providing services in this area (hereinafter referred to as interested persons), and the reduction of administrative costs in the work of government bodies of the Member States regulating foreign economic activity (hereinafter referred to as government bodies).

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The reference model is an innovative cross-border intelligent (smart) mechanism that allows interested parties to receive a range of services for carrying out export, import and transit operations in the course of interaction with government agencies and/or authorized organizations of Member States.

The reference model takes into account the provisions of international standards of the World Customs Organization and recommendations of the United Nations, integrates the experience of building modern models of the «single window» mechanism, using progressive organizational, legal, technical and technological solutions.[14]

The description of the reference model of the national «single window» mechanism in the foreign economic activity regulation system was approved by the Decision of the Eurasian Intergovernmental Council dated 30.04.2019 № 6 [15].

Note: In accordance with this decision

The reference model is a conceptual basis that defines the system of principles and tools for the development of national «single window» mechanisms and the creation of a foreign economic activity management ecosystem.

The reference model of the national mechanism of the «single window» in the system of regulation of foreign economic activity is designed to ensure the transition of national mechanisms of the «single window» to a new development trajectory, as well as the implementation of effective management of data, processes and information interaction (including economic entities with government agencies of Member States (B2G/G2B), government agencies of Member States among themselves (G2G) and economic entities among themselves (B2B).

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Similar methodological approaches can be used in developing a conceptual vision of the standard for carrying out customs operations in the EAEU.

There is an expert point of view on the definition of the standard for carrying out customs operations – «the application of customs procedures and the performance of customs operations in accordance with the current regulatory framework, ensuring equal, favorable and predictable conditions for doing business for bona fide participants in foreign economic activity, subject to the full, lawful and timely collection of customs duties» [12].

The analysis showed that the expert community does not have a comprehensive picture of the problems and prospects for developing a single standard and corresponding indicators for the purpose of improving customs regulation in the Union.

Eurasian integration in the customs aspect requires a new strategic approach and instrument – a set of customs standards of the EAEU (Customs blueprints).

Work on its creation should be organized on the platform of the EEC Customs cooperation block.

CONCLUSION :

The development of Eurasian economic integration requires the creation of a new supranational instrument of customs administration in the EAEU, which will consolidate unified approaches to the implementation of Union law (law enforcement practice) by the Customs services of the Union Member States.

It is proposed to develop a set of customs standards of the EAEU within the framework of the activities of the advisory bodies of the Customs cooperation block of the Commission and approve them by acts of the Union bodies (by decision of the Board and the EEC Council).

The structure of the standard should include the following elements: name of the standard, purpose, strategic objectives, indicators.

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It is recommended to consider the EU Customs blueprints as a model.

The following conceptual apparatus is proposed:

«The Unified Standard for Carrying Out Customs Operations» is a reference (standard) of customs rules for use by the Customs service for the purpose of assessing the work and organizing the application of customs procedures and carrying out customs operations in accordance with the law of the Union.

«The Set of Customs Standards of the EAEU» is a system of uniform standards for the performance of customs operations across customs regulation institutions, used for a comprehensive assessment of the activities of the Customs service in accordance with the law of the Union.

«International Customs Standard» is a provision, the implementation of which is recognized as necessary to achieve harmonization and simplification of customs procedures and practices, formalized in the WCO legal instruments and tools, as well as acts of integration associations (unions).

The development of a set of customs standards is aimed at ensuring uniform law enforcement practices in the area of customs regulation in the EAEU Member States.

The Customs Standards Framework is a tool for Customs administrations
to assess strengths and weaknesses, conduct gap and needs analyses, and identify development directions.

The development of indicators in the context of customs standards will allow for an assessment of the level of development of customs administration in the EAEU Member States, as well as the formation of proposals for promising areas of customs administration in the EAEU.

It is proposed to use the system of uniform customs standards of the EAEU when considering a request from a state that is not a member of the Union for membership in the EAEU. This tool will allow assessing the compliance of the third party Customs service with the requirements – uniform standards (set of customs standards) of customs regulation, formed on the basis of the Union law.

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The application of the set of customs standards of the EAEU will make it possible to identify potential risks associated with the subsequent practical implementation of the Union’s law in the sphere of customs regulation by a third party, as well as the readiness of its customs infrastructure and information systems of customs authorities to integrate with technologies implemented by the customs services of the EAEU Member States.

Thus, decisions of the Union bodies on the membership of a new candidate state in the EAEU are taken upon the implementation of the Union law in the area of customs regulation and the compliance of the activities of the customs service of the candidate country with the set of EAEU customs standards.

Such standards should be developed for the institute of authorized economic operators, risk management, coordinated border control, customs transit, post-clearance control and audit, digital (smart) customs and automation of customs services, advanced customs technologies, and the «single window» mechanism.

Along with this, it is necessary to create uniform standards for smart checkpoints and customs infrastructure.

Consideration of this initiative may be carried out within the framework of the activities of the Action plan for the implementation of the Declaration 2023-2045.

Note: This article is the personal point of view of the author and is not related to his professional activities.

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