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Regions and Countries Regional Cooperation Greater Mekong Subregion Publications Proceedings of Ministerial, Forum, and Working Group Meetings Workshop on Customs Facilitation in the GMS
Workshop on Customs Facilitation in the GMSIntroductionThe Workshop on Customs Facilitation in the GMS was held in Hat Yai, Thailand on 22-23 May 2001. The Workshop was co-organized by the Customs Department and the National Economic and Social Development Board of the Royal Thai Government and the Asian Development Bank (ADB). The Workshop was chaired by Mr. Santi Krongsithidej, Senior Expert on Duty Assessment, Customs Department of Thailand, and co-chaired by Mr. Toru Tatara, Head of the GMS Unit, Programs Department West Division 3 (PW3), ADB. The objectives of the Workshop are to: (i) review the areas of cooperation agreed upon by the Ad Hoc Subgroup on Customs that met in January 2000 and to consider modalities for implementation of these areas; (ii) review the status of implementation of GMS and ASEAN framework agreements that relate to customs; and (iii) agree on a workplan and timetable to pursue customs cooperation under the GMS Program framework. The agenda for the Workshop is attached as Appendix 1. The participants also took a field visit to Padang Besar at the Thai-Malaysian border to observe the single-stop inspection facilities there. The Workshop participants included representatives from the Kingdom of Cambodia, the People's Republic of China (the PRC), Lao People's Democratic Republic (Lao PDR), Union of Myanmar, Kingdom of Thailand, and the Socialist Republic of Viet Nam. A representative from the ASEAN Secretariat also attended the Workshop. ADB Staff and consultants participated in the Workshop as resource persons and facilitators. The list of participants is attached as Appendix 2. Opening SessionMr. Manit Wityatem, Director-General of Customs Department delivered the opening statement on behalf of the Royal Thai Government. He stressed the important role that the Customs Department has played in facilitating international trade and foreign investment. To further facilitate trade, cooperation in modernizing and strengthening customs procedures among the GMS countries is necessary. At present, the Customs Department is actively engaged in this cooperation and looks forward to further discussions during the Workshop on such important issues such as single- window and single-stop inspection, coordinated hours of cooperation, compatibility of data elements, electronically-based customs procedure system, and information exchange among customs authorities. He expressed the hope that the Workshop could strengthen cooperation for the mutually beneficial development of the GMS countries. Mr. Toru Tatara, Head, GMS Unit, delivered the opening statement on behalf of ADB. He explained the background of the GMS Program and its major accomplishments so far. With the acceleration in the pace of implementation of transport infrastructure projects, and parallel efforts at facilitating the movement of goods and peoples across borders, a new focus on trade and investment facilitation has emerged under the GMS Program. It was in this context that the Trade Facilitation Working Group (TFWG) identified customs facilitation as a priority area for cooperation. Seven priority areas of cooperation in customs were subsequently identified by an ad hoc subgroup and later endorsed by the Ninth Ministerial Conference. The principal objective of the Workshop therefore is to review these seven areas and determine the appropriate modalities of cooperation. Review of Developments Related to Customs Cooperation in the GMSGMS Program Developments: Implications on Customs Cooperation and the Tasks of the Customs Facilitation WorkshopIn elaborating further on the context and purpose of the Workshop, Mr. Tatara noted that recent policies on market openness, greater physical connections within the subregion, and membership of the GMS countries in regional and international organizations are compelling the need for facilitating economic activities at the borders. Under the GMS Program, major transport routes are in various stages of implementation, among them the Phnom Penh-Ho Chi Minh City Road, the East West Corridor, the North South Corridor, and the Kunming-Hanoi-Haiphong Multimodal Transport Projects. As transport infrastructure improves at the border and trade volume expands, it is essential that border controls, procedures, and other formalities converge or are simplified. He recalled the seven areas of cooperation agreed upon by the Ad Hoc Subgroup on Customs namely: (i) single window inspection; (ii) single stop inspection; (iii) coordination of hours of operation; (iv) transparency of customs practices; (v) adherence to the Revised Kyoto Convention; (vi) automation of customs procedures; and (vii) compatibility of statistics and data elements of declaration forms for customs purposes. The key tasks of the Workshop are to determine which of these areas can be implemented and the modalities and timetable for implementation. Continuing from Mr. Tatara's presentation, Mr. Florian Alburo, Trade and Customs Consultant, ADB, explained that his role is to assist participants in accomplishing the Workshop objectives that have been outlined. In trying to distinguish between the GMS and the ASEAN frameworks for customs cooperation, he differentiated between trade policy and facilitation that tend to have uniform effects such as tariff nomenclature and valuation (ASEAN), and administrative reforms and directives that aim at procedural and documentation changes (GMS). He specified the following outputs of the Workshop, namely : (i) proposals for customs cooperation that should be further discussed with the GMS capitals; (ii) a record of proceedings; and (iii) an outline of the next steps. Progress of ASEAN Cooperation on CustomsMs. Niken Wardhani, Technical Officer of the ASEAN Secretariat reported on the progress of ASEAN Cooperation on Customs, focusing on the priority areas under the Policy Implementation and Work Programme (PIWP) to implement the ASEAN Customs Vision 2020. Notable progress was reported on: (i) the ASEAN Harmonized Tariff Nomenclature (AHTN) which is due to be implemented by 2002; (ii) customs valuation which has been implemented by five WTO-member countries of ASEAN, and with the remaining member countries targeting implementation in various years not later than 2005; (iii) post clearance audit --- a new area in customs administration --- which is targeted to be implemented in 2003 and for which ASEAN countries are receiving technical assistance from Japan; and (iv) Agreement on the Facilitation of Goods in Transit which has been signed, but with two implementing protocols related to customs (i.e. Protocols 2-Designation of Frontier Posts, and Protocol 7-Customs Transit System) still under negotiation. Cambodia, Lao PDR, Myanmar and Viet Nam, being new members of ASEAN, are receiving technical assistance from other ASEAN countries, as well as from ASEAN Dialogue Partners in priority areas that the countries themselves have identified. Customs Cooperation Initiatives Among GMS CountriesGMS participants shared information on ongoing national efforts to improve customs procedures. These included implementation of their various commitments to the ASEAN PIWP in the areas of harmonization of tariff nomenclature, valuation, modernization of hardware and software components of customs administration, and training for customs officers. Cambodia reported current efforts on harmonization of customs procedures, and in this context presented a number of possibilities for cross-border cooperation, including simplification of customs procedure at the border, compatibility of customs forms, single administrative declaration (for ASEAN), and transparency of customs practices. PRC reported that actions have been taken to harmonize and simplify the customs procedures. PRC also informed that it will try to promote customs cooperation within the GMS. PRC is the only GMS country that has acceded to the Revised Kyoto Convention. Lao PDR reported progress in implementing a number of customs initiatives on valuation and harmonization of tariff nomenclature under the ASEAN Framework. Myanmar indicated that it is in the process of reducing its list of restricted goods as intended under the ASEAN Agreement on the Facilitation of Goods in Transit. Other ongoing efforts in Myanmar are in the areas of automation, data improvements, transparency, and training. Thailand shared information on its continuing efforts at customs modernization. It has implemented the EDI system as of 2000. It has promoted special simplified procedures for selected importers, exporters, and brokers, with proven good track record. Efforts are also ongoing to promote further bilateral arrangements on customs with neighboring countries. Viet Nam reported that it has ongoing cross-border cooperation with Cambodia, PRC, and Lao PDR. It is presently working on improving its customs laws to reduce uncertainties in the implementation of customs procedures. Cross-Border Customs FacilitationMrs. Chawewan Kongcharoenkitikul, Director of Human Resources Development Division, Customs Department of Thailand, presented Thailand's experience with Malaysia under the IMT-GT framework. She cited several customs-related issues being discussed under the IMT-GT framework, among others: trade facilitation, single customs declaration form, single inspection policy, and computerized systems. Three important projects that have been identified are: i) single inspection policy emphasizing the use of a single declaration form and computerization; (ii) lessening border regulations; and (iii) lessening regulations governing the movement of perishable goods. There has been no significant progress on item (i), and with respect to (ii) and (iii), Thai proposals are still under consideration by the Malaysian side. The Thai proposals include increase in the number of business hours for the operation at Sadao, Padang Besar, Sugai-Kolok, and lifting the weight ceiling of perishable goods moved in transit. Mrs. Chawewan explained that customs cooperation under the IMT-GT framework has been hampered by several factors, among others: (i) complexity of legal issues; (ii) lack of regularity of meetings; and (iii) conflicts of interest. Customs Cooperation in the East West Economic CorridorMr. Myo Thant, Senior Regional Cooperation Economist, ADB, made a presentation on the East West Economic Corridor (EWEC) extending from Mawlamyine (Myanmar) through Mukdahan (Thailand), Savanakhet (Lao PDR), to the port of Da Nang (Viet Nam). The development of the road along this route, which is being built through the combined efforts of the concerned national governments, the Government of Japan and the ADB, will be linked with production and trade potentials in the area to create a growth zone. A Pre-Investment Study identifying these economic opportunities has been completed recently and the modalities for implementing the development of the corridor is currently being discussed. With the development of other road arteries in the subregion (e.g. Chiang-Rai-Kunming via Lao PDR) and trade liberalization (through the ASEAN Free Trade Agreement or AFTA), gateways and border towns will increasingly become important. The Trade and Investment Report that is part of the EWEC Pre-Investment Study has identified several factors that still need to be addressed to realize the full trade potential of the Corridor. These include the removal of non-tariff barriers, the reduction in the number of products still excluded from the Common Effective Preferential Tariff (CEPT) Scheme under AFTA (and therefore still with high tariffs), improvements in standard valuation and labeling practices, and streamlining administrative procedures, including for customs, at the borders. Mr. Thant emphasized that without reducing or eliminating these barriers, the full trade potential of the Corridor will not be realized. In addressing these impediments, inputs and feedback from the private sector would be essential. In this regard, the GMS Business Forum, which has been recently established under the GMS Program should be actively utilized for this purpose. He also called for the expansion of the functions of the Border Committees to include economic development. Agreement of the Facilitation of the Cross-Border Movement of Goods and Services in the GMSMr. Kristiaan Bernauw, ADB Consultant (RETA 5850) started his presentation with the background and status of the Trilateral Agreement on the Facilitation of Cross-Border Movement of Goods and People Among Lao PDR, Thailand and Viet Nam signed in November 1999. He informed the participants that Cambodia has recently decided to accede to this Agreement. The enabling annexes and protocols to implement the Cross-Border Agreement have been drafted and circulated for review by the GMS countries and was also tabled for discussion at the Sixth Subregional Transport Meeting held in Vientiane on 17-18 May 2001. The customs-related annexes are being presented to the Workshop for a similar review. The annexes were drafted as an intermediate set of principles and guidelines based on, but not fully adopting the entirety of the international conventions, since the process of fully acceding to these international conventions could be complex and take time. The customs-related annexes were grouped into three categories: Group I (Annexes 4, 12 and 15) pertains to facilitation formalities and procedures (i.e. language, consultation, cooperation, harmonization, and information), infrastructure, equipment, and personnel; Group II (Annex 5) pertains to duty free allowance for passengers; and Group III (Annexes 6, 8, and 14) pertain to transit systems, inland clearance, and temporary importations. Mr. Bernauw explained the details of each of these annexes. The Workshop participants were requested to review the draft customs-related annexes and submit their comments to ADB. The participants were reminded that the Ninth Ministerial Meeting agreed on the adoption and signing of the Framework Agreement by all six GMS countries by the end of 2001, and the implementation of the Agreement, including all annexes and protocols by 2005. It was clarified that it is possible to implement certain provisions of the annexes even if a country or countries are not signatories to the Trilateral Agreement. Proposed Framework for Customs Cooperation in the GMS CountriesMr. Florian Alburo reviewed the pertinent provisions of the Revised Kyoto Convention as the basis for juxtapost customs offices along common borders to adopt certain technical and operational standards. Taking into account the seven priority areas for customs cooperation, he presented three modalities for customs cooperation for consideration by the participants, namely: Modality 1 for single-window and single-stop inspection; Modality 2 for transparency of customs procedures; and Modality 3 for adherence to the Revised Kyoto Convention. The tasks, activities, resource requirements, and timetable for each of these modalities were also laid out as contained in Appendix 3. As regards Modality I, the selection of common borders for pilot testing would be an important first step. The criteria for selecting pilot borders could include trade volume, and the degree of social interaction, among others. An alternative approach for identifying the pilot sites would be to request Thailand, with six border crossings, to take the lead in pilot testing, or to identify the pilot sites located along the East West Corridor (e.g. borders in Lao PDR). It was clarified that more than one border can be selected as pilot case. In this regard, PRC suggested that ADB should officially refer the matter of selecting the pilot cases to the level of the Directors General of Customs in the GMS countries. The technical procedures involved in the pilot areas must have to be studied carefully to ensure successful implementation, considering that countries could have different procedures in different borders. A proposal was made to separate the application of the single-window and single-stop inspection in the pilot cases. On Modality 2, some GMS countries (e.g. Thailand, Lao PDR ) reported that they already have laws requiring transparency of customs information. Aspects that may require improvement are the availability of the information in the English language, the need to make the information available to both big business as well as small and medium enterprises, and in the form and quality that would be responsive to the needs of various types of users (e.g. trading companies, freight forwarders, shipping lines, banks, etc). It was clarified that the purpose of compiling information on customs procedures for each country is to make this compendium available to traders on a region-wide basis. In this regard, it was informed that the ASEAN Customs website, hosted at the ASEAN Secretariat website, already provides information on the customs procedures of its member countries, including the progress of ASEAN cooperation in customs, and is linked to country-based customs websites. This ASEAN initiative notwithstanding, it was explained by Mr. Alburo that the objective in the long-run is to jointly and collaboratively develop documents that adhere to the Revised Kyoto Convention based on the examination of current practices. Modality 3 on adherence to the Revised Kyoto Convention focuses on risk management, which is a new element in the Revised Kyoto Convention. Improving the transparency and accessibility of information as envisioned in Modality 2 is an important element for implementing Modality 3. Thailand's experience in the electronic data interchange (EDI)-based system has helped significantly in risk management. It was noted that PRC has attached importance to the utilization of the risk management technique in customs procedures and has incorporated it into the computerized clearance systems. However, some GMS countries have found it difficult to implement risk management on account of the high cost of collecting data and acquiring the necessary hardware and software. There was agreement in principle that that priority should be given to Modality 1, with Thailand adding the suggestion that Modality 2 could also be implemented simultaneously. PRC requested however, to consult further with their national agencies on the matter of prioritization. To facilitate follow up actions on the various modalities, it was agreed that the GMS countries would each designate a customs focal point by the time of the Second Meeting of the Trade Facilitation Working Group Meeting on 28-29 June 2001. The participants agreed to consult further with their respective capitals on the three proposed modalities. In this regard, at the suggestion of Workshop participants, the ADB will write officially the Directors General of Customs of the GMS countries requesting their specific views on the following: (i) proposed modalities, their components, and relative priorities; (ii) the proposed pilot areas; and (iii) the designation of the customs focal points. To assist the countries in further studying these proposals, ADB has provided the definition of key concepts, the rationale and benefits for each modality, information on successful cases, and consultations with the private sector as a key activity in the discussion paper on GMS Proposals in Appendix 3. ADB expressed support for the required consultation process among the GMS countries, and indicated that the Trade Facilitation Working Group Meeting in Phnom Penh on 28-29 June will be the venue for discussing the results of the consultation processes. AcknowledgementsThe GMS countries and the ADB expressed their sincere thanks and appreciation to the Royal Thai Government, in particular the Customs Department and the National Economic and Social Development Board, for the warm hospitality, the excellent arrangements, including for the field visit at Padang Besar, and the invaluable assistance extended to all the participants.
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