Urgent digital transformation is needed to create safe and secure cross border ecommerce customs clearance in the world’s poorest countries.
Over the last few months, COVID-19 lockdown restrictions around the world have had a dramatic impact on cross border ecommerce, including a reduction in the volumes of international parcels postal operators are managing.
Ecommerce success globally had meant a flourishing of packages sent across borders, but coronavirus has caused a decline due to disruptions in transport capacity, the closure of borders and the impact the pandemic has had on consumer trust. Despite this, it is likely that global parcel supply chain infrastructure will be restored quickly by postal operators, transport companies and customs administrations.
This recovery and the return to higher and higher levels of mailings will require urgent digital transformation, especially considering an upcoming deadline for electronic communications on items being sent globally by post. And, action is needed to ensure some countries aren’t left behind.
The regulatory landscape is changing rapidly
The COVID-19 pandemic is only one of the elements currently impacting the growth of cross border ecommerce. This year and 2021 will see huge changes in the regulatory landscape for the international exchange of low-value parcels and packets through the global postal network, supported mainly by designated postal operators of Universal Postal Union (UPU) member countries. UPU members work to facilitate communications and social and economic inclusion through the provision of a universal service.
Electronic advising ahead of the sending of postal items will be critical in meeting legal requirements taking effect in 2020/21, such as those established by the United States of America (Synthetics Trafficking and Overdose Prevention (STOP) Act), China, the Russian Federation and the European Union (Union Customs Code, Import Control System 2). Upcoming security requirements include sending pre-loading advance cargo information (PLACI) before an item leaves the country of origin, confirming the correct export processing to destination customs and transport airlines, and possibly sending security alerts back to the country of origin.
Bringing posts and customs together
The UPU’s Postal Technology Centre created the Customs Declaration System (CDS) that is in use by over 100 member countries of the UPU. The CDS system helps streamline the postal customs clearance process by enabling postal operators and customs administrators to exchange electronic advance data (EAD), perform data-driven risk analysis to support package selection and screening, and expedite the calculation of required duties and taxes.
On the customs front, the UN Conference on Trade and Development (UNCTAD) developed ASYCUDA World, an automated customs management system currently used by 101 countries. The new data standard improves data quality and simplifies communications across the supply chain, thus facilitating trade growth, improving cargo security, modernising customs operations and fostering participation in global commerce through the submission of EAD for air cargo shipments. It also facilitates customs risk assessments for air cargo shipments and improves compliance with security regulations.
Link with the Trade Facilitation Agreement
The World Trade Organisation’s Trade Facilitation Agreement (TFA) outlines member countries’ obligations in terms of reducing trade frictions and red tape, and helps to improve the access of micro-, small- and medium-sized enterprises (MSMEs) to global trade.
The implementation of many of those obligations, such as pre-arrival processing and advance ruling, can be facilitated by existing UPU regulations and solutions. The UPU actively supports and accelerates the implementation of the TFA by postal operators, customs and other trade agencies through its information technology solutions like the abovementioned CDS or the International Postal System (IPS) used by postal operators to dispatch and process international mail items.
Many of these obligations are related to collaborative activities between customs and postal operators such as the single window (TFA article 10.4), pre-arrival processing (TFA article 7.1), advance rulings (TFA article 3) and acceptance of copies (TFA article 10.2). Cooperation between customs and postal operators can help to reduce trade frictions.
Helping least developed countries comply
With the growth of ecommerce and the resulting “parcelisation of trade”, a tsunami of packages is being sent across borders, and postal and customs administrations need to develop new methods to facilitate trade, especially for MSMEs.
To do this, the UPU, in cooperation with UNCTAD, launched an effort this year in 22 least developed countries (LDCs) to facilitate the clearance of postal packages through the exchange of pre-arrival/pre-departure information between postal operators and customs administrations, enabling the use of data to enhance postal and customs operations for more efficient postal operations and more effective customs clearance.
The overall objective is to increase border efficiency and reduce red tape and friction in the cross-border shipment of postal items, often burdened by lengthy paper-driven processes and sluggish physical inspections performed without the support of data analysis risk engines. This builds on previous successful UNCTAD and UPU projects, now with the aim to replicate that success in LDCs by January 2021. The work will seek to reduce enduring traditional challenges such as illicit trade, illicit financial flows, intellectual property right infringement, counterfeiting, and piracy, to name a few.
The UPU and UNCTAD have identified the 22 LDCs in which the national interfaces between UPU’s CDS and UNCTAD’s ASYCUDA can be established quickly to address the urgent need for posts and customs to exchange EAD (see Table 1). The goal is to:
· Enable an efficient customs clearance process and the timely delivery of postal items;
· Improve visibility, timelines and quality of service for items in the postal network;
· Ensure the effective and accurate collection of leviable duties and taxes, and the efficient implementation of de minimis thresholds.
UNCTAD’s e-trade readiness assessments are supporting this work with information about where ASYCUDA is operational and what challenges and opportunities exist in each country’s ecommerce context, while the UPU’s operational readiness for ecommerce project identifies which LDCs need to install CDS and which ones only need to interface with ASYCUDA. Proof of concept pilots are planned for Vanuatu, and Cambodia was recently added to the list.
The completion of this project will improve trade facilitation and inclusion to and from these countries, by enabling individuals and small businesses to exchange goods internationally through the global postal supply chain, while introducing efficient customs clearance processes and supporting the timely delivery of postal items.
Javier Garcia Blanch, Customs Programme Expert, Universal Postal Union
A version of this opinion piece appeared in the Opinion section of The Trade for Development News by the Enhanced Integrated Framework (EIF), WTO. To see the original, please go to: https://trade4devnews.enhancedif.org/en/op-ed/clock-ticking-electronic-advance-data-trade-and-ecommerce-ldcs