TOWARDS LEGITIMATE TRADE FACILITATION : A WELCOME BACK TO A PROFESSIONAL CUSTOMS ADMINISTRATION

By Dr. Eugene Nweke

 

1.0. PREAMBLE:

This modest is a series of shared professional thoughts which seeks to offer the new management team of the Nigeria Customs Service, a professional counsel (not a road map); and it is also an indirect way of congratulating and welcoming on board the New Management Team; doing so without prejudice.

It has been said that the greatest challenges that bedevils our customs operations in the context of its overall national performance, global assessment and  rating has been adduced to DISHONEST DECLARATION/NON COMPLIANCE TO TRADE LAWS AND OPERATIONAL HAGGLING AND HIGH-HANDEDNESS LEADING TO DELAYS.

From system study these thrives owing to the collusions between the ‘ insider traders and external traders ‘ arrangements (an operational connivance between the Shipper either as “Importer or Exporter” Foreign Forwarder/Broker and the Carrier on one hand and the Shipper, Shipping lines, Customs Officer, Forwarder/ Customs Brokers on the other hand.

This unholy alliance breeds operational malpractices, security challenges and revenue leakage. Efforts to mitigate this challenges via ICT tools and applications are often tactically resisted or proves high tasking and a near impossibility by the management (even where the management seems to undertake higher measures nigh un-customed approach), owing to the prevailing connivance in the system.

In spite of these, concealments, transfer of pricing, deliberate under declaration, wrong clarifications, over invoicing, cartels and racketeering etc, persists.

Whereas it is not enough to claim that the trading public are not COMPLIANT, it would appear that our international trade safety and security supply chains are not actually secured in line with global standards. Hence the Integrity of our entire trade and Customs ports supply chains requires urgent probing.

The followings submission is posited with utmost good faith to underscore the reasons professionalism in administration and operations cannot be over emphasized, if we must stem the above highlighted challenges.  We shall be looking at this posit from two angles.

SHARED PROFESSIONAL THOUGHTS WITH THE NEW MANAGEMENT, BY WAY OF CONGRATULATING AND WELCOMING THE NEW MANAGEMENT TEAM ON BOARD and A CRITICAL REVIEWE OF THE CGC, Col HAMED ALI Rtd EIGHT (8) YEARS ADMINISTRATIVE POLICY THRUST OF 3Rs ( Restructure , Reform and Revenue).

2.00. PART ONE: BEING A SHARED PROFESSIONAL THOUGHTS WITH THE NEW MANAGEMENT, BY WAY OF CONGRATULATING AND WELCOMING THE NEW MANAGEMENT TEAM ON BOARD

2.01. INTRODUCTION:

From a professional standpoint, Customs administration is a global practice, regulated by a global body saddle with the task of setting international best practices, among other roles undertaken by the World Customs Organization.

Knowing that the Customs is administered by codes, hence, it provides applicable tools, instruments and initiatives to ease global Customs administrative among signatory national Customs administration.

It is against this background this modest strongly believe that, with the professional in-depth of the Management Team, an aggressive policy could be formulated deployed and pursued, not limited to restore professional sanity via seamless trade treatment and instilling professional integrity but to boldly confront trade breaches and non compliance on the part of the trading public headlong, but with clear sense of patriotism, by maximizing and domesticating the applicable tools, instruments and initiatives of the WCO.

It is on this note, this modest therefore humbly craves your attention and patience while it x-rays and takes you through the global over views on Secured International Trade Safety Supply Chain, so as to foster the need for a professional idealism.

2.02. EMBRACING AN IDEAL SECURED TRADE AND PORT SUPPLY CHAIN VIA CONTAINER SECURITY INITIATIVES PROGRAM.

Globally, Customs of different countries has entered into one Security Initiatives Program or the other, a deliberate move aimed to mitigate the increasing incidences of threats to the Vessels and of the international trade, and ports supply chain, in the aftermath of the 9/11 attack on the World Trade Centre in the USA.

The US Customs proactively launched its Container Security Initiatives (CSI) to protect çontainerized shipping in USA from all forms of terrorists and trade infractions in January 2002.

Notably, under the CSI the US Customs enters into partnership with other governments to target and screen high risks sea containers in foreign ports before they are shipped to or through the US. The CSI is designed to address four cores issues:

a). Establishing Security criteria to identify high – risk containers;

b). Catching high – risk containers before they arrived at US ports;

c). Using Technology to quickly pre -screen or inspect high-risk containers;

d). Developing and using smart and secure containers.

In addition, in April 2002, the US Customs sponsored yet another voluntary program named CUSTOMS – TRADE PARTNERSHIP AGAINST TERRORISM ( C-TPAT). It aims to increase total supply chain security. In July 2002 the program was made available to sea carriers. The program reviewed existing security procedures and implemented enhanced security arrangements, companies (stakeholders) will be able to be certified by Customs as C-TPAT members.

The benefits of the participating companies are:

a). Fewer cargo inspections;

b). An Assigned account manager for each company;

b). Access to the C-TPAT membership list;

d). Placing more emphasis on Self Policing, as opposed to Customs Verification.

2.03. AUTOMATED MANIFEST SYSTEM AS A COMPONENT OF CONTAINER SECURITY INITIATIVES ( CSI) – A CASE OF FIRM STRUCTURE AND ADMINISTRATION:

Subsequently, the US Customs introduced an essential component or element of the Container Security Initiatives- CSI known as the AUTOMATED MANIFEST SYSTEM [AMS]. The AMS is 24 hours Advanced Manifest Rule (AMR), it allows the US Customs to have access to vessel cargo manifest information prior to loading. This allows US Customs officers posted at the foreign seaports to identify high -risks Containers before they are shipped to the USA.

The six (6) basic workings of the 24 hour advanced manifest rule are:

a) The rule covers Cargo destined for the US, as well as Foreign On Board ( FROB) Cargo . FROB Cargo is cargo loaded onto vessel bound for destinations other than the US, which make intermediary calls in the US ports;

b). Carriers will have to transmit cargo declarations to US Customs at least 24 hours prior to commencement of loading operations at the port of loading;

c). Carriers will establish advanced documentation cut -off deadlines of 48 hours to 72 hours of vessel arrival;

d). Customs will notify Carriers only for those shipments which do not have permission to load. Carriers who load without submitting documentation 24 hours prior to loading will face fines and risk delays, including denial of permission to unload or discharge;

e). Shipments placed on hold by Customs will be inspected expeditiously to avoid unnecessary delays;

f). Cargo description must be precise. The US Customs will not accept general description to avoid unnecessary use of vague description as “Freight All Kind -“FAK” or “Machinery “without precise.

It went further to gazette restricted and free to ship cargo for the attention of the Carriers and stipulates a clearly defined data requirements; terms and conditions of applications, etc, to foster compliance on the part of the Forwarder, Carrier and Shipper.

Against this backdrop, the Group of Seven Countries (G7) and the International Maritime Organization – IMO , requested the World Customs Organization – WCO to develop supply chain security instruments for the non Maritime part of supply chain. In response the WCO set up a security taskforce which worked on the basis of consensus between Customs Organizations and the private sector.

The security taskforce developed standards for advanced cargo information and standard data elements in cargo documentation known as the SAFE Framework, which was adopted in June 2005.

In June 2006, the WCO Council approved a document on Authorized Economic Operators – AEO as part of the SAFE Framework of standards.

The SAFE Framework of standards is structurally driven to harmonize the different approach which Customs administrations undertake towards co-operation – both the Mutual Recognized Agreements ( MRA) between Customs Organizations and between trading entities and Customs – while recognizing the needs of both industry and the Customs administrations.

2.04. THE SAFE FRAMEWORK OF STANDARDS – A DELIBERATE EMBRACE:

The SAFE Framework of Standards has four ( 4 ) Core Elements:

a). Advanced electronics manifest information.

b). A consistent risk management approach.

c). At the request of of the importing nation, outbound inspections of high risk cargo using non intrusive detection equipments.

d). Enhanced trade facilitation for legitimate trade that meets certain security standards.

Also, the SAFE Framework of Standards has two (2) Pillars Of Standards:

a). Customs- to-Customs Network Arrangements.

b). Customs – to Business Partnership.

2.05. OTHER FORMS OF SECURITY INITIATIVES PROGRAM IN EXISTENCE – A GLOBAL PRACTICE.

Going forward Customs of different Countries has signed up one or two Security Initiatives Programs Partnership peculiar to their trade environments. To mention but a few, the following Countries are amongst the earliest nations to sign up one Security Initiatives Program Partnership :

a). CANADA: Partners In Protection – PIP and Free & Secure Trade ( FAST) Programme.

b). SWEDEN : STAIRSEC.

c). NEW ZEALAND: Secure Export Partnership.

d). SINGAPORE: Secured Trade Partnership.

e). EUROPEAN UNION: AEO Customs Programme.

In addition the integration of the ISO Supply Chain Security Management System Standards can not be ruled out of consideration in this regards.

3.00. NATIONAL EFFORTS IN RESPONSE TO GLOBAL EMERGENCY:

The Nigeria Customs Service were passionate to pursue and actualize the following global concept and quest with a profound zeal to:

a). Attaining fewer cargo inspections;

b). Placing more emphasis on Self Policing, as opposed to Customs Verification.

c) Device its own method for advanced electronics manifest information collation.

d). consistently enhance its risk management approach.

e). Embracing security criteria to identify high – risk containers;

f). Forestalling high – risk containers before they arrived at the ports;

g). Using electronic Information and technology to quickly pre – screen or inspect high – risk containers;

It was in the above considerations that, the Pre-Arrival Assessment Report (PAAR) of the Nigeria Customs Service was homely developed as trade security tool aimed to facilitate trade cum cargo clearance from the port and forestall security objectives but does not and has not fully serve the purpose of signing up to a Container Security Initiatives Program, which is a global response to counteracting cargo concealments, risks and associated threats on the international trade security and safety supply chain, right from origin ports to destination ports.

3.01. THE PAAR SYSTEM AS A BENCHMARK FOR CUSTOMS MODERNIZATION EFFORTS:

Recall that, on 1st December, 2013 PAAR phase one was successful deployed into the import Clearance Process. This was graduated to a new portal known as the enhanced PAAR Platform which was effectively deployed on the 19th March, 2014. Subsequently, implementation processes and attainments gained the management desire to be a model administration with excellence in providing effective and efficient services to the trading community, while achieving graduated trade compliance processes.

Wherefore, the major initiatives and milestones recorded then include but not limited to:

a). Introduction of Robust Revenue Intervention Mechanism.

b). Fast Tracking of Compliant Traders Based on WCO SAFE-Framework of Safe Standards ( Autorised Economic Operators Concept – AEO Concept).

c). Timely Issuance of PAAR.

d). Consistent Internal and External Capacity Building Initiatives.

e). Building a Dynamic Risk Management Engine.

f). Entrenching the Culture of Professionalism and Quality Control.

3.02. THE FUTURE MODERNIZATION DEVELOPMENT AND IMPLEMENTATION PLANS:

The then Management set forth a Future Development Plan for the technological advancement and sustenance of the modernization efforts, the PAAR Ruling Centre was positioned to implement the following programmes so as to continuously ensure optimal output and seamless trade facilitation:

1). Full integration of the Destination Inspection Service i.e. Scanning and PAAR.

2). Onshore/Offshore capacity building for PRC ( PAAR Ruling Centre) Management , Technical Team and other officers to constantly keep them abreast with modern tools and international best practices.

3). Working out modalities to adopting the “Indian Customs Model”, by sending NCS officers as attachés'”, Prize Analyst” to chambers of commerce of countries with high volumes of imports to Nigeria.

4). Establishment and maintenance of a comprehensive and computerized Customs Risks Management System ( CRMS), fully integrated with relevant regulatory and security agencies such as NAFDAC, NAQS, SON, NSA, etc, to guarantee effective profiling of importers for targeting and informed intervention that would guarantee trade facilitation without jeopardizing national security and revenue.

5). Establishment of a world class Data Centre fully equipped with Back-ups, Disaster recovery plan, fire or water detection system and security controls.

4.0. PAAR AS A SELF DEFEATIST:

It must be stated that, compliance level of the trading public to national trade law was progressing from 20% to 35% and was expected to hit above 50% if the management had adhered to the implementation of the future development plan of the PAAR system and sustained by the PAAR Ruling Centre; unfortunately non compliance to trade laws remains at 20%.

Unfortunately, from 2016, the PAAR Ruling Centre gradually suffered systematic suffocation, manipulation and weaknesses from ambitious insider traders leading to self defeat and a departire from the envisaged milestone. Notably, unfolding events surrounding the PAAR regime amidst the non robust  interactions and integration with the declarant on matters of application with regards to the set workings and rules of the Agreed Custom Value – ACV 20.

This modest witnessed the system narrowed to a self defeatist and don’t intend to name calling any masterminds nor apportion blames. Like the practitioners do retort if the glory of the PAAR ruling centre was intact, there would not be room for an ICT concession arrangement, but for human factors and shortcomings.

The rest event is no longer story, as per is now rated as an advisory blind inspection documentation in the realm of the ousted Pre- shipment inspection Risk Assessment Report – “RAR”.

5.0. INTRODUCTION OF THE INTERNATIONAL CARGO TRACKING NOTE – ICTN BY THE NSC:

Permit to deviate a bit by bringing out the fact that, in the face of this missing national urgent response to global emergency, the Nigeria Shippers Council in an attempt to bridge the gap and in the absence of non iota of national response, resorted to the introduction of the International Cargo Tracking Note – ICTN

Unfortunately, experiences gained from other Countries that had practiced cargo tracking note regime, shows that the Cargo tracking note points more of revenue interests ( issuance of an imports detailing receipt /note as declared by the shipper to the shipping lines and controlled by the Council).

But lacks the requisite security components to mitigate the incidence of insecurity threats and challenges associated with çontainerization, whereby unable to address operational issues in the realm of concealments and accuracy of imports with regards to quantity and quality.

Notwithstanding, Cargo Tracking Note shall be discussed in another topic, where it will be integrated in the right perspective so as to flow with an appreciable costs functions in the reality of cargo security initiatives. Most importantly, any national container security initiatives shall be co- champion by the NCS and the NSC given our national trade environment and its peculiarities.

6.0. MAXIMISING TECHNOLOGY TO QUICKLY PRE – SCREEN OR INSPECT HIGH – RISK CONTAINERS – THE CARGO SCANNER BLAME GAME COME TO THE FORE:

It is on record that, the Nigeria Government had through the Federal Ministry of Finance embarked on a progressive modernization contractual agreement with the Web Fontain/Contecna via the introduction of the Automated System Customs Data ( ASYCUDA) migrated from Asycuda 1.7 Site and to Asycuda 3.0 Site, with a critical contract component to install the Scanner Machines across the Customs entry ports.

From available investigation reports in 2004, it was obvious that the contract was breached at several ends without recourse, especially in a later investigation it was discovered that, the Scanners machines installation was not simultaneously done across board and some of the ones installed in lieu of the contract were refurbished Scanner machines.

The issues of risk management components became highly, a challenge at the ports, invariably the objective was defeated within a short period of time, this is in specific with the transmitting of scanned cargo image for administrative analysis by Custom Officer became an issue, the Cotecna scanner site operator at Appap port reported then that the risk management element of the Mobile Scanner is bigger than the Asycuda channel, hence, performing below capacity as it claimed.

Globally, it does not matter where the Cargo Scanner is situated or cited or operated, all that the Custom officer or management requires is the transmission of the scanned image for analysis and immediate cargo treatment and applications. Cargo Scanned Images cannot be manipulated by undesignated third party.

Cargo Scanner can be performed at origin ( pre scan) or destination, all that matters is the effectiveness in the transmission of results ( scanned image).

The Terminal operators had in the past pleaded to be given the authority to nstall Scanner machines at their anchor bay, so that cargo can be scanned immediately it is been discharged from the vessel and scan image transmitted to the Customs for administrative analysis, for an administrative fee which the shipper still pays as a “transfer to scanning site”, even where they are refused from undertaking such.

7.0. SUGGESTIONS:

The opinion of this professional modest remains that, the Customs don’t really need to procure Cargo Scanning machines in a concession modern port operations. After all, even when you procure it, the maintenance and servicing will be done by the contracting party.

Going forward this modest wish to reiterate the fact that, the present import and export guidelines falls short and does no longer meets the trading realities, to this extend, this modest hopeful urges the new management to review the prevailing procedures and redeploy an authorized and secure Customs ports supply chain for all stakeholders in the international trade and port supply chain, namely the importers/exporters, shipping lines, Brokers, forwarders /intermediaries including independent transport mode operators ( barges operators), terminal operators, bonded warehouse operators, insurance companies and other applicable hubs for cargo management.

The present management team is urged to be professionally revolutionary, by laying a foundation that will promote the basic principles, techniques and strategies for prompt mitigation and the promotion of the culture of trade compliance at all time.

In this regards, Trade Compliance templates and rules should be simplified and adequately communicated and coordinated.

Though the recently presidential consented amended Customs Laws revolves around the peemis of trade sanctions as a way of serving as a deterrent to non compliant traders, here again, in the spirit of firm applications to “Self Control instead of Customs verification ” . It is much better for the Service to wade off non compliance than harboring a system that wet ground for the traders to try and error, while bearing in mind that a business man is driven by profit maximization and shall always seek for loopholes to actualize same.

In strong terms, there must be a deliberate administrative resolute devoid of playing lip services to the issues of non compliance on the part of the trading public, hence, without addressing fundamental administrative regulatory defects within the realm of requisite tools, instruments and initiatives, the essence of the new Customs laws and core functions of the Service may not be holistically achieved.

The present management team, is encouraged to revisit and enhance its once robust stakeholders engagements. The management should enter into strategic working relationship with the Council For the Regulation Of Freight Forwarding Practice in Nigeria – CRFFN, so as to foster professionalism on the part of the freight forwarders/brokers. Most importantly, this strategic alliance will evolve the culture of standard trading conditions ( KYC) and professional scale of charges, as the forwarders/brokers are simply professional service providers who earn a regulated fees or commissions for its services and not the present setting of an ambitious classified trader.

Simply put, encourage the Freight Forwarders/brokers to earn a standard professional charges with services component, join forces with the CRFFN to create enabling playing field, adherence to trade treatment in relation to valuation applications. The Freight Forwarders/brokers will gladly stay off assisting the shipper to cut corners.

8.0. CONCLUSION:

In general, if both the operational officers and the forwarders will dwell within the ambit of their professional engagements, connivances will fizzle out on its own. While the officers works for their salary, the Freight Forwarders/brokers stay with their professional scale of charges and the shippers pays its appropriate duty and receive his imports timely. With this, compliance will be enhanced, malpractices drastically reduced, trade predictability and competitiveness will be promptly achieved and revenue growth attained, and throughput will appreciate. We have what it takes to achieve this feat; it is doable and can be done.

Therefore, this modest solicit your understanding not to dwell on the recent contract award, aka the ambitious e – customs modernization concession for the period of 20 years for obvious reasons, especially so, from the professional knowledge and experiences driving this modest, it is obvious that the spirit behind it, is the same spirit that promoted the erstwhile pre-shipment arrangement of yesterday. Except proven otherwise, the concession arrangement is more or less a going back to yet another pre-shipment contract arrangement in its own disguise. Only time shall tell.

Finally, while Congratulating the management team in their respective portfolios, this modest wish to reinstate, that, you all have the opportunity to rekindle professionalism in all ramifications for a better customs administration beyond your years in office, that you can be proud of. It calls for team work and trust.

God bless the Nigeria Customs Service.

God bless the Nigeria Maritime Industry.

God bless the Nigeria Trading Public.

God bless the Federal Republic of Nigeria.

Thanks.

Fwdr Eugene Nweke Rff Ksm Fnis.

Convener /Vice Chairman – Customs Consultative Committee .

References: Unctad digest//Singapore Seafreight//WCpublications//WTOBulletins//IMOofficial site.