Speech at World Customs Forum 2009
By Mr. Zhu Gaozhang
（October 5, 2009）
Dear Chairperson
Distinguished guests, ladies and gentlemen, dear friends,
Good afternoon!
It is a great pleasure for me to be here to share with you the experience and practice of China Customs and some of my thinking on how Customs can contribute to promoting trade facililatation in a time of global economic crisis and downturn.
As we all know, the global economic crisis broke out first in the United States last year, swept the whole world like a hurricane and heavily struck the global economy, especially global trade. According to the WTO’s survey, the total volume of global trade in 2009 is expected to decrease by 9% , triggering the worst economic depression since the World War. That should be a compelling reason for us to be here today. I think it is the common duty and historical responsibility for all governments, especially all Customs administrations, to make contributions to overcoming the crisis.
Trade facilitaition, as a matter of fact, is an eternal topic for Customs. On one view, maximum facilitation would be achieved if there was no Customs intervention. But wherever there is a country, there is Customs. And where international trade exists, trade facilitation will be talked about. Customs and trade facilitation are the two sides of a coin and the two inalienable parts of a whole. Providing the global trade maximum facilitation while maintaining efficient and effective control has always been the duty of, as well as a challenge for, Customs. Therefore, as a border enforcement agency, Customs can and should play a pivotal and indispensable role in promoting trade facilitation - as mentioned in the WCO’s communication to the G20 early this year.
The level of trade facilitation affects the cost of production, the supply chain of trade and the trade volume, etc. It may cause issues of unemployment and social instability and impose great harm on the international community. However, lack of facilitation, in fact, in most cases finds expression in two types of barrier: tariff barriers and non-tariff barriers. In respect of the first barrier, I recall that the initial sign of the global economic depression from 1929 to 1933 was the terrible shrinking trade which resulted from the protective tariffs imposed by some countries. Other countries followed suit by raising their tariff rates and taking other measures in revenge which, as a result, cornered global trade and created crises in many countries. In the present time of economic crisis, many countries, with the same purpose of protecting their own domestic interests, are repeating the mistakes of the last crisis by putting up a number of tariff and non-tariff barriers, thereby making the current crisis even worse. So, bearing this in our mind and with the aim of enhancing trade facilitation against the global financial crisis, all countries should keep abreast with the G20 Summit to firmly reject trade protectionism and provide compliant companies and global trade with more facilitation.
Since the crisis broke out, the Chinese government and China Customs have taken whatever possible initiatives to eliminate all kinds of barriers, both domestically and internationally, aiming at creating a simplified, coordinated, transparent and equal Customs clearance environment for traders.
Domestically speaking, to meet the crisis, China Customs, in line with WCO recommendations, has explored various remedies including a flexible security system and delayed payment of duties for compliant companies to meet their requirement for the fastest possible flow of goods, thus reducing their costs and the time of release. (By the way, the present average clearance time in China is less than 24 hours for sea cargo and less than 12 hours for air cargo). China Customs has updated the Classified Enterprise Management System and provided enterprises with tailor-made legal assistance. It has also simplified the procedures of cargo flow in such Customs-controlled areas as free zones, bonded areas and warehouses, and encourages the processing trade to transform to better utilize the domestic and international markets. It uses the statistics alerting system to provide information support both to the central government for its decision-making and to companies for their business management. And China Customs continues its efforts in its IPR border protection and combats smuggling activities severely in order to secure the integrity of legitimate importation and exportation.
In addition, China Customs has expedited the government e-port system construction, which has now connected with 10 Chinese ministries, social institutions such as the China Council for the Promotion of International Trade (CCPIT), 14 commercial banks, nearly half a million companies and the Hong Kong and Macao economic authorities, and become an important platform for better communication and information sharing.
Just recently, we conducted a diagonostic research on the difficulties and problems both Chinese and foreign companies encounter in the economic downturn and what they want of China Customs. We sent out hundreds of questionnaires, had interviews with around 100 representatives of big companies, commercial institutions including the American Chamber of Commerce and EU Chamber of Commerce, and all the Customs attachés in Beijing. This helped us identify the priorities of our facilitation programme.
The above introduced initiatives by China Customs have witnessed remarkable effects in facilitating trade and helping companies out of the crisis.
Internationally speaking, in order to cope with the challenges of the 21
st century and secure the steady and sustainable development of global trade, China Customs has been engaging itself in its own facilitation programme. To better its legal system, China Customs has annulled (abolished) hundreds of Customs regulations and legal instruments not aligned with those of the WTO, WCO and other international organizations, and made every effort to ensure uniformity and consistency of enforcement in different regions by perfecting the legislation and standardizing procedures as well as other rules and regulations. In implementing the WCO’s SAFE Framework and C21 Document, China Customs inaugurated the first inter-continental Pilot Project with the EU in September 2006, known as China-EU Secure and Smart Trade Lane Pilot Project (SSTL) or Green Lane. And started formally to exchange electronic clearance data (16 of the 30 WCO recommended key items) in November 2007. Currently, the two sides have reached consensus on some key issues including company verification, mutual recognition of control results, application of smart containers and use of common risk indicators etc. They also have decided to realize the declaration data exchange 24 hours before packing and loading by the end of 2009, so as to achieve risk management and facilitation of international trade based on advance data exchange.
During the China-EU state leaders’ high-level dialogue in May this year, Minister Sheng of China Customs expressed that all Chinese ports were open to SSTL and welcomed more EU member Customs administrations to join in this programme, thus breaking the physical boundaries and helping create a virtual Customs territory so that the importers and exporters need make only one declaration and clearance, which will facilitate the international trade to the largest extent.
At the same time, China Customs started its study on the possibility of introducing the AEO concept into its management and incorporated the AEO concept into its law in 2008. As of today, more than 1200 of 600 thousand companies have already been verified as AEOs. However, our practice and experience in conducting international cooperation on AEO verification shows that due to different situations and legal systems in different countries, there is a long way to go before we can overcome the difficulties of establishing unified global standards for AEO. But in spite of this, we will try our best to reach the goal by starting bilaterally and regionally.
Now China Customs and EU Customs have finished reviewing their mutual verification of Customs procedures. With the US, we have carried out a Joint Validation Pilot Project (C-TPAT). More than 20 Chinese companies validated by China-EU and China-US Pilot projects can enjoy the same facilitation as EU or US AEO companies do.
Last week, the heads of China, Japan and Korea Customs held a tripartite meeting in Beijing and reached consensus on AEO implementation by concluding a Beijing Plan, which will be included in the joint communiqué of the tripartite Premiers’ Annual Conference. In addition, China Customs is also promoting AEO cooperation with the Customs administrations of ASEAN and other countries and regions.
Dear colleagues, it is a compelling obligation and shared responsibility for all governments, Customs as well as traders to maximise the facilitation of trade. Only when traders and Customs join their hands, can they together create a win-win scenario. Therefore, from the Customs perspective, I would like to stress the following points :
Ⅰ. We should take the WCO as a platform to establish and implement uniform Customs standards in the world.
The WCO is the only intergovernmental organization, composed of 174 members, that looks after 98% percent of global trade volume. It is the centre of world Customs expertise and has formulated more than 20 legal instruments such as the HS Convention, the Revised Kyoto Convention (RKC) and the SAFE Framework, which have been widely regarded as the standards and fundamental instruments of trade facilitation. But unfortunately, many members are still not contracting parties to these standards. For example, the RKC is an international convention on simplification and harmonization of Customs procedures and modern Customs management. But, until now, only 64 of the 174 members, that is 1/3 of the members, have signed the convention. As the WCO’s instruments are not so legally binding as those of the WTO, it is sometimes very difficult for Customs administrations to cooperate on a platform of common standards. Therefore, we strongly encourage the WCO members to accede to these conventions and hope that the WCO will cooperate more closely with the WTO and play a stronger and more influential role in pushing forward the new round of Doha negotiations.
Ⅱ. We should further strengthen capacity building and provide more assistance for Customs administrations in developing countries.
Capacity building is a primary and important aspect of international Customs cooperation, and also a catalyst for trade facilitation. It is known that the financial crisis has brought many members various difficulties and problems in their efforts to facilitate trade. However, we have to keep in mind that the developing members are facing even greater difficulties because of shortages of knowledge, technology, money, equipment and so on. Just as the WCO Communication to the G20 Summit stated, the developed members should provide the developing members with more substantial capacity building supports while solving their own. In this way, the gaps between the developing and the developed can be narrowed, the foundation of implementing the international standards and practices can be established and market access for the businesses of the developed members can be facilitated. This will be a win-win-win scenario. Otherwise, I think there will never be real trade facilitation .
Ⅲ．We should establish an efficient and effective Customs to Customs cooperation pattern.
Trade facilitation is safeguarded by efficient and effective Customs to Customs cooperation. China Customs has been exploring the establishment of a primary cooperation pattern with other Customs administrations based on Mutual Recognition of Control Results, Mutual Administrative Assistance and Mutual Information Exchange - namely, the “3M Programme” - the essentials of which are as follows:
Mutual Recognition of Control Results: The two Customs administrations mutually recognize the result of their control so as to minimize duplication of control and lower the administrative and business cost while reserving their respective rights of further control. Examples of this are the China-EU Pilot Project and mutually recognized AEOs which enjoy reciprocal facilitation treatment.
Mutual Administrative Assistance: The two Customs administrations provide mutual assistance in law enforcement in order to improve enforcement efficiency, secure normal trade order and protect the legitimate rights of compliant companies. The main initiatives include mutual assistance in case investigation, intelligence exchange on smuggling activities, Customs protection of IPR, anti-commercial fraud and price information exchange.
Mutual Information Exchange: Within their legal competence, China Customs and other members will provide each other with timely information and publicize laws and regulations on the Customs website. Through information sharing, it is hoped this will assist the governments and companies to appreciate new trends in the international market and to have clearance problems solved beforehand. The main initiatives include Statistics Sharing, Documents Sharing, Information Exchange on clearance requirements, laws and regulations, Customs procedures as well as organizational restructure and responsibilties etc.
Ladies and gentlemen, we have done much in the past, but we have more to do in the future. However, if member Customs administrations take trade facilitation measures only in favor of their own domestic interests without taking other members’ interests into consideration, trade facilitation will be distorted and used as new trade protection measures. Therefore, I would like to take this opportunity to call on all stakeholders here to promote better communication, understanding and cooperation between Customs and Customs, Customs and Business and Customs and other Border Authorites. Customs is not merely a gate, it should be more a grid which will let the legitimate goods pass freely while filtering out the irregularities. Let’s Customs, business and other government authorities join our hands in pushing forward trade facilitation in this time of ecomonic crisis.
Thank you for your kind attention!