OVERVIEW AND INTRODUCTION TO NEW MATERIALS JUNE 2015
Overview New materials: 1. Diagnostic Tool on Tariff Classification, Valuation and Origin Work and Related Infrastructure 2. Guidelines on Customs Infrastructure for Tariff Classification, Valuation And Origin 3. Diagnostic Tool on Post-Clearance Audit (PCA) and Infrastructure 4. Technical Guidelines on Advance Rulings for Classification, Origin and Valuation 5. Origin tools : a. Origin Irregularity Typology Study b. Guide to Counter Origin Irregularities (excluding fraud) c. Comparative Study on Certification of Origin d. Guidelines on Certification of Origin 6. Tools for reducing revenue risks and the revenue gap : - Mirror analysis guide, including case study - Undervaluation of textiles/ Italian experience 7. Developing policies with respect to informal trade: 8. Assistance To Members In The Termination Of Private Sector Inspection Contracts : 9. Customs Valuation and Transfer Pricing : - WCO Guide to Customs Valuation and Transfer Pricing - Updated e-learning module Updated materials 10. Practical Guidelines for Valuation Control : includes material from ICC on typical commercial pricing practices Benefits OVERVIEW The Revenue Package was initiated as a response to Members concerns over declining revenue returns in the context of the global financial crisis of 2008 and falling duty rates in general. Collection of revenue has historically been the cornerstone of a Customs administration s responsibilities. For a number of years, Customs has been actively involved in protection of society and trade facilitation initiatives. More recently, the role of Customs has expanded; issues such as the fight against counterfeiting, counter-terrorism activities and the protection of the environment have featured high on the agenda of international Customs work programmes. Alongside these important topics, revenue collection continues to be an area of concern for Customs administrations. The global financial crisis has led to a downturn in international trade which has inevitably hit government revenues. Additionally, the global trend in the reduction of Customs duty rates, through unilateral, regional, and multilateral trade liberalizations, will potentially have the same effect. A WCO Communication was issued to the G20 for its London Summit in 2009 on the global financial crisis. It expressed the WCO s viewpoint on specific global issues that impact on Customs, and to assure them that the WCO, within the framework of its mandate, is willing and ready to contribute positively to the resolution of global issues in co-operation with others. The WCO contribution was well-received and echoed in the G20 London Communiqué on 2 April 2009. 2
In response, the WCO Council passed the following Resolution in June 2009: The WCO Secretariat and Members should enhance even further the delivery of effective capacity building, especially as a response to declining revenue collection and obstacles to trade facilitation caused by the global economic downturn. In June 2012, work on the Phase I Revenue Package Action Plan was finalised. Following endorsement by the WCO Policy Commission and Council, a series of new tools and materials were launched. A Phase II Action Plan was established in June 2013, and a second series of tools and materials is due to be launched in June 2015. See next section for details. The Revenue Package consists of all available tools and instruments relevant to revenue collection. This includes, inter alia, formal instruments and Conventions, guidance notes and training material. A Revenue Package Schedule has been developed which acts as a single point of reference for all new and existing Revenue Package material. The Schedule provides direct access, via hyperlinks, to the material in question. The full Schedule is available on the WCO Members website. A version listing all unrestricted material is available on the Public website. Members are encouraged to consult the Schedule to ensure that necessary requirements have been met and that all relevant material has been obtained by the administration and is being utilized as appropriate. Copyright 2015 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org 3
INTRODUCTION TO NEW MATERIALS 1. Diagnostic Tool on Tariff Classification, Valuation and Origin Work and Related Infrastructure 2. Guidelines on Customs Infrastructure for Tariff Classification, Valuation And Origin The aim of this material is to provide a route map and self-assessment mechanism which will help Members assess their current level, identify weaknesses and plan the necessary steps for strengthening their infrastructures and control programmes. Additionally, the tool can be used in collaboration with external facilitators. The format for the new tool has been based on the diagnostic tool for classification already developed which in turn was based on the structure used in the WCO s Customs Capacity Building Diagnostic Framework. 3. Diagnostic Tool on Post-Clearance Audit (PCA) and Infrastructure The aim of this tool is to provide a route map and self-assessment mechanism which will help Members plan the necessary steps for strengthening their infrastructures and control programmes in line with WCO PCA Guidelines. The framework for the new tool has been based on the diagnostic tool for classification already developed. 4. Technical Guidelines on Advance Rulings for Classification, Origin and Valuation This document has been prepared to align and combine the various texts currently available which provide advice in relation to issuing advance rulings on classification, origin and valuation. In particular, this was done in the light of the WTO Trade Facilitation Agreement (TFA) which provides in Article 3 a requirement to provide advance rulings in respect of classification and origin and also encourages WTO members to provide rulings for Customs valuation. 5. Origin tools : a. Origin Irregularity Typology Study This study focuses on irregularity cases related to rules of origin, excluding fraud cases committed with deliberate intention. The study is based on inputs provided by WCO Members. It demonstrates that Customs administrations consider that the major cause of irregularities related to rules of origin is a low level of familiarization with origin criteria, as well as the fact that some of the procedural provisions stipulated in free trade agreements are not functioning efficiently. b. Guide to Counter Origin Irregularities (excluding fraud) The purpose of this Guide is to provide practical solutions to Customs authorities on the ways to confront origin irregularities. The Guide, consisting of good practices and actual cases collected from several WCO Members will hence constitute a useful practical tool. The case studies are prefaced with an overview of the topic including the background to the guidance material as well as the main considerations for tackling origin irregularities. 4
c. Comparative Study on Certification of Origin The aim of this tool is to capture the present state of play regarding certification of origin, both in the areas of non-preferential origin and preferential origin. One of the actions included in the Phase II Action Plan was the development of new guidance material to help Members to strengthen their capacity related to origin certification and the study has been undertaken as an initial step towards this goal. d. Guidelines on Certification of Origin The WCO Guidelines on Certification of Origin aim to provide useful guidance and practical explanations for the Members to design, develop and achieve robust management of origin-related procedures. Section I provides general background and definitions to be used throughout the Guidelines. Section II deals with the certification of origin with regard to preferential rules of origin, which is used to determine whether a preferential tariff rate is applicable under respective preferential schemes, and Section III covers the certification procedures for non-preferential rules of origin in relation to the WTO Agreement on Rules of Origin. 6. Tools for reducing revenue risks and the revenue gap : - Mirror analysis guide, including case studies - Undervaluation of textiles/ Italian experience It is acknowledged that accurate quantification of potential revenue loss is a great challenge. However, there are certain tools that are useful in this regard and can lead to better focused risk assessment and, in turn, improved compliance levels. For instance, the WCO s mirror analysis project is an example of how export and import trade statistics can be compared for the same products over the same period to identify possible undervaluation or misclassification of goods. Additionally, to provide assistance to Members, a guide has been prepared on the use of mirror statistics for analyzing discrepancies in Customs import and export data, based on existing literature and analysis of countries trade data. The Customs administration of Italy has produced a case study explaining how they used statistical analysis to target and identify the undervaluation of imported textiles. 7. Developing policies with respect to informal trade: Informal trade is regularly highlighted as one of several key challenges to effective revenue collection. A good practices guide has been produced, together with national case studies which illustrate Members various strategies for dealing with this issue. 8. Assistance to Members in the termination of private sector inspection contracts: 5
The WCO Secretariat has conducted several initiatives over recent years to assist and encourage countries which are planning, or considering, termination of inspection contracts, particularly in the areas of classification and valuation. Additionally, Article 10.5 of the TFA states that Members shall not require the use of pre-shipment inspections in relation to tariff classification and Customs valuation. A good practices guide has been produced, together with supporting national case studies, in order to provide valuable guidance to other Customs administrations who still maintain such contracts. 9. Customs Valuation and Transfer Pricing : - WCO Guide to Customs Valuation and Transfer Pricing - Updated e-learning module This Guide has been produced In response to needs expressed by Customs administrations and the business sector. It consists of technical background on Customs valuation and transfer pricing principles and methodologies, a summary of the work conducted to date and references to good practices developed by Member Customs administrations. Updated materials: 10. Practical Guidelines for Valuation Control An appendix has been added to these Guidelines, provided by the International Chamber of Commerce, which contains examples of typical commercial pricing practices. The aim is to provide illustrations of legitimate business scenarios where prices for the same goods may vary. It is important that Customs take into account such possibilities when making reference to a valuation database and determining whether a declared Customs value should be investigated further. BENEFITS By using the new and existing material (available via the WCO Members website), Members will be able to ensure they are identifying and collecting all revenue which is legally due and improve compliance levels. Effective risk management ensures that Customs deploys its resources in the most cost-effective way by targeting high-risk operators where revenue returns are likely to be high, whilst facilitating the compliant trade. For any questions relating to the Revenue Package, please contact: WCORevenuePackage@wcoomd.org 6