challenges facing customs administration in trade

facilitation

Customs modernization

Customs modernization refers to the process of improving and updating a country's

customs operations to enhance efficiency, transparency, and compliance. It involves
integrating technology, adopting international best practices, and streamlining customs
procedures to better manage cross-border trade, reduce costs, and improve revenue
collection.

Key components of customs modernization typically include:

• Automation of Processes: Implementing digital systems to automate the

clearance of goods, reduce paperwork, and speed up the processing time for
imports and exports.
• Risk Management: Developing systems to assess the risk of goods being
imported or exported, helping customs authorities focus on high-risk shipments
while expediting the clearance of low-risk goods.
• E-Government Initiatives: Facilitating online submission of customs declarations,
payments, and approvals to minimize delays, corruption, and human error.
• Single Window Systems: Introducing a single platform where all regulatory
agencies involved in cross-border trade can exchange information and processes
in one unified system, reducing redundancy and delays.
• Trade Facilitation: Simplifying tariffs, duties, and customs procedures to make it
easier for businesses to trade across borders.
• Customs Valuation Reforms: Modernizing the methods used for assessing the
value of goods for tax purposes, ensuring fairness and consistency.
• Customs Enforcement: Strengthening enforcement mechanisms to combat fraud,
smuggling, and the illicit trade of goods by using modern surveillance, inspection
technologies, and data analytics.
 • Capacity Building: Training customs officials in the use of new technologies,
procedures, and international trade regulations.
• Public-Private Partnerships: Collaborating with the private sector, such as
logistics companies and trade associations, to ensure that customs
modernization aligns with the needs of businesses and trade stakeholders.

Customs modernization applies trade facilitation and customs control measures in order
to overcome the challenges brought by globalization. The issue here is how much to
facilitate and how much to control?

Customs control focuses on enforcing laws and regulations, while trade facilitation aims
to simplify and streamline the movement of goods. The two concepts must work
together to ensure that trade is both secure and efficient.

How customs control and trade facilitation are interrelated:

Balancing Security and Efficiency

• Customs control ensures compliance with national and international trade laws,
protects national security, and prevents illegal activities like smuggling, while also
collecting revenue through tariffs and duties.
• Trade facilitation simplifies and speeds up the movement of goods by reducing
delays, streamlining processes, and improving border procedures.
• A balance between the two is necessary: excessive customs controls can slow
down trade, while inadequate control may lead to security risks and lost revenue.
Effective trade facilitation systems reduce delays without compromising the
ability to enforce regulations and ensure compliance.

Risk Management and Targeted Inspections

• Customs control implements risk management techniques to identify high-risk

shipments that need more scrutiny, while low-risk shipments can be processed
faster.
 • Trade facilitation benefits from these risk management systems, as they allow for
quicker clearance of goods that pose minimal risk, reducing bottlenecks and
improving trade flow.
• Advanced customs control systems use technologies like automated risk profiling
and electronic data exchange, allowing for faster customs clearance without
sacrificing security or regulatory compliance.

Automation and Technology

• Customs control has become increasingly digitalized with automated processes

for declaration submission, duty calculation, and clearance.
• Trade facilitation benefits directly from these technological advancements. For
example, the introduction of Single Window Systems, where traders can submit
all required documents electronically, reduces the complexity and paperwork
involved in customs procedures, speeding up the overall process.
• Technology integration, such as the use of X-ray scanners for non-intrusive
inspections, also allows customs authorities to maintain effective control while
avoiding delays for legitimate traders.

Simplified Procedures and Customs Documentation

• Customs control often involves verifying documentation, assessing the value of

goods, and ensuring compliance with regulations.
• Trade facilitation focuses on simplifying and harmonizing these customs
requirements to reduce delays. Simplified customs procedures, such as
streamlined documentation and clear customs tariffs, contribute to easier and
faster border crossings.
• Harmonization of customs rules with international standards, such as the World
Trade Organization’s Trade Facilitation Agreement (TFA), ensures that trade is
easier across borders while maintaining effective control measures.

Revenue Collection vs. Trade Flow

 • Customs control is responsible for collecting duties, taxes, and other fees on
imported goods, which is essential for government revenue.
• Trade facilitation seeks to ensure that these processes don’t hinder the flow of
trade, meaning that customs authorities must design procedures that allow
revenue collection without excessive delays.
• Proper customs controls ensure that the government collects the appropriate
revenue, while trade facilitation ensures that this is done efficiently, with minimal
disruption to trade.

Ensuring Legal and Safe Trade

• Customs control helps prevent the illegal importation of prohibited or restricted

items, such as drugs, weapons, or counterfeit goods.
• Trade facilitation ensures that legal trade flows smoothly and efficiently, making it
easier for businesses to import and export goods without unnecessary
administrative burdens.
• The integration of both allows legitimate trade to flourish while ensuring that
national security and public safety are maintained.

Public-Private Partnerships

• Customs control benefits from collaboration with private sector stakeholders

(e.g., logistics companies, traders, and freight forwarders) to enhance
compliance and improve enforcement.
• Trade facilitation is often more effective when there is close cooperation between
the public and private sectors. For example, the private sector can provide
valuable input on customs procedures that could be simplified or improved to
help reduce bottlenecks and improve the efficiency of customs clearance.

Customs Modernization and Efficiency

• Customs control has traditionally been paper-based and manual, which can be
slow and prone to human error.
 • Trade facilitation relies on modernizing customs systems to allow for faster
clearance, better use of data, and more streamlined operations. The
modernization of customs infrastructure—like e-filing systems, automated risk
management tools, and digital payment methods—supports both the need for
robust customs control and the goal of facilitating trade.

International Standards and Trade Agreements

• International agreements, such as the World Customs Organization's (WCO)

standards and the World Trade Organization's Trade Facilitation Agreement
(TFA), encourage customs control measures to be efficient, transparent, and
predictable while promoting easier trade.
• Compliance with international standards for both customs control and trade
facilitation ensures that countries can participate in global supply chains without
facing unnecessary trade barriers.

Customs Dilemma

A customs dilemma typically refers to a complex issue or challenge that arises during
the customs clearance process, often involving conflicting regulations, trade policies, or
ethical considerations. These dilemmas can occur at various stages of the import and
export process, including during the classification of goods, valuation of duties, or
compliance with national and international regulations. Below are a few examples of
common customs dilemmas:

Classification Disputes

• Scenario: A trader imports a product that could be classified under multiple tariff
codes. The customs department has a standard classification system for goods,
but the product could fit into different categories, each with different duty rates.
• Dilemma: The trader may want to classify the product under a lower duty rate,
while customs must ensure the product is correctly classified according to its
 actual characteristics. If the classification is incorrect, it may lead to penalties,
disputes, or delayed clearance.
• Solution: The customs officer may need to assess the product’s function,
appearance, and composition to make an accurate classification. This could
involve consulting with technical experts, verifying invoices, or referring to
international trade codes.

Valuation of Goods

• Scenario: A company imports goods at a lower price but includes additional fees
for shipping, insurance, and handling that are not clearly documented.
• Dilemma: Customs must determine the correct valuation of the goods for duty
and tax purposes. The trader might underreport the value of the goods to reduce
taxes or duties.
• Solution: Customs will need to review the documents carefully and ensure all
additional costs are included in the declared value of the goods. Discrepancies
between the declared value and market value could lead to audits, fines, or
shipment delays.

Risk of Smuggling and Fraud

• Scenario: A trader submits a declaration for a shipment of electronic goods, but

the customs department suspects that the goods may be misdeclared or contain
prohibited items (e.g., counterfeit electronics).
• Dilemma: Customs officers must balance the need for quick clearance with the
risk of illegal activities such as smuggling or fraud. A delay could disrupt trade,
but failing to inspect properly could allow prohibited goods into the market.
• Solution: Customs may employ risk management systems to assess whether a
shipment warrants further inspection, using criteria like the consignee’s history or
 the consignee's country of origin. Non-intrusive methods like X-rays or scanning
can be used to minimize delays while ensuring safety.

Ethical Dilemmas in Enforcement

• Scenario: A shipment of goods containing perishable food items is delayed at

customs because the importer has failed to meet all necessary health standards.
• Dilemma: The customs department must decide whether to reject the shipment
outright, risking a loss for the importer, or to allow the goods to proceed with a
penalty or additional inspections.
• Solution: The customs officer needs to consider public health implications and
the economic impact on the business. In some cases, goods may be allowed
entry with additional fees or certifications, or the shipment may be sent back to
the origin for proper handling.

Interagency Conflicts

• Scenario: A shipment arrives that includes both pharmaceuticals and hazardous

materials. Customs needs to coordinate with other agencies, like the Tanzania
Medicines and Medical Devices Authority (TMDA) and the National
Environmental Management Council (NEMC), to clear the goods.
• Dilemma: Customs may face delays due to conflicting regulations or differing
interpretations of how to handle the shipment from the various agencies involved.
The customs department needs to ensure that the goods are cleared in
accordance with all regulations while preventing goods that may be unsafe from
entering the market.
• Solution: The customs department should ensure clear communication and
coordination between the involved agencies

Other Government Department (OGDs)

In Tanzania, the clearance of goods at ports and border posts for import or export
involves the coordination of several government departments and agencies. Each of
these departments plays a crucial role in ensuring that the goods comply with national
regulations, safety standards, and international agreements. Below is an explanation of
the roles of various government departments involved in the clearance of goods to and
from Tanzania:

Tanzania Bureau of Standards (TBS)

TBS is responsible for ensuring that imported and exported goods meet national quality
and safety standards. TBS inspects and certifies that products meet Tanzanian
standards for quality and safety before they can be sold in the domestic market. This
includes various consumer products, industrial goods, and machinery. It also issues
certificates of conformity for goods that meet the required standards, which is a
prerequisite for importing or exporting certain goods, particularly those that affect
consumer safety and public health. TBS conducts testing to ensure that goods,
especially consumer products, food, and electronics, comply with the necessary safety
regulations and technical standards.

Atomic Energy Commission (AEC)

The Atomic Energy Commission of Tanzania regulates the use of radioactive materials
and ensures that any goods involving radiation comply with safety and security
measures. AEC is responsible for overseeing the import and export of radioactive
materials or equipment that may pose health and environmental risks if not properly
handled. It ensures that the importation, handling, and disposal of radioactive
substances comply with national and international safety standards, such as those
governed by the International Atomic Energy Agency (IAEA).

Tanzania Medicines and Devices Authority (TMDA)

TMDA is the body that regulates the import and export of medicines, medical devices,
and related products to ensure their safety, efficacy, and quality. TMDA ensures that
imported pharmaceutical products, vaccines, medical devices, and health-related
equipment meet national standards for safety, quality, and efficacy. The authority issues
permit and certificates for the import and export of medicines and medical devices,
including performing detailed evaluations of these products before they enter or leave
the country. TMDA also monitors the safety of pharmaceutical products through post-
market surveillance and quality assurance mechanisms, ensuring the continuous safety
of health products available in the market.

Ministry of Agriculture
The Ministry of Agriculture ensures that agricultural goods (including plants, seeds, food
products, and animals) are safe, free of pests, and do not introduce diseases that could
harm local agriculture or ecosystems. The Ministry conducts inspections of imported
agricultural products (such as fruits, vegetables, seeds, and livestock) to ensure they
are free from harmful pests and diseases. It issues phytosanitary certificates for
agricultural exports, ensuring that these goods meet the required health standards in
the destination country. The Ministry also ensures that agricultural imports meet local
standards for food safety and plant health to protect domestic crops and livestock from
foreign pests and diseases.

Government Chemist Laboratory Agency (GCLA)

The GCLA ensures that chemicals, food products, and other substances entering or
leaving the country comply with health and safety standards. It conducts testing of
chemicals, particularly for industrial or medical use, to ensure they meet the required
safety standards and are not harmful to public health or the environment. The GCLA
also plays a role in testing food products for contaminants such as heavy metals,
pesticides, and other hazardous substances before they are cleared for import or
export. Additionally, the Government Chemist supports law enforcement and regulatory
agencies by providing forensic analysis, particularly in cases involving illicit or
dangerous chemicals.

Immigration Department
The Tanzania Immigration Department is responsible for regulating the movement of
people across the country's borders, including those engaged in trade activities. It
issues visas, work permits, and other necessary documentation for foreign nationals
involved in the import/export sector. The department enforces border security, ensuring
that unauthorized individuals do not cross into or out of the country, which can help
reduce the risk of smuggling or illegal trade activities. Immigration officials also monitor
the movement of foreign traders or workers involved in clearing goods or managing
logistics at ports and border posts.

National Environment Management Council (NEMC)

NEMC is responsible for ensuring that goods imported or exported do not harm the
environment or violate environmental regulations. NEMC assesses the environmental
impact of certain goods and activities, particularly those involving hazardous chemicals,
waste products, or large-scale industrial equipment. The agency ensures that certain
goods, such as hazardous chemicals, pollutants, or waste products, comply with
Tanzanian environmental laws and international environmental protocols (e.g., Basel
Convention). NEMC enforces regulations regarding the importation and exportation of
goods that could have detrimental effects on the environment, including monitoring the
handling and disposal of hazardous materials.