FACILITATING INTRA-OIC TRADE:
Improving the Efficiency of the Customs Procedures in the OIC Member States
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CHAPTER II: THE ROLE OF CUSTOMS IN FACILITATING TRADE
Customs administrations are critical institutions for almost all the countries. They
collect revenues, implement the provisions of trade policy, secure the country from
illegal trade (such as narcotics, arms etc). They are applying the necessary procedures
for the movement of goods across the borders. Customs administrations may be
responsible for the application not just of their own procedures and requirements but
also those of a range of other authorities, particularly for ensuring compliance with
documentary requirements (licenses, certificates, etc.) for many purposes (Moise 2013).
Due to these procedures, clearance of goods from the customs takes too long time in
many countries which have negative impact on foreign trade.
Improving the efficiency of the customs procedures is one of the main objectives of
trade facilitation efforts. Delays in international trade due to prolonged customs
procedures have significant impact on foreign trade. For example, Martincus and
Graziano (2012) studied the case of Uruguay by using detailed export data of Uruguay
Customs from 2002 to 2011. The study found that delays associated with customs
procedures have a significant negative impact on exports. For each additional day that
these procedures add to the transit time between the origin and the destination, results in
a 1.4% decline in the export growth rate. In another study, Cudmore and Whalley
(2005) investigated the interaction of border delays and trade liberalization in the CIS
Countries by using the data of Russian trade for the late 1990s. They found that if such
delays are significant and the length of the delay is endogenously determined, then trade
liberalization through tariff reductions that increase the length of the queue can be
welfare worsening.
During the past several decades, the cargo to be processed by the Customs
Administrations increased dramatically due to developments in global trade. More
goods need to be processed by the Customs in a timely manner to improve the
competitiveness of the country while ensuring the goods processed are safe.
Governments eager to attract investments and promote exports requested customs
administrations to facilitate commercial transactions, keeping administrative charges
and wait times for enterprises to a strict minimum (Rentier and Parent 2012).
Multilateral Trade facilitation efforts under WTO also focused on simplifying the
customs procedures including risk management, Single Window, post clearance audit
etc. To support the developing and least developed countries, WTO Secretariat is
providing needs assessments to these countries in cooperation with the relevant
international institutions and developed countries. In this context, 94 national needs
assessments have been conducted during the September 2007-December 2010 period.
The World Customs Organization (WCO) and UN economic Commission for Europe
(UNECE) also has remarkable work in recent years for the modernization of the
Customs Administrations and to improve the efficiency of customs formalities. Several
standards and international conventions have been developed and put into force in this