Customs and Air Cargo – Cooperation or Constraint

Customs enter at least twice into each international air movement, inserting a set of obligatory, authoritative official controls into the commercial management of aircraft and cargo.

Those interventions can bring costly delays, open up opportunities for damage, loss and pilferage, inflate insurance charges, reduce customer confidence and satisfaction, frustrate just-in-time supply, production and distribution chains and cancel out the inherent speed advantages of air transport compared with surface movement. All too often associated administrative interruptions and inefficiencies are complicated and polluted by endemic petty corruption.

Such practices cripple trade in and out of many developing and emergent economies, with consequent sharp curbs on inward investment and associated employment.

In happy contrast, a relatively few customs services, operating mainly in major global trade flows, offer the air cargo industry consistently reliable, rapid and sympathetic treatment.

How does this situation affect the various sectors of The International Air Cargo Association membership and what can the Association do to bring about necessary reforms and encourage high-quality customs administrations?

Customs dictate the extent and quality of services that cargo carriers, airlines and express integrators, are able to offer at all points in the global freight delivery market. In some countries sustained, if unpredictable, delays imposed by customs requirements rule out any possibility of modern express operations. In others procedural and delay costs escalate and carriers are unable to develop efficient and economic means of importing essential supplies or exporting such exceptionally time-sensitive products as fashion garments or electronic components and sub-assemblies.

Customs performance and standards mould and limit the operational resources that agents and brokers can offer their cargo-owner customers. Customs, with direct control of major revenue collection operations and wielding discretionary powers to confirm or question the declared foreign currency value of export consignments, are in an ideal position, in many countries, to demand bribes. Agents can find themselves under immense, often irresistible pressures to connive in and channel such illegal payments. They become unwilling scapegoats with a constant threat of exposure as international anti-corruption sentiment and action gains in scope and momentum.

Airports have to take their operational cue from customs, who set effective limits for commercial performance within often highly competitive national, regional and international air transport networks.

It is impossible to recoup the benefits of the large investments associated with modern airport structures and services if these cannot attract freight traffic because they are shackled to inefficient customs administrations.

Aircraft constructors are dependent on customs services at all stages of their business cycle. Like automobile manufacturers, they are predominantly assembly industries, entirely dependent, in production techniques, on the rapid and timely arrival of an enormous variety of materials and components in precisely calculated sequences and combinations. Bringing such complex commercial flows into compliance with equally complicated customs requirements, such as classification or certification of origin, can, even in the best-managed administrative circumstances, present constant difficulties and, disputes, with an ever-present risk of exceptionally costly interruption to finely adjusted assembly schedules.

Once aircraft are in service there are frequent, often unpredictable and usually urgent requirements for rapid delivery of spare parts or service equipment. Such situations often arise in countries with primitive and corrupt customs services. Aircraft, costing many million dollars, can be grounded for days, awaiting the arrival of what, for customs purposes, may seem a very trivial and unimportant item.

Even in developed economies with efficient customs, there can be clearance problems for spare parts subject to well-justified but inappropriately complex controls designed to eliminate fraudulent and so dangerous imitations.

It seems likely that the most effective way forward for The International Air Cargo Association will lie through a judicious combination of self-help and inter-institutional cooperation.

Certain objectives can be directly related to the special concerns and requirements of our industry. We are, for example, particularly dependent on the rapid reliable release of consignments and aircraft. We can, therefore, afford to concentrate a visible TIACA effort on these aspects of customs control and performance, scrutinising and seeking to improve both relevant parts of the regulatory framework and the methods by which customs administrations interpret and apply it.

On the other hand, it is impossible to predicate customs services which are effective solely in respect of rapid release. Such efficiency has, in practice, to be one aspect of a more general standard of performance. As a single, relatively narrow international trade sector, therefore, we need to work towards overall customs reform within a wider consortium of business and inter-governmental interests.

In acquiring the ability and means to play air cargo industry tunes on the global institutional piano we will need to effect and sustain useful synergies with a range of other bodies;

On the business side we can count as potential allies the International Chamber of Commerce, IATA, IECC, UPU, FIATA and ACI. For official purposes we can look to and assist the WTO, WCO, APEC, EU Commission, G8, OECD, UNCTAD, ICAO and the World Bank.

We shall need to appreciate the radical difference between the need to sharpen already effective customs practices in Europe, the US, Australasia, and such competitive entities as Singapore and Hong Kong, on the one hand and the laborious, even dangerous, task of taking the edge off gross customs inefficiencies and improprieties in numerous Latin American, African, East European and Central and South East Asian customs on the other.

We shall have equal need to accept and respond to an urgent social and political imperative to relate the most advanced solutions to global trade requirements, at one end of the customs spectrum, as effectively and rapidly as possible, to the move for radical reform of the largely nineteenth century practices still prevalent among many developing country customs services.

We must also recognise and react, appropriately, to the serious problem of official corruption, which underlies and sustains inefficiency in far too many economies. Here we should cooperate closely with Transparency International, the WCO, and, eventually, the WTO.

Given this sufficiently extensive and demanding work programme, we could well, in the immediate future, focus our customs policy sights on two key developments - the forthcoming WTO trade round, which can, and should, include a trade facilitation “package”, of new and salutary enforceable rules in favour of customs transparency, equity and predictability, and the movement, by the World Customs Organisation (WCO), to secure necessary launch-pad adherence to the Kyoto Convention on the Simplification of Customs Procedures.

The immediate need is to connect the membership effectively to a reasonable and manageable work programme. The Association has already established contacts with the main representative commercial and inter-governmental organisations. The next step is for the Secretariat to identify members who appreciate, and have personal experience of, customs influence on their daily operational responsibilities, and form them into a small working group with an initial set of suggestions for future activity based on a broad customs strategy agreed by the Association’s Executive Council.