Convention on Mutual Administrative Assistance in Customs Matters: SA Revenue Services briefing
NCOP Finance
31 May 2006
Meeting Summary
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Meeting report
FINANCE SELECT COMMITTEE
31 May 2006
CONVENTION ON MUTUAL ADMINISTRATIVE ASSISTANCE IN CUSTOMS MATTERS: SA REVENUE
SERVICES BRIEFING
Chairperson: Mr T Ralane (ANC) (Free State)
Documents handed out:
International Convention on
Mutual Administrative Assistance in Customs Matters (2003)
Explanatory
Memorandum of Convention on Mutual Administrative Assistance in Customs Matters
SA Revenue Services
briefing
Draft Committee Annual Report
SUMMARY
The South African Revenue Services (SARS) briefed Members on important
elements of the Johannesburg Convention being considered for ratification. The
meeting also looked at further aspects of customs-related international
obligations. The delegation attempted to persuade the Committee to support the
Johannesburg Convention. Much emphasis was placed on the increase in volume and
changes in type of trade. There was a need to redefine customs and consider the
employment and ‘upskilling’ of customs officials. The meeting agreed to support
the ratification of the Convention.
The meeting also took on the Committee Annual Report for later personal review.
The Chairperson suggested that Members present their comments at the next
meeting before likely adoption.
SA Revenue Services briefing
The presentation was conducted by Mr Giorgio Radesich, SARS Policy Unit and
Ms Varsha Singh, Manager of International Customs from the International
Relations Unit.
Mr Radesich emphasised that there were 48 points of border entry and much trade
movement with the Southern African Customs Union (SACU) countries. The purpose
of the Convention was to redefine the role of customs so that it not only
related to security issues, but also to trade facilitation. The coming together
of key stakeholders was essential. He illustrated the complexity of customs and
the need to employ people with the necessary knowledge in processes of trade.
There was a need to balance the interest of trade and security in every
province at all 48 points of entry. There were only two provinces without
international land borders, namely Gauteng and the Western Cape. It was a
challenge to improve infrastructure at certain border posts and this would
become more relevant in the future
The driving force behind this Convention was the World Customs Organisation
(WCO), where South Africa enjoyed a strong strategic position. The need for the
Convention was based on numerous factors. Many changes had occurred, both
commercially and electronically, regarding the movement of high-value goods.
There was a need for a specific calibre of people to deal with this. Officials
would need an economic grasp of customs in relation to the types of goods and
the type of trade. Due to globalisation, there was also a growing inequality
between countries. There was a growing demand for consumer goods and therefore
a need for more effective anti-smuggling measures.
Ms Singh continued that from a multilateral perspective, there were two main
international responses. The first was the WCO and the Kyoto Convention. The
Johannesburg Convention was also built around the Frameworks of Standards to
facilitate trade. There was a need for good networks with other customs
administrations. Information from the exporting country could possibly then be
used in the risk analysis process in South Africa. For example, at the Durban
Port, American customs officials were profiling goods moving between the two
countries. Non-intrusive equipment and scanners should be used to assist in
trade facilitation. There was also the identification of ‘Authorised Economic
Operators’, where different status could be given to clients in a whole supply
chain. The concept of a ‘single window’ sought to ensure that there was only
one point of entry where information was shared with other stakeholders, and a
process of integrated inspection.
Mr Radesich then discussed the Legal Enabling Framework. To date, there had
been an accession to the Revised Kyoto Convention. Currently there was an
intention to implement the Framework of Standards, as a working blueprint
document on customs requirements. Various Multilateral Assistance Agreements
had been signed to support customs-to-customs networks.
Ms Singh went on to discuss customs-to-business partnerships, such as the
accreditation system. For example, clearing agents could ensure goods complied
with customs standards, and in return offered a short timeframe incentive.
Hygienic inspections were carried out on a periodical basis. If there were no
compliance, then sanctions would be attached.
Other important elements were visibility issues, a ‘mindset change’, and
recognition of wider discretionary powers. The Discipline issue needs to be
addressed and how the image of officials had to be portrayed, in the coming
months there would be dogs as well as scanners and non-intrusive equipment at
ports of entry.
Ms Singh elaborated on the fourth objective of the Convention, which looks at
expanding customs focus because traditionally the focus was on imports, however
there was a need to focus on security when goods were leaving the country as
well as goods that were transiting in our country. Therefore customs had to be
looked at in terms of the whole supply chain. Commenting on the benefits in
terms of accession, it was said that the Convention would provide the legal
basis to use information in court proceedings, currently there was no such
basis. This would be useful especially in regard to Valuation fraud, which was
becoming more prominent.
The obligatory core provisions would only to be used for the purpose that it
was provided for, however there was an exception in terms of Article 24, where
data elements could be exchanged between customs administrations there were
numerous data elements in a customs bill of entry, in drafting the Convention
27 data elements had been identified which were the most important to be used
in risk assessment.
There was an incentive to allow for more modern methods of customs
corporations, includes cross-border surveillance, joint control and
investigation. The joint investigation team had been created to address issues
of smuggling such as the smuggling of cigarettes and also combating criminal
syndicates.
Mr Radesich elaborated on an important selling point of the Convention, which
also looks at the possibility of co-operation between SA officials and the
importing or exporting country, whereby SA official could go abroad and
implement SA law at borders and vice versa, this relates to the concept of
‘one–stop’ borderposts, and was largely dependant on whether SA was able to do
the work abroad.
Discussion
The Chairperson was particularly concerned about female officials being
vulnerable as no security was provided. The critical issues were sharing
information across borders and dealing with criminal activities.
Mr Robertson (ANC) asked about the percentage of counterfeited imports and
the percentage of contraband goods confiscated. He also enquired about
corruption at warehouses in Johannesburg, where it had been alleged that
illegal goods were being cleared by customs officials, such as with Digital
Video Disks (DVDs) from India. How was this being monitored? A further question
related to the BMW motorcar issue in Johannesburg.
Ms Singh replied that in terms of their risk-based approach, a number of rules
regarding counterfeit goods were important. There was a 6% target rate on ‘red’
goods; and a target of 94% on smuggled goods at the point of entry. About 40 -
50% of counterfeit goods were found at points of entry. Currently teams were
also visiting importers’ premises and checking their accounts books. A
percentage of counterfeit goods were found on post-clearance inspections.
In terms of the Johannesburg Convention, there were regular meetings with SACU.
The Convention would provide exact information on goods to SACU Members. With
regards to corruption, an Ethics Office at SARS conducted regular checks on
staff. All customs officials were required to sign an Integrity Pledge. If any
members were found not to meet the ethical standards, their names would be
published. This was done on a regular basis. She was not able to provide any
information on the BMW case.
Ms Robinson (DA) sought clarity on the one-stop borderposts. Mr Radesich
replied that the idea was that there be only one stop and both countries did
whatever they had to in terms of the cargo. The way in which it manifested
depended on the port of entry. There could be officials from both countries at
the same port and where forms would only be filled in on one occasion. In order
to achieve this, there would have to be an assessment. The first challenge
would entail harmonising the laws between the two countries and setting
standards on how the job could be done between the two officials. The WCO
Framework of Standards assisted in this regard. SARS had already promulgated
legislation where the commissioner could permit that SARS officials work in
other countries and allow for reciprocity.
Ms A Mchunu (ANC) asked why Cape Town and Richards Bay had not been mentioned
in the presentation. Mr Radesich apologised for his oversight, and acknowledged
that they were equally important.
Mr Mkhaliphi asked how monitoring of goods transiting the country was taking
place. The issue of security was raised. Some Members asked about the effects
of unilateralism.
Mr Radesich noted that the questions of security and unilateralism were
important. The Framework of Standards had been accepted worldwide. The WCO had
not succumbed to any unilateralism. This could clearly be seen in working
committees and its Policy Committee, particularly regarding security standards.
Mr Sogoni questioned the effect of the Kyoto Convention if the USA did not
support it. A second question related to abuses of the customs-to-business
system. A further issue was the question of customs officials being vulnerable
to crime themselves.
Mr Radesich replied that the USA was in fact the 40th signatory to
the Convention. The Accreditation System had defined criteria in order to
prevent abuse of the customs-to-business arrangements. The system checked
whether the official had fulfilled these criteria, and there was a system in
place for staff removal. Much work still needed to be done here. Ultimately
they would need to introduce a mechanism of strict licensing conditions, linked
to criminal records, to prevent accessing particular markets. There were fiscal
implications if business was not being done the proper way, and education and
awareness campaigns were needed. A programme at schools had already been
introduced to promote ‘fiscal awareness’.
Mr Radesich replied that corruption was also linked to who was being appointed
as customs officials, and training selection factors and recruitment needed to
be looked at. A standard of excellence was required.
Mr Sogoni wanted to know more about the role of the Southern African
Development Community (SADC). Mr Radesich replied that operations, documentation
and practices would have to be the same in SADC. However, there was scope for
different kinds of packaging. Mr Singh pointed out that in Namibia, Botswana
and South Africa, there was a single Administration Document. It was hoped that
by October, all SACU Members would use this document.
Mr Sogoni asked more about national rules superseding the Convention. Mr
Radesich replied that the Convention provided for the exchange of information
confidentially. This had to be done within the framework of national law. If a
country offered more protection and there were certain legislation
restrictions, this would over-rule the Convention.
In terms of effectiveness, South Africa was not where it should be. Customs
modernisation had to come into effect soon. Capacity and human resource
remained a couple of the biggest challenges. In some countries there were
customs genetic laboratories, such as those in Italy. He suggested a laboratory
at the Port of Durban. There was a need to increase visibility with regard to
passengers. There had been a legal struggle to obtain advanced passenger
information to identify possible suspects.
Mr Botha mentioned delays and asked how one-stop borderposts would be monitored
and managed. Mr Radesich replied that in terms of the WCO Framework of
Standards, there were guidelines for the level of co-operation and checking. He
further commented on the proposal whereby, for example, a Zimbabwean official
would act as a South African agent abroad to implement South African law. The Border
Control Operations Co-ordinating Centre (BCOCC) reported to the security
cluster in which all agencies had an interest, was operating in a governmental
joint venture to do the work at borderposts. SARS had the one-stop legislation
in place, but was a bit ahead of other agencies.
The Members unanimously agreed to support ratification of the Convention.
The Chairperson thereafter referred to the Committee’s Annual Report and
requested that Members critically review the report. It was hoped that the report
would be adopted at the next scheduled meeting.
Ms Robinson (DA) wanted to raise further more technical questions about this
report. The Chairperson responded that she should forward these to the
Committee Clerk.
The meeting was adjourned.
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