REPORT OF THE POLICY COMMISSION

Transcription

1 WORLD CUSTOMS ORGANIZATION ORGANISATION MONDIALE DES DOUANES Established in 1952 as the Customs Co-operation Council Créée en 1952 sous le nom de Conseil de coopération douanière POLICY COMMISSION - 57 th Session - SP0250E1b Brussels, 27 June REPORT OF THE POLICY COMMISSION 1. The Policy Commission held its 57 th Session in Brussels from Monday 25 to Wednesday 27 June The list of participants is reproduced at Annex I to this Report. I. ADOPTION OF THE AGENDA 2. The draft Agenda, circulated as Doc. SP0233, was adopted subject to the inclusion in Item XV (Other Business) of an additional question relating to the publications strategy. The Agenda, thus amended, is reproduced at Annex II hereto. II. APPROVAL OF THE REPORT OF THE 56 TH SESSION 3. The Report of the 56 th Session of the Policy Commission, contained in Doc. SP0232, was adopted unchanged. III. COMMENTS BY THE CHAIRPERSON OF THE COUNCIL 4. The Chairperson said that it was both a pleasure and an honour for him to address such a distinguished gathering of colleagues who had come together to discuss a series of important topics, both in the Policy Commission and at the Council Sessions which would follow later in the week. At this stage he intended to confine his remarks to a few points which he considered particularly pertinent from a Chairperson s point of view. 5. Firstly, the environment in which Customs administrations had to operate was becoming increasingly complex and demanding, with clear challenges posed by both global and regional economic integration in terms of trade facilitation and supply chain security - two topics which featured prominently on the Agenda for the current session. Copyright 2007 World Customs Organization. All rights reserved. Requests and inquiries concerning translation, reproduction and adaptation rights should be addressed to copyright@wcoomd.org.

2 SP0250E1b In the area of supply chain security, concerns ranged from purely economic issues such as the protection of intellectual property rights and under-valuation, to the Customs response to the serious threat posed by international terrorism. 6. Other important challenges facing Customs administrations included : the need to make the best possible use of IT and other modern technologies as a means of responding to trade facilitation and security concerns, despite the difficulties and costs that this entailed; the need for intensive co-operation with the private sector, with the aim of facilitating the activities of companies which were operating legally whilst taking effective measures against those which were operating fraudulently; the need to extend their co-operation with other authorities, especially those responsible for law-enforcement activities. This was essential in order to combat the increase in organized crime world-wide, and new patterns and ideas were required for this purpose. 7. In the light of these challenges, it was time for a rethink on many aspects, both operationally and in terms of the objectives and strategies of Customs administrations and of the WCO. 8. The WCO had made considerable progress of late in terms of contacts with significant organizations, increased visibility, and better awareness of the work done by Customs, not only internationally but also at the national level, where Customs was stronger and more visible to political leaders. Nevertheless, there was still potential for further improvements in this respect. For example, while much had been achieved in terms of the adoption of Conventions, recommendations and other WCO instruments, implementation of the Revised Kyoto Convention was not yet complete, and on a more general level there was intellectual capital within the Organization which could be deployed more strategically to support the enhancement of the role of the Organization and of Customs administrations. 9. With these points in mind the Chairperson suggested that there might be a case for developing a new position paper outlining the future of the WCO, in the context of the current discussions on Customs in the 21 st Century based on a valuable submission by the South African Administration. 10. This would involve collecting and analysing information from national administrations and exploiting the outcomes of discussions in the WCO regions, in order to put together a political paper which addressed two key issues. 11. The first of these would be to define the common core functions for which Customs administrations were responsible world-wide. Identifying these common core functions would facilitate international co-operation between Customs administrations, as well as providing a basis for developing the role of the WCO and redesigning its strategies in accordance with the core priorities. Essentially, these common core functions would be comprised of revenue (Customs and taxes), trade-related issues (including the closely-related question of logistics), and those concerns related to security and the protection of society that Customs was responsible for. There were, of 2.

3 SP0250E1b course, various other functions that some Customs administrations were responsible for, but it remained to be seen whether these could be termed common core functions. In any event, once the common core functions had been identified they would provide the focus for future work. 12. The Chairperson said that the second key issue to be addressed by such a position paper would relate to the role of the WCO in global negotiations in topic areas connected to the core functions of Customs administrations. It was essential that the WCO be involved in negotiations on trade-related issues, as well as in the development area where it had much to offer with capacity building in particular, and in the security field. Customs could add value to the negotiations in all of these significant areas, and needed to take its proper place at the negotiating tables. Here, Member administrations needed to be active nationally in terms of working with, or advising the members of their governments negotiating teams, as well as operating through the WCO in order to secure a strong presence for Customs in international fora. 13. The Chairperson suggested that the aim should be to have this position paper ready for adoption at the Council Sessions in June He hoped that at the present session the Policy Commission would be able to take a position on the process for developing such a paper, based on the provisional schedule proposed in Doc. SP0240 for the end-product of the work on Customs in the 21 st Century. There would be an opportunity for detailed discussions on the substance of the paper during the Council Sessions later in the week. IV. REPORT BY THE SECRETARY GENERAL An Organization working on behalf of its Members 14. The Secretary General began his report by describing the situation with regard to accessions, staff and financial matters. He informed the Policy Commission that the WCO now had 171 Members with the recent accession of Montenegro and the Lao People s Democratic Republic. One State, Bosnia-Herzegovina, was on the verge of depositing its instrument of accession. A further two were currently holding discussions with the Secretariat regarding possible accession, namely Djibouti and Liechtenstein. For its part, Iraq was in the process of regularizing its situation vis-à-vis the Secretariat. Somewhat unusually, only two WCO Members were inactive, thus reflecting the international community s interest in the Organization s work. 15. With regard to staff numbers, the Secretariat currently had 103 budget posts and 29 nationalities were represented therein. There would be an election for the post of Director, Tariff and Trade Affairs at the 109 th /110 th Council Sessions, however the Secretary General noted that, paradoxically, four of the eleven candidates would be absent for the vote. He consequently felt that without wishing to prejudice the outcome of the vote, Members were missing out on an important opportunity to talk to these candidates. He suggested that in future, vacancies for elected posts include a requirement for the candidate to be present at elections. 16. The Secretary General thanked Members for having made 22 Technical Attachés available to the WCO, equating to a budget saving of 2.5 million euros. 3.

4 SP0250E1b 17. Seven of the 22 Technical Attachés had been posted to Capacity Building, five to Enforcement, four to Nomenclature, and two each to Facilitation, Customs Valuation and Origin. 18. With regard to the choice and assignment of Technical Attachés, the Secretary General told Members that the nominations received by the Secretariat did not always correspond to the Strategic Plan priorities. He therefore felt that the Secretariat should offer some guidance in this respect, and wished to pursue discussions with Members in order to recruit based on the priorities of the Organization s Strategic Plan. 19. He drew attention to the status of one of the Technical Attachés from Canada. His situation was unusual insofar as he was performing his duties on the premises of his home administration, whilst receiving his instructions from the WCO Director of Capacity Building. This innovative approach, which cost less than sending a Technical Attaché to WCO Headquarters in Brussels, was potentially extremely interesting and the Secretary General hoped to be able to develop this possibility and make similar arrangements with other administrations in the future. A healthier financial situation 20. The Secretary General then reported on the state of the WCO s finances and said that he had been able to meet the Council s requirements in this respect thanks to a global budget strategy covering several years and consisting, for Members, of a 3 % increase in the overall contributions and, for the Secretariat, of : - a drastic restructuring policy; - strict management of the general operating expenses; - skilful management of staff turnover arrangements; - a proactive outsourcing policy; - timely management of the portfolio; - a reform of the Terminal Allowance system; and - a dynamic policy to generate extraordinary revenue. 21. The Secretary General noted that these measures had produced satisfactory results, and that the past two financial years marked the end of a cycle of austerity and constraints. In fact, despite an estimated deficit of 700,000 euros, financial year 2005/2006 had closed with a final surplus of 700,000 euros. Financial year 2006/2007 was showing a provisional surplus of approximately one million euros, despite an estimated deficit of 1.1 million euros. This was mainly due to sustained efforts to curb expenditure, to maximize additional revenue (500,000 euros instead of the estimated 150,000 euros, largely as a result of the launching of the 2007 version of the Harmonized System), and to manage the portfolio most advantageously, together with made to measure management of staff turnover arrangements and the Terminal Allowance. 22. A new cycle was therefore coming into being since, for the first time in 13 years, a balanced budget would be presented. This would give the Secretary General the option of presenting a budget for financial year 2008/2009 that might include some new approaches, such as discontinuing, in full or part, the 3 % increase in the overall contributions on the one hand, and the temporary freeze on recruitment for certain posts on the other. 4.

5 SP0250E1b 23. The Secretary General welcomed the fact that the reserves had been built up again (they were currently in the order of 8.68 million euros), but called on Members not to draw on them, since a prerequisite for a truly healthy budget was reserves equating to an annual budget, or approximately 13 million euros. Strengthened financial governance 24. After having covered these administrative issues, the Secretary General announced the introduction, thanks to the co-operation of the Chairperson of the Finance Committee, of strengthened financial governance built on three pillars : a Finance Committee with greater powers; an Audit Committee in place, with a programme of work covering several years; and Financial and Management Audits conducted by private-sector auditors. The question which had to be asked was whether the WCO could take this approach even further and make a balanced budget a constitutional principle. An Organization with a higher international profile 25. The Secretary General illustrated the WCO s growing international profile by referring to the successful and prominent meetings held in : - Budapest (Hungary), attended by the Minister of Finance of Hungary and Commissioner Kovács of the European Commission; - Yaoundé (Cameroon), attended by the Minister of Economy and Finance of Cameroon; - Veracruz (Mexico), attended by the Minister of Finance of Mexico; and - Ciudad del Este (Paraguay), attended by the President of the Republic of Paraguay. 26. The WCO was now at the heart of an international network whose Members engaged in dialogue and interacted. The Secretary General said that although efforts had to be made regarding co-operation with the Secretariat of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and with the World Health Organization (WHO), the WCO maintained excellent relations with the major players in international trade such as the OECD, Interpol, UNCTAD, the UN, the G8 and the WTO. 27. Regarding OECD/WCO co-operation, the Secretary General informed Members of the implementation of joint initiatives (Valuation/Transfer Pricing Seminar, piracy study). The WCO had also presented the Columbus Programme to OECD experts, who wished to use it as a basis for building the capacities of tax authorities. Finally, the two Organizations were studying the possibility of organizing a Ministerial Conference on the progression of Customs and taxation revenue in Africa and its repercussions for State services (spring 2008). 28. Turning to the United Nations (UN), the WCO was participating in the work of the Counter-Terrorism Committee and had taken part in audit missions to Albania, Kenya, Morocco, Thailand, Mali, India and Pakistan. Other audit missions were scheduled to be conducted in the course of 2007, but there was a funding issue since the UN was not in a position to provide financing. 5.

6 SP0250E1b 29. The WCO had actively participated in the preparations for the G8 Summit in Heiligendamm (Germany), within which it had acted as an expert and consultant on combating piracy, as well as on issues going far beyond the boundaries of traditional Customs topics. The Final Declaration consequently stressed the key role of Customs and the WCO in this respect, and the Secretary General drew Members attention to the need for a WCO response on this matter. 30. The Secretary General then turned to the issue of WCO/WTO relations, which were characterized by co-operation based on the fact that the two institutions fully complemented each other. The Secretary General had met the Director-General of the WTO twice since the last Policy Commission session, and the latter had specifically requested that the WCO pursue its training assistance activities until the conclusion of the Doha Round negotiations. 31. These meetings had provided an opportunity to take stock of progress regarding issues of common interest : - Counterfeiting : the Director-General of the WTO had informed the Secretary General that, given the difficulty of the negotiations in progress and the fact that the end of the transitional period for developing countries, as provided for under the TRIPS Agreement, was drawing near, the WTO was not in a position to discuss this issue. This had been noted by the G8, which had suggested that the OECD take over. - Origin : origin matters were very important to the WTO, and the WCO was shortly expected to take on certain tasks relating to non-preferential rules of origin. The WCO was making an effort to analyse the preferential rules arising from the plethora of regional and bilateral agreements (400 by 2010). - Harmonized System : the WTO considered the Harmonized System to be a valuable tool, and Pascal Lamy expressed his dismay at the thought that some Members were still using the 1992 version to broach and discuss trade issues. - Facilitation : the Doha Round was still ongoing, but it was currently difficult to predict the outcome. The question was whether, in the event of failure, only an agreement on trade facilitation would remain conceivable by If necessary, the WTO would ask the WCO to act as an executive agency by implementing capacity building activities in the facilitation domain in accordance with the political agreements concluded in Geneva. Work at the heart of international concerns 32. The Secretary General noted that the WCO s work in terms of drug enforcement and the environment remained somewhat limited. 6.

7 SP0250E1b 33. In contrast, with regard to security and facilitation of trade, the WCO could pride itself on having established the SAFE Framework, which had progressed considerably in terms of Authorized Economic Operator status, relations with small and medium sized enterprises (SMEs), the concepts of reciprocity and mutual recognition, and a review mechanism and cycle. However, in order to remain a living and effective tool, and obtain any necessary funding, it required : - an action plan to present and promote it throughout the world : two seminars were currently scheduled to that end in Belgium and Morocco; - a programme of work which would set deadlines; and, above all, - a steering body : intended to replace the High Level Strategic Group. It could be a sub-group reporting directly to the Policy Commission, which would set its terms of reference. This model could even be adapted to the Columbus Programme and to combating counterfeiting. 34. The Columbus Programme was a resounding success, since of the WCO s 171 Members, 147 had signed the Letter of Intent and 105 had requested Diagnostics. With all these requests having been honoured in keeping with the Secretary General s undertaking at the June 2006 Council Sessions, the Secretary General declared that Phase 1 had been successful and that many lessons had been learned. The Columbus Programme was thus entering Phase 2, which was more complex, more critical, yet just as important, since it involved Members drafting an action plan which would have to be adopted by their government in order to obtain financing (internal or international). In this respect, the Secretary General stressed that the Secretariat s role would be to offer support, and it hoped that Members would take full ownership of the action plan. 35. In addition, Phase 2 would also impact on regional unions, since the capacities of some of the Members concerned would be built more rapidly than others. The risk was that variable geometry development would be encouraged within these regional unions, consequently diluting the benefits of the Columbus Programme. The Secretary General raised the issue of how to provide a uniform level of assistance to a regional union s Members. 36. As had been the case for the SAFE Programme, Global Forum V on Integrity held in South Africa had highlighted the need for a steering body which would be tasked with establishing the parameters for Phase 2 of the Columbus Programme. It had also provided an opportunity to meet potential donors, who had expressed a great deal of interest in the Columbus Programme and had given assurances that money was not the problem. The Secretary General explained that although funding did not raise a problem, it was difficult to access and, to that end, the Members concerned had to submit a faultless and appealing business case. 37. In terms of combating counterfeiting and piracy, the Secretary General said that all the warning lights were on : the number and volume of seizures had continued to break all records and now involved all products. In addition, the international legal environment was at a standstill. There was nevertheless a pressing demand for concrete discussions on this real threat, and full responsibility now fell upon Customs administrations which remained the first line of defence for public health and safety. The WCO s role in this domain was clear : it proposed the adoption of a SECURE 7.

8 SP0250E1b Framework, a capacity building policy for Members requesting it and an ambitious action plan. 38. The Secretary General informed Members that bilateral agreements had been concluded between the United States and China, and between the European Union and China, and he strongly encouraged these initiatives, which nevertheless should not rule out actions at multilateral level. 39. Turning to the issue of Customs in the 21 st Century, the Secretary General felt that the results of a detailed discussion on the following issues could be presented at the 2008 Council Sessions : - the nature and function of the document currently in preparation : was it a quasischolarly intellectual contribution, or a strategy, policy or technical document? - the functions and missions of Customs administrations : as a result of the emergence of many new functions, the different points of view had to be reconciled; - the WCO s missions : deliberations on Customs in the 21 st Century necessarily required parallel deliberations on the WCO in the 21 st Century. Should the WCO s twin pillars (standards and capacity building) remain unchanged? Would the structure not benefit from being altered? 40. The Secretary General concluded his report by making some recommendations for the future : - noting that even the Harmonized System, the WCO s flagship instrument, was not applied as widely as it should be (of the 130 Contracting Parties, 74 had implemented the 2007 version of the Harmonized System, 45 were still using the 2002 version and 11 were using even older versions), it was vital that the implementation crisis regarding WCO instruments be resolved; - the WCO had to constantly strive to improve global security and should never stop challenging itself; - the development of trade must be ensured, as it was a source of progress and growth; - Members had to be alerted to the increased risks threatening our societies in the form of drugs, money laundering, piracy and counterfeiting, trafficking in weapons of mass destruction, toxic waste, light weapons, organs, blood diamonds, cultural property, etc. 41. In short, more had to be done if we were to be capable of inventing our future. 42. The Chairperson invited delegates to make general observations on the report by the Secretary General and on his own comments made under Agenda Item III - Comments by the Chairperson of the Council. 8.

9 SP0250E1b 43. During the ensuing discussions, a number of delegates congratulated the Secretary General on his comprehensive presentation which offered food for thought, as well as on the quality and professionalism of the work carried out and the excellent results achieved in the course of financial year 2006/ The Delegate of Germany said that Guidelines for Customs and Border Surveillance had been drafted by the German Government, and they set out recommendations on co-operation between Customs and other border services in terms of applying penalties for piracy. One of the aspects of these Guidelines was improved data exchange between Customs and border protection services, and this concept would have to be applied among the G8 Members, which had decided that these Guidelines should be implemented. He thanked and congratulated the Secretary General on his contribution to the G8 and welcomed the fact that, thanks to this and the German Customs Administration s efforts in this respect, the WCO and its work had been recognized and taken into account in the G8 s work. He concluded by stating that Germany wished to make an additional Technical Attaché available to the WCO to help it fulfill its mission. 45. Several delegates felt that the idea proposed by the Secretary General to establish, under the charge of the Policy Commission, specific steering bodies for the SAFE, Columbus and other Programmes would be a sensible way of compensating for the loss of the High Level Strategic Group. However one should not bite off more than one could chew, and the Policy Commission s priorities would have to be defined to ensure that it was not given a workload so heavy that it could not complete it, or which would distract it from its objectives. A delegate added that these structures should retain a regional balance. 46. The delegates welcomed the constructive and complementary relations that were fostered by the WCO and the WTO. With regard to the possibility of an agreement on facilitation despite the potential failure of the Doha Round of trade negotiations, several delegates hoped that the WCO would pursue its efforts to promote the Revised Kyoto Convention. In this connection, one delegate wished to know what proportion of global trade was represented by the Contracting Parties to this Convention, and which States had not yet acceded to it. 47. Some delegates expressed concerns regarding the level of implementation of the Convention on the Harmonized Commodity Description and Coding System. Another delegate stressed the importance of the implementation of WCO instruments such as the Revised Kyoto Convention and he invited the Secretariat to pursue its work in this respect. 48. After congratulating the Secretariat for the return to a balanced budget within the WCO, one delegate said that he was not in favour of a balanced budget becoming a constitutional principle since, in his opinion, this would be an overly strict solution which would not grant the WCO sufficient leeway to pursue its objectives. Another delegate was pleased that this return to a balanced budget would make it possible to fill posts that had remained vacant for budgetary reasons, thus giving the WCO the resources it needed to fulfill its mission. 49. Several delegates took the floor to discuss the issue of Customs in the 21 st Century, and recalled that some States could not forego Customs revenue, that 9.

10 SP0250E1b information exchange was vital in order to combat piracy and, finally, that effective co-operation should remain a key objective. 50. With regard to the Columbus Programme, one delegate informed the Secretary General that the drafting and implementation of his Administration s action plan had been delayed because the tax authority s deliberations also had to be included in the planned reform. This horizontal approach might explain why the Columbus Programme was so difficult to implement. 51. One delegate warmly welcomed the Secretary General s recommendation to inform Members of increased risks threatening them, and pointed out that this should play a role in the development of the Strategic Plan. 52. The Secretary General responded to the comments made regarding the role of the Policy Commission and the steering bodies, by stressing that it was possible to go even further and that the discussions were still open. In short, the question raised was how to make the Policy Commission the governing body without, for all that, increasing its workload excessively. Should more frequent Policy Commission meetings be the solution? Should there be a change to how its work was organized? Should the agenda be adjusted? The Secretary General suggested that, as things currently stood, the December session could focus on a few fundamental issues, with the other subjects only being covered as subsidiary issues. 53. He reminded Members that although the implementation crisis was most visible with regard to the Harmonized System, it also affected the Convention on Mutual Administrative Assistance in Customs Matters (Johannesburg Convention) and the Revised Kyoto Convention. 54. The Policy Commission took note of the Secretary General s oral and written reports. V. SECURITY AND FACILITATION OF TRADE (a) Report of the High Level Strategic Group and SAFE Framework of Standards 55. The Chairperson introduced this Agenda item by stating that the HLSG had met for the seventh and final time in April The major points for consideration by the Policy Commission were summarized at the beginning of the comprehensive Report of that meeting, which had been circulated as an Annex to Doc. SP0235, but three key issues should be highlighted : the amendment process for the SAFE Framework; the reporting mechanism for the SAFE Working Group (SWG) or other designated HLSG successor, as well as for the Private Sector Consultative Group; and how to deal with non-safe issues which had been the concern of the HLSG. Where the first of these issues was concerned, the HLSG had approved an amendment process which was appended to the aforementioned HLSG Report as Annex IV. A three-year review cycle was being proposed, with the SWG meeting periodically during the review cycle. On reporting mechanisms and how to deal with the non-safe matters, there were different opinions and unresolved questions which the Secretariat should address. 10.

11 SP0250E1b 56. The Director, Compliance and Facilitation explained that the HLSG, with the objective of arriving at a periodic, rational and transparent amendment process, had opted for the process outlined in Annex IV to the HLSG Report and had recommended it to the Policy Commission for approval. A three-year review cycle had been preferred because this would enable the review period to coincide with the review cycle for the WCO Data Model. There was agreement in the HLSG that in order for a data element to be brought forward for inclusion in the SAFE Framework, that element would first have to be present in the Data Model. If this was not the case, the established procedures would first have to be followed in order to have the item included in the Data Model. 57. The HLSG had recognized that both policy-related and technical amendments might need to be made to the SAFE Framework in the future, and had favoured a two-stage process. For technical issues the SWG would undertake the work, and would be guided by the Permanent Technical Committee (PTC). The PTC had been identified as the logical body to perform this function since it already had technical competence in dealing with matters such as the Revised Kyoto Convention (RKC), Integrated Border Management and the Data Model. For policy-related amendments, the HLSG s view was that the Policy Commission was the body with proper competence to govern the process. 58. Turning to the criteria for the amendment process, the Director said that the United States had provided a non-paper on the topic which had been discussed by the HLSG. The HLSG had preferred Option A from that non-paper, under which the SWG would be comprised of interested WCO Members, the members of the PSCG, and recognized WCO observers. Ghana had made an intervention at the HLSG meeting to the effect that while it was acceptable for membership to be open to all administrations, specific Members should perhaps be designated or nominated from within the regions just to ensure that each region was represented. 59. Where the agenda of the SWG was concerned, this body would certainly be working on the issue of data element additions as well as the criteria for the amendment process. It was possible that the United States would soon be adding to the data requirements applicable to its trade community, and it would be beneficial for the SWG to meet for the first time in early Autumn 2007 in order to take up this and other review and maintenance issues. As the first proposed review of the SAFE Framework provisions would be in 2008 (in keeping with the schedule for the Data Model review), this timing would be appropriate. 60. The Director added that the Secretariat was also seeking to arrange the existing SAFE data elements in a more logical order, so as to indicate more clearly which of the two SAFE Framework Pillars they fell under. Another item of work for the SWG would concern the matter of Integrated Border Management (IBM). In this connection the Secretariat was aware of the opinion expressed by the United Kingdom that use of the term integrated did not signify that all border-related functions should be integrated under Customs, but rather that Customs was the logical co-ordinator for these border requirements. 61. The Director concluded his presentation by reiterating that the Policy Commission was being asked to endorse the SAFE Working Group and the amendment process put 11.

12 SP0250E1b forward by the HLSG, and to decide on the reporting mechanism (particularly with reference to the PSCG). 62. A delegate expressed her Administration s support for the amendment process as described by the Secretariat and for the proposed SWG mechanisms, with the understanding that major policy issues would be brought before the Policy Commission. She sought clarification as to whether, as had been the case with the HLSG, Customs-only meetings would continue to be held in the framework of the SWG, with the private sector representatives then joining the Customs group for joint discussions. 63. The Director, Compliance and Facilitation, said he should perhaps have made it clear that procedures for holding Customs-only and private sector-only meetings as part of the SWG process, in addition to joint sessions, had indeed been accepted by the HLSG. 64. A delegate thanked the HLSG and the Secretariat for the good work which had been done. While he agreed with the concept of a SWG involving WCO Members, the PSCG and recognized observers, he had some concerns about the size of such a group, fearing that it might become a large assembly of doubtful efficiency. Consequently there was a case for limiting the number of participants from each region. Turning to certain proposed changes to the SAFE Framework document itself, he said he could accept the deletion of supplemental national criteria, but sought clarifications regarding the timing of the discussions on the issue of Integrated Border Management. 65. On the latter question the Director, Compliance and Facilitation, recognized that Integrated Border Management was the subject of a separate Agenda item to be taken up later in the Policy Commission session. The provision on this subject which had been inserted in the SAFE Framework was there only as a place holder, and the concept would be further developed in due course. Regarding supplemental national criteria, he said that the original proponent of the relevant provision had agreed to its withdrawal during the final HLSG meeting, at which point the HLSG had unanimously decided to delete it. Other amendments made to the SAFE Framework document involved the updating of the footnote on the status of the Revised Kyoto Convention, to show that this Convention was now in force, and the merging of the Authorized Economic Operator provisions into the SAFE Framework document, together with certain organizational rearrangements. 66. Finally, where the size of the SWG was concerned there were no plans to place any restrictions on the number of Members who could attend the meetings. For information, to date there had been two joint meetings of Customs experts and PSCG members, and total attendance at these meetings had been only slightly larger than a typical gathering of the HLSG. The Secretariat did, on the other hand, accept the point raised by Ghana regarding the usefulness of having a regional nomination process, simply as a means of ensuring that each region had at least one representative at SAFE Working Group meetings. 67. A delegate said that in her view the two-tier structure proposed for the SWG was appropriate, and she looked forward to receiving the Group s draft Terms of Reference. 12.

13 SP0250E1b 68. In conclusion, the Chairperson said that the Policy Commission agreed with the various proposals put forward by the HLSG. In particular, there should be a SAFE Working Group operating at two levels, i.e., one dealing with policy amendments and one dealing with technical amendments. The Group would be open to all interested Members, and the PSCG and Customs groups could meet separately as well as in joint sessions. It was his understanding that the one possible area of concern for the PSCG was that its representatives wished to continue meeting with senior-level officials. It was agreed that the PSCG would report to the Policy Commission. (b) Negotiations at WTO 69. The Deputy Secretary General presented this item. He briefed delegates on the current situation of the entire WTO Doha negotiations. The negotiations had been suspended between July 2006 and February At the G8 Summit earlier in June, the WTO Director-General had stated that an interim agreement was now within reach, which would pave the way for a final agreement in 6 to 9 months time. After the unsuccessful meeting of 4 key WTO members (Brazil, European Union, India and United States) however, Doha was back again in the multilateral process led by the WTO Chairpersons of negotiations. The future of Doha appeared to be less clear at this point in time. 70. Turning to the WTO trade facilitation agenda, the Deputy Secretary General explained that it was regarded as pro-development, not a political problem and it was making progress. There were so far 36 legal text proposals submitted by WTO Members, which would form a foundation of future WTO commitments in trade facilitation. Finalization of these texts, including selection of issues and legal drafting of the final texts, had not yet started. While consistency between the WCO instruments and the WTO proposals had so far been maintained, Customs administrations were expected to participate in the determination of national positions to ensure consistency and the complementary nature of the two Organizations. 71. The WTO was launching a national needs assessment project to help WTO negotiators understand their home situation in relation to the WTO proposals and determine negotiation positions. The WCO, together with the WTO Secretariat and other Annex D organizations, would provide facilitators for those countries conducting national workshops. 72. While the WCO would continue to contribute to the WTO process, it would be important to pursue the trade facilitation agenda for the Customs community by promoting implementation of the Revised Kyoto Convention, regardless of the progress in the WTO negotiations. Meanwhile, the WCO would promote Customs reform as an excellent area for Aid-for-Trade projects which would comprise capacity building at the implementation stage of a future WTO agreement on trade facilitation. 73. Expressing his appreciation of the Secretariat s work, including its contribution to the WTO Self Assessment Guide, a delegate requested the Compliance and Facilitation Directorate to continue the technical contribution to the WTO negotiation process by explaining to countries the existing WCO instruments and how the Customs could contribute to the process. As Customs expertise on trade procedures would be increasingly important in drafting legal texts, Customs administrations needed to 13.

14 SP0250E1b engage fully in the negotiation process at the national level to shape the national position, as well as at the international level. 74. Another delegate asked about the relationship between the WTO Trade Facilitation Needs Assessment project and the WCO Diagnostic programmes. In reply, the Director of Capacity Building explained that the Columbus Programme was looking into Customs in a more holistic way, whereas the WTO trade facilitation work did not refer only to Customs but also to the other border agencies. In order to avoid potential duplication, the two Secretariats had engaged in dialogue, including on how to use the existing information, developing jointly the WTO Self Assessment Guide and deliverance of experts for WTO workshops. 75. While noting the substantial contribution made by the WCO to the WTO negotiation process, another delegate stressed the need for the two Organizations to work in a consistent and complementary way in order to pursue trade facilitation. The efficiency of Customs administrations had a positive impact on the trade capacity of each State and greatly contributed to the proper and the smooth functioning of the international market. 76. One delegate noted the encouraging relationship developed between the WTO and the WCO, which should work together while avoiding duplication. Potential failure of the WTO Doha negotiations would give an opportunity for Customs and the Revised Kyoto Convention to fill the vacuum. In his country, the Trade Ministry had the leading role for the WTO negotiations, though the Customs worked and participated in the WTO meetings together with that Ministry. Two Columbus experts from his Administration had participated in the training workshop in June His country had agreed to fund six WTO national workshops. He hoped that all WCO Member administrations would work with their Trade Ministries, as well as being involved at the international level. 77. Another delegate suggested that many of the proposals referred to, and/or were inspired by, the WCO instruments which were the basic Customs tools. Customs should engage other border agencies to identify areas of convergence and common application - other agencies need not re-invent the wheel because these tools readily existed. 78. Another delegate expressed concern with respect to the drafting work of the legal text in the WTO. He wondered what texts the WTO regional and national workshops would be based upon. He also suggested that the WCO should continue to promote trade facilitation, especially where the WTO might not be able to conclude the negotiations in the near future. 79. One delegate supported a previous speaker s intervention on the importance of setting up an internal co-ordination mechanism. Her Administration noted that some of the issues tabled in the WTO negotiations went beyond Customs. She suggested that the WCO could play a proactive role in identifying other agencies that would be impacted by a possible agreement. This would help the position of the WCO not only on the basis of the revised Kyoto Convention, but also in giving a leadership role to Customs administrations. Her Administration appreciated the role that the WCO was playing and thought that a delay in the negotiations would give an opportunity for the WCO to develop the Customs role in providing advice to the other agencies. 14.

15 SP0250E1b 80. The Deputy Secretary General explained that whether and when the WTO Members would produce a consolidated legal draft text would depend on the progress of the entire Doha negotiations and how the trade facilitation negotiations would be treated with or without regard to the other negotiating agenda. 81. The purpose of the WTO regional workshops was to disseminate information of how to use the Self Assessment Guide and, ideally, to train the participants to facilitate national workshops in their home countries. The basic texts for the WTO regional and national workshops were the proposals submitted to the negotiations by WTO Members. These proposed texts would probably be the potential basis of a future WTO Agreement, but this remained subject to the subsequent negotiations. The objectives of these WTO workshops were to deepen the understanding of the WTO negotiations and to help the WTO Members to formulate their negotiation position. 82. He agreed that the WCO had to continue promoting trade facilitation regardless of the progress of the WTO trade facilitation negotiations. He also agreed that the scope of the WTO negotiations went beyond Customs and explained that the WTO Needs Assessment Workshop was expected to invite all the relevant border agencies and private sector to the largest extent possible. He hoped that this exercise would be used to enhance the co-ordination and co-operation with other border agencies, Trade Ministries and the private sector in pursuing trade facilitation. 83. Closing the discussion, the Chairperson concluded that much had been happening in the area of trade issues, in particular there had been substantial improvements in the relationship between the WTO and the WCO. There was a great deal that Customs could offer for the trade agenda internationally. It was also of paramount importance that Customs become involved with the Ministry in charge of trade facilitation negotiations at national level to ensure that its voice was heard on a national basis. 84. Customs administrations could also provide a contribution to trade facilitation through their enforcement role, in the sense that the removal of fraudulent trade operators from the trading system would bring benefits to legitimate trade operators. 85. Even if there were to be stalemate in the Doha negotiations, the WCO and its Members could - and had to - continue work on its trade facilitation agenda, notably the Revised Kyoto Convention and its implementation. (c) Impact of Regional Trade Agreements 86. The Secretary General introduced this item by recalling that the question of the proliferation of bilateral and Regional Trade Agreements had already been raised at the last Policy Commission session in Chennai (India). He said that the pace of negotiation of trade agreements containing preferential rules of origin was accelerating and that there could be as many as 400 regional or bilateral agreements by These agreements were difficult for Customs and the private sector to apply because of the complexity of the rules of origin, which could slow the clearance of goods. The experts had compared the preferential rules to a bowl of spaghetti as they were so heterogeneous. 15.

16 SP0250E1b 88. The Secretary General next mentioned that, at the various regional meetings in which he had participated, the Directors General had requested ever-increasing amounts of aid from the WCO for the administration, simplification and application of the rules. This had recently been the case at Yaoundé (Cameroon), where a number of ACP (Africa-Caribbean-Pacific) countries, which would have to apply new partnership agreements (EPA) as from 2008, had asked for assistance from the WCO. 89. The WCO had drawn up an action plan whose broad outlines were as follows (see Doc. SP0237) : the listing of preferential agreements in a passive database; a feasibility study of an interactive database in accordance with the needs of the public and private sectors; a comparative study of the agreements to identify their commonalities and differences and propose best practices (proposal of a model agreement); development of e-learning modules suitable for Customs and the private sector and dealing with the main preferential agreements applicable in various parts of the world; WCO participation in the training of experts in origin; a study of questions relating to preferential rules of origin by the Technical Committee on Rules of Origin (TCRO). 90. The Secretary General added that these issues were of primary importance for the developing countries but that, for all countries, a better understanding of the rules and their improvement could be a form of trade facilitation. 91. Several delegates strongly supported this action plan since more and more Members were having difficulty administering preferential rules of origin. 92. One delegate said that through the rules of origin the Customs community should gain a better understanding of the private sector s trade models and, at the same time, develop administrative co-operation to ensure the smooth application of the tariff preferences granted. He added that the WCO should play an active role and endeavour to propose models that could lead to the eventual standardization of the agreements. 93. Two other delegates considered that the rules should be simpler and easy for Customs to administer and that they should not give rise to additional costs. 94. The Secretary General informed delegates of his intention to strengthen the staff of the Origin Sub-Directorate, in particular with a new Technical Attaché. 95. The Policy Commission approved the action plan and all the measures proposed for improving the administration and application of preferential rules of origin, which involved closer co-operation among Members, more sustained contact with the private sector, the identification of best practices and a better use of risk analysis. 16.

17 SP0250E1b (d) Integrated Border Management - Preliminary Study 96. In introducing this item the Director, Compliance and Facilitation, said that an Integrated Border Management system was essential for the efficient management of the border. Implementation of an Integrated Border Management system was of considerable interest to governments. Various regional fora, including the EU, APEC and SADC, were pursuing its implementation. The question of Integrated Border Management was wider than Single Window, which was already being covered by UN/ECE Recommendation No. 33, to which the WCO had contributed. The Secretariat had also produced WCO Compendium No. 9 on Integrated Border Management because of Members interest. When the draft International Border Management Standard had been presented to the PTC, the latter had been uncertain as to the precise nature of a Standard in this context and had concerns about the obligatory nature of the draft. Single Window and Integrated Border Management also featured in WTO proposals and presented an opportunity for Customs to take centre stage and assume an important role nationally in the development of proposals. Customs had, however, to engage more in the WTO process at national level. Donor institutions also supported Customs taking the lead in Integrated Border Management because Customs was viewed as the largest and most competent border agency. 97. The Policy Commission s view on the merits of developing standards on the subject were now being sought by the Secretariat. 98. A majority of delegations that intervened felt that it might be premature to attempt to set standards in respect of Integrated Border Management. A number of delegations felt that a more traditional instrument such as a Recommendation would be a more suitable approach. 99. One delegation felt that many of the principles of the draft Standard were to be welcomed, for example juxtaposed controls, the sharing of Customs equipment and simplified procedures for the economic operator. However, a recommendation for a single border agency was not possible for many administrations A delegation whose country had gone down the road of creating a single border control agency pointed out that it was still a long way from making integrated or unified border management a reality. A small number of delegations said that this was not a priority issue for the WCO Another delegation was of the opinion that the proposal presented particular difficulties for developing countries. There were numerous problems in Africa, for example at border points where closures and conflicts were not uncommon. One delegation wondered whether the concept should also be extended to maritime and air borders. Reinforced co-operation between agencies was a more realistic goal in the opinion of another delegation A delegation felt that the term Integrated Border Management might not be the best. Reference had been made earlier to joined up border management, which might be closer to the current situation. The delegation felt that discussions in the context of Customs in the 21 st Century might well facilitate a way forward. This view was echoed by a number of delegations who also felt the terms of the draft were too prescriptive. A number of delegations stressed that a more realistic way forward at this 17.