Customs inefficiency hindering
regional trade and investment - WTO

According to a report made by a World Trade Organization (WTO) specialist on customs valuations and operations, many countries in the region must take dramatic steps to upgrade their customs systems in order to attract international investors.

The WTO researcher, Mark Siegrist, said this is particularly true for multinational corporations who depend on a reliable customs machinery to get their products to market. He added that despite advantages in other sectors of the economy, the inefficient and non-transparent customs systems throughout the region may deter investors as it adds an element of unpredictability to their production schedules.

"The decision to locate plants is based partly on how quickly these companies can get their goods and spare parts through the local bureaucracy or free zone. An efficient customs machinery will support their need to urgently service their export markets as well as ensure the quick delivery of raw materials and spare parts for their manufacturing operations," Siegrist told a Jamaican Ministry of Finance and Planning seminar recently.

He noted, an arbitrary and unpredictable customs valuation system tended to breed a lack of full disclosure by traders.
"If one knows that arbitrary and fictitious values will be imposed (by customs), then it doesn't mean a great deal as to the value of the goods one declares as it is going to be changed anyhow," he said. This, said Siegrist, was a recipe for the smuggling of goods across borders.

It was against this background that the WTO was promoting the adoption of an "objective and quantifiable" customs valuation system that was predictable, fair and transparent, he added.

The WTO Customs Evaluation Agreement provides for a hierarchy of valuation methods starting with the transaction value, which refers to the actual prices paid or payable for goods for export.

"Customs will not impose a value," Siegrist emphasised. "It will either reject the value declared or accept it, in which case the hierarchy of methods becomes applicable. The importer declares and customs determines."

The customs valuation agreement was signed by Caricom member states at the General Agreement on Tariffs and Trade (GATT) Ministerial conference in April 1994. Caricom along with other developing countries, obtained a five-year extension in the application of the WTO Customs Evaluation Agreement. The period of extension comes to an end in March 2000, and although further extension is permissible, the governments of Jamaica, Barbados, St. Lucia and Trinidad and Tobago has embarked on the drafting of appropriate legislation to give effect to the agreement by the year 2000.

The free flow of trade in a transparent and predictable manner is the objective of the WTO, said Edward Brown, Chairman of the WTO committee on customs valuation in Jamaica. "The overarching principle of the WTO is to level the playing field," he said. Another transparency requirement is for governments to publish the laws and regulations relating to customs administration.

"When a trader goes to court in a matter pertaining to the customs regulations, that ruling has to be published," said Siegrist.

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