Today, much attention is paid to customs control issues both by the Federal Customs Service of the Russian Federation (here in the foreground is the problem of improving the effectiveness of customs control, changing its quality and bringing customs legislation into line with international standards), and by participants in foreign economic activity (FEA). Moreover, the latter are often in the “space of uncertainty” in relation to the actions of customs officers and are forced to adapt to changes in the very system of control actions of the Federal Customs Service of the Russian Federation.
In Russia, customs control is the exclusive prerogative of customs authorities and in this sense, the FCS of the Russian Federation bears the burden of responsibility for the application of forms, methods and means of customs control. It is clear that this state of affairs leads to the emergence of various kinds of “risks” and problematic situations in the relationship between the participants of foreign economic activity and the state represented by the customs service.
Let’s try to look at the problem of the effectiveness of customs control through the prism of the interests of the state and participants in foreign economic activity.
In order to understand the philosophy, logic, methodology and mechanism of modern customs control (the evolution of its forms), we must answer a number of key questions. So…
How should an effective customs control system be set up? Are there any standards in this area that we should strive for?
The generally recognized international standard in the field of customs control is the International Convention on Simplification and Harmonization of Customs Procedures of the World Customs Organization (Kyoto Convention, ed. 1999), which contains General Annex No. 6 “Customs Control”. It is this international agreement that defines the philosophy and methodology of customs control in the countries that have signed the Convention. The document offers the basic principles of control.
It is absolutely certain that the customs console should be maintained at a minimum level, perhaps in order to meet all the others. We may continue to be guided in fact by selectivity with maximum use of the risk management method.Kyoto
The implementation of customs control on the basis of such principles will allow customs officials:
– focus on high-risk areas and, consequently, ensure more efficient use of available resources;
– to increase the possibilities of detecting violations of customs legislation, as well as unscrupulous participants in foreign economic activity and individuals;
– to provide assistance to bona fide participants in foreign economic activity and individuals, to help accelerate international commodity flows.
It should be noted that the provisions and recommendations of the Kyoto Convention have actually been applied in the Russian Federation since 2003. It was not ratified until 2010.
Also, the use of the provisions of the Kyoto Convention in the development of the Customs Code of the Customs Union and Federal Law No. 311-FZ dated 11/27/2010 – “On Customs Regulation in the Russian Federation” is very noticeable.
For example, Article 94 of the Customs Code of the Customs Union establishes the principles of selectivity and sufficiency in customs control. Chapter 18 of the Code details the application of the risk management system (RMS).
Today, the RMS should become a philosophy of customs control, an integral part of it. In practice, this is expressed in the development of special documents for official use, which are called “risk profiles”. They contain a description of the risk (probability of violation of customs legislation), the risk area: categories of movement, goods and vehicles classified as “high” risk elements based on pre–developed indicators – criteria (i.e. indicators that allow these goods and vehicles to be classified as risk categories). The categories of movement that pose a risk from the point of view of State security are items such as drugs, weapons, psychotropic, nuclear substances, as well as ordinary goods for which there is a possibility of underestimation of customs value. The profiles also contain indications of the use of direct risk minimization measures – specific actions or measures by customs officials to prevent risks.
The customs service has a twofold task: to provide broad assistance to trade development by simplifying customs procedures, ensuring selective control and increasing its effectiveness, as well as implementing strict customs control over international movements of goods, vehicles and individuals with whom the greatest risk is associated.
How to solve this problem? To do this, it is supposed to use preliminary information and filing of a declaration before the import of goods into the territory of the Customs Union and Russia, and the widespread use of an electronic declaration system.
The daily analytical activities of the departments of the application of the risk management system (RMSMS) of customs in the field are aimed at achieving the main goal of control – its selectivity.
Customs control methods can be applied to a foreign trade participant of any significance, from a small importer with irregular transactions to an exporter of international scale. Control can also be carried out regardless of the amount of customs duties and taxes that are in doubt. The application of RMS will allow Customs authorities to move from movement control measures to audit-based measures.
The target guideline for the selectivity of control may be the volume, degree and depth of individual forms of control measures (for example, inspection). According to customs statistics, 60-65% of the volume of all shipments imported into the country are currently subject to inspection in Russia (and the dynamics is positive, given that most recently this figure was 90-95%). However, the performance targets of the foreign customs services of Western Europe or the United States (to which the Federal Customs Service of the Russian Federation also aspires) are completely different. For example, in the United States, 6-8% of shipments imported into the country are subject to actual inspection.
The question arises: how has such a result been achieved in developed countries? This is due to the more effective use of pre-notification and RMS systems. In the USA, customs control is carried out either before the arrival of goods or after their release. Moreover, customs control is practically not carried out at the stages of unloading / unloading goods, which makes it possible to solve many problems of transshipment of foreign trade goods peculiar to Russian conditions, to prevent downtime of wagons, ships, railway trains. This, in turn, leads to a decrease in the commercial expenses of the participants of foreign economic activity. Along the way, another task is being solved to increase the effectiveness of control actions – saving budget funds for customs control in terms of financing the customs service. The fact is that according to the facts of control measures, the necessary organizational decisions are made in a timely manner on the basis of “error correction”.
What are the main problems in the field of customs control in Russia?
Today, in Russia, almost 90% of imports fall under or are covered by risk profiles. This is a significant amount of food, medicines, clothing and other goods, including technological equipment. However, despite the “triggering” of the profiles, there are no fewer risks themselves! The problem of “gray” imports has not been eliminated. For example, according to experts, the share of counterfeit products in the Russian market is at least 50%. Counterfeit clothes and shoes, cosmetics and medicines, perfumes, alcohol and tobacco and much more are imported into the country, which poses an increased risk. Thus, it is difficult to talk about the effectiveness of customs control. It can be said that customs control has actually turned into a corruption trap, which was created by an inefficient system of customs administration. Unfortunately, it is also not necessary to talk about the selectivity of customs control. This is largely due to the established practice of the customs service and its attitude towards foreign trade participants.
The logic of the provisions of internal official orders, instructions, letters and other documents of the customs service contradicts the norms of both the Customs Code of the Customs Union and the Federal Law “On Customs Regulation in the Russian Federation”, not to mention the international standards of the Kyoto Convention. An analysis of such documents and reactions of the customs system allows us to conclude that the main thing that customs control is aimed at today is the maximum containment of import flows at the border through comprehensive control actions. It is not even about actual control, for example in the form of inspection, but rather about documentary verification of information provided to the customs authority about goods or vehicles. Verification, confirmation or non-confirmation of the information specified in the customs declaration and accompanying documentation, request for additional documents and information, the “passage” of these documents according to the technological scheme of the customs authority takes time, and therefore leads to losses of participants in foreign economic activity.
Another reason for the inefficiency of customs control is the mechanism for forming risk profiles, its impact on foreign trade processes and price factors.
Most risk profiles affect the control of the customs value of imported goods, which means that today, in addition to performing fiscal functions, the customs service also acquires the functions of a price regulator, directly or indirectly influencing the price of imported goods (in the process of adjusting the customs value). And the problem is not even that most participants in foreign economic activity “do not see” the risk profiles, which means they cannot assess the validity of the actions of customs officials, i.e. they do not know which goods, for example, are subject to inspection, the degree of such inspection, what is allowed during inspection and what is not. At the same time, the degree and volume of inspection can be easily increased by the decision of the head of the customs authority or even the customs post. The problem is as follows:
In the process of adjusting the customs value, influencing and influencing the prices of imported goods, the customs service performs the functions of a price regulator that are not typical. Therefore, a lot depends on the quality of the risk profiles for adjusting the customs value. And here (according to customs officials who develop risk profiles) problems arise. For example, in order to analyze prices for one commodity item, it is necessary to organize entire expert groups (since there are a lot of sources of price information), which should include representatives of the business community, professional appraisers and customs officials. It is clear that in modern conditions, especially given the closeness of the SUR, it is impossible to do this. Therefore, the risk profiles being developed today are far from perfect, and often do not even reflect market prices for real goods.
Under these conditions, some participants in foreign economic activity (having information from customs authorities) have a wide arsenal of methods of understating the customs value, and bona fide participants in foreign economic activity, in turn, declaring the customs value below the control indicator of the risk profile, face serious problems. About what efficiency
Is it possible to talk about SUR and customs control in this state of affairs?
Judge for yourself. The dry figures of customs statistics indicate that the “gray” schemes of understating the customs value cover 70% of commodity supplies to Russia. Having information about indicators of risk profiles, unscrupulous participants in foreign economic activity declare the customs value slightly above the threshold value set by the risk profile. The situation is aggravated by the fact that the decisions of the courts on the adjustment of the customs value in 98% of cases are not made in favor of the customs authorities. The main argument is that the statements of the customs authority on the adjustment of the customs value are probabilistic or subjective. As a result, customs control has turned into a selective instrument of pressure on bona fide participants in foreign economic activity and a privilege for “selected” firms or companies.
As a result, quite legal firms that carry out production processes or technological operations (for example, companies such as Ford, General Motors, assembling cars or manufacturing equipment like Samsung, etc.) fall on the customs blacklist. At the same time, a huge number of “illegals” through “gray brokers” are expanding their “business” in the country.
Is there a way out of the impasse?
One of the ways to solve problems of this kind is to effectively create new and improve existing risk profiles. All this cannot be done without scientific study of the issue, without the participation of the business community and experts in a broad discussion of the specific content of risk profiles (including in the framework of price information analysis).
The second way to increase the effectiveness of customs control is the full–scale development of the institute of preliminary information and improvement of customs clearance procedures based on the practice of electronic declaration.
In the context of the unification of information databases on the line of RMS within the framework of the Customs Union, the issue of increasing the effectiveness of mutual information exchange between the customs services of the participating countries is more acute than ever. The effectiveness of customs control depends on how quickly it is possible to prepare a high-quality database of all-Union risk profiles and ensure their implementation.
Author: Konstantin Alexandrovich Blokhin, Candidate of Economic Sciences
Source: The article was published in the journal “Foreign Economic Activity Consulting”, No. 1, 2011, p.24