Customs modernization and trade facilitation

Company information

Inefficient, unpredictable and unclear customs procedures and practices contribute to unnecessary financial costs and delays for exports and imports for HP and other companies around the world. HP supports customs modernization reforms that would introduce greater transparency and predictability into national customs systems, including automation, tracking of financial transactions, clear and publicized rules governing customs procedures and an open appeals process. In 1974, the Kyoto Convention came into force as a voluntary agreement through the World Customs Organization (WCO), as an attempt to harmonize customs systems internationally. However, traditional customs methods that were in place in 1974 have become outmoded and are inadequate to deal with growth in cargo volume, advances in technology and the modern global trading system.

Recognizing a need to modernize and further harmonize customs procedures internationally, countries set forth a revised version of the Kyoto Convention through the WCO. The purpose of the treaty is to simplify customs procedures, eliminate wasteful transaction charges, improve transparency and predictability, and facilitate trade. The WCO Council adopted the revised Kyoto Convention in June 1999 as a model for modern, efficient and effective customs procedures. The revised Kyoto Convention on the Simplification and Harmonization of Customs Procedures went into effect on February 3, 2006 with 44 Contracting Parties.  This important measure means that almost 80% of international trade will now be facilitated under the provisions of the revised Kyoto Convention.  It now has 56 Contracting Parties.

HP's position

	•	HP supports the ratification by the U.S. Senate of the Kyoto Convention on the Simplification and Harmonization of Customs Procedures, which provides the most efficient method to establish a transparent, simplified and efficient environment for customs procedures across the globe. HP also supports the expedited adoption and implementation of the convention by other countries to bring the convention into force as quickly as possible.
	•	Customs modernization through the revised Kyoto Convention, as well as trade negotiations, is essential to improve the global supply chain and improve time-to-market of IT offerings.
	•	Outdated customs procedures and policies unnecessarily add to the cost of doing business internationally through customs delays, bureaucratic inefficiencies and redundancies and inefficient screening processes.
	•	HP supports automation of data systems and the use of information technology wherever possible to cut costs and improve reliability and security of customs operations. HP supports the use of automated data requirements, as adhering to country-specific data requirements is costly and takes away from the gains intended from implementing automated systems.
	•	HP encourages the establishment of formal relationships between national customs authorities and international shippers, along with the implementation of pre-screening methods, risk-management techniques and information-sharing. By allowing officials to screen for high-risk transactions, low-risk importers will benefit from expedited clearance procedures.
	•	HP supports the introduction of customs modernization reforms that would introduce greater transparency and predictability into national customs systems, including automation, tracking of financial transactions, clear and publicized rules governing customs procedures, and an open appeals process.
	•	HP supports the incorporation of customs procedures and practices into the disciplines covered by the Doha Round of WTO trade negotiations.

	Impact on HP

It is critical for HP to move raw materials, parts and finished goods around the globe as efficiently and as cost-effectively as possible. According to the Organization for Economic Co-operation and Development (OECD), between two and 15 percent of the cost of imported goods is attributed to customs and border processes. A one percent reduction of these costs would result in gains of $43 billion worldwide.

Unanticipated delays in clearing customs can greatly diminish the value of time-sensitive IT shipments, in some cases forcing companies to abandon their products.

Implementing the recommendations of the revised Kyoto Convention - including greater use of automated data systems and improved communication between related national enforcement agencies - would reduce or eliminate these costs. Increased transparency and routinization through revised national regulations and use of IT services in customs procedures would enhance security and reduce opportunities for corruption and fraud. The convention would require countries to track and make transparent duty payments and customs-related financial transactions, further reducing instances of extortion or unauthorized facilitation payments to customs officials. The revised convention would introduce greater predictability, speed and lower costs, facilitating the introduction to market of products that rely on supply-chain sourcing from other, sometimes multiple, countries. Predictability and time-savings in the customs clearance process also can encourage savings on inventory costs.