An International Perspective Of Customs Law International Law

The virtually unstoppable Globalization phenomena that prevails today, has lead to exponential growth of International Trade, and as such trading across borders and facilitation of the same is critical to the functioning of the global economy. Customs Agencies who are entrusted with border protection hence are not in a position to function in isolation without relating to the rules of international law, and should be mindful of its government’s obligations internationally.Given the above, unification of customs activity globally has become critical to trade facilitation and ensuring international obligations of every state. Hence, in elucidating the International Law as it applies to customs as a regulatory authority, it is critical to understand that it is not a recognized discipline.

Therefore, it is pertinent to understand the formulation of International Law itself in order to understand the legal implications of International Customs Law.Subsets of International Law which impact the border protection activity is diverse and as such are depicted in the diagram 1.1 as cited in International Customs Law, Study Guide, p4. Canberra: Centre for Customs and Excise Studies, University of Canberra.Diagram 1.1 – Subsets of International LawAs evident from above International Customs Law by itself does not have a specific set of formulated rules. Hence the application of law towards settlement of International disputes as depicted under Article 38 of the statute of the International Court of Justice which stipulates the sources of Law for its determinations needs to be looked at, and is given below in Diagram 1.2.Diagram 1.2 – Sources of International LawSource : International Court of Justice.

Statute of the International Court of Justice. Retrieved January, 30, 2010, from http://www.icj-cij.org/documents/index.Given the above, it is clear that unification of customs activity and legal obligations of the same across the globe by states should be centered primarily around a collection of treaties, resolutions, and recommendations etc which has been adopted by various countries’ border protection agencies with a view to facilitate trade across borders as a primary objective, keeping in mind that majority of those countries are still dependent on tariff collected by customs as a large component of government revenue.Organizations central to these unifications efforts are the World Customs Organization (WCO) and the World Trade Organization (WTO) whose conventions and agreements have become the cornerstone to evolution of Customs Law as a discipline.The ongoing brief will discuss the evolution of International Law with emphasis on Customs or Border Protection where international customs law has evolved through coagulation of various treaties, conventions and recommendations under the preview of the World Customs Organization (WCO) and the World Trade Organization (WTO) and legal implications arising therein keeping in mind the statute of the International Court of Justice (ICJ) which defines the sources of International Law.Formulation of International Customs LawTreaties and ConventionsAs indicated above the major source of International Law are Treaties and conventions, and legal implications governing global customs activity is dealt with by the World Customs Organization.

The adoption of Treaties and conventions in formulating customs law by a state has dependency on the ‘Treaty of Treaties’ the Vienna convention adopted in 1969 which defines the rules as to how treaties are formed, and interpreted.It is binding on a state when it enters into a treaty and becomes a party via ratification of the treaty and accedes to it. Hence, the dualist and monist theories are relevant. A dualist country is where even though signatory to the treaty by its executive, domestic legislation needs to be formulated and ratified by its legislative body such as the parliament so as to bring in the content of the treaty as part of its own domestic law, and an example is Sri Lanka.

Whereas, in a monist state a treaty becomes part of its legislation once the state has ratified the signatory to a convention, such as the United States where the President has the power by consent of the senate to make treaties, and as such treaties which are ratified in accordance with the constitution becomes part of the domestic law. However, Article 26 of the Vienna convention ‘Pacta sunt servanda’ should be noted which states that ‘Every treaty in force is binding upon the parties to it and must be performed by them in good faith’.Some of the key WCO Treaties that formulate International Customs Law which covers majority of conflicts that are attributable to between customs and the supply chain fraternity are covered in brief below, whilst the complete list of treaties and conventions which constitute legal instruments of International Customs Law and in depositary and technically administered by WCO are given in Annexure I.Convention establishing a Customs Co-operation Council of 1952The customs co-operation council is the precursor to the World Customs Organization as it is known today and is the depositary of all treaties, conventions and agreements covering International Customs Law and as of 30th June, 2010 consists of 176 contracting parties to it.

It is also responsible for the technical administration of the WTO agreements on Valuation and Rules of Origin. The stated mission of WCO is to ‘improve the effectiveness and the efficiency of its Member Customs administrations across the globe’ (World Customs Organization.WCO in Brief. Retrieved February, 4, 2011, from http://www.wcoomd.org/home_about_us.htm). However, it should be noted that WCO is not a legislative body, but an entity which has legal capacity within the territory of its members to exercise its functions as indicated in Article XIII and as indicated in Article II of the Annex to the convention the Council will have Juridical personality, and such it could be argued that the Council does have powers to institute legal action, though limited to the territories of its members.

In addition council’s powers in dispute settlement as indicated in Art III (e) shows that this be done in a conciliatory capacity, but binds members to accept recommendations of the council. Sri Lanka’s notice of ratification and accession to the convention became official in May 1967.International Convention on the Harmonized Commodity Description and Coding SystemThe primary objective of the above convention is to achieve uniformity in tariff globally, thus establishing a universal convention of product description and classification. Now commonly known as the Harmonized System Nomenclature, and is the accepted basis for all customs tariff documents in the world with over 200 countries adopting the same. Though, it should be noted that as of June 30, 2010 contracting parties to the agreement were 138 countries.

Article 10 of the convention defines the dispute settlement process where the disputing contracting parties may refer it to the Harmonized System Committee which shall make its recommendations, and if no settlement is achieved the same may be referred to the WCO council of which the recommendation would be binding if the parties has agreed to do so prior. Sri Lanka became a party to the convention in 1989, and provisions of the same has been brought into the Sri Lanka customs ordinance, and as such any disputes with Sri Lanka customs rulings on nomenclature is entitled to appeal to WCO nomenclature committee through Sri Lanka customs (Weerasekera.P & Kananathanlingam. T (2009). Customs Law of Sri Lanka, p382- 384.

Rajagiriya, Sri Lanka. Author.).International Convention on the simplification and harmonization of Customs procedures (Kyoto Convention and the Revised Kyoto Convention)The Revised Kyoto Convention (RKC) which is central to International Customs Law for which Sri Lanka is a party to establishes International Standards towards simplification and modernization of customs procedures. RKC’s key principals are:Transparency and predictability of Customs actions;Standardization and simplification of the goods declaration and supporting documents;Simplified procedures for authorized persons;Maximum use of information technology;Minimum necessary Customs control to ensure compliance with regulations;Use of risk management and audit based controls;Whilst it may not be pertinent to detail out as to how the above principals are covered under the convention, it should be noted that parties to the convention need to accept the body of the convention and the General Annex.

The General Annex consists of the core provisions and definitions of general application to all customs procedures, Standards which needs to be implemented within 3 years of accession and Transitional Standards which needs to be implemented within 5 years of accession. The standards under the General Annex does not provide for reservations in ratification whilst 10 specific annexes gives the option for acceding members to provision reservations in implementation. In terms of the 10 specific annexes the provisions provide for Standards which needs to be implemented within 3 years and recommended practices which needs to be implemented within 3 years if they are not excluded in the acceptance.A key pertinent provision is the standard 1.3 which provides for customs to establish a consultative process with the trade for development of effective methods of working, thus leading the way for recognition of highly compliant traders provisioning higher levels of trade facilitation for them.

Though Sri Lanka has not implemented these measures it is highly desirable that these be pursued. Globally, this initiative is taking place in the form of Authorized Economic Operator (AEO) who would get preferential treatment at the border from a customs perspective, and allows a trader who has achieved compliance with AEO standards to be mutually recognized by other nations though left for individual nations to establish bilateral arrangements to do so, hence the complexity of a Global AEO status may be yet to come.It should be noted that contracting parties need to bring in domestic legislation, regulations, directives, decrees and operating instructions towards interpreting the obligations under the convention.

Given the expectation of globally unifying the simplified processes towards trade facilitation the transparency and predictability of the processes are an essential and binding component of the convention.WTO Agreement on ValuationAnother agreement of significance from a legal perspective is the WTO Valuation Agreement to which Sri Lanka is party to, which defines process that is to be used in valuation of goods at the border for application of tariff. The agreement focuses on transparency and predictability in customs valuation and use of quantifiable and objective data for arriving at the value of goods. Central to this agreement is the use of Transaction Value as a primary means and a sequential application of other methods to arrive at the value of goods.

Thus, subjective arbitrary valuation of goods by customs at the border is to a great degree is minimized.Whilst, conventions and treaties under the purview of WCO provides for the Legal Instruments towards unification of customs processes, thereby leading to transparency and predictability, it is also pertinent to note that that there are conventions and treaties that are relevant to the Jurisdiction of Customs Authorities that are essentially conventions developed towards establishing borders of nations, as well as towards prevention trafficking in Narcotic Drugs. In addition legal implications of immunity granted to persons, vessels and aircraft are also relevant in the formulation of International Customs Law.

Some of the relevant treaties which cover the Jurisdiction of Customs are given below;United Nations Convention on the Law of the Sea (UNCLOS)Chicago Convention on International Civil AviationVienna Convention on Illicit Traffic in Narcotic Drugs and Psychotropic SubstancesInternational Convention on Diplomatic Privileges and Immunities, Vienna 1961Revised Kyoto Convention (Extraterritoriality)Other Sources of International Customs LawCustomary Law and State PracticeAs per the statute of the International Court of Justice (ICJ) indicated above established that International Custom as evidence of general practice can accepted as law, and as such the same principal would apply to International Customs Law as well. State practices could include the following as indicated in Diagram 1.3 below.Diagram 1.3 – Sources of State PracticesSource : International Customs Law, Study Guide, p19.

Canberra: Centre for Customs and Excise Studies, University of Canberra.Most practices which had developed over time has now been now turned into treaties, Vienna Convention on Diplomatic Immunity and United Nations Law of the Sea Convention are examples which has become instruments of law as cited above and provides for the jurisdiction of Customs.In addition, it should be noted that treaties if practiced over time, and if it is practiced by a majority of nations, then it could become part of Customary Law as practiced by states. North Sea Continental Shelf case involving Denmark, Netherlands and Federal Republic of Germany is a classic example involving land boundaries, thus has a bearing on International Customs Law in terms of Jurisdiction of Customs.The Harmonized Commodity Description and Coding System is another example of as to the legal implication of customary law.

The HS convention as it is commonly known had 138 participating nations listed as contracting parties as of 30th June, 2010. However, many other countries apply the same without being party to the convention, thus in those countries the application of HS code has become state practice, and given that it has been in practice over two decades or so with uniformity and consistency the HS convention would form to be customary law internationally, though there are countries who are not contracting parties to the same.General Principals of LawThere are general principals of law which are recognized by civilized nations, and these form part of International law as well.

From a customs law perspective one of the key aspects of this is the right to appeal against adverse judgment.In addition, another aspect of the general principals of law that is applied from a customs perspective is the expectation that a breach of law results in penalties or sanctions against that breach and such sanctions should be proportionate to the breach that has occurred.Subsidiary MeansAs indicated above under the ICJ statute, though not considered part of International Law but to be used as a means of determining rules of law and a key component of International Customs unification process in achieving transparency and predictability are non treaty documents such as resolutions, recommendations, and declarations as handled by the WCO which are relevant in determining the International Customs law.Recommendations, Declarations and ResolutionsRecommendations are not legally binding as indicated above, but as cited in WCO’s document ‘The Nature of WCO Recommendations and the procedures for their Acceptance’ a nation which accepts a recommendation does so with the condition for application that they are implicitly committed, insofar as possible to implementing its provisions. Thus, a country who willingly accepts WCO recommendations becomes bound by those recommendations, and the process of acceptance is through a notification sent to the WCO Secretary General.Declarations are of a less binding nature though by nature stresses on principles, philosophies and good governance as is evident from the Arusha Declaration Concerning Good Governance and Integrity in Customs.

However, declarations could become a convention over time as has been seen in other scenarios under the United Nations regime.Resolutions are, similar in nature to declarations, and are not legally binding though it may have the support of the majority of nations, and WCO is home many such declarations. However, resolutions and declarations as statements of principals have taken on a legal force once again as is evident in the case of United Nations.

The Resolution of the Customs Co‑operation Council concerning the prevention of illicit traffic in endangered species of wild fauna and flora (June 1991) is one that could be cited as one which would impact Sri Lanka’s customs, as it is to a great degree entrusted with combating illicit traffic of endangered species of Fauna and Flora under Sri Lanka’s Fauna and Flora Protection act.A list of Recommendations, Declarations and Resolutions of WCO are given in Annexure II for reference.ConclusionIt is clear that the International Customs Law is centered primarily on coagulation of treaties and recommendations (provided the state has acceded to them), whilst subsidiary means of determination could be gained through resolutions and declaration. Sri Lanka is party to some of the key treaties which are driving the unification of the customs process globally as identified above, and is legally bound through ratification.

These treaties address some of the key conflicts that arise between trading parties and border protection agencies, such as unified standard addressed through RKC, HS nomenclature leading to applicability of the correct band of tariff, and the WTO Valuation Agreement which irons out issues related valuation of goods. Whilst right of appeal is one of the key ingredients of RKC, it should be noted that RKC itself shifts the burden of proof to the importer and understanding of the above should lead to minimizing customs related issues going forward.Annexure I – WCOConventionsConvention establishing a Customs Co-operation Council. Signed in Brussels on 15 December 1950, entered into force on 4 November 1952.International Convention on the Harmonized Commodity Description and Coding System.

Entered into force on 1 January 1988.Convention on Nomenclature for the classification of goods in Customs tariffs and Protocol of Amendment thereto.Customs Convention on ECS carnets for commercial samples.Entered into force on 3 October 1957.Customs Convention on the temporary importation of packings. Entered into force on 15 March 1962.Customs Convention on the temporary importation of professional equipment. Entered into force on 1 July 1962.Customs Convention concerning facilities for the importation of goods for display or use at exhibitions, fairs, meetings or similar events. Entered into force on 13 July 1962.Customs Convention on the ATA carnet for the temporary admission of goods (ATA Convention). Entered into force on 30 July 1963Customs Convention concerning welfare material for seafarers.

Entered into force on 11 December 1965.Customs Convention on the temporary importation of scientific equipment. Entered into force on 5 September 1969.Customs Convention on the temporary importation of pedagogic material. Entered into force on 10 September 1971.Customs Convention on the international transit of goods (ITI Convention). Done on 7 June 1971.International Convention on the simplification and harmonization of Customs procedures (Kyoto Convention).

Entered into force on 25 September 1974.International Convention on the simplification and harmonization of Customs procedures (Kyoto Convention) as amended. Entered into force on 3 February 2006.International Convention on mutual administrative assistance for the prevention, investigation and repression of Customs offences (Nairobi Convention). Entered into force on 21 May 1980.International Convention on mutual administrative assistance in Customs matters (Johannesburg Convention). Done on 27 June 2003.Convention on Temporary Admission (Istanbul Convention). Entered into force on 27 November 1993.Customs Convention on Containers, 1972.

Entered into force on 6 December 1975.Convention on the Valuation of Goods for Customs Purposes (BDV). Entered into force on 28 July 1953.AgreementsWTO Agreement on Valuation. Entered into force on 5 September 1969.WTO Agreement on Rules of Origin.Source : World Customs Organization.

Conventions sponsored or administered by the Customs Co-operation Council. Retrieved January, 30, 2010, from http://www.wcoomd.org/home_about_us_conventionslist.htm.Annexure II – WCO Recommendations, Declarations and ResolutionsRecommendationsRecommendations Related to Harmonized SystemRecommendations Related to Procedures and FacilitationRecommendations Related to Information Technologies (IT)Recommendations Related to Compliance and EnforcementSource : World Customs Organization. Recommendations.

Retrieved January, 30, 2010, from http://www.wcoomd.org/home_about_us_conventionslist_recommendationslist.htm.DeclarationsFourth Global Congress on Combating Counterfeiting and Piracy - Dubai Declaration (February 2008)Declaration of the Council concerning promotion of Conventions and other international instruments designed to harmonize and standardize Customs laws and regulations and technical co‑operation - Seoul Declaration (May 1984)Declaration of the Customs Co‑operation Council concerning its role in the field of Customs enforcement - Brussels Declaration (June 1986)Declaration of the Council for meeting the challenges of the year 2000 - Ottawa Declaration (June 1987)Declaration of the Customs Co-operation Council concerning harmonization/computerization of Customs procedures and a strategy for the 21st century - Washington Declaration (July 1989)Declaration of the Customs Co-operation Council on the further national development of Memoranda of Understanding between Customs and the trading community aimed at co-operation to prevent drug smuggling - MOU Declaration (June 1992)Declaration of the Customs Co‑operation Council concerning good Governance and Integrity in Customs - The Revised Arusha Declaration (June 2003)Declaration of the World Customs Organization on transnational organized crime - Budapest Declaration(June 1997)Declaration of the Customs Co‑operation Council on the improvement of Customs co‑operation and mutual administrative assistance - Cyprus Declaration (June 2000)Declaration of the Customs Co‑operation Council concerning e‑commerce - Baku Declaration (June 2001)Declaration of the Customs Co‑operation Council on the illicit traffic in drugs - Brussels Declaration(June 2003)Source : World Customs Organization. Declarations.

Retrieved January, 30, 2010, from http://www.wcoomd.org/home_about_us_conventionslist_declarationslist.htm.ResolutionsResolution of the Customs Co‑operation Council concerning the mobilization of Members’ resources (June 1988)Resolution of the Customs Co‑operation Council on the introduction of pre-entry classification information programmes (June 1991)Resolution of the Customs Co‑operation Council concerning the prevention of illicit traffic in endangered species of wild fauna and flora (June 1991)Resolution of the Customs Co‑operation Council concerning the importance of intelligence in supporting Customs enforcement activity (June 1992)Resolution of the Customs Co‑operation Council on Security and Facilitation of the International Trade Supply Chain (June 2002)Resolution of the Customs Co‑operation Council on global security and facilitation measures concerning the international trade supply chain (June 2004)Resolution of the Customs Co-operation Council on the Framework of Standards to Secure and Facilitate Global Trade (June 2005)Resolution of the Customs Co-operation Council on the High Level Strategic Group (June 2005)Resolution of the Customs Co-operation Council on the Framework of Standards to Secure and Facilitate Global Trade (June 2006)Resolution of the Customs Co-operation Council on the Role of Customs in the 21st Century (June 2008)Resolution of the Customs Co-operation Council on the Global Economic Downturn - (June 2009)Source : World Customs Organization. Resolutions. Retrieved January, 30, 2010, from http://www.wcoomd.org/home_about_us_conventionslist_resolutionslist.htm.