Customs Modernization

Topics: International trade, Customs, Risk management Pages: 28 (9041 words) Published: June 20, 2013
customs modernization program in Ethiopia

Chapter one

1.1 Introduction
Customs administration plays a vital role in the growth of international trade and the development of economy in the country. The efficiency and effectiveness of customs procedure can significantly influence the economic competitiveness of nation. In a highly competitive world environment, international trade and investment will flow toward efficient, supportive and facilitative locations. Customs system and process must not be allowed to serve or be perceived as a barrier to international trade and growth. To avoid harming the increased and diversified trade flows, the customs administrations have to update the procedures according to international standards. In addition, the task of customs has become increasingly difficult because of growing complexity of trade policy due to the proliferation of regional and international trade agreements, the greater sophistication of traders, and the multiple and shifting objectives imposed on customs. So that, Customs policy and regulation has to be refined or upgrade to be more in compliance with WTO and WCO framework and relevant international standards. As a result, because customs has a powerful impact on the economic development, the modernization of its procedure must be a target to eliminate all the challenges and drawbacks associated with international trade transactions. It is obvious that customs reform and modernization has significant benefits to improve the organization efficiency and effectiveness to carry out their operation. However, due to various reasons this modernization program might not achieve its targeted goal. In other words, countries might fail to implement the program efficiently and effectively. Various experience shows that effective and successful customs modernization process generally start with good initial diagnostic work to identify the short comings of the existing system, to define a strategy for reform, and to mobilize stakeholder support. Successful modernization also requires a comprehensive approach, that is, an approach that encompass all aspects of customs administration to address the issues identified, as well as an adequate sequencing of action. Therefore, countries have to make a depth investigation before applying reform or modernization program in order to eliminate the challenges that hinder the program achievement.

1.2 Statement of the problem
As international trade has developed within the global economy, outdated, incompatible and inefficient customs procedure have been recognized as a costly constraint. In addition, the latest evolution of techniques and tendencies of contraband and fraudulent practices are continuously evolving and resulting in an increasing treat to the legitimate trade, people’s migration, public security in a context of fighting terrorism and to the government revenue collection. Because of this, Customs administration should implement procedures and process that are fully compliant with international standards and conventions. Furthermore, customs shall require more appropriate and sophisticated enforcement tools and combating techniques based on global trends analysis first and not only on factual and individual deterred offences. Although there are many studies conducted in relation with customs modernization in different corner of the world, the writers of this paper is unaware of similar studies in Ethiopia case as far as the researcher’s knowledge is concerned. Ethiopia revenue and customs authority has applied various modernization programs so as to cop up with increasing growth and development of trade, and to mitigate the risk involved and secure the supply chain. However, although ERCA applied various modernization programs together with other initiatives since 2002, these comprehensive reforms that impact revenue and trade facilitation in a significant...
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