The Secretary General of the World Customs Organisation Dr Kunio Mikuriya spoke with James Anyanzwa about the place of Customs reforms in the regional integration process, and why the African Union is interested.
What is your mission in East Africa?
Kenya is an important member of the World Customs Organisation because it is the entry point for East Africa and the East African Community is quite advanced in terms of regional integration. I have been visiting Kenya to gauge progress made in the integration agenda and how we can co-operate in boosting that integration as well as international co-operation. At the same time, I want to learn about regional integration from Kenya’s experience.
What are your thoughts on the Customs reforms EAC member states are undertaking?
When it comes to regional integration Customs is the driving force and the success of the EAC is highly dependent on the Customs reforms. EAC Customs reforms are progressing and Kenya is an important economy in defining the success of regional integration.
As a global body with deep knowledge on Customs matters what kind of reforms should EAC member states embrace in order to put the trading bloc on the world map?
There are several points. First, the EAC is progressing through the use of technology, the most visible being the electronic cargo tracking system. But the bloc needs to improve on communicating its progress to the rest of the world because the ultimate goal is to facilitate cross-border movement of goods and improve trade in the region.
In terms of regional integration, there is a need to harmonise policies, laws and systems such as the risk management systems. Revenue is key and if there are incidences of cargo diversion, risk management systems will help Customs officers deal with the fraud. Thus there is a need to improve on harmonising risk management systems.
We have also held extensive discussions on the importance of harmonising the valuation system for purposes of taxation. A variation in the system for cargo entering any of the member states for example, leaves it vulnerable to exploitation by fraudsters.
We have also discussed human resource management and development. Fortunately, in East Africa there is a programme to ensure personnel are trained on Customs principles and methodology.
Despite numerous Customs reforms that the EAC countries have undertaken including the creation of one-stop border posts, intra-regional trade is on the decline. What is your advice on this?
There are several ways to boost intra-regional trade. Across Africa the share of intra-trade is low. This is an area that the African Continental free trade area (AfCFTA) hopes to address. Customs reforms are necessary but another potential weakness which we have discussed is co-ordinated border management. For example, the World Bank has conducted a business survey and the ranking for the region is not high. The challenge is to improve this ranking and show that EAC is ready to receive more investments and boost intra-regional trade.
Customs reforms are necessary but co-ordination with other government agencies is still lacking. With the one stop border posts in place, Customs clearance is now faster. We have also seen that other government agencies are implementing such reforms to hasten clearance of goods at the borders, which is the co-ordinated border management.
Another area is Customs business partnership, which brings the private sector together in order to raise tax compliance levels. So enhanced co-ordination between government agencies and the private sector is key to boosting effectiveness at border posts.
Despite reforms in Customs and taxation systems, revenue collection by member states is still on the decline. What needs to be done to reverse this trend?
First, Customs capacity building is necessary but there is also a need for partnerships with businesses to develop tax compliance strategy targeting businesses in order to raise their compliance levels and get informal trade into the formal sector, by providing incentives to businesses that comply with Customs regulations. That way, it is a win-win situation for both the tax agencies and the businesses.
Kenya proposed to split its revenue collection agency into Domestic (inland) tax Agency and the Customs and Border Control Agency. How feasible is this proposal and how does it stand out in view of regional integration?
Our position is that irrespective of any organisational arrangement, Customs has its unique mission. Revenue is one area, facilitation is another and security and protecting society is another area. The three are the main functions of Customs and as such our recommendation is that as a revenue authority whether you are independent or have other organisational arrangements, you need to discharge those responsibilities.
There should be a framework on how Customs and inland tax agencies can co-operate in exchanging information and creating synergies because even though Customs and inland taxes are two different areas they have to work together by sharing information, and by complementing each other. So whether a revenue authority is separated or operates as a single unit, in the area of protecting society, Customs officers have to work with the police and other law enforcement agencies because quite often Customs are prone to dangerous goods crossing the borders.
There is also a need to work with financial intelligence units that have information on suspicious transactions. In some countries these units operate within Customs offices and in others, they are separated.
We cherish border management irrespective of the organisational arrangement.
On a scale of one to 10 how would you rate the EAC in terms of Customs reforms
The regional bloc is doing well but there is room for improvement and for that I will rate it at seven to eight. But please share with us more of your success stories because communication is key and we try to reach out to countries to provide a platform on what they are doing. When I talked to the African Union they said that they are looking at EAC as a model for the African continental integration and from that point regional bloc could do more.
Also what the EAC is doing is now being studied in other parts of the world. I have been contacted by Asian countries and they are interested in what EAC is doing such as the electronic cargo tracking system and single Customs territory. So those success stories should be shared more.
WCO has been heavily involved in the rollout of the ‘Global Travel Assessment System’, or more commonly known as ‘GTAS’ for Uganda Revenue Authority Customs officers. What does this system mean and what is its significance?
A. ‘GTAS’ means that Customs officers are not only looking at the movement of cargo but also the movement of passengers who carry the goods. There are passengers who may pose a risk of safety and security. So getting prior information on these passengers including how they purchased their tickets is important in risk management.
Such information is obtained through the GTAS that includes the Advance Passenger Information and Passenger Name Record. Through this system Customs officers can find information on suspicious people from their data base and identify passengers who pose a risk before the arrival of the aeroplane. We recommend this type of risk management of passengers and we are helping countries to achieve this goal.
Dr Kunio Mikuriya has served as World Customs Organisation Secretary-General since January 1, 2009.
He was re-elected in Brussels, Belgium in June 2018 for a further five-year term with effect from January 1, 2019.
Prior to this, the 66-year-old spent seven years as WCO’s Deputy Secretary General, leading efforts to co-ordinate the Secretariat’s work in partnership with other international organisations such as the World Trade Organisation, the World Bank and the International Monetary Fund, as well as with the private sector.
Dr Mikuriya also spent 25 years in Japan’s Ministry of Finance, where he served in a variety of senior posts which gave him broad experience in Customs-related issues, trade development, budgetary matters and financial policies, including expertise in the WTO’s international trade negotiations.
Dr Mikuriya holds a Bachelor of Arts degree in Law from the University of Tokyo (Japan) and a PhD in International Relations from the University of Kent in the UK.