On the prospects of development of the Customs Service

On October 28th, 2005, Alexander Zherikhov, the Head of the Federal Customs Service of Russia presented the Major directions of the Customs Service development within the framework of the Draft Concept of Customs Service development up to 2010 to Michael Fradkov, the Chairman of the Government of the Russian Federation, German Gref, the Minister of Economic Development and Trade of the Russian Federation, and other members of the Government. The meeting was conducted as a video conference with the participation of the heads of all regional Customs Administrations. It was shown what customs authorities are presently equipped with; what is being done, and what is yet planned to be done for further development of the systems and process engineering; what customs service is to have in the long run. The present system of customs control is rigid, complex and costly for a participant of foreign trade both in terms finance and time. Cargo is conveyed to a customs check-point where it is to pass 7 types of control: border control, customs control, phytosanitary defense, veterinary control, transport control, sanitary-quarantine examination, and migration control (when required).

 After that cargo proceeds to the customs of destination. Internal customs authorities carry out main customs clearance in the form of five stage control: documents control; customs value control; charging and payment of customs duties; currency control; physical examination and release of goods. Each stage of control is to be carried out by a different customs officer.

With such system, the border is plagued by queuing, which is a growth medium for corruption, since release of goods in circulation depends on too many persons. In view of such shortcomings, the FCS of Russia has developed, and is now working out, as an experiment, a new scheme of goods control organization, which major novelty is comprised of preliminary informing; with two control services at a customs checkpoint: border and customs control, “one stop” principle for passing a customs check-point; goods are to be declared electronically using “one window” principle without a personal contact of a foreign trade activity participant with a customs officers. An important prerequisite of such scheme is setting up of the Common database of all control authorities, including all the services working outside of the area of border and customs control, in the vicinity of a customs check-point.

 Preliminary informing means that a customs officer is aware of the product features in advance and is capable of making a decision regarding what other types of control are to be engaged in a particular situation. This system has already been implemented at Kaliningrad Transit Project.

 The advantages of such scheme are self evident, but it is required to carry out serious development of all the customs border of Russia, with the purpose of creating the civilized conditions for passing of transport means and conveying of goods across the border. First of all, it is necessary to erect in the vicinity of customs check-points the specialized premises for those control services which are to operate outside of the territory of a customs check-point. It is also necessary to expand the road network, to arrange parking areas for transport vehicles outside of customs check-points, outside of the zone of customs and border control.

One of the most important tasks is equipping customs check-points with inspection-examination complexes (IDK). The first such complex is going to be put into operation at the Ukrainian border at the Troebortntoe check-point. Three complexes are going to be installed at the borders with Finland and Latvia within the framework of the World Bank Project. Another 19 complexes are planned to be installed by 2010 within the Federal purpose-oriented program “The State Border”.

It is also necessary to resolve the issues of construction of border facilities. Thus, only 45 check points out of 317 meet all the modern requirements. The “State Border” program adopted by the Government is not resolving the problem of border facilities construction in full, since such border facilities construction in this program is planned only for 65 check-points. More over, the reconstruction of the existing customs check-points will be required in view of the transfer to the “one window” principle of operation (i.e. two control services at the border).

At that, there emerges an issue of organization of operation and administration of the existing check-points and those which are being under construction now. These issues may be resolved by means of setting up a specialized Federal Agency within the Ministry of the Economic Development and Trade of Russia. In this case Federal services shall be fulfilling their own control functions, while the Agency in question might provide for rendering services in development and operation of border infrastructure.

 Another method to resolve the problem is to assign these functions to a government institution. A new control system might be as follows: - prior to arrival of goods, Main Scientific Information Computation Center of the FCS of Russia will receive the information from the owner of goods or customs of departure;

 - Main Scientific Information Computation Center of the FCS of Russia will then send this information to the check-point in question and to the customs of destination;

 - at the entry of a transport vehicle into the territory of the check-point all the data about the transport means and the goods imported will be scanned and read, and then it will be passed to the Common database;

- relevant decisions will be made after the analysis of the information from the Common database (such as; to carry out inspection at the inspection-examination complex (IDK), to apply another type of control depending on the profile of risks).

 If cargo and transport vehicle are found compliant, they will be allowed into the territory of the Russian Federation without a delay.

Some of the engineering processes of new control systems have already been included into the existing control system “Yantar”. Special attention should be paid to preliminary informing as to a fundamental principle in organization of a new system of work. Preliminary informing allows to operate at a higher level of customs control and customs clearing, namely, preliminary electronic declaring.

Electronic declaring is carried out within minutes; it excludes a contact between a foreign activity trade participant and a customs officer, and it limits the opportunities for forming of relations based on corruption. Electronic declaring is the basis of all the new schemes of customs control organization. Currently, 57 customs terminals operate in the mode of electronic declaring. By the end of the year, the number of customs terminals working in the mode of electronic declaring will be 66, and in 2006 another 100 customs terminals will be included into this new system.

 However, the efficient use of this new technology is possible only with reliable pricing information, which is the basis for control of the customs value. The FCS of Russia is now working on creation of the pricing information database, which should be transformed into the Specialized Center of Pricing Information.

Risks management system is another important component of the new system of customs control. It allows transfer from inspection of 100% of goods and transport means to selective inspection, i.e. inspection of only those goods which are likely to cause damage to economical and national security of Russia. The backbone of the system is the Unified Central Register of foreign trade subjects, which has files of every transaction, of every trade participant. The Register is connected with databases of the Federal Tax Service. Risks profiles are formed on the basis of such information. Risks profiles automatically form electronic regulations for every customs inspector in relation of every declaration. Inspector is not allowed to do anything which is not stipulated in the risks profile. Thus, the automated system does not allow an inspector to make decisions contrary to the established algorithm. Risks management system is going to be used at all customs terminals starting from January 1rst, 2006.

Working in the system of risks management analysis implies a compulsory post-audit, which comes as a logical finalization of customs control integrity. The system is functionally closed, the things in it are related between each other and the system is targeted to compliance with the customs legislation in the territory of Russia with minimum interference of customs in the activity of foreign trade participants.

At the meeting there were discussed the measures necessary for the implementation of the scheme proposed with participation of other Ministries and Agencies.