WCO trade regime faces hurdles

WCO trade regime faces hurdles

OTTAWA -- A far-reaching new regime for modernized global trade, offering streamlined clearance in exchange for self-assessed security, is coming to a world not altogether ready for it. Based on U.S. security and information exchange practices, this regime has been approved by the inner workings of the World Customs Organization and is expected to be adopted by the 165-member body June 23-25.

The change to the world's customs administrations, their systems and cultures of trade will begin after the full WCO at its June meeting approves a Framework of Standards for ensuring supply chain security and trade facilitation.

The Framework sets out principles for advance, verified and electronic reporting of cargo, conveyance and customer data, with the onus on importers to verify security measures taken by suppliers and intermediaries.

The regime is built around two annexes, or "pillars" that offer detailed descriptions of the high-tech detection apparatus, automated systems, expanded and trained staffs and the electronic information-sharing with other nations that national customs administrations must have or control; and the similar verifiable security measures and reporting that any customs administration will require of its national traders, carriers and brokers. These customs-to-customs and customs-to-business rules are joined by separate plans for container seals when that becomes more practicable, and a "letter of intent" for a country joining the voluntary program.

In a phone interview, WCO Secretary General Michel Danet said the Framework is based on U.S. programs such as the Container Security Initiative (CSI), and Customs-Trade Partnership Against Terrorism (C-TPAT), and will profoundly alter practices and customs-trade cultures of many if not most countries over the four years it will take to phase in.

The program is voluntary in that a country can choose not to join, but it would put itself and its industry at a competitive disadvantage without the fast-track treatment accorded participants.

Moreover, the once-obscure WCO, originally set up by a handful of European countries, will enter the world spotlight as the managing force behind the development, funding and implementation of the Framework.

A member country wishing to participate would submit a letter of intent to the WCO, which would then assess the member's needs and put together a plan detailing the necessary capacity -- financial, technical, and human -- needed to implement the Framework. The WCO would organize funding by bringing together international institutions and countries, and the capacity-building would then take place.

Danet acknowledged that the plan is beyond the capability of smaller countries and traders without assistance. "Everything that has been done corresponds to the expectations of the large multi-nationals, whether they are American, European, Chinese, Australian," he said. "But trade is not only about multi-nationals. For an organization such as ours, this is a very difficult challenge."

The WCO is positioning itself as a broker between international institutions and wealthy nations, who would help pay for their poorer brethren to join the program. It would have as well a grander role, as a central body granting exporters, importers, carriers, brokers, forwarders and other traders rights as Authorized Economic Operators. These AEOs would make the verifiable supply chain security commitments, in return for streamlined clearance at each others' borders, that those in the U.S.-Canada Free and Secure Trade (FAST) program do.

In the near-term, it will be left to participating countries to sign up and authorize these private sector players -- but only after those countries agree to recognize the authority of other countries' customs organizations, a hurdle the WCO has yet to clear. The U.S. and other major industrial powers are leery. In Danet's words, "We have to give more body and flesh to this concept. We are only at the beginning of this one, trying to put in place (agreed) rules."

Courtney Tower is the Canadian correspondent for The Journal of Commerce Online.