Improvement of instruments of customs administration: international and legal aspect (The Revised Kyoto Convention Management Committee)

The State Official Educational Institution of Higher Education «RUSSIAN CUSTOMS ACADEMY»


The Regional Training Center of the World Customs Organization The Research Institute of the Russian Customs Academy



M.A. KADYRKULOV, S.V. MOZER

IMPROVEMENT OF INSTRUMENTS OF CUSTOMS ADMINISTRATION: INTERNATIONAL AND LEGAL ASPECT (The WCO Revised Kyoto Convention Management Committee)

Monograph







Moscow
2018

UDC 339.543








     Reviewers:
     N.G. LIPATOVA, Director of Research Institute - Leading Researcher of the Russian Customs Academy, Candidate of Technical Sciences, Senior Researcher (Associate Professor);
     M.A. RYLSKAYA, Director of Institute for Problems of an Effective State and Civil Society of the Financial University under the Government of the Russian Federation, Doctor of Law, Associate Professor



     Kadyrkulov M.A., Mozer S.V.
        Improvement of instruments of customs administration: international and legal aspect (The Revised Kyoto Convention Management Committee): monograph / M.A. Kady-rkulov, S.V. Mozer. Moscow: Publishing House of the Russian Customs Academy, 2018. 248 p.


        ISBN 978-5-9590-1024-9



          The monograph presents historical and modern facts of the World Customs Organization’s activities in terms of improving of customs regulation and revision of the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention). It analyzes some aspects of the forthcoming work on the updating of the Kyoto Convention by the international customs community. It considers the possible directions of mutually beneficial customs cooperation between the World Customs Organization as an international institution for the development and improvement of customs administration and the Eurasian Economic Commission as a permanent regulatory body of the Eurasian Economic Union (EEU).
          The monograph can be useful for a wide range of specialists in the field of international customs cooperation and improvement of customs regulation on the basis of international standards. It can be used by scientists, lecturers, students, graduate students and other categories of students in the Russian Customs Academy, in other universities and Regional Training Centers of the World Customs Organization specializing in «Customs» and «Jurisprudence» as well as for experts of the WCO working bodies, Customs and other executive authorities in the Member States of the EEU, experts of the Eurasian Economic Commission for organizing and implementing mutually beneficial customs cooperation between the Eurasian Economic Commission and the World Customs Organization.


UDC 339.543




ISBN 978-5-9590-1024-9

© М.А. Kadyrkulov, 2018
© S.V. Mozer, 2018

From authors




    Dear friends and colleagues!

    With great pleasure we present to your attention our monograph, which reveals the current issues of the functioning of the World Customs Organization (WCO) in the context of creation and improvement of modern instruments of customs regulation.
    To date, the WCO is a serious international structure under the aegis of which the international customs community creates modern standards and legal means of customs administration. The WCO Secretariat headed by the Secretary General provides invaluable assistance in this process. Our active cooperation with this international institute, where the experts of the world Customs administrations discuss and decide relevant issues of customs regulation, began in 2016 after the signing of the Memorandum of Understanding between the Eurasian Economic Commission (EEC) and the World Customs Organization. During this time the doors were opened for the EEC specialists to a number of WCO working bodies, which are responsible for various issues of customs administration and trade facilitation.
    With each working visit to the WCO we learn more about its specifics and peculiarities, realizing the importance of continuing common beneficial cooperation between the Eurasian Economic Union and the WCO on improving customs regulation and matters of common interest. Such interaction already brings its positive results within the framework of Eurasian integration and modernization of the EEU law in customs sphere.
    In the near future we will witness a revision of the International Convention on Harmonization and Simplification of Customs Procedures. The EEC experts of customs block have already expressed their willingness to participate in this process, which will be no doubt very interesting from the professional and scientific point of view. Actually, the monograph is devoted to the issue of the forthcoming revision of the Kyoto Convention.



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    In this context we are ready to share our experience and knowledge, sincerely hoping that they can be useful for a wide audience - practitioners of Customs authorities, students, graduate students as well as interested persons who study the World Customs Organization and issues of international customs cooperation, legal development means of customs regulation and trade facilitation.
    Kind regards,

Mukai Kadyrkulov                                             Sergei Mozer

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TABLE OF CONTENTS



      SYMBOLS AND ABBREVIATIONS ...............................9

      FOREWORD................................................. 10

      Chapter 1
      THE WORLD CUSTOMS ORGANIZATION
1.1.   The World Customs Organization as a modern institution for improvement of customs regulation and trade facilitation .... 14
1.2.   Areas of activity and strategic objectives of the World Customs Organization ........................... 16
1.3.   Structure of the organizational form of management of the Kyoto Convention ..................................... 19
1.3.1. The Compliance and Facilitation Directorate............20
1.3.2. The Procedures and Facilitation Sub-Directorate.........20
1.3.3. The Revised Kyoto Convention Management Committee.......22


     Chapter 2
     INTERNATIONAL CONVENTION
     ON THE SIMPLIFICATION AND HARMONIZATION
     OF CUSTOMS PROCEDURES

2.1.   On the International Convention on the Simplification and Harmonization of Customs Procedures ............................... 24
2.2.   Revision of the Convention and results ...................... 25
2.3.   Major features of the Revised Kyoto Convention .............. 28
2.4.   Accession to the Convention ................................. 29
2.5.   Benefits of the Kyoto Convention ............................ 30
2.6.   Kyoto Convention and WTO Negotiations on Trade Facilitation . 31

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2.7.   Kyoto Convention and Framework of Standards to Secure and Facilitate Global Trade............................. 32
2.8.   Rights and obligations of the Parties to the Convention ... 33

      Chapter 3
      THE WORLD CUSTOMS ORGANIZATION
      AND THE EURASIAN ECONOMIC UNION
3.1.   Interaction of the Eurasian Economic Union
       and the World Customs Organization at the current stage ....................................... 36
3.2.   International activities of the Eurasian Economic Union
       in the framework of interaction with the World Customs Organization..........................43
3.3.   Improvement of customs regulation in the context of interaction between the EEU and the WCO ....................... 53

      Chapter 4
       IMPROVEMENT OF INSTRUMENTS OF CUSTOMS REGULATION: THEORETICAL ASPECT
4.1.   On legal instruments and tools of customs regulation....... 65
4.2.   The main instruments of customs regulation................. 68
4.2.1. Customs law as a branch of administrative law ............. 70
4.2.2. Norms of customs law ...................................... 70
4.2.3. Legal institutes of customs law ........................... 71
4.2.4. Normative acts in the sphere of customs regulation......... 71
4.2.5. Permissions, bans, positive requiring in the sphere of customs regulation ....................................................... 71
4.2.6. Legal mechanism in the field of customs regulation ........ 72
4.2.7. Administrative and legal regimes (customs procedures)........ 72
4.2.8. Legal constructions in the field of customs regulation ...... 74

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4.2.9. Forms of management in the sphere of customs regulation ...... 75
4.2.10. Act of public administration ................................ 76
4.2.11. Administrative agreement in customs sphere .................. 76
4.2.12. Programs, concepts of development and improvement of customs regulation (as acts of public administration
       in the field of customs) ..................................... 76
4.3.   The concept of improving the instruments of customs regulation............................................... 81
4.4.   Methodological approaches to improve the instruments of customs regulation............................................... 91

       Chapter 5
       REVISION OF THE KYOTO CONVENTION
5.1.   Conceptual approaches in 2009 for the revision of the Kyoto Convention ........................................... 98
5.2.   Revision of the Kyoto Convention: outcomes of 2018 .......... 106
5.3.   Analysis of procedural issues of the Terms of Reference
       of the Working Group on a Comprehensive Review of the Revised Kyoto Convention ............................. 109
5.4.   Improvement of the instruments of customs regulation: the Revised Kyoto Convention...................................... 113
5.5.   Overview of the directions of updating the Kyoto Convention.. 116
5.6.   Classification of topical issues
       of customs regulation considered by the Permanent Technical Committee in 1997-2018........................................139
5.7.   Proposals for the revision of the Kyoto Convention .......... 152
5.7.1. Plan of activities for the revision of the Kyoto Convention . 153
5.7.2. Concept of the revision of the Kyoto Convention ............. 156
5.7.3. On the Methodology of the revision of the Kyoto Convention .. 162

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5.7.4.  Organizational and legal aspects of interaction between
      the participants of the Working Group
      on a Comprehensive Review of the Revised Kyoto Convention ................................. 173
5.7.5.  The role of observers in the revision of the Kyoto Convention . 181
5.7.6.  On the issue of National Working Groups (Committees) on a Comprehensive Review of the Kyoto Convention .............. 186

      CONCLUSION ...................................................... 190

      LIST OF SOURCES USED ............................................ 192

      ANNEXES.......................................................... 210
      1. Contracting Parties to the Revised Kyoto Convention .......... 210
      2. List of Contracting Parties to the RKC - Chart.................223
      3. Memorandum of Understanding Between
      the World Customs Organization (WCO), Having
      its Headquarters in Brussels, Belgium, and the Eurasian
      Economic Community (EAEC), Having its Headquarters
      in Moscow, Russia and in Almaty, Kazakhstan (25 June, 2004) ......224
      4. Decree of the Collegium of the Eurasian Economic Commission
      № 64 «On the draft Memorandum of Understanding between
      the Eurasian Economic Commission and the World Customs Organization» (17 May 2016) ..................................... 227
      5. Memorandum of Understanding between
      the Eurasian Economic Commission and the World Customs Organization (17 June 2016) ..................................... 228
      6. Provisional list of customs operations and business processes .................................... 230
      7. Terms of Reference of the Working Group
      on a Comprehensive Review of the Revised Kyoto Convention (WGRKC) ......................................................... 245

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                SYMBOLS AND ABBREVIATIONS




APEC                - Asia-Pacific Economic Cooperation    
CAREC               - Central Asian Regional Economic      
                    Cooperation                            
CCC, Council        - The Customs Cooperation Council      
CEN                 - Customs Enforcement Network          
Convention, Kyoto   - The International Convention on the  
Convention, Revised Simplification and Harmonization of    
Convention          Customs Procedures                     
CUC                 - The Commission of the Customs Union  
EEC, Commission     - The Eurasian Economic Commission     
EEU, Union          - The Eurasian Economic Union          
EAEC                - The Eurasian Economic Community      
EU                  - The European Union                   
ISCM                - Integrated Supply Chain Management   
PTC                 - The Permanent Technical Committee    
RKC, Revised Kyoto  - The International Convention on the  
Convention          Simplification and Harmonization of    
                    Customs Procedures                     
RKCMC, Management   - The Revised Kyoto Convention         
Committee           Management Committee                   
SAFE                - SAFE Framework of Standards to Secure
                    and Facilitate Global Trade            
UCC                 - Customs Code of the Eurasian Economic
                    Union                                  
UNECE               - The United Nations Economic          
                    Commission for Europe                  
Treaty              - Treaty on the Eurasian Economic Union
WGCR RKC            - The Working Group on a Comprehensive 
                    Review of the Revised Kyoto Convention 
WCO, Organization   - The World Customs Organization.      

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                FOREWORD





    In the publications on the activities of the World Customs Organization (hereinafter - WCO, the Organization), we repeatedly draw attention to the need to develop mutually beneficial relations between the Eurasian Economic Union (hereinafter - EEU) and the WCO, within the framework of which the experts develop fundamental concepts, ideas, models, instruments and recommendations in the field of customs regulation. In our opinion, the WCO is a universal negotiating platform for the majority of the world’s customs administrations, international organizations, representatives of the business community, whose activities are related to the improvement of customs regulation and the governing external trade activities. Full participation in the work of the Organization of stakeholders with the status of the WCO members, observers, stakeholders, including academic circles, allows comprehensive consideration of the customs issues and to prepare proposals for improving customs regulation taking into account different points of view and the variety of options to meet the challenges. Confirmation of this thesis becomes apparent at meetings of various WCO working bodies.
    In May 2018 the representatives of the Eurasian Economic Commission (hereinafter - EEC, Commission) as observers participated for the first time in the meeting of the Revised Kyoto Convention Management Committee. We believe that this is a significant event, because, in our understanding, this WCO working body is one of the main ones, which is responsible for a wide range of issues related to modernization and preparation of recommendations, guidelines for the implementation of the provisions of the International Convention on the Simplification and Harmonization of Customs Procedures. The time of participation of the EEC representatives in the meeting of this working body coincided with the development of a package of documents for a comprehensive revision of the Convention by the Working Group on the Comprehensive Review of the Revised Kyoto Convention (hereinafter - WGCR RKC) with active participation of the WCO Secretariat.
    On January the 1st, 2018 the Customs Code of the Eurasian Economic Union entered into force on the territory of the EEU. The Parties of the Union are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic and the Russian Federation. When drafting the Code, the experts from the Expert Group on Preparation of the Union Customs Code have often referred to the provisions of the Kyoto Convention. In our opinion,

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the experience gained in the development of the new Code may be also a matter of interest in the process of a comprehensive review of the Kyoto Convention.
    Given the importance of the forthcoming work on the revision of the Kyoto Convention, we considered it possible to conduct a study of this issue taking into account the experience of the EEC on improving customs regulation, touching upon individual issues of revision of the Convention as well as some aspects of the organizational and legal mechanism for managing this project. The monograph presents the point of view of its authors on a number of issues of updating of the Convention. We believe that the variety of approaches and proposals will eventually allow in the near future to develop a fundamental document, which will become for the international customs community a kind of constitution in the field of customs regulation.
    The need to study the activities of the World Customs Organization is also confirmed by a number of other circumstances, namely:
    -     the issue of updating of the Kyoto Convention and the scientific and methodological apparatus applied for these purposes has not been sufficiently studied in scientific community;
    -     to date, the expert community involved in the revision process of the Convention is in need of an effective scientific and methodological support for this project;
    -     despite the existence of a multitude of instruments for customs regulation of external trade, the activities of the WCO working bodies (working groups, subgroups, committees, subcommittees, focus groups, etc.) that participated in their development, have not been sufficiently studied;
    -     it has not been carried out detailed analysis of the rules, regulations and administrative procedures of the WCO working bodies with regard to the possible involvement of customs and economic unions, international organizations, the business community, academia, and other stakeholders in the development of international standards in the field of customs regulations on the platform of the World Customs Organization;
    -     the prospects and possible models of organization of mutually beneficial customs cooperation between the Eurasian Economic Union and the World Customs Organization have not been sufficiently explored.
    The above circumstances determine the relevance of this study.
    The object of the study is the activities of the World Customs Organization and its working bodies in connection with the revision of the International Convention on the Simplification and Harmonization of Customs Procedures.
    The purpose of the study is to research the activities of the WCO on the revision of the International Convention on the Simplification and Harmonization

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of Customs Procedures (hereinafter - Convention, Kyoto Convention, Revised Convention, RKC) as well as to prepare practical proposals for improving the project management mechanism for the updating the Convention.
    The subject of the study is the rules, procedures, working materials of the Revised Kyoto Convention Management Committee for the revision of the Kyoto Convention as well as of the Virtual Working Group related to updating of the Convention.
    The need to achieve this goal has determined the formulation and solution of the following main tasks:
    -     study of the organizational form of management of the Kyoto Convention;
    -     study of relevant issues of application of the Kyoto Convention in the current conditions of customs regulation;
    -     analysis of the development of relations between the EEC and the WCO at the present stage of international customs cooperation and development of proposals for their improvement;
    -     analysis of instruments of customs regulation as well as proposals for their improvement;
    -     study of the project management mechanism for revising of the Convention, as well as approaches to improving the Kyoto Convention;
    -     study the issue of revision of the Kyoto Convention, as well as the preparation of practical recommendations, including taking into account the experience of updating of customs regulation in the Eurasian Economic Union.
    The normative legal basis of the study consists of international conventions and agreements, legal documents regulating the activities of the World Customs Organization, the Eurasian Economic Union and their working bodies.
    The empirical basis of the study is presented by archival materials of the Eurasian Economic Commission as well as materials of the World Customs Organization. In addition the study used the experience of the authors in the EEC related to interaction with the WCO.
    This work is one of the first studies revealing relevant issues of the revision of the Kyoto Convention in the context of the experience of the Eurasian Economic Union in the field of improving the instruments of customs administration in the EEU Member States.
    The scientific value and novelty of the monograph lies in the fact that this study is a factual material based on historical facts and on the current description of the WCO rules, regulations and materials on the project for the updating the Kyoto Convention.
    The practical significance of the study is that this research is aimed at improving the project management mechanism for the revision of the Kyoto

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Convention. Its materials can be used in the practice of developing conceptual approaches for the updating the RKC.
    The monograph consists of an introduction, five chapters, conclusion, a list of sources used and annexes.
    The first chapter is devoted to the working bodies of the WCO, which activities are related to the revision of the Kyoto Convention.
    The second chapter examines the relevant issues of the application of the Kyoto Convention in the current conditions of customs regulation.
    The development of relations between the Eurasian Economic Union and the World Customs Organization at the present stage is considered in the third chapter.
    The fourth chapter includes an analysis of the theory of law on improving tools of customs regulation.
    The fifth chapter is devoted to conceptual scientific and methodological approaches to the revision of the Kyoto Convention.
    The Conclusion summarizes the results of study of the directions of updating the Kyoto Convention, concretizes the further prospects for organizing and implementing mutually beneficial customs cooperation between the EEC and the WCO.
    The annexes contain basic documents and information that provide a more detailed study of the subject of this study.
    The accomplished research work can be useful for a wide range of specialists in the field of external economic activity, world trade and international customs cooperation. Its results can be used as a basis for further studies on the development of the theory and practice of international customs law and the law of the Eurasian Economic Union.
    The monograph can be useful for a wide range of specialists in the field of customs regulation and trade facilitation as well as international customs cooperation.
    The work can be used by experts from the WCO Secretariat, the Revised Kyoto Convention Management Committee, the Working Group on the Comprehensive Review of the Revised Kyoto Convention, researchers, lecturers, students, postgraduate students of the Russian Customs Academy, other institutes of higher education and the WCO Regional Training Centers, specializing in «Jurisprudence», «Customs» as well as experts of customs and other executive authorities of the EEU Member States, experts of the Eurasian Economic Commission.

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Chapter 1
THE WORLD CUSTOMS ORGANIZATION





        1.1. The World Customs Organization as a modern institution for improvement of customs regulation and trade facilitation

   As part of the study of international customs law as well as the issues of improvement of customs regulation, the activities of the World Customs Organization in the current conditions of international customs cooperation is a matter of particular interest as well as its impact on customs regulation and trade facilitation. No less important aspects of this issue are a comprehensive study of the functional and institutional aspects of the Organization’s activities, in particular the WCO Secretariat and its main working bodies in the relevant areas of operation as well as modern customs regulation instruments and tools developed on the WCO platform. The analysis of the research works relating to the topic in question allows us to conclude that despite the existence of a multitude of instruments of customs regulation of external trade and customs administration the activities of the WCO working bodies (working groups, subgroups, committees, subcommittees, focus groups, etc.),which participated in their development, has not been sufficiently studied.
   The history of the WCO began in 1947 when the thirteen European Governments represented in the Committee for European Economic Co-operation agreed to set up a Study Group. This Group examined the possibility of establishing one or more inter-European Customs Unions based on the principles of the General Agreement on Tariffs and Trade (GATT).
   In 1948, the Study Group set up two committees - an Economic Committee and a Customs Committee. The Economic Committee was the predecessor of the Organization for Economic Co-operation and Development (OECD), the Customs Committee became the Customs Co-operation Council (CCC).¹
   In 1952, the Convention formally establishing the CCC came into force. The Council is the governing body of the CCC, and the inaugural Session of the Council was held in Brussels on 26 January 1953.

¹ History. The World Customs Organization. URL: http://www.wcoomd.org/en/about-us/what-is-the-wco/au_history.aspx

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    Representatives of seventeen European countries attended the first Council Session of the CCC.
    After years of membership growth, in 1994 the Council adopted the working name World Customs Organization, to more clearly reflect its transition to a truly global intergovernmental institution. It is now the voice of 181 Customs administrations which operate on all continents and represent all stages of economic development. Today, WCO Members are responsible for processing more than 98% of all international trade.¹
    The main body of the Organization is the Customs Cooperation Council.¹ ² This WCO working body was established in 1950in accordance with the Convention establishing a Customs Co-operation Council³ in order to ensure the highest degree of consistency and uniformity in the customs systems of the Member States, and also to study the problems associated with the development and improvement of customs technologies and customs legislation in this regard. The Council is the supreme body of the WCO, as such, takes final decisions concerning the work and activities of the Organization. All WCO working bodies report to the Council, which works with the administrative support of the WCO Secretariat. Each Member of the Organization has the right to be represented in the Council.
    It is the responsibility of the Council to examine all issues relating to customs cooperation, which the Contracting Parties agreed to promote in accordance with the main objectives of the Convention; the study of the technical aspects of customs systems as well as related economic factors with a view to provide the Members of the Council with practical means to achieve the highest possible level of coherence and uniformity; preparation of draft conventions and amendments to conventions as well as making recommendations on their adoption by interested governments.
    Today the World Customs Organization is the main international institution that develops international standards in the field of customs. It is an excellent platform, where a wide exchange of opinions is provided between the Customs administrations of the world, other international organizations, representatives of the private sector as well as academic circles on problematic issues of customs




¹ History. The World Customs Organization. URL: http://www.wcoomd.org/en/about-us/what-is-the-wco/au_history.aspx

² Council. Terms of Reference for the Council. URL: http://www.wcoomd.org/en/about-us/ wco-working-bodies/council.aspx

³ Convention establishing a Customs Co-operation Council. URL: http://www.wcoomd.org/-/ media/wco/public/global/pdf/about-us/legal-instruments/conventions-and-agreements/ccc/ convccc.pdf?la=en

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