• January 27, 2015
  • |
  • Trade

The Power of Customs Modernization

How efficient customs clearance can open the doors for easier global trade.

Manufacturers that trade on a global scale face significant customs clearance obstacles. Until we break these barriers, companies will miss valuable growth opportunities that are enabled by advancements in technology and ecommerce.

We need modern, coordinated border-clearance processes that facilitate the flow of international shipments. We can achieve that if exporters and importers advocate for free-trade agreements and push customs administrations to invest in cutting-edge technologies that support enhanced security measures and trade facilitation.

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In addition to business opportunities, these steps also support jobs for the growing middle class.

These steps would provide more than just business opportunities. They also would support jobs for the growing middle class.

In my work at UPS and as chair of the International Chamber of Commerce Commission on Customs and Trade Facilitation, I hear from businesses daily about the hassles of getting products across borders.

Top retailers like Amazon and eBay face burdensome processes for low-value shipments. Manufacturers such as Apple and General Motors that have repetitive shipments of identical products must clear those shipments as if they were first-time importers.

These stories are all too common. And it’s especially alarming that 50 percent of destination countries delay more than 25 percent of all imported shipments while 20 percent of destination countries delay more than 50 percent of all imported shipments.

Thought leadership and advocacy initiatives by UPS and other industry leaders have helped improve border management policies. These efforts target the key causes of bottlenecks at borders and advance our goals to achieve fast and predictable border procedures.

By working with our customers, UPS has identified some initiatives that can – and do – enable efficient customs clearance and open the doors for easier global trade in the near future:

Sign Here: Finalize Pending Free Trade Agreements

Free trade agreements consistently prove their worth by eliminating barriers, harmonizing laws and enabling trade between countries. The World Trade Organization’s (WTO) agreement and the Trans-Pacific Partnership (TPP) are excellent examples.

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Free trade agreements eliminate barriers, harmonize laws and enable trade between countries.

The WTO’s trade facilitation agreement, covers 160 countries and includes important border facilitation improvements such as advanced clearances and exemptions for low-value shipments, also known as de minimis.

More than 80 percent of the agreement touches border facilitation and provides improvements to help both developing and developed countries.

The TPP, meanwhile, would permit us to integrate North American supply chains and enable trade with Asia-Pacific nations. Twelve Asia-Pacific countries whose economies represent 39 percent of worldwide GDP are negotiating the deal. This region represents tremendous opportunity, with two thirds of the global middle class projected to be there by 2030.

Leverage the Use of Advanced Shipment Data that Promote Efficiency and Security

Electronic, automated pre-clearance is one way to minimize delays. This would enable advanced screening and processing of shipments before they arrive at the border.

Another example is the International Trade Data System, which is a single database for U.S. border clearance. It will provide for a “Single Window”, otherwise known as “one government at the border” clearance for all government agencies.

Stop Living in the Past: Raise the U.S. De Minimis Threshold

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When it’s easier to trade, more trade happens.

Believe it or not, the minimum value at which customs duties are imposed on imported goods has been static since 1993, the same year Congress approved the North American Free Trade Agreement.

A lot has changed in 21 years. It’s time to raise the de minimis threshold from $200 to $800, which is the same amount a U.S. citizen can exempt from customs duties and fees when returning from traveling abroad.

This would benefit small and medium-sized enterprises that are new to global trade. It also would help open the door to exporting for startup companies.

Implement Innovative Clearance Programs Like Accelerated Border Clearance (ABC)

ABC is an innovative and transformational model developed by UPS and U.S. Customs & Border Protection for highly compliant companies.

ABC modernizes the clearance process by converting transactional clearances to an account-based approach. Shipments from companies that have a proven track record of compliance are not subject to screenings as if they were new importers.

This model also blends the requirements for other government agencies into a more efficient process and reduces the potential for delays at the border.

The initiatives described above are not exhaustive, but they are important steps toward customs modernization. It’s an issue of global importance. By eliminating barriers, companies – large and small – are able to expand their businesses, create jobs and spur economic growth. When it’s easier to trade, more trade happens. goldbrown2

This article has been updated based on changes in the legislative process.

Norm Schenk is Vice President of Public Affairs at UPS. He is responsible for shaping global customs policy and border strategies to facilitate the smooth flow of shipments across international borders.

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Reprinted with permission of Longitudes, the UPS blog devoted to the trends shaping the global economy.