COVID-19 and Customs Opportunity for Scaling up Digital Transformation

KATHMANDU: Outbreaks, epidemics, and pandemics are a fact of nature, and a recurring feature of recorded history, from the Plague of Athens in 430 BCE, to the Black Death, the 1918 influenza pandemic, and now the coronavirus disease (COVID-19). First reported on 31 December 2019, COVID-19 has rapidly progressed to become a global pandemic, causing unprecedented, far reaching impact on health, social and economic wellbeing of countries around the world.

At the beginning of the third year of this pandemic (as of first day of 2022), nearly 5.5 million people were killed due to this disease, and they are just the reported deaths. The excess deaths caused by the virus, and by disruption to essential health services, are far higher. Never experienced before, people in all parts of the world are waking up to a new reality of world shutting down, as countries desperately try to contain the spread of this new virus.

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After the outbreak of the disease, besides health, people’s lives have been severely affected with cities locked down, millions of jobs gone, restrictions in travelling causing adverse effects in global economy. Thus, pandemic has changed our lives in ways that we never imagined, It affected every facets of society. No person, company or institution is immune- organizations of all shapes and sizes were compelled to face problems with their business, employees and stakeholders.

Evidently, it demonstrated that when health is at risk; the economy, jobs, trade, social cohesion, political stability and multilateralism is at risk. Not since the World War Second, have we seen such widespread global disruption. If has tested us all and shown just how sensitive global supply chains are to disruption. Nevertheless, it is also a time of
opportunity. Against the background stated above, one thing however has become very clear; the continued importance of global trade and of initiatives supporting the smooth flow of goods across borders, especially essential goods to areas where they are most needed.

Critical role played by Customs and lessons learned

Customs authorities are one of the oldest government institutions in existence: they came into being when humans first began to trade with one another and have survived multiple pandemics and natural disasters over time. Each of these events has forced them to adapt and implement innovative processes and cutting edge technologies that have become part of their regular operations helping them improve the service they provide. The challenges brought by the novel coronavirus are no exception. Under the auspices of WCO, customs administrations across the globe responded to the challenge with enthusiasm and creativity. The risks associated with this pandemic have required customs authorities to implement safe and stream lined procedures, make effective use of technologies and engage in
enormous coordination efforts with other government authorities and the private sector. In other words, these risks have required the maximum level of automation and implementation of contingency plans. Taking these realities into consideration, most of the countries have taken steps to adapt to new norm, the result of which have been reflected on the ground.

In this regard, it is noteworthy to mention some key lessons learned by Customs from the pandemic, which include:

ƒ The ability to adapt and change to modify regulations, and implement simplified and agile procedures during the crisis.

ƒ The value of having a high level of automation and digitization for operational management that reduces human intervention and the use of paper.

ƒ The usefulness of applying and perfecting risk management to facilitate legal trade, encourage customs compliance, as well as successfully detect and apprehend illegal operations.

ƒ The need to have Contingency Plans coordinated with the other border management entities, the private sector and the Customs of neighboring countries.

ƒ The importance of establishing or expanding programs with the private sector such as Authorized Economics Operator (AEO).

ƒ The benefits of cooperation’ beyond our borders with harmonization measures and data exchange between Customs.

ƒ The advantage of taking advantage of this turning point for the adoption of new ICTs such as artificial intelligence (AI), block chain and big data, which transform and streamline customs management and contribute to the economic reactivation of countries through their foreign trade.

WCO’s response to safeguard supply chain continuity

Evidently, the pandemic not only highlighted the importance of trade and foreign trade logistics but also suggested the key role to be played by customs and the areas for improvement. At this point, it is important to note that WCO has taken a number of actions to support WCO members and stakeholders worldwide in tackling various COVID-19 related challenges. The WCO has urged all its member customs administrations to facilitate the flow of goods and
ensure the integrity of the global supply chain. It has called for effective communication and a more coordinated and pro-active approach among WCO members themselves, as well as with other relevant border agencies and international organizations. Notably, the WCO has also reached out to its business partners within the private sector, to seek advice on the impact of COVID-19 from a trade perspective.

The fight to prevent the spread of COVID-19 has called for coordinated response at global level, where national governments, international organizations and businesses join forces. In a very short time, the pandemic has had a great impact on economies and societies. The global customs community has as well recognized the challenge the world is facing and stepped efforts to help minimize the overall impact of the COVID-19 outbreak and respond effectively to government and business needs. Recent measures of the World Customs Organization (WCO) to address the pandemic aim, on the one hand, to prevent the spread of the virus and, on the other hand, to safeguard supply-chain continuity.

Efforts to strengthen Data system and Digitalization

Considering the current realities, WCO is dedicating 2022 to scaling up customs digital transformation by embracing a data culture and building a data ecosystem. It can be easily said that the theme of this year’s international customs day is built on WCO’s continued efforts in strengthening modern technology in overall customs procedures.

The optimization, automation & digitalization of customs and border processes are among the areas that new technologies address. These factors are the cornerstones of modernization and lay the groundwork for generating the high quality data needed to implement robust and effective risk management systems. Accordingly customs authorities are required to implement new technologies & innovation to boost their digital transformation and streamline. This, in turn can help improve competitiveness and support the country’s economic growth.

The data that customs authorities capture has immense value for customs and border risk management by digitalizing and associating them with freight & transportation documents. Once the data is captured, artificial intelligence machine learning and big data tools allow the processing & analysis of large volumes of information to identify patterns and potentially risky or fraudulent operations.

Data are critical to informed decision-making, and trade policy is not an exception. Considering its importance during crisis of this pandemic, WTO has published information note explaining some steps that could be taken by members in the short and medium term to redress the problem, strengthen international cooperation, and improve the measurement of trade in COVID-19 essential products. The note clearly explains an in-depth understanding of the supply chain problems caused by the COVID-19 pandemic needs to be grounded in data.

A lack of adequate or timely information makes it difficult to take informed decisions, and could lead to sub-optimal or counter-productive policy measures. Given the nature of international trade, no single WTO member has complete information about world trade within its jurisdiction and must, therefore, necessarily depend on sharing information with other members. Data-sharing is a public goods. There are several reasons why members should try to address this data-sharing problems urgently. First, the most detailed national trade data is not readily available at the international level. Generally, customs transaction data and the most detailed statistical data are only available for internal government use, and these detailed statistics are not published. Those statistics that are published often take a long time to become available, a problem which is compounded by the fact that most members take even longer to provide that information to international organizations.

Second, even if members were to agree to make detailed information available, the data might not be comparable across are WTO membership. Third, while one obvious solution would be for the WCO’s Harmonized System Committee to create new standard HS subheadings for COVID-19 essential goods, this process usually takes several years. Finally, the pandemic is likely to continue to affect many members for several years to come. Food, medical supplies, medical equipment, PPE and medicines are all essential goods, and making vaccines available to all by means of global cooperation and efficient distribution is key to ending this crisis. Therefore, it is critical that members find a workable approach as soon as possible in order to be able to start compiling the relevant data to facilitate international cooperation and better informed decision making.

A final point to make in terms of coordination is that governments are not the only possible source of relevant information, as private companies may also have an important role to play. For essential products, the production of which is concentrated in a small group of companies, as is the case for vaccines, it may be possible to establish public-private partnership to obtain more timely and precise information.

Based on the above considerations, any initiative to tackle data problems and develop a system to properly monitor trade in essential products for the COVID-19 pandemic (or future crises) should have three characteristics. First, it should be a collective effort, with as much participation as possible. Second, it should take into account the way in which trade statistics are initially collected by customs agencies and disseminated at the international level. And
third, it should be flexible so it can be adjusted to changing circumstances.

Cooperation and transparency are playing a key role in tackling the COVID-19 pandemic and in fostering economic recovery and trade policy has a central role to play in both of these efforts. These elements are a common theme in several ministerial declarations, communiques, statements and proposals that were put forward over the past year by different groups of WTO members.

The article has been extracted from https://customs.gov.np/ and Ramchandra Man Singh is its original author