Transatlantic drive to cut customs red tape and reduce companies’ costs

Date: 16/09/1999

By Renée Cordes

EASTMAN Kodak Co. pays brokers tens of millions of euro annually to ensure that its products get past international borders and onto store shelves around the world.

But that is just the tip of the iceberg for the multinational maker of photo-processing and medical imagery equipment, which has to deal with a hotchpotch of national customs requirements and fees which are both costly and time-consuming. "These costs are always a lot more than we expect," says Christopher Padilla, Kodak's director of international trade relations.

Like other multinationals around the globe, Kodak is banking on a solution emerging from the forthcoming round of world trade talks.

Both the US and the EU are pressing for members of the World Trade Organisation to give trade facilitation a high priority. They are calling for measures to simplify and automate customs and other import/export requirements, reduce paperwork and boost transparency.

The move would ideally guarantee that companies, especially smaller ones, can get their products to market more quickly. It would also mean that customs officials could monitor fraud more closely and focus the bulk of their resources on those areas most likely to be problematic.

Although the agenda for the talks has not yet been finalised, trade facilitation is one of the few issues which is certain to be discussed. However, some company executives are worried that trade negotiators will shy away from making specific commitments, opting instead for a broad declaration.

"It may be dangerous if there is a very general discussion and at the end civil servants and customs authorities create an obstacle," said Ernst Buser, head of economic affairs for Swiss drug group Novartis International.

Much of the groundwork for easing the customs congestion has already been laid. In June, the heads of more than 100 customs administrations unanimously adopted the Kyoto Convention, which seeks to allow more rapid clearance of goods by customs.

Both the EU and the US agree on the need to build on legislation already in place aimed at combating trade obstacles. But while the Union is calling for a general set of commitments, the US is pressing for a more practical approach, urging step-by-step reforms with tight deadlines.

"Improving the trade facilitation environment is a large task, some of which is not appropriate for the WTO to address," warned Washington in a recent report. "The WTO work towards improving the trade facilitation environment should be cast in its true terms: an undertaking of rules-based systemic and institutional reforms, rather than a lengthy complex negotiation involving precise harmonisation of specific customs techniques."

The US is, for example, calling for greater cooperation between the WTO and other organisations such as the United Nation's and the World Customs Organisation, as well as focused studies over the next two years on the implementation of trade-facilitation measures already agreed.

But this faces strong resistance from less-developed countries, who fear that any push to automate customs procedures would put them at a competitive disadvantage as they might not have the financial resources to pump into new technologies.

However, supporters of the move to streamline procedures argue that this would be offset by the greater revenues which countries would reap from customs duties under a more efficient system.

Even if trade negotiators are not able to agree on the detailed approach the US is championing, European employers federation UNICE is confident that any agreement coming out of the WTO talks in Seattle will be a step in the right direction.

The organisation argued in a recent report that customs procedures might have become one of the biggest barriers to trade. "We have to be practical and realistic," says Ivano Casella, advisor for external relations and customs at UNICE. "First we want to be sure to introduce some order to the international work that has already been carried out and put everything into a single body of rules."

Article forms part of a survey on world trade, p13-20.