The Baltic Course

Cutting the Red-Tape

By Victor Nechayev, consultant for the Institute of International Economic Relations and Customs

New priorities have been set for international rights, leading the customs legislation in Latvia to experience substantial change. Customs cooperation in the Baltic States poses as a good example for other post-Soviet countries and the Baltics have clearly defined their positions in regard to foreign economic relations, as global economic developments now demand countries to put their historical experience in regional cooperation to use.

A ceremonial meeting held in January 2001 marking the anniversary of Latvia's customs service, was attended by Michel Danet, Secretary General of the World Customs Organization, who delivered a speech emphasizing the priorities that should be implemented in the next century to further develop the Latvian Customs service. These priorities include the following:

  1. to reduce the role of direct administrative and fiscal measures, as well as to diminish different administrative and technical aspects creating obstacles in the regulation of the relationship between the customs administration and persons transporting goods.
  2. to modernize both the customs management structure and the system of customs clearance procedures and customs control (harmonization and simplification of customs laws, extending the use of IT for better data transmission and processing etc.).
  3. measures implemented by customs control should be targeted at giving maximum support to the international turnover of goods, increased co-operation with persons involved in foreign trade transactions and international cargo shipments, and also to render different services concerning the customs field.

These above mentioned priorities are in compliance with the following processes already ongoing in other countries: geographical expansion of market economies with the number of countries implementing corresponding economic policies on the rise, the active search for new markets by private and also transnational corporations, capital placement, movement of labor forces, expanding use of new technologies and the modernization of cargo processing facilities (Internet trade, electronic documentation and data exchange).
Having these characteristics of developing global economic relations common for the entire Northern European region (The Northern Dimension), the historical experience of co-operation between the countries of the Baltic Sea region (Germany, Denmark, Sweden, Finland, Russia, Estonia, Latvia, Lithuania and Poland) dating back to the period of the Hansaetic League is what emphasizes the importance of joint efforts in developing the underlying potential of this region. Of course, it is no secret that the whole Baltic Sea region is relatively small when compared to the global market; however, it possesses favorable advantages of permanent nature that attract the attention of major global players doing business in cargo shipping, advantages such as:

Nevertheless, only after having worked out common and indisputable laws (clear of any sign of selfish interests and/or corruption) on the relationship between countries on all levels (on international, national, department of state and municipal levels) can the Baltic region then expect a change in the direction of cargo flows and benefit from its advantages. Common policy is a substantial precondition for implementing tax and tariff policies, the common use of services provided by transportation, warehousing, forwarding and other facilities, as well as efficient co-operation in the sphere of customs clearance procedures and customs control.
Besides all this, by establishing joint customs control points (on Estonian-Latvian and Lithuanian-Latvian borders) and carrying out joint programs on risk analysis for potential customs offences and smuggling - with special attention devoted to the carriage of goods such as alcohol and tobacco, the Baltic region sets a good example for other Post-Soviet countries.

Less conflict ahead

By joining the General Agreement on Tariffs and Trade (GATT), followed by the accession to the Marrakech Agreement establishing the World Trade Organization (WTO) and ratification of various international conventions and agreements providing for foreign trade turnover, the Republic of Latvia has clearly defined its position in regards to foreign economic relations (including customs policies) - choosing the course towards economic integration: trade liberalization, free movement of capital and so on.
In the sphere of customs it implies being in conformity with the requirements stipulated by the principle of the most-favored nation treatment - according to the conclusions made during the Uruguayan round of WTO talks (1988-1994) this means striving for restrictions on imposition customs duties, the introduction of non-tariff barriers, including different limits on the import and export of goods, reduction quota use and negotiating more favorable licensing terms.
Nevertheless, liberalization of government regulations in regards to customs procedures should not be understood as only an attempt to eliminate the above-mentioned international trade barriers - it is also very essential to expand the possibilities of the legal policymaking providing for both the use of state-of-art technologies in customs clearance procedures and the implementation of world standards proven to be effective in reducing the number of conflict situations.
Today, for instance, persons transporting goods may use the services rendered by customs declaration and brokerage agencies, which submit the information on goods stated in the declaration electronically, sending it to the customs authority for further processing by computer. For these purposes ASYCUDA - the automated system for customs data - is used by Latvian customs authorities for analysis of information in customs declarations. The system's Software can ensure the accounting of different customs payments, and also includes an assessment of compliance to regulations by use of certain customs settings and risk analysis. The use of this automated system helps to avoid conflict situations caused by human factors - cases of subjective dislike between customs representatives, who consider themselves being cheated, and persons declaring goods, which, in turn, find that customs officials bicker unnecessarily.
Amendments made in the Customs Law of the Republic of Latvia in April 2001 serve as another example, particularly when taking into consideration the current global situation. Regulations stipulating the import of goods into free customs zones or into free customs warehouses have now been adopted - thus when these amendments take effect, the owner of goods will not be obliged to submit guarantees to customs authorities concerning customs debt or any possible discharge.
Latvia has also joined the protocol of amendments to the International Convention on the Simplification and Harmonization of Customs Procedures, passed in Brussels on June 26, 1999. The positive aspects of joining this particular protocol are, for instance, softer formulation of the corpus delicti for common customs offences like submitting doubtful information to customs authorities or the declaration of goods under another person's name (offences of this kind are mentioned in the Codex of Administrative Offences (CAO)). The point of the matter is that, according to the standard 3.39, set by the above-mentioned convention, customs administrations may not really impose any penalties in regard to the specified offences, in case they are of accidental nature (offences committed due to inattentiveness) or as a result of technical failures - of course, the presence of strong evidence is required. The given conditions were not particularly highlighted in the previous versions of the CAO, thus widening the possibilities of a formal approach to reviewing similar customs offence cases. Amendments made to the Customs Law give basis to believe that positive changes in the relations between the customs administration and private entrepreneurs are soon to come.
Fulfillment of these above-mentioned priorities means that businessmen and their representatives in the future will less frequently come across red-taped obstacles. It is considered that computerized processing of information and documents, adopting analytical methods in everyday customs procedures and the establishment of customer service offices free of like and/or dislike attitudes reminds us that the 21st century has set in.

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