Relaxed customs procedures and controls in free zones outdated – WCO

Kunio Mikuriya, WCO Secretary General

The World Customs Organisation (WCO) has declared that relaxed customs procedures and controls in free zones under the guise of promoting economic development are outdated.

WCO however averred that customs should be in the zones as one of the main authorities to coordinate with all public and private authorities with the objective of contributing to a safe and sustainable global trade ecosystem.

The Secretary-General of WCO, Dr. Kunio Mikuriya stated in his speech at the First Global Free Zone Conference held virtually last week with the support of Japan’s Customs Cooperation Fund.

 Dr. Kunio Mikuriya said “Today, arguing for relaxed Customs procedures and controls in free zones under the guise of promoting economic development seem rather outdated. Benefits can be provided without sacrificing the safety and security of trade.

“Customs should be there as one of the main Authorities and need to coordinate with all public and private authorities, with the objective of contributing to a safe and sustainable global trade ecosystem”, he reiterated to the 600 participants.”

In his speech, Ahmad Abdullah Bin Lahej Alfalasi, Director General of Federal Customs Authority, United Arab Emirates (UAE), highlighted that the UAE continues to work on reviewing the customs procedures for free zone to cope with the new challenges that customs face, including the application of Authorized Economic Operator to those companies therein.

He further called upon the international customs community, the private sector, and relevant government agencies to have further collaboration, to ensure the safety and security of the border while supporting the national and international economic growth.

Introducing the recently published OECD Free Zone Recommendation with referring to WCO Practical Guidance on Free Zone endorsed by December 2020 Council, Mr. Chris Martin, the Co-Chair of the OECD Task Force on Countering Illicit Trade (TF-CIT) mentioned that it is reassuring and persuasive that despite their differences in terms of architecture, both international instruments on free zones bring focus to the same core elements with the same goals and are complementary to one another in relation to the envisaged outcomes.

He further explained that these core elements include: territoriality of free zones; full Customs involvement and approval process for free zone Operators; access to data via integrated IT systems; effective surveillance, control and audit by Customs and other competent authorities; and more effective international cooperation.

During a high-level dialog with the distinguished speakers from McKinsey, Panama, the United States and Lebanon who shared their ongoing initiatives with respect to collectively addressing challenges in free zones, the Conference acknowledged the economic opportunities of free zones and the significance of Customs strategic involvement in the overall life cycle of free zones. 

With concrete facts provided by the speakers from the International Chamber of Commerce (ICC), Toyota Motor Corporation and Jordan Customs, it is noted that more and more customs administrations are actively engaged and involved in the management and control of free zones, which resulted in a number of seizures of illicit trade.  

In this context, Financial Action Task Force (FATF) also welcomed the WCO Anti Money Laundering (AML)/combating the financing of terrorism (CTF) Programme, of which capacity building activities expanded to September 2022.

Learned from the analysis and expertise shared by United Nation Conference on Trade and Development (UNCTAD), the European Union and Renault Nissan Mitsubishi, the Conference also recognized the consequence of the unique treatment of free zones and the necessity for proper and consistent application of Rules of Origin for the economic competitiveness of free zones.

In his closing speech, Mr. Ricardo Treviño Chapa, WCO Deputy Secretary-General, said “As the WCO theme for 2021 states, I hope this Conference and the WCO Practical Guidance on free zones will build the necessary momentum for Customs and all relevant parties to foster recovery, renewal and resilience for a sustainable supply chain in free zones.”

As the follow-up of this Conference, the WCO plans to provide capacity building activities based on the finding in the WCO research paper on free zone and WCO Practical Guidance on Free Zone to Member Customs administrations.

Around 600 policymakers as well as operational experts from customs administrations, free zone authorities, manufacturing companies, international organizations, academia, and other stakeholders from over 90 countries attended the conference with the theme of Meeting the SDGs – Ensuring Customs involvement for Free Zones’ competitiveness, safety and sustainability.

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