Customs drafts risk management rules for cargo clearance

ISLAMABAD: Pakistan Customs has drafted Risk Management System Rules for the clearance of cargo as it was required under Article 7.4 of Trade Facilitation Agreement (TFA) of World Trade Organization (WTO), a statement said on Tuesday.

“Pakistan Customs is following Risk Management System since long as a signatory to Revised Kyoto Convention. However, in compliance to TFA, further legal changes were made in Custom Act, 1969 through Finance Act 2019,” said Federal Board of Revenue (FBR) in its communication.

“Now in pursuance to Article 7.4 of TFA and also keeping in view best International practices, Risk Management System Rules for clearance of cargo have been drafted.”

The board said these rules would help identify high risk imports/exports, while facilitating international trade as decreasing physical inspections to a large extent, thus reducing dwell time and port congestion.

“These measures will help reduce cost of doing business and thus further improve the business and investment environment in the country,” the FBR said in its release.

On 27 October 2015, Pakistan ratified the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA), becoming the 51st WTO member around the world to ratify the agreement. Article 7.4 of the TFA mandates WTO Members to undertake the arrangement and implementation of a risk-based management system for carrying out customs controls on all imports, exports and transit transactions.

This provision hence requires Members to ensure that customs administrations handle the nature of risks and compliance through a systematic application of risk management principles in trade transactions, so as to ease the process of releasing goods, while at the same time ensuring the safety of the released merchandise.

Another significant provision entailed by Article 7.4 is that Members shall concentrate customs controls, and to the possible extent, other relevant border controls, on high-risk consignments, while facilitating the release of low-risk ones as a means to quicken flows of international trade and reduce the costs of doing business.

Therefore, the use of risk-based selectivity – according to a red/green channel criterion – will allow customs to converge their resources towards the high-risk shipments, while allowing expediting the release of goods which present low risk. The federal tax authority further said these draft risk management rules were now being also published on its website for the information and input from all stakeholders and general public.

“These draft rules will be finalised after reviewing the feedback and their incorporation where beneficial,” the board said.