Trade and Border Control Procedures - the United States and South Africa - Case Study Example

Trade and Border Control Procedures (United States and South Africa) Name Institution Course Date Abstract International trade has developed rapidly in recent past, and with it the proportional importance of border procedures for example customs requirements. Border procedures vary from one nation to another. In addition to this, different goods have different border procedures. Trading countries are finding new ways of making the whole process of cross border trade smoother and simpler. It is for this reason that some countries have agreed to unite and form a single customs agency such as the World Customs Agency, to assist in responding to the dynamics of cross border trade. Member countries have agreed to harmonise border procedures and ease trade. United States and South Africa are both members of World Customs Organisation. This study is part of growing research on understanding the border procedures of different trading nations. In using the United States and South Africa in context of tobacco products' importation, this study will contribute to future studies on border procedures. Introduction In an era of globalisation, global trade offers immense benefits to all countries. Access to international markets by business communities is important for growth of their business and delays at the borders can lead to substantial losses. Trade facilitation by customs and other border agencies are essential for reduction of trade costs and for enhancement of international trade. All goods that enters into an importing country pass through a border in gaining entry into the country. Due to the increasing global trade, countries are facing numerous challenges pertaining to security and clearing of goods at the border. As a result, both developed and developing countries are implementing various measures aimed at securing borders and facilitating lawful trade. World Customs Organization members have made their Customs administration procedures and practices more efficient by adopting the revised Kyoto Convention. The Convention offers a lot of benefits including preparation of Modern Customs code. This essay compares and contrasts United States and South Africa border controls procedures in relation to importation of tobacco products. The governing principles, procedures and relevance of revised Kyoto Convention pertaining to tobacco products importation will be included. International Trade and Border Controls International trade is important for the development of many economies and facilitating it through simple but effective customs and administrative border procedures impact heavily on flow of trade. Regulations and policies that enhance and promote efficient border operations play a crucial role in enhancing trade (Sourdin & Pomfret 2012, p. 4). Border controls are done by various government agencies and they rely on security and management agencies at the border to provide information on stakeholders using border services. Export and import countries have different methods and types of control at their borders. In addition, border check procedures are not similar and criteria for judging conformity of products may be different as well as analytical techniques used (Sourdin & Pomfret 2012, p. 6). Regulation and control of trade is done by many government agencies and they inspect and control the entrance of goods into an importing country. Co-ordination of work by these border agencies and delegation of authority is carried out in ensuring that control and inspection procedures are done smoothly. This enables facilitation of trade and increased border controls effectiveness. Border control procedures can be cumbersome and the clearing processes imposed by customs can hinder smooth movement of goods across the borders. Cumbersome procedures at the borders increases transaction costs as well as lengthening delays to transit, imports and exports goods (McLinden 2011, p. 1). Developed and developing countries border procedures and clearance differs in terms of its effectiveness. Although in both divide there exist bottlenecks at the borders that hinders efficient global supply of goods, it is so predominant in the developing world. It takes three times more days to import goods in developing countries than in the developed world (McLinden 2011, p. 1). Traditionally, the roles of customs and other border agencies have been to control goods for purposes of revenue collection, community protection and industry assistance. However, these roles have widened to include facilitation of legitimate trade. Moreover, various new risks have evolved in the trade industry and sophisticated security measures are necessary at the borders in order to counter them. Terrorist attacks have necessitated border agencies to be vigilant in their work and ensure that only genuine goods are allowed into the country and contrabands and illegal goods are identified and confiscated. United States Border Control Procedures In the United States, Customs and Border Protection (CBP) oversees importation of all goods into the country. United States borders services serve many stakeholders such as traders, transport and related services such as bank and finance companies, shipping lines and freight forwarders. Because of the large number of stakeholders that customs and other border agencies serves, it has a challenge of stopping threats and at the same time facilitates legitimate trade (OSCE & United Nations Economic Commission for Europe 2012, p. 56). In the United States, Department of Homeland Security oversees the function of U.S Customs and Border Protection which has a responsibility of ensuring that trade is carried out in U.S entry ports in a smooth manner. Importation is the process by which goods are brought into a country’s customs territory. United States Customs and Border Protection (CBP) is responsible for clearing all the imported goods to the United States Customs territory (Hegland 2009, p.9). The requirements and procedures of United States CBP for imported goods begin before goods are loaded into a means of transportation at the country of export. It continues until goods arrive at the United States and the process ends when goods are finally released by CBP. The clearing of goods through Customs and Border Protection occurs at one of the CBP entry ports located throughout United States Customs territory. At these entry points, CBP officials undertake the clearing process and import specialists review importers paperwork while other officers physically inspect goods before they can release them (Hegland 2009, p.9). Tobacco products are one of the products that have special import procedures in addition to general import procedures in the United States and appropriate approval from United States government agencies must be obtained before their importation (Johnson & Bade 2010, p. 17-18). There are a number of steps and legal requirements that a tobacco products' importer must fulfil before importing his goods to United States. Importer must find out if he has the legal right of importing tobacco products to United States, obtain customs bond for securing import entry transactions and ensure that all documents and information needed by CBP are available for purposes of releasing the imported goods (Hegland 2009, p.11). An importer of tobacco products must obtain a permit from U.S Treasury Department that is Alcohol and Tobacco Tax and Trade Bureau before undertaking any importation. In addition, Federal Trade Commission (FTC) requires that tobacco products packaging are labelled according to criteria set by Cigarette Labelling and Advertisement Act (U.S Customs and Border Protection, 2006, p.111). When tobacco products reach the United States border, an importer is required to file entry documents for the goods with the director of the products entry port (Hinkleman, Manley, Nolan, Shippey, & Bidwell 2004, p. 199). Imported tobacco products are not legally allowed into United States until shipment arrives into entry port, CBP agents have authorized the delivery of merchandise and excise duties have been duly paid. Imported tobacco products are subjected to security and trade enforcement procedures before they can be released by CBP. It includes screening of the tobacco products, scanning shipment containers, physical examination of tobacco products in the container, review of container contents (Jones & Rosenblum 2013, p.15). Importers may challenge the assessment from that period of cargo entry to that period of final tax assessment, a process called liquidation. This normally occurs in 12 months or more after goods are entered into United States. Imported tobacco products are subjected to payment of federal excise taxes when they arrive in United States unless they qualify for exemption under Harmonized Tariff Schedule (U.S Customs and Border Protection 2006, p. 111). In summary, the formal entry process of imported tobacco products to United States involves the following four steps. Tobacco products arrived at United States entry port, they are not coming from an embargoed country, customs authorized delivery after inspecting and releasing them and finally duties are promptly paid or customs bond posted. Goods are deemed to have officially ‘entered’ United States only after the above requirements are met (Schaffer, Agusti & Earle, 2009, p. 385). South Africa Border Control Procedures South Africa is a member of World Customs Organization (WCO). Department of Trade and Industry regulates and prohibits imports to South Africa but most goods are generally allowed to be imported to South Africa without any restrictions (Department of Trade and Industry 2012, p. 47). However, certain goods are imported to South Africa only after an import permit is given to an importer. Restricted goods can be imported to South Africa with possession of required permit by the importer before goods can be shipped. Issuing and control of import permits is administered by International Trade Administration Commission of South Africa (ITAC) (ITAC, 2014). Importers in South Africa are required to register as importers with South African Revenue Service (SARS) Commissioner which normally takes two to three weeks for registration process to be complete. Importing tobacco products to South Africa require import permit from the ITAC. This permit must be produced at the time of shipping tobacco products to South Africa. Importation of tobacco products are subjected to specific excise taxes in South Africa (Department of Trade and Industry 2012, p.48). After acquiring a tobacco products' imports permit, an importer is required to declare these goods on a prescribed bill of entry. South Africa Customs Union then levies imports tariffs after tobacco products gain first entry point to South Africa (Roux, 2005, p.158). A commercial invoice showing price charged to importation of tobacco products should be produced to Customs union on arrival of tobacco products to South Africa. In addition, insurance documents, bill of lading and packing list must also be produced. Tobacco products must be labelled and printed in English language. Relevance of Revised Kyoto Convention United States and South Africa are both members of World Customs Organization which adopted the revised Kyoto Convention in 1999. Revised Kyoto Convention offers a sound legal basis for both United States and South Africa customs administrations in establishing an integrated border management system. The revised Kyoto Convention was developed and adopted in 1999 in standardising customs procedures and policies all over the world Mikuriya 2005, p. 52). In adopting the revised Kyoto Convention, South Africa and United States customs unions have been enabled to process imports of tobacco products in a smoother manner. In addition, elimination of divergent customs practices and procedures all over the world have permitted international businesses to fulfil their customs obligations in a more effortless manner. World Customs organisation mission in which both South Africa and United States are members is harmonization and simplification of Customs procedures (World Customs Organization 2006). In accomplishing this, it adopted revised Kyoto Convention in 1999 which are available for implementation by its members. The revised Kyoto Convention has served as a guiding principle to United States and South Africa in preparing their modern Customs Code. Customs administrations in any country perform a crucial role in international trade growth and development of global market. Effectiveness and efficiency of customs procedures can have a significant influence on a nation’s competitiveness (United Nations 2005, p. 27). Customs administrations which are efficient, transparent and supportive attract international trade and investment. United States and South Africa customs administration have been aided by revised Kyoto Convention in making their customs more efficient thereby attracting more investment. The aims of the revised Kyoto Convention include elimination of divergent customs practices and procedures, ensuring of appropriate customs control standards and enabling of customs administration to respond to business changes promptly (United Nations 2005, p. 27). Furthermore, revision of Kyoto Convention aimed at making the nations customs administrations to meet international trade needs in facilitating, simplifying and harmonizing Customs practices and procedures. Import processes in United States and South Africa have been enhanced and made more efficient by the Revised Kyoto Convention benefits hence facilitating international trade needed for global economic growth. Similarities and Differences United States and South Africa border control procedures in relation to importing tobacco products have some similarities. United States Customs and Border Protection (CBP) and South Africa Customs Union carry out administration, process and procedure of importation of tobacco products at the respective borders. In both countries, a special permit is required by an importer before importation of tobacco products can be done. Imported tobacco products in both countries are levied excise taxes and must be clearly labelled. There is no much difference in procedure for importation of tobacco products in United States and South Africa as tobacco products importation needs a special permit in both countries. Conclusion Border control procedures are important to international trade as it plays a vital role in its facilitation. World Customs Organisation adopted the revised Kyoto Convention in 1999 which has helped its members in adopting and harmonising its Customs practices and procedures. Importing tobacco products in both the United States and South Africa can be cumbersome and lengthy. It is required that importers of tobacco products in both countries get special permit before they can carry out tobacco products importation. In essence, importing tobacco products to both countries are allowed and importers need only to follow due process of importation and pay the required duties to Customs authorities. United States and South Africa has reaped a lot from the benefits of Kyoto Convention such as harmonization of Customs procedures and practices which in turn have facilitated and increased international trade in both countries. References Department of Trade and Industry. 2012. South Africa: Investors Handbook 2011/2012, Accessed on 5 September 2014. . Hegland, P. 2009. 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