ANNEX J.1.

concerning Customs applications
of computers

Entered into force: ......

February 1989


TABLE OF CONTENTS

I.   Text and Commentary

     - Introduction 5
     - Definitions  6
     - Principles (provisions 1 to 4)   6
     - Review of national legislation prior to computerisation
       (provisions 5 to 8) 9
     - Use of international standards (provision 9)    10
     - Technical co-operation and exchange of information
       (provisions 10 to 12)    11
     - Interfaces between automated systems (provisions 13 to l5)     12
     - Computer applications for Customs control (provisions 16
       and 17)   13
     - Information concerning Customs applications of computers
       (provision 18) 14

II.  Entry into force

     - Contracting Parties having accepted the Annex   15

III. Reservations

     - Contracting Parties having entered reservations 17

IV.  Alphabetical Index

V.   Provisions studied in detail reproduced in Volume IV


I.--TEXT AND COMMENTARY *



*  Annex J.1 was adopted by the Permanent Technical Committee at its
135th/136th Sessions in April 1987, and has been incorporated in the
Kyoto convention by decision of the Council, taken on June 1988 at its
69th/70th sessions held in Ottawa (Canada). It entered into force on
......



Introduction

Computer techniques are being used increasingly by Customs
administrations to support a wide range of Customs operations such as
inventory control, accounting for goods, Goods declaration processing,
accounting for revenue, warehousing, enforcement, etc.

The trading community, e.g. carriers, importers, exporters, port
authorities, freight forwarders, banking and insurance companies,
postal authorities, etc., utilize computer techniques in a variety of
Customs-related areas such as the production of Customs declarations
on paper documents or in computer-readable format in electronic data
interchange systems.

Because of decreasing hardware costs and the opportunities afforded by
the merging of data processing and telecommunications technologies,
computer techniques will be used on an even wider scale in the future
in international trade in order to facilitate the movement of goods.

The main objectives of this Annex are to facilitate international
trade and to assist Customs administrations by encouraging the use of
modern techniques to support Customs procedures; to promote the use of
international standards in the interchange of data among Customs
administrations and other participants in international trade and to
assist and guide Customs administrations in the establishment of new
Customs systems and the improvement of existing systems.

Definitions

     For the purposes of this Annex:

(a)  the term " Customs applications of computers " means all Customs
operations which are supported by the use of ADP (Automated Data
Processing) techniques;

(b)  the term " code " means:

1.   a set of unambiguous rules specifying the manner in which data
may be represented in a discrete form;

2.   the representation of an item of data established by a code or
the representation of a character established by a coded character
set;

3.   the complete set of coded representations defined by a code or by
a coded character set;

(c)  the term " data element " means a concept and associated
attribute for which the definition, representation, identification and
meaning have been agreed. It consists of a generic part representing a
defined concept and an attribute, the data item;

(d)  the term " Computerization File " means the File on the
computerization of Customs operations. This contains the results of
studies undertaken by the Council as well as Recommendations and
Guidelines;

(e)  the term " document " means any medium designed to carry and
actually carrying a record of data entries, it includes magnetic tapes
and disks, microfilms, etc.;

(f)  the term " interface protocol " means a set of rules which define
how network components establish communications between computer
systems, exchange data and terminate communications;

(g)  the term " message syntax " means a set of rules which define the
method of structuring user data for teletransmission purposes;

(h)  the term " Customs control " means those measures applied to
ensure compliance with the laws and regulations which the Customs are
responsible for enforcing.


Principles

1.   Standard

Customs applications of computers shall be governed by the provisions
of this Annex (1).

COMMENTARY

(1) Customs authorities may provide facilities greater than those
provided for in the Annex, as recommended in Article 2 of the
Convention.

2.   Standard

The Customs authorities shall investigate the feasibility of using ADP
techniques to support Customs operations and based on the findings of
such reviews, shall introduce computerised systems where feasible,
cost-effective and otherwise appropriate (1) (2).

Notes     1.   ADP techniques may be used to support Customs
operations in a wide variety of areas such as (3):
--   inventory control,
--   accounting for goods,
--   accounting for revenue,
--   Goods declaration processing,
--   production of statistics,
--   enforcement.

     2.   Customs authorities may obtain a proportion of system
development and operational costs from the trading community in
recognition of the fact that the benefits of computerization accrue
not only to Customs but also to other participants in trade (4).

COMMENTARY

(1) Electronic paperless processing should be established as a basic
goal of Customs commercial automation.

(2) A Feasibility Study is a necessary first step towards the
introduction of any Customs ADP System. The Feasibility Study should
identify the costs and benefits and should consider unquantifiable or
intangible benefits e.g. more effective Customs controls, greater
facilitation of trade, more efficient revenue collection, better use
of personnel resources, improved trade statistics, etc.

(3) If an administration decides to proceed with the introduction of
an ADP system it should first establish the necessary internal
organization structures to facilitate the planning and control of the
computerization project. A recognized methodology should be used to
facilitate the orderly development, procurement, evaluation and
maintenance of the Customs computer system. It is also important that
Customs consult with all those who may be affected by the new computer
system so as to avoid problems at a later stage. Those to be consulted
should include Customs staff, trade unions, other government agencies,
importers/exporters, agents/brokers carriers, warehouse operators,
port/airport operators, freight forwarders, etc.

(4) One of the principal benefits of Customs computerisation is the
accelerated clearance of goods at the point of entry, This has obvious
benefits for the trading community at large but particularly for
importers, their agents and carriers. The participation of the trading
community in the development process should be formalized and ongoing.


3    Standard

In examining the feasibility of introducing ADP systems and in the
design and implementation of systems, Customs authorities shall review
the Guidelines contained in the Computerization File and, where
appropriate, apply the measures recommended therein (1).

COMMENTARY

(1) The CCC's File on the computerization of Customs operations
contains a series of Guidelines, which help to avoid making errors.
They also identify some of the problems which have been encountered
and some possible solutions to these problems. The Guidelines include:
-    Organization and management of ADP in Customs administrations.
-    Effects of national privacy/data protection legislation.

Preferential regimes at importation.
-    ADP techniques and postal traffic.
-    ADP techniques and enforcement.
-    Revenue accounting.
-    Goods accounting (inventory control).
-    Data validation and credibility checks.
-    Interfaces between Customs and traders.
-    Selection of goods for examination.
-    Auditing of commercial ADP systems.
-    Use of microcomputers for Customs purposes.
-    Evaluation of Customs ADP systems.
-    Use of ADP techniques to assist tariff classification.
-    Development and maintenance of Customs/Airline interface systems.


4.   Recommended Practice

Customs authorities should make the greatest possible use of
information sources and ADP techniques for Customs control purposes
(l).

COMMENTARY

(1) ADP techniques can be of great assistance to administrations in
ensuring compliance with laws and regulations which Customs are
responsible for enforcing. A well designed system will ensure a high
level of compliance. (See also Recommended Practice No. 17).

Review of national legislation
prior to computerization

5.   Recommended Practice

Prior to introducing the use of ADP techniques Contracting Parties
should review existing national legislation. Whenever national
legislation is being developed or revised, Contracting Parties should
ensure that such legislation caters for computerized procedures as
well as manual procedures (1).

COMMENTARY

(1) Many of the possibilities offered by ADP, such as the electronic
transmission of data and the authentication of "documents" by
electronic means may not have been provided for in legislation.
Recommended Practices 5 and 6 call on administrations to update their
national laws in this respect. In many cases the laws in question will
not be specifically Customs laws. In such instances, Customs should
work to influence the Government Department responsible to bring about
the necessary legislative changes.


6.   Recommended Practice

The Contracting Parties should ensure that new or revised legislation
provides for:

--   other information transmission methods as an alternative to
paper-based documentary requirements e.g. magnetic media and
teletransmission;

--   other authentication methods as an alternative to hand-written
and other paper-based signatures;

--   the definition of relevant terms by using internationally
accepted definitions which take account of ADP media (1).

COMMENTARY

(1) See Recommended Practice 5 and commentary.


7.   Recommended Practice

The Customs authorities should review and where appropriate modernize
existing manual procedures, documentation and coding practices prior
to introducing the use of ADP techniques (1).

COMMENTARY

(1) The introduction of an ADP system provides an ideal opportunity
for taking a fresh look at current practices, eliminating those that
are redundant and streamlining those that are inefficient or wasteful.
The Feasibility Study which should be carried out as a first step
towards automation should identify those practices and make
recommendations for reform including the elimination of unnecessary or
outdated data requirements. Administrations should look to the
provisions of the Kyoto Convention for overall guidance as to
simplified procedures and documents.


8.   Recommended Practice

Subject to conditions laid down in national legislation (1), the
Contracting Parties should ensure that the Customs authorities have
the right to retain information for their own use and, as appropriate,
to exchange such information with other Customs administrations and
all other interested parties by means of ADP techniques. Similarly,
Customs authorities should have access to traders' computer systems
for verification/audit purposes (2).

COMMENTARY

(1) Privacy legislation and Data Protection legislation has already
been passed in many countries and many more countries will follow suit
in the years to come. When such legislation is being drafted, Customs
should try to ensure that the provisions of such legislation do not
compromise their ability to protect revenue, trade or other State
interests by limiting their need to retain information and to exchange
information with other interested parties.

(2) It is also important, in the national interest, that Customs have
the right of access to traders' computer systems for
verification/audit purposes. Customs should be careful to ensure that
this situation is not reversed under the provisions of new
legislation.


Use of international standards

9.   Recommended Practice

Whenever practicable, computer applications implemented by Customs
authorities should use internationally accepted standards, especially
those adopted by the Council and referred to in the Computerization
File.

Note The adoption of international standards for the representation of
data elements, codes and coding structures, interface protocols and
message syntax greatly facilitates data exchange between Customs
administrations and between Customs administrations and international
trade participants whenever there is a need for such data interchange
(l).

COMMENTARY

(1) The Customs Co-operation Council has recommended the use of the
EDIFACT standards and the use of the United Nations Trade Data Element
Directory. The File on the computerization of Customs operations
contains further details of the standards recommended by the Council.


Technical co-operation and exchange of information

10.  Recommended Practice

Customs authorities should consult with other agencies (both national
and international), when systems are being considered, developed or
enhanced, with a view to avoiding duplication of effort wherever
possible (1).

COMMENTARY

(1) The development of a Customs computer system can be a costly
undertaking. It is advisable therefore that prior to the commencement
of system development work, administrations should familiarize
themselves with offerings available both commercially and through
international organizations with a view to avoiding some of their
software development costs.


11.  Recommended Practice

Where practicable the Customs authorities should, at the request of
the Customs authorities of another country, co-operate on technical
matters concerning computerized systems for Customs purposes,
utilizing the channels of the Council so far as may be possible.

Note Technical co-operation may take the form of:
     --   the provision of information,
     --   the provision of specialized Customs-related ADP training,
     --   the organization of seminars, courses or symposia intended for
            foreign participants in order to promote computerization,
     --   the provision of expert advice following on-site analysis of
            existing procedures (l).

COMMENTARY

(1) Customs authorities which may be just beginning to computerize
should avail themselves of the opportunity of consulting with those
already highly experienced in the field. Administrations wishing to
avail themselves of technical assistance should make arrangements
directly with the country concerned or, in case of difficulty, should
use the services of the Council Secretariat.


12.  Recommended Practice

For the purposes of Customs control, Customs authorities should use
administrative assistance arrangements to facilitate the audit of
commercial ADP systems located in other States(l).

COMMENTARY

(1) With the merging of computer and telecommunications technology it
is now possible for companies to use data processing services actually
located outside the Customs territory of the country in which they are
operating. This can happen especially with large multinational
corporations with a head office and data processing facilities in one
country and a number of branches in different countries having access
to a centralized data processing facility. This could cause problems
for Customs authorities in auditing the ADP systems of commercial
enterprises which provide data to Customs. For the purposes of
overcoming this type of difficulty therefore, Customs authorities
should make use of established mutual administrative assistance
arrangements or conclude additional agreements if necessary.


Interfaces between automated systems

13.  Recommended Practice

In automating procedures, Customs authorities should consider the
possibility of interchanging data with trade users by direct link or
on machine-readable media according to the technology available(l).

Note Data interchange may be by means of, for example, Direct Trade
Input (DTI), teletransmission or magnetic media.

COMMENTARY

(1) Data capture costs are one of the main operational overheads in
most computer systems. Duplication of data capture should be avoided.
The trading community could enter data directly into the Customs
system. Similarly, where data can be exchanged via teletransmission or
magnetic media, this should be encouraged.

14.  Recommended Practice

To ensure compliance with Customs requirements the Customs authorities
should evaluate commercial ADP systems where those systems have an
impact on Customs operations(l).

Note Such evaluations may take place during the design phase of the
system in question, following implementation, at regular intervals
following implementation and following major system enhancements.

COMMENTARY

(1) Where Customs ADP systems interface with the ADP systems of other
trade participants it is advisable that, as a condition of such
interface arrangements Customs should insist on their right to audit
these commercial systems in order to ensure compliance with Customs
requirements. Customs staff engaged in this activity require adequate
training with regard to ADP audit techniques. It may be prudent where
resources allow, to establish a central specialist computer auditing
division composed of Al)l' auditing experts.


15.  Recommended Practice

Customs authorities should make available to users non-sensitive
files, for example those concerning exchange rates, tariff
item/statistical code combinations, rates of duties and taxes,
exemptions, quota categories, quota balances, prohibitions and
restrictions(1).

COMMENTARY

(1) Limited trader access to Customs ADP systems for the purpose of
obtaining information on the types of subject mentioned in this
Recommended Practice is a procedure which has benefits for both
Customs and the trading community. It helps to ensure a higher degree
of accuracy in the data being submitted to Customs and thereby reduces
rejections and delays.


Computer applications
for Customs control

16.  Recommended Practice

Continuous liaison and consultation should be established at the
national level, between the services responsible for ADP and the
services responsible for Customs control matters within each Customs
administration with a view to identifying the needs of Customs control
services and in order to make the best possible use of ADP techniques
and facilities to assist in meeting such needs(1).

COMMENTARY

(1) A formal Steering Committee of executive Customs managers should
be established within the national Customs to guide system
development.


17.  Recommended Practice

The Customs authorities should consider incorporating Customs
selectivity criteria in Customs ADP systems, in particular, to
facilitate the identification of Goods declarations for checking or of
consignments for examination.


Information concerning Customs applications
of computers

18.  Standard

The Customs authorities shall ensure that all relevant information
concerning the ways and means of the practical application of ADP
techniques in the Customs field is readily available to any person
interested (1) (2).

COMMENTARY

(1) "Information can be made available through the usual information
media such as regular publications (e.g., official gazettes and
notices) and should be readily obtainable on request".

(2) A comprehensive training programme for all affected Customs and
other personnel should be implemented.

______


II.--ENTRY INTO FORCE

Contracting Parties having accepted the Annex,
with dates of entry into force

Canada    ......
Morocco   ......
New Zealand    ......
Switzerland    ......


III.--RESERVATIONS

Contracting Parties having entered reservations

Contracting Parties Provisions reserved

Switzerland    12


SWITZERLAND


Recommended Practice 12

Swiss legislation does not provide in principle mutual assistance in
Customs matters.


IV.--ALPHABETICAL INDEX

     Provisions

Access of users to the ADP systems 15
Administrative assistance     12
Adoption of international standards     9
ADP guidelines 3
Co-operation between Customs Administrations 10, 11
Computerization of the legislation 5
Controls  4, 16
Evaluation of commercial ADP systems    14
Exchange of information  8, 13
Information    18
Modernization of manual procedures 7
Principle 1
Selectivity criteria     17
Use of ADP techniques    2

Top of this page

Return to Standards & Recommendations