BRICS customs cooperation / Yana Grigoryeva

Yana Grigoryeva, Intern at the Russian National Committee on BRICS Research - special for InfoBRICS

The BRICS members had been developing friendly relations with each other for a long time, also through cooperation in customs matters. Customs offences undermine economic, social and financial interests of any country. Cooperation between countries contributes to effective prevention and elimination of such violations. That is why it is extremely important to maintain close relations.

Customs cooperation between the BRICS countries began to develop in 2012 In 2013, the First Meeting of the Heads of Customs Administrations of the BRICS countries was held in South Africa. There was prepared the “Report of the meeting” and were formed few of cooperation mechanisms between the BRICS countries, such as a meeting of the heads of customs departments, a meeting of working groups, etc. They also decided to organize inter-ministerial and working meetings in World Customs Organization and other structures.

During 2015, the Federal Customs Service of Russia held meetings of the BRICS countries` customs services heads and experts. During the events, the parties finalized a draft regulation on the Committee of Customs Cooperation of the BRICS countries and agreed to conduct interstate procedures for its coordination in order to subsequent signing. On October 16, 2016, the Regulation on the BRICS Customs Cooperation Committee, which was the first result of customs cooperation, was signed in the Indian city of Goa. This event was an important step towards creating a regulatory framework in the field of customs cooperation within the framework of this association. The task of the Committee is to coordinate and develop customs cooperation between the BRICS countries. All problems of the BRICS countries in the field of customs should be discussed and resolved within the Committee.

On September 4, 2017, during the 9th BRICS summit, the heads of the national customs services signed the “BRICS Strategy for Customs Cooperation”. This document is intended to fix the strategic framework for BRICS customs departments cooperation, to simplify customs procedures in mutual trade, to bring together customs administration rules and procedures and to use unified approaches in information exchange. The guideline of the strategic cooperation will be the “3M” concept - mutual exchange of information, mutual recognition of controls and trusted trader programs, and mutual administrative assistance.

What are the key points of this strategy?

The BRICS Customs Services have agreed to share practical experience in the implementation of the WTO Trade Facilitation Agreement. Due to the Strategy, customs administrations of the BRICS countries have to support economic activities in order to increase trade, to maintain social stability and to generate employment. They have to set up the implementation and mutual recognition of the Authorized Economic Operators within the framework of the five customs administrations.

It is necessary to promote the acceleration of customs clearance, including transit goods, which constitute a mutual interest to the BRICS countries. For example, New Silk Road Initiative will bring a lot of advantages to Russia because of the transit. Russia acts as a key backbone in all transit system from China to Europe. Facilitation of this procedure will entail greater flow of goods and, consequently, greater level of customs revenue collection.

It is very important to exchange new trends, methods and experience in the implementation of enforcement activities, security and anti-smuggling measures. All BRICS participants are transit countries of drugs. And therefore, the fight against illicit traffic in narcotics becomes a crucial element in customs borders’ security. Also, one of the most important points of the Strategy is the establishment of a mutual response mechanism to fight against illegal financial flows. Corruption has a negative impact on the sustainable development of every country. The BRICS participants are going to compile a compendium on fighting corruption in BRICS. An important moment lies in the risk management framework. All BRICS countries have to identify risk profiles of traders to increase the efficiency of customs control.

Customs administrations of the BRICS countries are going to implement the Digital customs, which includes electronic processing of customs data, electronic duties and taxes payment, mobile services for traders, submission of preliminary additional information before the loading of cargo. The main aspects of digital customs are handling Big Data. use of the Internet and mass-media (including social networks), transport telematics (satellite monitoring of transport); telematics services (business, commerce, logistics, government), mobile technologies and cellular networks. Particular attention is paid to Single Window system. This system helps to increase the efficiency of information exchange between business and government, helps to reduce time and cost of international trade, simplifies trade procedures for all parties involved. All BRICS countries have launched the process of creating a Single Window system in their national economies.

The BRICS countries also support new business formats, including e- commerce. The BRICS members are creating a single payment system, which will be called BRICS Pay. Thanks to this system it will be possible to make purchases in any BRICS country. One of the versions of the project is to create the E-wallet that combines payment systems of all five countries. All BRICS members will participate in the creation of BRICS Pay, but the main role in the project will play China and India due to the possession of high-technologies in this sphere. The working system of the wallet will work in same way with Samsung Pay or Apple Pay.

The next stage of developing the legal framework for customs cooperation should be the Intergovernmental Agreement of the BRICS countries on cooperation and mutual assistance in customs matters.

According to customs statistics, in 2017, the volume of Russia's foreign trade with the BRICS countries was 102.4 billion USD, what is 30% higher than in previous year. There is also increase in export by 35% ($ 47.6 billion) and import - by 26% (54.8 billion dollars). Mutual trade of all five countries have positive trends. The number of contracts is growing, throughput is increasing. Countries decline the rates of customs duties and adopt preferential regimes. The volume of Russian exports to the BRICS countries is projected to rise to 49.7 billion dollars, and imports to 68.5 billion dollars by 2020.

Integration process within the framework of customs cooperation is always very complex. The participating countries are bound by their own national interests and features of economic development, numerous bilateral agreements, regional and global international agreements. But also, with the successful development of cooperation, the benefits for all BRICS participants are obvious. The BRICS member countries have all the opportunities for a long and mutually beneficial cooperation.