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Customs 2020

A Business and Technology Point of View

Preface

Customs agencies, long seen as a steward of a nation's trade and borders, are under pressure like never before. This pressure is arriving simultaneously on many fronts, requiring Customs to perform at the highest levels to facilitate legitimate trade while protecting its nation's citizens from an ever-growing and dynamic litany of threats.

Traders demand that Customs not disrupt their just-in-time supply chains as both nations and companies seek to gain a competitive edge. The competition within and between supply chains and their regulatory agencies is at the cutting edge of today's business environment, and the smallest process improvement can lead to a distinctive competitive advantage.

At some borders, both trade and Customs are operating at high velocity as secure Customs entry is processed in seconds with “prescreened” and “validated” declaration data. At the other extreme, containers sit dockside at some ports for weeks awaiting Customs clearance.

Governments wish to provide essential services in ways that maximize the efficiency of resident (i.e. indigenous and multinational) industry and promote trade competitiveness. This has resulted in an increasing pace of administrative reform; in the world of border regulation and Customs, the focus is on creating a more transparent and industry-friendly regulatory framework while at the same time protecting the nation's citizens. This is also inspiring Customs to look for technology that can provide not only the tools required to maximize performance but also the means to obtain the high degree of assurance demanded by citizens and policy makers.

We selected the year 2020 for this paper to allow enough time for Customs agencies in both developing and developed countries to hone their strategic direction and use capacity-building measures to minimize the operational gaps between administrations and stakeholders. In this paper, we will begin by considering the evolution in the role of and the emerging landscape of Customs in the run up to the year 2020. We will then look at global trends in the business and technology direction of Customs and attempt to understand the role of ICT not only as an enabler, but also as a real change agent in the process of transformation for Customs.

The landscape for Customs in the run up to the year 2020 Geopolitical and social landscape

In order to establish a view of the evolving and future role of Customs in the year 2020, it is necessary to look first at the geopolitical, socioeconomic and technology environments that may exist at the time and within which Customs will be expected to play its part. It is also necessary to look at the evolution of Customs and technology directions because it is inevitable that not all Customs administrations will operate with the same functions or at the same levels of operational or administrative capacity. The capacity-building initiative of the WCO and the international donor and business community must also be considered.

It is not just a matter of population and economic weight. Globalization has changed the way countries interact economically. Globalization is not merely the internationalization of trade and financial flows between national economies interacting at arm's length. Globalization has fundamentally transformed the nature of international economic interaction.

The world's economies now penetrate each other's internal domains because large international firms are now global networks that function seamlessly across borders. Inter- and intracompany trade movements have increased as a proportion of total trade. The integration of world financial markets has created what is essentially a single global capital market. Migration and the outsourcing of activities have transformed and linked labor markets globally. Modern transportation and communication linkages in effect have shrunk geographic distance. As a result of these factors, porous borders have changed the meaning of the boundaries that define nations.

International trade has long been recognized as a key driver for good governance to alleviate poverty by promoting foreign direct investment that will lead to economic growth. Governments and the international donor community are challenged to find ways to encourage and support low-income countries to be less reliant on resource-based exports and to move up the value chain.

History and human nature suggest that we are likely to face a major catastrophe in the run up to 2020 either in terms of a global pandemic or a major threat to society such as a large-scale terrorist attack or a regional or multi-country conflict. The security agenda for Customs is likely to remain. It is incumbent on Customs and other border protection agencies to collaborate in constantly assessing and reviewing the likely impact of such a catastrophe - and in ensuring an effective business continuity response.

The world's population is predicted to increase by 25 percent, from 6 billion people to 7.5 billion, in the period up to the year 2020 (Economist Intelligence Unit Vision 2020). This increase will occur mainly in developing countries, while the number of people living in advanced industrial countries will be about the same as it is today - roughly 1 billion.

In contrast, the number of people in developing countries will increase by some 40 percent. This means that today's developing countries will total about 80 percent of the world's population by 2020, and industrial countries associated with “the West” (including Japan) will become an ever-smaller minority of the world's population.

The rapid economic development in some less developed parts of the world, notably in Southeast Asia, will change the current balance of economic weight between industrialized and developing/least developed countries in the run up to 2020.

Economic landscape

Labor-intensive products such as clothing and consumer electronics are increasingly time-sensitive, and many developing countries urgently need to shorten lead time in order to stay competitive in these sectors.

According to the Economist Intelligence Unit, some predictive highlights include the following:

• Theworldeconomywillbetwo-thirdsbigger in 2020 than in 2005.

• Globalgrossdomesticproduct(GDP)will grow at an annual average rate of 3.5 percent between 2006 and 2020.

• ChinaandIndiawillbeamongthefastest-growing economies.

• Asia’sshareoftheglobaleconomy will rise from 35 percent in 2005 to 43 percent in 2020.

• InLatinAmerica,growthinGDPperhead will merely be sufficient to prevent the current gulf with the developed world from widening, whereas Sub-Saharan Africa will fall further behind.

• Worldconsumerspending,measuredin US dollars at market exchange rates, will expand at an annual average rate of 5.6 percent, to some US$62 trillion in 2020 compared with US$27 trillion today.

• TheUSwillremaintheworld’slargesttrading nation, although its share of world exports and imports will drop from 14 percent to 12 percent.

Economic arrangements and partnerships will evolve between now and 2020. Increased cooperation between groups of countries will form new (and strengthen existing) economic blocs, rivaling the dominance of the US and the EU in the current landscape. ASEAN (the Association of Southeast Asian Nations) has the potential to become a prominent trading bloc, with its membership being extended to include Australasia, South Korea and Japan. Likewise, the Americas or a coalition of Spanish-speaking nations is capable of forming notable economic blocs.

Governments around the world, developed and those in transition, are placing increased emphasis on the removal of barriers and the creation of a seamless flow of goods, services and people. This is a key factor of economic growth, including enhanced trade and investment. There is a need for more efficient, rapid and open movement of passengers and goods. This coincides with heightened demands for more secure traveler and cargo identification than before, at and within a country's borders, without compromising an individual's basic rights and privacy. Excess time taken to cross borders and complete formalities is found not only to reduce trade volumes, but also to reduce the probability that companies will enter export markets for time- sensitive products at all.

Furthermore, a broader range of products is becoming time-sensitive following the proliferation of modern supply chain management in manufacturing as well as retailing.

Customs landscape Standards

The WCO Framework provides for the mutual recognition of controls under certain circumstances. It enables Customs administrations to adopt a broader and more comprehensive view of the global supply chain and create the opportunity to eliminate duplication and multiple reporting requirements.

The Customs-to-Customs reciprocal network arrangements represent an opportunity to strengthen cooperation between Customs administrations and enable controls to be carried out earlier in the supply chain.

The main focus of the Customs-to¬business agreements is the creation of an international system for identify-ing businesses that offer a high degree of compliance integrity and security guarantees in respect to their role in the supply chain. The WCO Framework is a current example of such an agreement because it sets forth the criteria by which businesses will be able to obtain a secure Authorized Economic Operator (AEO) sta-tus. This preferential status will be a vital concept for Customs in 2020, conferring a number of business benefits including more rapid clearance turnaround times for low-risk cargo, improved security levels, optimized supply chain costs, and enhanced compliance reputation with Customs and its related agencies.

The Evolving Role of Customs Organizations The traditional role of Customs over the years has always been the enforcement of prohibitions and restrictions and the collection of import and export revenues. This role has evolved over time to include the facilitation of legitimate trade and protection of society through environmental, health and cultural controls. There has also been a recent shift from the economic protection function of Customs (through the instrument of Customs duties) to a broader protection of society and the citizen.

Figure 1 - The Evolution of the Role of Customs from the 1980’s

Customs and Trade Policies The trend toward bilateral and multilateral free trade agreements is accelerating. Furthermore, economic blocs themselves are getting bigger; the EU is nearing 30 members, and five more Customs unions are planned in Africa alone.

This phenomenon carries risks and challenges for the global trading environment. The greatest risk is the unraveling of the multilateral order and its institutions. The World Trade Organization (WTO) and its agreements stand for essential modern principles such as most favored nation, national treatment and transparency. The WTO maintains a reasonable measure of discipline and control over what its members can and cannot do in terms of trade regimes.

The recent growth of regional trade agreements suggests that the WTO will assume greater importance in shaping trade and investment rules. To date, most systematic work on regional or other preferential agreements has looked at the impact in terms of tariff preferences. But as tariffs are further reduced, rule making becomes more important in terms of trade and investment.

The institutions that play a role in trade - WTO, UNCTAD (United Nations Conference on Trade and Development), UNECE (United Nations Economic Commission for Europe), OECD (Organization for Economic Cooperation and Development) and the WCO - increasingly are in a position of overlap and have common interests. Such institutions can reinforce the rule of law and play a critical role in determining which economies thrive and which lag behind in the future.

Standards will continue to play an increasingly important role in the cohesion between Customs and its partners. However, a distinction needs to be made in the international trading arena between guidelines and standards. Over the years a number of “standards” were developed under the auspices of the WCO, but insufficient attention is being given to the implementation and respect of these standards. In particular, the entry into force of the WCO Revised Kyoto Convention in February 2006 requires a faster accession by more contracting parties to ensure its effective global implementation.

In response to heightened security concerns associated with international trade, the WCO is developing a number of initiatives to enhance the prescreening of goods destined for export at national and regional levels; one result is the WCO Framework of Standards to secure and facilitate global trade (SAFE).

In an effort to counter illegal counterfeiting and piracy trade that threatens the health and safety of people as well as economic development, the WTO TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement covers special measures at borders regarding its implementation.

It is recognized that requiring different data sets for different countries/economic areas is detrimental to global trade facilitation. Agreements should be set in place to simplify and harmonize the data elements that are now used in declaration processing, and to limit the number of data elements required by Customs to those agreed within the WCO Framework.

Since September 11, 2001 Customs and its stakeholders have been required to balance new securitymeasures with changing patterns in cargo and passenger movements in a global economy that is more dependent than ever on rapid movement of goods and services across borders.

Trade facilitation is progressively being seen by governments as an important element of economic policy, with Customs having a unique position within the hub of the international supply chain of security of goods and services.

The challenge to the Customs community today is to proactively manage the apparently contradictory role of ensuring improvements in the speed and service delivery of Customs formalities while maintaining systematic and effective intervention controls in a “hostile” environment where organized crime and terrorist activity is an ever-increasing threat.

As Customs administrations strive to balance these duties, it is important to take advantage of trusted relationships in order to clearly distinguish between compliant and noncompliant business practices. The diagram above shows the evolution of the role of Customs from the 1980s, where an administration's focus was primarily enforcement, through 2020, where the focus will switch to collaboration between entities and forming trusted partnerships.

Service oriented architecture (SOA)

Evolving standards and architectures will be robust and industrialized enough to form a major part of the technology landscape in 2020, providing a foundation for the vision of ICT applications to be delivered.

Technology will dramatically increase the ability of Customs administrations and other entities to work together. Interoperable systems and business processes will facilitate seamless operations across countries, organizations and other boundaries. Interoperability will be achieved through the global adoption of standards for transaction data capture and control, the extensive use of service oriented architectures (SOAs) and new models of IT governance.

SOAs provide an IT foundation for integrating business processes governed by multiple systems. Enterprise-level

strategies or implementing small-scale initial SOA projects. Accenture believes that by 2020 there will be widespread adoption of the SOA framework. Customs organizations will benefit from their SOA investment though an increasingly more sophisticated and streamlined yet less intrusive ability to interact with other agencies and external stakeholders. Services will be designed to operate as single units that can be assembled or orchestrated into business processes without costly point-to-point integration between services.

This model of interaction between Customs and the traders will be underpinned by an internationally recognized set of service standards. These standards (service contracts) will need to be owned and defined by the WCO, and subsets of the standards may also need to be defined at the regional (for example, economic bloc) level.

services are accessible through pervasive, vendor-neutral, Web-based standards. These services can be reused across the organization and assembled very quickly, thus ensuring business-driven, technology-enabled responses to changes in the competitive and customer landscape.

SOAs make it possible for separate business functions, governed by autonomous systems, to work together to execute a business process. With this capability, SOAs can change the way organizations are run and the way they interact with business partners and customers. Their focus is on the optimization of individual and collective business processes, rather than on the IT applications used to support those processes.

Some administrations are in the early stages of adopting SOAs - either defining

Technology landscape

Technology will enable agencies to achieve their vision of high performance in Customs. The organizational, procedural and political shifts in Customs that are described in this paper will be enabled by new forms of ICT applications. Trends in technologies that are being seen in 2007 will continue to evolve, and will become industrialized and widespread by 2020. ICT solutions for Customs in 2020 will ensure:

- Interoperability of Customs and other agencies involved in border management.

- A fully distributed, open, wireless and mobile operational environment.

- Solutions for structured and unstructured data.

The evolution of three major elements of ICT will determine how technology solutions will operate in 2020, namely:

• Serviceorientedarchitecture• Identitymanagement• Riskmanagement.

Figure 2 - ICT Solutions for Customs in 2010

Nanotechnology can also be applied to identity management to improve the authentication of documents such as ID cards, passports and birth certificates. Nanotechnology provides an alternative, more secure identification method compared with traditional methods, such as bar codes, that typically alter the appearance of the product or document and are therefore easier to tamper with.

Existing concerns include security, cost and accuracy. However, identity management remains a sensitive and highly important area of national security, and agencies now face the challenge of reaping the potential benefits of technology advances without compromising the security and regulatory aspects of Customs processing.

The use of wireless applications will present clear advantages especially in the area of Customs intelligence and enforcement in the future. RFID (radio frequency identification), particularly in association with satellite technology, will become an important part of the international supply chain, allowing the secure tracking and monitoring of cargo.

The benefits of wireless technology include not only more control and oversight in the trading process, but also the potential for solutions that are cheaper than current manual operations. RFID technology can be used to allow agencies to determine whether a container has been tampered with. They can detect changes in pressure, humidity temperature, carbon dioxide levels, etc. This supports the “virtual border” concept since a container that has been certified at the point of origin can be cleared at the point of entry with a high level of certainty that its contents have not changed or been tampered with along the way.

higher-level services (for example, integrated risk assessment) designed to fit the specific processes and requirements of that agency, while reducing development and maintenance costs. SOA will also be a key enabler for single window services to the trade.

Along with the adoption of an SOA, improvements in standard definitions and secure networking will allow a new breed of flexible, efficient, cross-border applications to be developed that support both trade facilitation and risk analysis in cargo and passenger processing.

Identity management

Increased global travel and trade coupled with escalating security concerns have presented new challenges in the area of identity management for passenger and cargo control. New solutions to meeting these challenges are available thanks to technological developments.

The use of sophisticated search and match technology will improve Customs administrations' ability to identify both individuals and cargo for intervention control. “Fuzzy” (or non-exact) matching and ranking of results is performed based on predetermined weights and priorities. A combination of algorithms ensures high accuracy rates. Such search and match technology already operates at very high speeds and allows, for example, Customs to trawl manifests for specific content in short time frames.

Biometrics will become a primary and widespread method of strengthening identity verification by the year 2020, relying on characteristics such as fingerprinting, iris scanning and voice recognition to prove an individual's identity. Biometrics technologies have the potential to be more secure than methods relying simply on what a passenger possesses (such as a passport) or what he or she can provide (such as a password), because both of these are easier to forge or obtain fraudulently.

The cost of manufacturing RFID technology is expected to drop rapidly in the future. This technology also reduces time in clearing Customs at the point of origin, giving suppliers and other interested parties a higher level of certainty in the time it takes to obtain their goods.

SOAs present an opportunity for a strong, reliable technical integration capability that can be deployed across multiple agencies on an international basis. SOAs have the potential to enable real-time, transparent views of clients across multiple agencies and borders, heralding a new approach to the way we access and act on information. It provides a technology framework for Customs administrations around the world to implement similar processes, while recognizing differences in national legislation and certain procedural aspects of the business model. SOAs strengthen the potential for both synergy and close cooperation.

We envisage a world where Customs administrations will directly access trader systems to get required data that is already available in the supply chain, thereby reducing the current compliance and administrative burden for both Customs and the traders concerned.

An SOA's inherent flexibility and loose-coupling mean that individual agencies can compose shared services into

The use of sophisticated search and match technology will improve Customs administrations' ability to identify both individuals and cargo for intervention control.

Risk management

Intelligence-driven risk assessment will be sufficiently accurate to allow virtually all legitimate traders or passengers to continue their business without intervention, and to allow for the remainder to be targeted.

The majority of global ports and airports operate “carrier” computerized inventory control systems that are capable of interfacing with Customs cargo declaration processing systems. Establishing such interfaces, including securing agreement on the use of the Unique Consignment Reference (UCR) for cargo is a vital component of overall cargo control. Inventory selection, especially on pre-arrival and pre-departure data, will become ever more important in investigating smuggling operations; information on anticipated suspect consignments can be used to locate the goods at the earliest opportunity and commence covert surveillance operations.

Intelligence systems will be built around the principle of piecing together disparate information to form a bigger control picture. Wireless positioning systems (such as GPS) and spatial technologies will enable organizations to define and analyze spatial information in totally new ways. This includes the exploration of spatial relationships and hidden trends. The resulting intelligence will allow informed decisions to be made about where and when Customs and Border Management resources can be best utilized.

The adoption and application of global standards, architectures and applications facilitating collaborative efforts are vital to the success of the Customs 2020 vision. Technology strategies will change to underpin the facilitation of increased cooperation, and to effectively use the resulting information to drive high performance in Customs administrations.

Customs 2020 - A Point of View The goals, structure and role of Customs globally

Structural changes for Customs Currently, Customs organizations operate at a national level. Their primary interest is trade regulation and security within their jurisdiction's physical border. In the future, a shared model of Customs responsibilities will evolve between nations and within economic blocs.

Alternative organization models for Customs administrations may emerge, including the following possibilities:

Model 1:Fully functional devolved Regional Executive Customs Agency. Such an agency would be in a single location and managed centrally. It would provide staffing, resources and equipment to appropriate locations at both the external community border and inland throughout the region. Its functions could include the collection of third-country duties and taxes, protection of the external frontier, enforcement of community and national prohibitions and restrictions, and investigation and prosecution of fraud and infringements of Customs legislation.

Model 2:Regional Executive Customs Agency with devolved operational responsibilities to the member countries. Such an agency would be responsible for determining and supervising operational policy and standards, but the implementation would be done by the Customs administrations of the member countries. Its functions could include ensuring the correct application and consistency of community legislation throughout the region, contributing toward the competitiveness and growth of the region's industries in the global marketplace, and coordinating with other regional and international partners.

Model 3:Regionally integrated External Customs and Border Management Agency. This model is designed to bring together all national and regional law enforcement agencies with a frontier (air, sea or land) protection role. Its role would be to coordinate those member-country services that operate on the external border. All legislative and operational policy matters would be the responsibility

The overall goals of Customs will remain the same in 2020 as they are in 2010 - namely, to: •Facilitatetrade;•Protectnationalsecurity;•Ensureaccuraterevenuecollection. Though the outcomes agencies seek will remain the same our vision for Customs in 2020 is one where fundamental shifts have occurred in policies, organizational structures, procedures, client experiences and the way in which Customs officials approach their work. The changes, enabled by new technologies, will mark a shift in organizational mind-set toward a more outcome-centric approach. Historically, Customs administrations have tended to focus on the pure process-driven approach to cargo and passenger declaration processing; by 2020 the focus will be a collaborative interconnected approach to delivering these three outcomes.

2010 2020

Figure 3 – Role of Customs in 2010

of the agency, with the member countries actively involved in influencing such policy.

The creation of an Executive Customs Agency for an economic bloc will require agreement from all member states on legislative and procedural matters. The drivers encouraging member states to find this common ground include security of the member states, revenue protection, promotion of trade within and outside of the bloc, and the development of competition.

At a global level, organizations such as the WTO and WCO play a crucial role in providing standards and a framework to enable economic blocs to interoperate effectively.

Policy drivers for Customs Customs administrations today are primarily compliance-driven, focusing strongly on physical intervention and control. This usually occurs at a country's physical borders at the time of arrival. Interactions with clients are mainly transactional - that is, each time a container (or individual) arrives at the border, that cargo (or person) must fully comply with regulatory requirements at that point in time, before being permitted to clear Customs.

In the future, Customs will build on trusted stakeholder partnerships in driving trade facilitation and economic competitiveness. Customs and other agencies involved in border management will work together to facilitate legitimate trade and travel. They will focus their intervention on the small minority of cases that represent a high risk to security and regulatory compliance.

Similarly, more collaborative efforts will be seen in interactions between Customs and other nongovernment stakeholders in the supply chain. This will allow certain businesses or other stakeholders to become trusted partners of Customs, reducing the compliance burden for

transit. Widespread adoption of the UCR number will serve to reduce these duplicate efforts.

A new definition of the role of the Customs agent will need to be made in light of a significantly reduced compliance burden, which will reduce the added value of the agent to the importer. Customs administrations should therefore recognize that such agents may act as inhibitors to change.

Manifests are currently filed on arrival in the port of entry, meaning that compliance activities are performed at the physical border. In 2020, manifests will be prefiled, coinciding with the cargo leaving the port of export. Risk assessment on the cargo can be performed before the goods reach the physical destination border. This will represent a change in declaration processing, where risk will be used to identify which shipments to inspect manually and which shipments can be precleared. Preclearance will mean the goods can be directed straight to their

final destination, rather than having to go through the full formalities at the port of entry. This will also mean a more extensive use of periodic import and export entry (e.g. period and summary declarations).

Payment of Customs duties will also be processed in a different manner. The current processes require agents or importers to pay all duties prior to the goods being released. A shift to a deferred or periodic payment system will allow the revenue-collection side of Customs to be more closely aligned to the periodic tax processing that traders and agents are currently required to comply with for other tax purposes. For example, a bimonthly filing of consolidated duties for all goods imported during that filing period would represent lower costs of compliance.

Client experience Client experiences will be changed not only by revised filing and payment

businesses and allowing Customs to deploy resources to higher-risk areas.

Trade facilitation will come to mean new procedures that are designed into the supply chain at the earliest point possible, and not necessarily a simplification of existing procedures. The existing situation with multiple border agencies requiring the same information from a trader is recognized as a detriment to trade facilitation. Such duplication of effort and redundancy will be eliminated through revised filing and payment solutions. According to the OECD*, between 2 percent and 15 percent of the cost of imported goods is currently attributed to Customs and border processes. A 1 percent reduction in these costs would result in worldwide gains of US$43 billion.

An intelligent risk-driven approach will be enabled by more sophisticated ICT applications, providing fast, secure sharing of information between agencies. ICT applications with complex risk models developed and managed by the business side of Customs will support compliance management by identifying hidden patterns or trends in large volumes of data. These applications will help agencies to quickly detect suspect goods or passengers while streamlining processing for low-risk clients.

As well as facilitating legitimate trade, Customs will play a larger role in enforcing national security. Current security approaches are mostly reactive in nature - for example, the closing of borders after major security alerts.

While there will continue to be an element of reactive security in the future, a stronger emphasis will be placed on proactive security - that is, preventing the potentially hazardous entity (be it cargo or passengers) from entering the country. The focus of Customs activities will move to an earlier stage of the international supply chain, allowing Customs to assess and manage risk as early as possible.

Accurate and consistent identification of passengers and cargo is a fundamental requirement that enables informed eligibility determinations, risk assessments, and intervention or enforcement decisions. To avoid disrupting the movement of legitimate passengers and trade, identification must be determined quickly. Accordingly, we suggest that the traditional way of doing business with a reliance on transaction-based declaration processing systems will be replaced by a system of identity assurance and risk management, where the control intervention is determined at the earliest possible time in the supply chain (i.e. prior to arrival at the border).

The concept of a virtual border implies significantly closer national and international collaboration among other government agencies and the international travel and shipping industries.

To realize this vision, Customs and other border management agencies should operate as an coordinated enterprise to achieve a common vision. Even when border management activities are distributed across multiple agencies, all functions and organizations should be aligned around the same mission, should work together to achieve the same goals, and should integrate their respective information seamlessly within the requirements of data protection and privacy legislation. Success requires a clearly defined strategy across border management functions, the policies to support this strategy, and a governance and leadership structure that provides continual, clear direction.

Procedural shifts The current process for filing declaration requirements is a burden for traders. There are multiple forms associated with the movement of goods, including export, transit and import declarations. These forms contain largely similar information but must be filed separately for each office: import, export and

requirements, but also by the way clients interact with the Customs administration. Customs will evolve from its current role as an administrator and enforcer to a new role as a trusted partner and facilitator of business.

Currently, there is little differentiation in how compliant and noncompliant clients are treated by Customs. Each client must go through the same compliance processes and undergo the same security inspections. The AEO scheme is an example of the new type of client experience.

Acquiring an AEO accreditation will allow for differentiation in the way Customs interacts with clients. The benefits of the AEO scheme to agencies and stakeholders include:

•Anincreasedlevelofsecurity/safetystatus. AEOs will have a lower-risk profile, resulting in greater certainty that goods may be cleared quickly through ports.

* Walkinhorst and Yasui 2003

Where to from here? This 2020 vision can be realized in a number of different ways. The WCO and other organizations can provide a structure to debate and agree on such a vision and to create the sense of trust and partnership among and between Customs administrations and business. They also need to offer the governance framework essential to enabling the practical manifestation of such close cooperation.

Successfully implementing these key Customs 2020 vision components requires addressing a number of operational realities simultaneously. For example, Customs administrations must secure the political and financial commitment to develop the transformation program, assess the program's administrative capacity to deliver the vision, select the right partners to support the change process (including redesign of facilities and ICT infrastructure), and continue to evolve and align its business and technical strategy in a way that demonstrates the true value of Customs to its stakeholders.

•UniformityandpredictabilityofCustoms procedures.

•Fasterapprovalforsimplifications.Streamlined SAD reporting processes will be possible due to reduced require-ments for the application for a simpli-fication. The duplication of work that exists today because of different sim-plifications or multiple applications in different countries will be minimized for AEOs - they will only be required to qualify for the differentiating condition of each simplification. The risk status will already be confirmed through the AEO approval and ongoing general compliance performance.

•Amarkofqualitywhencomparedwithnon-AEO traders. These traders are considered to be secure traders, and therefore can differentiate themselves from competitors who do not hold AEO status. Providing clients with more certainty about clearance through Customs and reduced time frames will prove to be a competitive advantage for traders

A key component of the new client experience will be the implementation of a Single Window that allows trade and transport to comply with all regulatory import, export and transit requirements through a single and standardized point of entry. The Single Window would be based on a standardized set of import and export requirements and would require close cooperation between many government bodies. Importers and exporters would lodge their information only once through the central portal, reducing the complexity and effort required to comply with Customs regulations. All interested regulatory authorities would be able to access the information through the integrated system.

The WCO should coordinate the governance of the Single Window globally. This will involve covering issues such as ownership, standards, access, operations and support. Regional governance of the single window will also be required. Customs officers Customs officers today follow the policy of the Customs administration to act through intervention and control. They tend to operate in compliance roles, almost exclusively at the country's physical borders.

In 2020, Customs officers will assume one of three broad roles:

Client-focused account managers They will become the primary point of contact for stakeholders in the supply chain and will operate at the “virtual border” - that is, the earliest point in the supply chain at which they can become involved. This could be the point of manufacture, port of departure, etc. Their role is to help businesses achieve and retain a preferred status such as AEO, and thereby facilitate trade. Account managers will also be responsible for the fiscal compliance of clients, ensuring correct and timely payments in the periodic payment model.

Risk analysis / intelligence officers These officers will drive the risk-oriented approach in Customs. While the risk models are enabled by sophisticated ICT tools, officers with highly developed skills in predictive analytics and modeling will be required to own and drive the agency's risk framework.

Physical inspectors A reduced number of Customs officers will still be located at the physical border for the purposes of security and control measures. However, the physical border could be located in a different place in the future, such as at the external border of the economic bloc, rather than at the national border.

Technology shifts Technology will provide the basis for the seamless interaction of Customs administrations both with their clients and with other Customs authorities. Technology is therefore the bedrock for international trade. Customs application design will focus on robustness, security and interoperability. Applications will run within a well- governed SOA framework for Customs and traders that provides full interoperability. The applications will operate within sophisticated network architectures designed to ensure resilience through the extensive use of redundancy and robust security protocols.

Supply chain security will be enhanced through the improved use of technology for the tracking and monitoring of goods. The use of RFID technology will be routine. There will also be widespread adoption of nanotechnology and multiple biometrics to identify high-risk passengers and goods.

Intelligent risk-analysis applications are the vital safeguard for protecting against fraudulent exploitation of the trusted-partner model. These applications are capable of processing vast quantities of both structured and unstructured information, including biometric and spatial data. Their power will provide Customs officials within currently unachievable query flexibility.

Figure 4 – Customs 2020 Vision to Reality

Accenture Capability Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills and technologies to help clients improve their performance. With approximately 146,000 people in 49 countries, the company generated net revenues of US$16.65 billion for the fiscal year ended August 31, 2006. Its home page is www.accenture.com.

Accenture has extensive experience in partnering with government organizations in the field of Revenue, Customs and Border Management, having successfully worked with more than 70 agencies worldwide. There are currently over 1,500 Accenture professionals working in the Revenue, Customs and Border Management industry, with experience in the areas of strategy definition, product design, business process definition and systems development.

Accenture has developed strategies and delivered innovative solutions to fit the needs of Customs clients looking to improve service today and tomorrow. Our relationships with the world's leading technology companies mean tailored solutions that take advantage of your existing resources whenever possible. We can also ensure that the chosen technology can scale to grow with your administration as necessary.

Following are some examples of how Accenture has helped Customs organizations:

Irish Office of the Revenue Commissioners Accenture is working with the Irish Office of the Revenue Commissioners to implement the Automated Entry System, a Customs declaration system that will deliver one of the world's first integrated tax and Customs systems. Accenture has worked with Revenue to implement the CAP DTI electronic process and the Transit system.

South African Revenue Service Customs Modernization Accenture is helping SARS achieve high performance by designing a blueprint for the modernization of its customs functions to make processes more efficient and to facilitate trade as a modern customs agency. SARS serves approximately five million taxpayers and interacts with approximately 42,000 active customs entities. Embarking on

a large-scale, multi-phase initiative, Accenture is teaming with SARS to introduce an integrated enterprise resource planning solution that helps the agency better facilitate trade while enhancing methods for identifying security risk.

New Zealand Customs Service Together, Accenture and New Zealand Customs Service reviewed the whole of the Customs operation, considering strategy, people, processes and technology. The resulting program, CusMod, improved work processes and information systems, thus empowering staff and enabling them to manage their work more effectively. A greater client service orientation has been created, significantly reducing the impact of Customs activities on legitimate trade and travel, and making more effective use of resources.

UK HM Revenue & Customs (HMRC) Accenture worked with a senior Customs management team within HMRC to develop a new organizational vision that would clarify the agency's role within the wider context of government and help prioritize areas for future investment and change. The work involved consultation with key staff and day-long facilitated workshops with the senior management team. Based on the Accenture High Performing Process Excellence Model for Customs, the vision draws on leading practices of Customs authorities around the world and is helping Customs operations within HMRC achieve high performance.

U.S. Department of Homeland Security As part of the US-VISIT program, Accenture helped the U.S. Department of Homeland Security develop a strategic plan for how information technology, data management, facilities, business processes and organizations could create a single, interoperable immigration and border management system to improve the security of the nation while expediting the process for legitimate trade and travel. The plan portrays a future in which border management organizations work together to define the policies, processes, tools and technologies to dramatically improve operations across the travel continuum.

Customs organizations will continue their efforts to ensure compliance with national legislation, and to facilitate trade and stimulate competitiveness without compromising standards or safety. As they do so, Accenture can supply innovative solutions to help Customs administrations reform, modernize and transform their operations.