import export procedures in jordan

IMPORT - EXPORT PROCEDURES IN JORDAN

Final Report

Bureau for Private Enterprise U.S. Agency for International Development

Prepared for:

Prepared by:

Sponsored by:

The Ministry of Planning, Jordan and USAIDl Jordan

Charles A. McCue Arthur Young 55 Almaden Blvd. San Jose, CA 951 15 (408) 947-5500

Private Enterprise Development Support Project II Project Number 940-2028.03 Prime Contractor: Arthur Young

December 1988

TABLE OF CONTENTS

VII .

VIII .

INTRODUCTION ............................. SCOPE OF PROJECT ......................... IMPORT-EXPORT PROCEDURES. EXECUTIVE OVERVIEW ....................... 1

SUMMARY OF STUDY FINDINGS ................ 4

PRIORITIZED LIST OF RECOMMENDATIONS ...... 13

STATEMENT OF PROJECT CHRONOLOGY ............ 25 INITIAL INTERVIEWS

A . General .............................. 26

B . Private sector ........................ 27 C . Public sector ......................... 32 D . Comments on interviews ............... 35

INVOICE VALUE INCREASES BY CUSTOMS. HISTORICAL DATA .......................... 36

A . Aqaba transit ........................ 37

B . Aqaba other .......................... 38

C . Aqaba re-export ...................... 3 9

D . Aqaba Free Zone ...................... 40

E . Aqaba local sales .................... 41

F . Aqaba consumption. including . temporary imports .................... 42

G . Amman consumption. including .................... temporary imports 43

H . Total declarations for consumption. including temporary imports .......... 44

I . Total of all declarations ............ 45

J . Comments on historical data for invoice value increases ............... 46

IX . NUMBER OF DAYS FOR CUSTOMS CLEARANCE. HISTORICAL DATA .......................... 47

A . Aqaba declarations. transit .......... 48

B . Aqaba declarations. re-export ........ 49

C . Aqaba declarations. Free Zone ........ 50 D . Aqaba declarations. bonded ........... 51

E . Aqaba declarations. for auction ...... 52

F . Aqaba declarations. consumption. including temporary imports .......... 53

G . Amman declarations. consumption. including temporary imports .......... 54

H . Total of all declarations ............ 55

I . Comments on historical data for clearance declarations ........... 57

X . NUMBER OF DAYS FOR CUSTOMS CLEARANCE. "LIVE" DATA .............................. 58

A . Alia declarations. consumption. including temporary imports .......... 59

B . Aqaba declarations. consumption. including temporary imports .......... 60

C . Amman declarations. consumption. .......... including temporary imports 62

............ D . Total of all declarations 63

E . Comments on tfliveft data for clearance declarations ............... 64

F . "Liveff data report ................... 65

XI . NUMBER OF DAYS TO OBTAIN IMPORT & EXPORT ................ LICENSES. HISTORICAL DATA 75

Export

Import

licensing.

licensing.

data

data

and

and

comments

cormnents

QUESTIONNAIRE

A . Statement of comments ................ 82

B . Comments by descending number of occurrences ................ 90

C . Import licensing. comments ........... 92

Export 1 icensing . comments E . Import clearance for consumption. ............................. comments 94

F . Export clearance. comments ........... 97

G . Import clearance for temporary imports and exempt. comments ......... 99

H . Number of comment occurences by agency ............................ 100

I . Product categories ................... 101 XI11 . RECOMMENDATIONS FOR SIMPLIFICATIONS.

BY RESPONSIBLE AGENCY .................... 102 XIV . PROCEDURES. REGULATIONS. FLOW CHARTS.

FORMS. QUESTIONNAIRE RAW DATA. AND SAMPLE RAW DATA ARE AVAILABLE IN ARABIC FROM MINISTRY OF PLANNING ......... 120

INTRODUCTION

In response to complaints from the business community that Jordan's import-export procedures are cumbersome, the Government of Jordan has formed a Steering Group representing the Ministry of Planning, Customs, Central Bank, Chamber of Commerce, Chamber of Industry, and Ministry of Industry and Trade.

The purpose of the Steering Group is to develop recommendations for reform and simplification.

To help the Steering Group, the Ministry of Planning has requested USAID AMMAN to assist in locating and funding the services of a consultant in the field of ~mport-export procedures.

The consultant chosen for the project is Mr. Charles A. McCue, a partner and Director of Customs Practice of Arthur Young United States.

The consultant visited Jordan twice, the first time from June 29th, 1988 for approximately 3 weeks, and his second visit commenced from November 8th to November 2Ilth, 1988.

SCOPE OF PROJECT

The three tasks within the scope of the project are:

1. Examine current procedures and regulations governing import-export procedures in Jordan. This task includes import-export licensing and import-export clearance of goods.

2. Identify problems experienced by the Jordanian business community in dealing with import-export procedures.

3. Develop recommendations to reform and streamline the import- export procedures.

There was a verbal instruction given June 29th to also examine duty drawback and re-export.

Note: Very few regulations were available to the consultant in English; thus, task (1) "examine reg regulation^....^^ was accomplished only to a limited degree.

IMPORT-EXPORT PROCEDURES, EXECUTIVE OVERVIEW

The major aspects of the import-export process, are:

1. Obtaining an import license.

This license is obtained at the Department of Trade within the Ministry of Industry and Trade. Prior to the November 6th implementation of the import ban on certain items, approximately 75% of all licenses were issued on the same day they were applied for. There are certain goods which require approval of other agencies, and in some of these instances the process can take longer than 1 day. Approximately 95% of all licenses are issued within 4 days of the application. This later processing time is based on pre-November 6th data.

There is a fee for the import license which is 5% of the import value. It should be noted that neither temporary nor duty drawback imports are subject to the licensing requirement and are, therefore, not subject to this additional 5% expense. This is a tangible benefit to the importer of goods who subsequently exports the goods as part of a Jordanian-made product.

2. Obtaining bank guarantees in lieu of certain payments for duties and/or for import licensing fees.

When duties are not payable upon importation, such as temporary and drawback imports, a guarantee must be obtained from a commercial bank to cover the amount of the duty should the product be sold in the domestic market. The cost of the guarantee is 5% of the contingent liability.

Clearing the imported goods through Customs.

Typically this process is done on behalf of the importer by a broker for a fee of approximately 20 JD. The process can be very time consuming, especially if agencies other than Customs are involved. Data shows that only 23% of imported goods are cleared within 2 days and one-quarter are cleared within 6 days. The remaining 52% can take up to 8 days, with a small percenatge taking as much as several months to be cleared through the import process.

Assuming a 2 day clearance period to be acceptable, the data shows that approximately 77% of the imported goods are delayed. Of these 77 percentage points, 43 percentage points are caused by agencies other than Customs, 31 percentage points are caused by the importer and/or the broker, and only 3 percentage points are caused by Customs.

It appears that 20% of all delays are caused by the current sampling and testing procedures carried out by the Department of Standards within the Ministry of Industry and Trade.

4. Temporary and drawback import clearances.

There has been a recent change to the drawback regulations which resulted in many improvements for the exporter. With the new regulations, the name l1duty drawback1' is really a misnomer because duty is not paid at all if the import is subsequently exported.

The following table summarizes the major differences between a temporary import and a drawback import:

Item Temporary Drawback Import Import

Import license No No

Guarantees 2 1 (for Customs (for Customs)

& lic fee)

Additional tax Yes No

Multiple imports, blanket guarantee Yes

Eligible to import exempt goods with no fees No

Transfer goods into local market without prior approval from Customs No

Sell into local market and buyer exports without paying duties No

Transfer material from one factory to another No

Maintain duty rate at time of import if sell into local market No

5. Obtaining an export license.

Optional

Yes

Yes

Yes

Yes

Yes

The data shows that 100% of the export licenses are issued on the same day they are applied for. ~dditionally, 69% of the license applications are approved within the same building at the Ministry of Industry and Trade.

6 . Obtaining bank guarantees f o r secur ing t h e payment by t h e expor t customer.

This is no t a requirement f o r Jordanian e x p o r t e r s s e l l i n g by means of Letters of C r e d i t ( L C s ) ; however, it is cons idered t o be a ve ry onerous requirement by t h o s e no t us ing L C s . Under t h e c u r r e n t system, t h e e x p o r t e r must p o s t a guarantee , i n t h e amount of 1 0 % of t h e expor t va lue of t h e goods, t h a t t h e expor t customer w i l l pay f o r t h e goods. I t is p o s s i b l e f o r a Jordanian expor te r t o have goods s p o i l e d i n shipment t o t h e expor t customer, and he can t h u s l o s e t h e goods, t h e 1 0 % d e p o s i t , p l u s t h e c o s t of t h e guarantee .

7 . Clear ing t h e exported goods through Customs.

This p rocess is u s u a l l y completed i n i day, a l though it can t a k e longer i f o t h e r agencies a r e involved.

This execu t ive overview has n o t covered exempt, i n t r a n s i t , bonded, o r Free Zone t r a n s a c t i o n s . The t i m e c o n s t r a i n t s d i d n o t permi t any s u b s t a n t i v e examination of t h e s e t y p e s of t r a n s a c t i o n s .

SUMMARY O F STUDY FINDINGS

There a r e s e v e r a l problems of major p r o p o r t i o n s invo lv ing t h e p r i v a t e and p u b l i c s e c t o r s i n t h e import-export procedures . ~ d d i t i o n a l l y , t h e r e a r e s e v e r a l problems of a medium propor t ion and many of a minor p ropor t ion involv ing t h e p r i v a t e and p u b l i c s e c t o r s i n t h e import-export procedures .

I t is cons idered t h a t t h e m a j o r i t y of t h e problems can and should be r e so lved i n t h e s h o r t t o medium term ( w i t h i n t h e next s i x months) , and t h e remainder of t h e problems can and should be r e so lved i n t h e long term ( s i x months t o one y e a r ) . Two p o s s i b l e important excep t ions f o r r e s o l u t i o n w i t h i n a yea r a r e : t h e problem invo lv ing t h e changes i n import i nvo ice v a l u e s ; and, t h e problem invo lv ing t h e l a c k of t r u s t between t h e p r i v a t e s e c t o r and Customs.

The major problem a r e a s r e l a t i v e t o t h e 7 s t e p s o u t l i n e d i n t h e I ' import-export procedures , execu t ive overview1' a r e a s shown on t h e fo l lowing 7 pages.

OBTAINING AN IMPORT LICENSE (STEP 1)

AND

OBTAINING AN EXPORT LICENSE (STEP 5)

1. There are too many agencies other than the Ministry of Industry and Trade involved in the prxess of obtaining import and export licenses.

There are approximately ten (10) agencies, other than the Ministry of Industry and Trade, which may be involved in the licensing process. Some of these agencies have more than one department involved.

Licenses should be required only for a limited number of products. There should also be "one-stopI1 service provided by the Department of Trade. To achieve the latter, there should be a delegation of authority given to this department for all of the approvals that are required for both import and export licenses. This recommendation also covers the next problem.

For further data, discussion and recommendations, please refer to Section V of this report.

2. The process of obtaining import and export licenses is too bureaucratic.

Note: Problems (1) and (2) evoked a total of 236 comments in the questionnaires which is a significant percentage (19%) of the total comments in the 800 questionnaires received from the private sector.

Whether or not these two stated problems are really problems is very subjective. The data shows that 100% of the export licenses are approved on the same day they are applied for and that 69% of the export license applications are processed at the Ministry of Industry and Trade within the same building.

The data also shows that 76% of the import licenses are approved on the same day they are applied for and that 93% of the import license applications are processed at the Ministry of Industry and Trade within the same building.

These two issues are included here as major problems in deference to the questionnaire response. However, it is believed that the large percentage of license

applications which are processed on the same day they are applied for, within the same building, really casts doubt on whether or not these issues are a major problem or just "aggravationlI items.

Both of the licensing problems would be greatly alleviated if there is a significant reduction in the number of imported and exported goods requiring a license, and if there is a "one-stopw service provided by the Department of Trade.

It should also be noted that subsequent to the November 6th import ban on certain articles, the reaction of the importing public was to anticipate further bans; and consequently, the applications for import licenses has greatly increased. This situation has currently resulted in applications being delayed.


OBTAINING BANK GUARANTEES-IMPORT RELATED (STEP 2)

AND

OBTAINING BANK GUARANTEES-EXPORT RELATED (STEP 6)

1. There are too many separate guarantee requirements, and the logistics of obtaining these guarantees is time consuming.

2. The major problem is the added expense to the importing and exporting communities for the guarantee fees.

Two major improvements that would provide immediate relief for the quantity of guarantees and the cost of guarantees would be: institute an annual bulk guarantee to cover the total estimated liability of the importer/exporter for the year; and, make the rates more reasonable so that they more accurately reflect the default rate of the community as a whole and the default rate of the individual company. The current perception is that the banks are making an unreasonable profit. This study did not cover the latter aspect.


CLEARING IMPORTED GOODS THROUGH CUSTOMS (STEP 3)

1. Customs increasing the values of import invoices.

This issue evoked the largest number of responses (14% of the- total) in the questionnaire. This is a very complex issue, and it is considered as a major problem from two different points of view. Customs agrees that they increase most invoices, but (they say) only because there are valid reasons such as: importers using F.0.B pricing versus C.1.F pricing; importers using currency exchange rates which understate the Dinar value; and, the import invoices being lower than the standard prices suggested by the data files maintained by Customs. The private sector believes that while some increases are justified, a lot of them are not.

The data shows that only 4% of import invoices are not increased, and approximately 47% of the invoices are increased in value by 1% to 10%. This magnitude of increase in the values appears to verify the Customs viewpoint regarding the use of F.0.B pricing and minor currency fluctuations. Customs should take immediate steps to reduce the need for these routine increases. This could be achieved by establishing official exchange rates that would be filled in by Customs and by considering all invoice values to be F.0.B unless the importer/broker provides proof to the contrary at the time of presenting the clearance declaration.

The key question is, how many of the invoices (49%) that are increased by more than 10% in value, are justified increases? This question does not have a definitive answer. However, based on some very detailed questioning of several Customs officials, and by the admission of several members of the private sector, it is concluded that a significant proportion of this 49% is justified.

The very high duty rates provide a "built-in1# incentive for importers to keep the dutiable values low, sometimes at the expensive of the truth. It is considered that the most effective way to promote correctly stated invoices is to increase Customst ability to determine the correct pricing and to make the importing community aware of Customs capabilities. The approach is threefold:

(A) Training the valuation personnel in the range of world market values (there are no absolute values) of commonly imported products, and ensuring that they have access to pricing information from databases, commercial attaches, etc. This could include using international inspection service companies to provide Customs with prices from their very extensive data bases.

(B) Requiring importers/brokers to provide price lists and other pertinent documentation at clearance; and

(C) Strictly enforcing penalties in the case of repeat offenders.

It is critical to'note that improvements must be made to the system to reduce the proportion of the increases which are not justified. In this regard, it would be useful to senior management in Customs if they regulariy reviewed a statistical summary of invoice increases. This would, on a current basis, give them the ability to readily identify such important facts as: which importers are regularly having their invoices increased; which officials are levying the most increases: which products are being increased: which exporters and countries of export are regularly having the values of their goods increased; and, in general, it would provide a good management tool.


There is a very noticeable lack of trust between the private and public sectors. This is especially true of the relationship between the private sector and Customs.

The private sector acknowledges that there is a significant amount of rule breaking by members of its sector, but it also acknowledges that there are many members of the private sector who do not break the regulations. These members resent Customs treating them all as rule breakers.

Customs has a great deal of factual evidence proving that there is a lot of rule breaking practiced by the private sector. As a result of this, Customs appears to have adopted an attitude that most transactions are the subject of rule breaking by the private sector.

Without question, there is a significant polarization between Customs and the private sector. Although this might never be fully resolved (after all there is a natural adversary relationship in all countries between importers/exporters and the Customs), the present situation must be improved in order to promote efficient import-export procedures.

While the solution to this problem will involve many different actions, a significant step that can be taken immediately is to establish a forum for a regular dialogue between Customs and the private sector.


3. The import-export clearance procedures are too complicated.

In addition to the historical data verifying that there are several aspects of clearing goods which complicate the procedures, a physical review of the process reveals that there are many times when it takes real perseverance by the importer/broker to successfully import into and/or export from Jordan.

The major complicating factors are: licensing; bank guarantees; clearance declarations which can routinely require more than twenty (20) signatures; an inordinate amount of sample taking and testing; and, approximately 90% of imports being done at Aqaba, while the major public sector infrastructure is in Amman.

These complications could be considerably reduced by: reducing licensing requirements; providing "one-stopI1 services at the Ministry of Industry and Trade and Customs; and, delegating more authority from Amman to the various Customs Houses.


TEMPORARY AND DRAWBACK IMPORT CLEARANCES (STEP 4)

AND

CLEARING EXPORTED GOODS THROUGH CUSTOMS (STEP 7)

1. There is a perception in the exporting community that their type of business is different from that of companies which import for domestic trade or consumption. There is also a recognition that the Jordanian economy can be improved by exporters increasing exports of goods with Jordanian material and value added content. Exporters believe that these 2 items should merit their community some extra considerations from the public sector for all aspects of the import-export procedures.

2. Certain members of the public sector are also very aware of the importance to the Jordanian economy attributable to the exporting community's activities, expecially if these activities can be carried out with as little interference from the public sector as is reasonatiy possible.

3. The problem is that the public sector has experienced many abuses by the exporting community in its use of preferential items (duty free temporary entries, etc.); and the lack of trust, as discussed in previous paragraphs, tends to come to the forefront and has an influence on the transactions.

Recommended solutions to this problem have been discussed in previous paragraphs.


Although the subject of computerization is not included as part of the project scope, it would be remiss not to comment on this. The Customs Department and other agencies involved in the import-export procedures are in the process of starting to implement various computer systems. Based on some brief observations, it appears that there is not an integrated approach being taken by the various agencies.

There is a concern that without the correct coordination between the agencies, there will arise a situation wherein the agencies will not have compatible hardware and/or software and it will not be possible to send information of mutual interest from one agency to another. This would then result in either a very inefficient use of the computer systems or, just as expensive, a need to redesign systems.

There may be a project in place to manage this issue. If not, then it is strongly recommended that such a project be considered.

RECOMMENDATIONS FOR SIMPLIFICATIONS IN THE IMPORT-EXPORT PROCESS

The simplification recommendations are listed in order of priority in the following 12 pages. Also, they are listed in order by the various agencies that-are involved in the recommended simplifications. This latter list is on pages 102 through 119.

The first aspect of improving the import-export procedures that should be examined is the lack of trust between the public and private sectors, especially between Customs and the importing-exporting community. The first 11 recommendations are directed at reducing this lack of mutual trust.

1. Customs should establish "reliabilityv1 factors for import and export clearances by using the "track record1@ of foreign suppliers, foreign countries of origin, importers, brokers, and product types. A mathematical model can be constructed which combines the various criteria, and an enquiry of the computer (or even of a manual list) will indicate to Customs what level of inspection the imports should receive. With this system, many of the imports will not be inspected at all (using this method in the United States results in 85% of imports entering the country without any Customs involvement other than processing the paperwork). This reduction in the inspection of many routine imports will also result in: the entire import process being less complicated; the importers being treated with more respect based on their documented good ntrack recordu; and, more Customs manpower being freed up to concentrate on the processing and inspection of imports with low reliability factors. This system can be achieved with a low level of computerization, or even manually.

This system will encourage mutual trust between Customs and importers; and as a result, the importers with good track records will be treated more efficiently, and the other importers wishing to receive the same treatment should improve their procedures so as to get on the good reliability list.

A separate project could be established for the implementation of this type of systen.

2. Customs should establish a forum for regular dialogue between the public and private sectors. This could be accomplished by forming a special IvOperations Committeevv which would consist of members from senior management of Customs, Ministry of Industry and Trade, the importing/exporting private sector, and the brokers syndicate. This committee should be involved in monthly meetings to review such items as: pending changes in the regulations; problems being e>:perienced as a result of current legislation; special projects; and, planning improvements for the future.

13

3. Customs should promote the elimination of many "aggravationM items, including some items which are imposed by other agencies. Some of these "aggravation'l items are:

Review the fine that is imposed when the waybill does not match the commercial invoice with regards to shipping point ;

Do not automatically treat commercial samples as suspect of being diverted to the local market. Even minute quantities of commercial samples are subjected to testing and the complete onerous import process;

Review the need to ship samples from Aqaba to Amman for a radiation check. These checks shculd be done at Aqaba;

NOTE: Customs states that radiation checks are now performed by them at their laboratory in Aqaba, and only those products failing the test are sent to Amman for further testing.

The lack of authority for Customs at Aqaba to approve temporary imports;

Eliminate the fee of 150 fils per ton to the Ministry of Agriculture. This is not just a matter of the money, it also concerns time (e.g., the fee must be paid in Amman; thus for the importer of 1 ton in Aqaba, it is necessary to go to Amman).

Eliminate the practice of fees for live and dead animals. Customs should incorporate this fee into the duty rate. This would also save a double inspection.

Liberalize the current minimum of 500 tons for use of the Aqaba refrigeration facilities. Recommend expanding the fee structure to handle smaller shipments.

Address import procedures for spare parts. Customs appears to always be concerned that the imported part will not be used as a spare part but will be sold in the market, thus evading duty.

Re-evaluate current procedures that permit Customs to lock facilities (subject to production tax) after 1 shift. This practice restricts factory owners to 1 shift and can be dangerous in the case of fire if Customs has the only key.

Address country of origin certification issues for small foreign towns that do not have a Chamber. It can be a problem for Country of Origin certification.

Do not penalize brokers for making reasonable mistakes in classifying products under the new Harmonized System. 14

Customs should change the current reward system whereby Customs employees share a significant percentage of the fines and extra duties imposed when an importer/exporter loses a ttcase.tl An alternative would be to put all of the extra revenue into the Treasury and then use these extra monies to provide salary increases to the diligent and competent Customs employees.

This would provide an incentive for all Customs employees, not just those who have an opportunity to share in "caseM money, and it would also eliminate the direct association between punishing the private sector and rewarding the public sector.

This system would also discourage Customs from trying to entrap importers into signing a document stating that the imported article is a certain classification, when Customs knows it is not, and then Customs institutes a I1caset1 and the importer is fined. The Customs official then gets a reward, and the perception of Customs by the public is tarnished.

5. Senior Customs manaqement should communicate to Customs employees interfacing with the public that their function is a vital part of establishing efficient commercial practices. They should be made aware that all unnecessary delays and added expenses to the importing/exporting community will eventually become an extra burden that the Jordanian consumer will have to bear.

6. Customs should enforce procedures to eliminate the very common practice of importers/brokers using incorrect exchange rates and F.0.B pricing instead of C.1.F pricing. This will remove the perception of unjust invoice increases for approximately 47% of the incidences.

7. Customs should provide training to valuation personnel on world price ranges (there are no absclute world prices) for commonly imported products. Also, these individuals should have access to pricing data bases and other sources which will enable them to efficiently establish reasonable values for imported products. When the importing community knows that the valuators are competent and aware of world pricing, they will be careful to correctly state invoices and this will result in trust being earned by both sides.

NOTE: Dr. Rima Khalaf enquired about information on international companies that specialize in inspection and verifying prices. There are many different opinions regarding these companies, and while they can perform a valuable function, it is the importer that ultimately bears the added expense. As suggested by ITC's Mr. Alain Chevalier, Jordan could request competitive bids to provide pricing data. In this regard, there are two points to be noted: international prices are very dynamic and can vary significantly over short time 15

periods; and, the referenced agencies specialize in ensuring that importing government agencies are not paying inflated prices. The latter is the opposite of the problem being experienced in Jordan.

8. The Minister of Finance should promote the establishment of an wombudsmanl~ function under the jurisdiction of an agency outside of Customs (perhaps under the Justice Department). The ombudsman (an independent referee) would review cases of unreasonable treatment of the importing/exporting community by the agencies involved in the import-export process.

9. Currently importers-exporters have to provide the following guarantees:

A. That the duty and license fee shall be paid on temporary imports that are sold in the domestic market;

B. That the duty shall be paid on drawback imports that are sold in the domestic market; and,

C. That the value of exported goods will be paid by the export customer.

The standard, non-recoverable charge is 5 % of the value of the guarantee. The high cost of guarantees could be reduced by allowing importers-exporters to post interest bearing bonds as surety for payment of duties, license fees, etc.

10. Customs should sponsor joint seminars and training sessions with the private sector. This will assist in establishing mutual respect.

11. The brokers should significantly raise their standards by self-regulation and education. Some actions that could be taken are:

A . Promote the establishment of academic and practical education at the universities and/or technical institutes in the fields of freight forwarding, import-export regulations, and brokerage;

B. Promote the establishment of brokers operating out of a properly equipped office, instead of standing outside of the Customs Houses with a briefcase soliciting business;

C. Obtain training from experts in classification using the Harmonized System. Do not depend on the Customs to do this. The classification of imported products is supposed to be done by the broker before presentation of clearance declarations. It is understood that brokers are reluctant to include classification numbers on the declarations because Customs can penalize them if the classification is incorrect. Customs should change this practice.

D. Do not delay import clearances by accumulating several declarations to be processed at the same time.

12. The requirements for import and export licenses should be eliminated with the exception of a limited number of products and possibly countries. Should the fees from these licenses be an important revenue item, then collect these same fees at the time of import or export.

NOTE: The import licensing system currently exists to provide a means for controlling imports. The system dates back to 1976, with its precursor originating in the 19301s. It is considered that there is no longer a need to enforce the prohibition of imports by means of an import licensing process, and that this control can be achieved by self-enforcement:, supported by formal notices to the importing community. Importers failing to heed the notices would carry the risk of having prohibited imports being refused import clearance.

13. The signature requirements for all of the other agencies and the departments within the Ministry of Industry and Trade, with the exception of the license issuing department, should be eliminated for the products that are determined to require the retention of the licensing requirement.

This can be done by giving the necessary authority to the license issuing department and providing it with guidelines that are currently being used by the other agencies and departments in the Ministry of Industry and Trade (e.g., list of products required to meet Jordanian standards).

14. There should be llone-stopll services at the Customs Houses. Customs should have control over the various agencies at the Customs Houses and these individuals should be authorized by Customs to handle most transactions without having to refer to a headquarters function. In most cases, the importing/exporting community should have to deal only with Customs at the port.

15. Customs should reduce the number of signatures on the Customs Declaration to the following:

A. Registration (1 signature), including any other functions done by the current first four signatures.

B. Inspection (1 signature), including the two-step process that the inspector currently performs by signing twice. Eliminate the practice of a manager signing to allocate an inspector and an appraiser.

C. Valuation (1 signature), including the two-step process that the evaluator currently pert~rms by signing twice. Eliminate the routine signature of the Chief Evaluator and have his signature only on Customs Declarations that

require a higher level of authority. The regular evaluator should be trained sufficiently to handle most of the valuation issues, especially with assistance from a new group of experts employed by Customs (e.g., the textile engineers).

D. Other agencies (1 signature), including the functions of agricultural marketing signature currently required and the three signatures required for samples taken by Agriculture, Health, and Department of Standards.

E. Approval (1 signature) of sample after it has been approved at the Customs House or other facilities. This would include signing for receipt of the radiation test results.

F. Classification (1 signature). Elirlinate the routine signature of the classification auditor. Customs does a 100% check at headquarters.

G. Payment of duties (1 signature). Eliminate the other two signatures currently required.

H. Final clearance (1 signature) instead of current two for final approval and clearance of the goods.

NOTE: Since July, the signatures have been reduced by four.

16. Due to the importance of promoting exports, Customs should appoint a senior member of the department to assist in solving the day-to-day problems experienced by exporters. The availability of this assistance should be made known to the exporting community.

The role of this senior Customs "expc.zt facilitator" should be as broad as possible within the context of all import-export procedures. There are, of course, other requirements for improving exports which would not be within the scope of the facilitator, some of these being: tax incentives; marketing assistance; export sales financing; education on the product needs of export markets; and training on how to establish joint ventures.

Some items of assistance that could be provided by the facilitator are:

A. Form and chair a small (no more than 10 members) group of succesful exporters, with representation from the major types of export businesses. Meetings should be held once per month, with the location being alternated between each of the members facilities.

B. At the first meeting determine a priority listing of the import-export procedures, which &re directly under the control of Customs, that can be improved. A secondary

list should be made of the import-export procedures, which are not under the direct control of Customs, that can be improved. It is very important that these lists be representative of both the private and public sector concerns.

Establish a time-table to complete the steps required to implement the improvements.

C. Work with the private and public sectors to improve the mechanical steps that can be improved quickly.

D. Possibly the single most important assistance will be communicating to the exporting community that Customs considers the development of practical, cost-effective solutions to exporting problems to be a high priority.

17. Customs should make more of an effort to place sufficient infrastructure in Aqaba where approximately 90% of the imports come into Jordan.

While it is recognized that the Customs Headquarters function will remain in Amman, the following decentralized authority and infrastructure items could be instituted in Aqaba:

A. Approval of all matters concerning temporary and drawback clearances;

B. Approval of license applications and amendments;

C. Provision of equipment to perform the routine testing that is carried out in Amman for Aqaba imports.

18. Customs should establish and utilize a reporting system which will enable them to track and manage such areas as invoice changes and delays in clearances.

19. The Ministry of Industry and Trade should review the operation of the Department of Standards with a view to reducing the amount of sample taking and testing. Also, they should not institute unique Jordanian standards unless they are absolutely required. More use shculd be made of international standards such as Underwriters Laboratory (UL) and the Canadian Standards Associaticil (CSA).

Implementation of recommendation number 1. would result in a substantial reduction in the number of samples for imports-exports. Until such time as this first recommendation is implemented, sample taking could be significantly reduced by increasing the cycle time between samples for products from companies that are internationally recognized as being high quality companies. This approach would result in much less sampling of imported products.

NOTE: It was observed by several members of the public and private sectors that the Department of Standards is expanding unnecessarily and that this growth is resulting in excess samples being taken. This does appear to be a legitimate concern.

20. The Department of Standards should make readily available to the importing/exporting community the Jordanian standards.

21. The importers should make these Jordanian standards available to their suppliers. This procedure should be enforced by the Department of Standards.

22. Customs should establish uniformity in classification to reduce to a minimum the number of times that imports are given different classifications by different individuals.

23. Customs should establish a classification arbitration committee to handle the volume of classification issues that will arise as a result of implementing the new Harmonized System of classification on January 1, 1989. Additionally, during the first year (possibly longer) of using the Harmonized System, there should be a monthly meeting of importers, brokers, and Customs, with Customs providing a review of the previous month's classification decisions and the technical reasons for the decisions. This will enhance the private sector's understanding of the new classification system and also give that sector an opportunity to contribute constructive comments.

24. Customs should evaluate the administrative procedures for the protection of Jordanian manufacturers. Two examples cited were:

A. A manufacturer of paint (for export) imports a resin that is not made in Jordan. He must pay duties because another Jordanian company makes a resin (this product is not the same as the imported resin); and

B. The same paint manufacturer must buy Jordanian-made cardboard cartons to use in exporting paint. These are 30% more expensive than cartons from Saudi Arabia.

25. Customs should sponsor an objective for Jordan to become a signatory to the General Agreement on Tariffs and Trade (GATT). The GATT has evolved, over a long period of time, many procedures for the inspection, classification and valuation of imported products.

26. Customs should address current procedures requiring importers to forward shipments arriving at Alia to Aqaba for Customs lab inspection. Where possible, imports arriving by air should be inspected at Alia or Amman.

27. The Department of Standards should promote procedures that will permit pre-clearance of samples.

28. Customs should administer the policy of clearing food products at Aqaba within two days. Those products are not being cleared within the specified time period.

29. Customs should standardize the data requirements on import documentation (e.g., state the BTN and the ingredients on the import invoice).

30. Customs should establish higher export inspection standards. Inspectors of exported products are not always as careful as they should be. This results in damage being done to the exported product.

31. Customs should review the requirement for re-export authorization for goods imported under a temporary import status.

32. There is a 100% audit of Customs Declarations at Customs headquarters. This should mean that other individuals may not be performing audit functions.

33. Customs should enforce the practice of typing and proofreading all Customs Declarations to reduce the clerical errors caused by handwritten documents.

34. Changes affecting the import-export process should be phased in at regular periods. There are too many regulation changes from all of the agencies involved in the import-export process. It is very difficult for Customs to stay current. The Ministry of Finance should assist Customs in implementing this plan with the other agencies.

35. The current Customs computerization g.zogram should be continued and enhanced to include comnercially available data bases that are easy to program and use.

36. The recently started program of ffconditional releaseu of goods while awaiting lab results should be continued as well as improved upon.

37. It should be mandatory that brokers subscribe to all of the regulations that affect the services they provide.

38. Customs should not issue any new broker licenses until there is a reduction in current licenses. It is apparent that the number of brokers per capita is very high (e.g.! if the same per capita ratio existed in Jordan that exists In the United States, there would be approximately 15 broker companies in Jordan versus the actual number of 172.) Jordanian per capita ratio is over 10 times that of the U.S.

39. There must exist a better sense of commercial practice in the Customs regulations and the individuals dealing with the import-export process (e.g., if it is suspected that an importation of samples may be diverted to the marketplace, then there should be a simple procedure for the articles to be I1damaged1@ by Customs prior to clearance. This will make the sample unsuitable for sale.) Additionally, samples of small quantities should be duty-free and cleared without the normal tests (e.g., if a legitimate paint seller/manufacturer imports several cans of paint or other substances that are used to make paint, then these should be treated as truly commercial samples with no commercial value.)

There, of course, has to be a rule of reasonableness in this procedure to prevent an importer from importing samples on a daily basis when it is known that there is no commercial need to do so. In this case Customs indivi:iuals well trained in commercial practices would be able to quickly and efficiently resolve any disputes.

40. It should be mandatory that all practicing brokers attend a minimum number of training hours per year. Both the private and public sectors should teach these training sessions.

41. The importers/exporters whose practices and documentation are excellent should be identified and called upon to provide training seminars for the private sector.

42. Customs should enforce the stricter penalties and jail sentences for repeat offenders of serious offenses such as smuggling.

43. Customs should encourage computerization in the private sector, especially by the brokers. Customs would be able to transmit regulation changes and other important information to the private sector on a very timely basis by means of modems.

44. The Central Bank should clarify the regulation in Chapter 13, article 88, paragraph b. of the Central Bank Regulations. Many exporters do not understand that this regulation enables them to consign products to foreign distributors with the payment not being due until they, the Jordanian exporter, are paid by the foreign distributor.

45. The recent changes to the drawback regulations are excellent, and they have created an immediate incentive for companies to use drawback, as evidenced by the 30 companies that have just started to do so. This number compares to 1 company that was using drawback under the old regulations.

Additional improvements could be made to the drawback regulations that would encourage Jorchnian companies, which normally import duty paid raw materiils for manufacture and sale in the domestic market, to break into foreign markets

with the sale of production that is in excess of domestic needs. The mechanical steps involved in these improvements are :

A. Make optional the requirement to declare imports as being destined for duty drawback. This would alleviate the current situation of being able to claim drawback only on exports that have been imported for drawback.

B. Obtain Customs approval for drawback prior to exportation of products that contain duty-paid imported materials.

C. Develop straightforward formulae for claiming duty drawback on the valueless and valuable wastes that result from the Jordanian manufacturing process. This is known as claiming drawback on a basis of "appearing in,n ''used in," or "used in, less valuable waste." Initially establish national standards by industry or product and revise them only when the system is running smoothly.

This is currently being partially achieved by the use of manufacturing coefficients. The administration of these coefficients can be cumbersome and the system could be improved.

D. Allow substitution of Jordanian product in the exported duty drawback product to encourage use of domestic materials. This is a common world standard.

E. Allow drawback on the exportation of articles which are exported in the same condition as they were when imported. This would be applicakLe fir the exportation of imported spare parts which are not involved in a ~ordanian manufacturing process.

46. With the improved drawback regulations, it now appears that there are more benefits to using the drawback import system instead of the temporary import system. Further, there is no clear distinction between what imports should use one system versus the other. It is recommended that all of the benefits of the new drawback regulations be incorporated into the temporary import procedures, and that the drawback regulations focus on the exporters getting duty drawback on the exportation of duty-paid goods. This could be achieved by implementing recommendation number 45.

Implementation of this recommendation (number 46.) would also provide a clear distinction between temporary imports and drawback imports. That is, any import-ed goods with a high probability of being subsequently exported would be cleared as a temporary import (under the improved temporary import system), and drawback would be used for imported duty-paid goods which are exported.

One important exception to implementing all of the benefits of the new drawback system under a new temporary import system would be the ability to transfer the non duty-paid imported goods into the domestic market without prior approval by Customs. If this were allowed, it could very easily result in abuses by the exporters to save cash flow on duty payments.

STATEMENT OF PROJECT CHRONOLOGY

The chronological steps in the project are as follows:

1. Meeting with the Steering Group to agree on the basic approach to the project.

2. Conduct interviews with the private and public sectors to determine the viewpoint of each and to document the various mechanical processing steps needed to import goods into and export goods from Jordan.

3. Prepare a preliminary report, based on the interviews, including preliminary recommendations for simplification of the import-export procedures.

4. Design a questionnaire for obtaining comments from the importing-exporting community and the public sector.

5. Design forms to be used for collecting historical and ttlive't data on: the time to obtain import and export licenses; the problems involved in getting these licenses, especially relative to the involvement of other than the primary agency; the time to clear imports and exports through Customs; and, the problems involved in clearance, especially relative to the involvement of agencies other than Customs.

6. Meet with the Steering Group to review the preliminary report, the draft questionnaire and the draft data collection f oms.

7. Distribute questionnaires and collect data.

8. Analyze the questionnaires and the data samples.

9. Meet with primary agencies (Customs and Ministry of Industry and Trade) to discuss the data.

10. Draft recommendations for simplification of the import-export procedures based on all interviews and data analyses.

11. Prepare a draft of the final report for a November 26th review by the Minister of Planning.

12. Submit the final report by the week of December 19th, 1988 to Dr. Rima Khalaf at the Ministry of Planning.

INITIAL INTERVIEWS - GENERAL

During the process of reviewing the import-export procedures from June 29th through July 16th, a working group of ten (10) people performed the tasks and approximately 80 people were interviewed. Several of the 80 were intemiewed more than once.

The interviews contained a great deal of emotional reaction and animosity from both the private and public sectors towards one another. At first, this made it very difficult to distill the results of the interviews into any meaningful conclusions. However, by balancing the interviews between the two sectors, meaningful conclusions and recommendations were derived.

The November interviews involved only Customs, the Ministry of Industry and Trade, and the Chamber of Industry (by telephone).

INITIAL INTERVIEWS - PRIVATE SECTOR

The private sector members interviewed included importers, exporters, and brokers.

The interviews with the private sector resulted in the statement of several problems and solutions as presented herein.

It is stressed that the following problems and suggested solutions are as stated by the private sector. They do not contain any opinions of the consultant or the working group.

1. The first major problem is the complete lack of mutual trust between the private and public sectors (e.g., Itthe attitude of Customs is harsh and almost always full of suspi~ion~~ and vlCustoms treats us as guilty until proven inno~ent.~)

The major effects of this lack of trust are: the frequency with which Customs does not accept the invoice values; and the large number of fines and penalties for situations that are not mistakes (e.g., an importer gets a product from Vienna which has to be loaded on a ship in Germany but there are no ports in Austria. In this case, the importer is fined 5% because the waybill does not correspond to the commercial invoice. )

The major solutions suggested are:

A. Reduce the duty rates to lower than the current average rate of 65%. There would be fewer attempts at cheating and, consequently, mutual trust could be established.

B. Increase the severity of fines and penalties, including prison terms for repeat offenders, for smuggling offenses. This would create a big incentive to be honest and would thus foster mutual trust.

C. Consider specific rates of duty instead of ad valorem. This would take away the incentive for false' invoicing and thus encourage trust.

NOTE: This is done in Mexico and Switzerland on the basis of weight (e.g., duty on a kilo of foodstuffs is 1, etc.)

D. Change Customs approach as was done by the income tax service a few years ago. The trust process may be initiated with Customs adopting t:he attitude of "innocent until proven guilty.I1

E. Increase the experience level of Customs. Experienced individuals would be able to differentiate between the real cheaters and clerical errors.

F. Create segregation of Customs responsibilities towards industrialists versus traders and other importers. There are unique problems encountered by industrialists and thus unique skills are required to handle these problems.

2. The second major problem is the lack of "one-stop" service for all of the steps in the import-export process. The major solution is for Customs to control all of the agencies at the Customs Houses and for the Ministry of Industry and Trade to control the complete licensing process.

The third major problem is the very large number of signatures required on documents (e.g., a minimum of 19 signatures are required on a Customs Declaration for the simplest of products which have no need to be checked by any agency other than Customs.) The number of signatures can very easily exceed 25 for an agricultural product that has no known problems. The numbers get higher. It has been known for a Customs Declaration to contain over 100 signatures!!

4. The fourth major problem is the procedure whereby Customs employees (through the highest level) can share 40% of fines and extra duties when an importer-exporter loses a vcase." This practice encourages Customs to make ncasesll and results in clearance delays and undue expenses. This should be discontinued immediately and 100% of the fines should go to the Treasury.

The following is a list of other problems and suggested solutions that were stated by the private sector:

1. Establish uniformity in practice at the various Customs Houses. Customs should provide more training for personnel.

2. Eliminate the practice of a fee of 150 fils per ton to the Ministry of Agriculture. This is not just a matter of the money, it also concerns time (e.g., the fee must be paid in Amman, requiring the importer to go to Amman for imports of 1 ton in Aqaba.)

3. Eliminate the practice of fees for live and dead animals. Customs should incorporate this fee into the duty rate. This would also save a double inspection.

4. Re-evaluate the procedures for sending samples from Aqaba to Amman for a radiation check. This is expensive and very time consuming. The procedure should be centralized at Aqaba where 90% of the requirement exists.

5. Redefine authority structure. Agriculture, Health and Standards personnel at the Customs Houses have little or no authority, even to clear product that is imported on a routine basis.

6. Re-evaluate the requirement for separate import licenses (e.g., the importation of trousers, jackets, and shirts requires three separate licenses. This is also the case for duty-free imports from Syria.)

NOTE: At a meeting held July 17th, Ministry of Industry and Trade said these separate licenses are no longer required.

7. Streamline the import licensing procedures (i.e., one should not have to go from Aqaba to Amman to make a change to an import license.)

8. Liberalize the requirement for use of Aqaba refrigeration facilities for a cargo of less than 500 tons.

9. Establish fair arbitration practices on classification issues.

10. Establish uniformity in classification (e.g., often routine imports are given different classifications by Customs.)

11. Publicize foreign standards information to the importing and exporting public.

12. Re-evaluate the bonded facilities operations. The problems encountered are so great that people do not use these facilities.

13. Develop an atmosphere of cooperation hetween Customs and the importing community. There is often a hostile attitude displayed by Customs, and it is not unusual for them to intimidate the private sector.

14. Address import procedures for spare parts. Customs appears to always be concerned that the imported part will not be used as a spare part but will be sold in the market, thus evading duty.

15. Establish improved import procedures for duty-free entry of commercial samples. Currently Customs suspects that the samples will be sold in the market and thus evade duties.

16. Eliminate bank guarantees for proof that exported products are received by the foreign customer.

17. Re-evaluate administrative procedures for the protection of Jordanian manufacturers. Two examples cited were: (1) a manufacturer of paint (for export) imports a resin that is not made in Jordan. He must pay the duties because another Jordanian company makes a resin. This resin is not the same as the imported resin; and (2) the same paint manufacturer must buy Jordanian-made cardboard cartons to use for exporting paint. These cartons are 30% more expensive than cartons from Saudi Arabia.

18. Become a signatory to the General Agreement on Tariffs and Trade (GATT).

19. Increase the quality standards for exports to ensure high quality Jordanian goods.

20. Re-evaluate current procedures that permit Customs to lock facilities (subject to production tax) after 1 shift. This practice restricts factory owners to 1 shift and can be dangerous in the case of fire if Customs has the only key.

21. Address the country of origin certification issues for small foreign towns that do not have a Chamber. It can be a problem for country of Origin certification.

22. Address current procedures requiring importers to forward air shipments to Aqaba for Customs lab inspection. This results in additional expenses.

23. Establish procedures that will pennit pre-clearance of samples with the Department of Standards.

24. Administer the policy of clearing food products at Aqaba within two days. Products are not being cleared within the specified time period.

25. Have Customs treat the constituents of food products as being food products.

26. Address the issue of expediting Customs clearance processes. Delays in clearing imports can result in a significant portion of the shelf life being consumed and at times even require re-export.

27. Standardize data requirements on import documentation for industrialists ( e . g . , state the BTN and the ingredients on the import invoice.)

28. Expedite the export clearance process. Export clearance processing takes two days. This is too long and could be expedited if Customs had people more expert in exported products.

29. Increase availability of Customs officials for problem resolution.

30. Re-evaluate the requirement for two bank guarantees for temporary imports and production tax.

31. Establish export inspection standard:;. Inspectors of exported products are not always as careful as they should be, and this results in damage being done to the exported product.

3 2 . Expedi te process ing t i m e t o reduce t h e added t r u c k i n g expense. Approximately 2 0 % of t h e t ime, t r u c k s c a r r y i n g expor ted product must s t a y overn ight a t t h e Customs House.

3 3 . El imina te t h e requirement f o r re -expor t a u t h o r i z a t i o n f o r goods imported under a temporary import s t a t u s .

3 4 . E l imina te t h e requirement t h a t a D i r e c t o r a t t h e Min i s t ry of I n d u s t r y and Trade s i g n a l l import l i c e n s e a p p l i c a t i o n s f o r impor ts from Arab c o u n t r i e s .

INITIAL INTERVIEWS - PUBLIC SECTOR

The interviews with the public sector resulted in the statement of several problems and solutions as presented herein.

It is stressed that the following problems and suggested solutions are as stated by the public sector. They do not contain any opinions of the consultant or the working group.

1. The public sector individuals were not unanimous that the major problem is a complete lack of mutual trust between the private and public sectors. Although several Customs officials stated that there is a big trust problem, most of them went on to point out specific instances where they had caught someone smuggling. This places the responsibility for the lack of trust onto the private sector. Generally speaking, Customs did not agree that they consider the private sector as l1guilty until proven innocent.I1 There was general agreement that a lack of trust: between the private and public sectors is a significant problem.

The major solutions suggested were:

A. To reduce the duty rates tp lower than the current average rate of 65% (rates prior to November 6, 1988). There would be fewer attempts at cheating and, consequently, mutual trust could he established.

B. For people to obey the laws of the land and stop smuggling.

2. Establish a "one-stoptt service process. There are too many agencies involved in the import-export process. The need to go from Ministry to Ministry should be replaced by "one-stopll service.

3. Establish centralized control by Customs over all agencies at the Customs Houses.

4. Educate Customs on international pricing structures. There is a great deal of evidence which shows that false invoicing is a major problem (several examples were cited where the importer was caught with "no shadow of a doubttt). The major suggestions for solving this problem were: for Customs to have more knowledge of world pricing - this will discourage the use of false invoices; and for Cc.stoms to lower the duty rates.

5. Educate brokers on import-export procedures. Many brokers are not technically competent in the tariff or import-export procedures.

6. Require Customs brokers to have an est-ablished place of business. Some brokers operate out of a briefcase and do not have any facilities to keep regulations pertaining to their services.

The following is a list of other problems and suggested solutions that were stated by the public sector:

1. The phasing out of protectionism. This will result in more efficient private sector operations for domestic and export sales.

2. Many importers routinely import products which they know are not acceptable to Jordanian standards (e.g., those with lack of labelling).

3. The private sector many times does not understand the need for certain controls (e.g., a major shoe manufacturer was not authorized a license to import a machine that could have put out of business approximately 300 small shoe manufacturers.)

4. Many importers apply for multiple licenses to save cash flow on the 5% import fee.

5. Brokers and/or importers cause procedural delays by not expediting the flow of documentation.

6. Certain agencies have more people than they need, which encourages too many signature approvals.

7. Importers do not provide their foreign suppliers with Jordanian standards. This causes problems at the time of importation.

8. There are too many brokers for the volume of transactions. This quantity should be reduced.

9. The attitude of some Customs officials is that the importers can afford to have invoice values increased.

lo. Many brokers do not complete the Customs Declaration correctly (e.g., they routinely do not fill in the tariff number) .

11. Customs trusts only about 20% to 30% of the importers.

12. The duty rates are too high, which ercourages smuggling.

13. Some importers cannot afford to give correct invoices because they would not be competitive in the market.

14. The duty drawback system is not efficient and is not being used.

There is a 100% audit of Customs Declarations at Customs Headquarters. This suggests that other individuals need not be performing audit functions.

There is no need for the Customs House to keep track of the balance on an import license.

There is too much interference by other agencies in the Customs function.

There is a problem with Arab countries not recognizing a Certificate of Origin for goods produced in a Free Zone. This reduces exports.

Jordan should use international standards wherever possible (e.g., if importing a product from Canada, then use the Canadian standard, if appropriate).

The practice of typing all Customs Declarations has not yet been achieved.

Many laboratories do not send sample results to Customs.

The temporary import system is frequently abused.

There are too many regulation changes from all of the agencies involved in the import-export process. This makes it very difficult for Customs to stay current.

COMMENTS ON INITIAL INTERVIEWS

As can be determined by reviewing the tasks stated on the first page of this report, the foregoing interviews covered the first two tasks. Some applicable comments are:

1. Observations of the process and discussions with officials lead to the conclusion that there are indeed many problems for the private sector in the import-export process.

2. The statement of the major problems by both sectors is essentially correct.

3. It is considered that the lack of mutual trust is something that has existed for a very long time. It is to a significant degree based on factual events such as smuggling by some of the private sector and high duty rates coupled with certain inefficiencies on the part of the public sector. This latter item is certainly not the exclusive domain of Customs. There are at least 10 other public sector agencies involved in the import-export process.

4. It appears that both sectors are ready and willing to make immediate improvements.

5. Definite signs were seen of planned improvements by Customs (e.g. conditional import clearances while waiting to resolve delays; the introduction of a new Customs Declaration; and, the introduction of computerization).

6. Everyone interviewed was very cooperative.

INVOICE VALUE INCREASES BY CUSTOMS

HISTORICAL DATA FOR CUSTOMS CLEARANCE DECLARATIONS

DATA COLLECTED BY MINISTRY OF PLANNING

AQABA TRANSIT

..................................................................... ..................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE

OF AS A PERCENTAGE DECLARATIONS 0% 1 - 5% 6 - 10% 11 - 20% 21 - 30% OVER 30% ..................................................................... .....................................................................

Total original value of the 98 declarations: 5,922,163

Total uplifted value of the 98 declarations: 8,443,700

Total JD. uplift: 2,521,537

Average percentage uplift: 43%

AQABA OTHER



Total original value of the 17 declarations: 244,290

Total uplifted value of the 17 declarations: 291,115

Total JD. uplift: 46,825


AQABA RE-EXPORT


OF AS A PERCENTAGE DECLARATIONS 0% 1 - 5 % 6 - 1 0 % 1 1 - 2 0 % 2 1 - 3 0 % OVER30% .....................................................................





AQABA FREE ZONE


OF AS A PERCENTAGE DECLARATIONS 0% 1 - 5% 6 - 10% 11 -- 20% 21 - 30% OVER 30% ..................................................................... .....................................................................



Total JD. uplift:

Average percentage uplift:

AQABA LOCAL SALES

...................................................................... ..................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE

OF AS A PERCENTAGE DECLARATIONS 0% ,1 - 5% 6 - 10% 11 - 20% 21 - 30% OVER 30% ..................................................................... .....................................................................

Total original value of the 10 declarations:




AQABA CONSUMPTION (INCLUDES TEMi'ORARY IMPORTS)

..................................................................... ..................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE OF AS A PERCENTAGE

DECLARATIONS 0% 1 - 5% 6 - 10% 11 - 20% 21 - 30% OVER 30% ..................................................................... .....................................................................



Total JD. uplift:

Average percentage uplift: 4 %

AMMAN CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

-------------- --------------========ia=ia~3~3~=i=i=====i=i=i=i=i=3~==i=i=========================

NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE OF AS A PERCENTAGE




Total JD. uplift:


TOTAL DECLARATIONS FOR CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

..................................................................... ...................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE






TOTAL OF ALL SAMPLE DECLARATIONS

..................................................................... ..................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE OF AS A PERCENTAGE




Total JD. uplift: 3,267,638


Percentage of sample uplifted by 0%: 4%

Percentage of sample uplifted from 1 to 5%: 40%




Percentage of sample uplifted by more than 30%: 3 2 %

COMMENTS ON DATA FOR INVOICE VALUE INCREASES

Although the data does not show the reason for the value increases, it is useful to consider the following:

1. It appears to be significant that only 4% of the sample declarations were not subject to any increases.

2. The large percentage (47%) of uplifts in the 1% to 10% range could be accounted for by the difference between F.0.B and C.1.F pricing and inaccurate exchange rates.

3. It also appears to be significant that 32% of the sample declarations were increased in excess of 30%, while 49% were increased in excess of 10%.

4. The data does not provide a definitive answer as to whether or not the increases are justified due to undervalued invoices or if they are as a result of Customs1 desire to increase for the sake of increasing or for the sake of revenues.

It appears that the increases were not the result of any I1cases. Customs individuals would not have benefited financially from arbitrary uplifts.

5. The Amman increases could be higher than those at Aqaba because many of the problem valuation issues are settled in Amman.

6. Transit increases may be high due to the practice of the brokers not wishing to have their transit guarantee amounts used up. It appears that documentation for transit goods often does not include invoices, just packing lists. Correct value is not a priority conceirn. These increases do not result in any duties since the goods are treated as duty- free.

The invoice increase data certainly verifies the 172 comments made in the questionnaire that Customs increases over 90% of a.11 invoices.

NUMBER O F DAYS FOR CUSTOMS CLEARANCE DECLARATIONS

H I S T O R I C A L DATA SHOWS THE AGENCIES INVOLVED

DATA COLLECTED BY M I N I S T R Y O F PLANNING

The data herein is based upon an I1approximatel1 translation (by Khaled Rababa of the Customs Department) of an original Arabic document. The original document was prepared by the Ministry of Planning.

AQABA DECLARATIONS FOR TRANSIT

The sample size is 88 out of a population of 8127 for the period (i.e., 1%).

..................................................................... ..................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED OF IN DAYS BY OTHER AGENCIES

DECLARATIONS SPECIFIC NUMBER OF

% 1-2 3-6 7+ DAYS(D) *1 * 2 *3 *4 * 5 *6 *7 *8 *9 ..................................................................... ...................................................................... 39 44 39

..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY

*2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7: CUSTOMS LABORATORY *8: RSS *9: OTHER

The original data did not give details of the other agencies involved in any of the declarations. Also, there was no indication of how many of the total 88 declarations involved only Customs.

AQABA DECLARATIONS FOR RE-EXPORT




% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 * 8 *9 ..................................................................... ..................................................................... 12 19 12

..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY



AQABA DECLARATIONS FOR FREE ZONE

The sample size is 55 out of a population of 435 FOR THE PERIOD (i.e., 13%).

..................................................................... ..................................................................... QUANTITY C L E W C E PERIOD QUANTITIES PROCESSED OF IN DAYS BY OTHER AGENCIES


% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 *8 *9 ..................................................................... ...................................................................... 8 15 8

55 100 8 47@3-256D 7 15 ..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY


Original data did not give details of the other agencies involved in the 3 declarations that took from 94 to 256 days to complete. Also, there was no indication of how many of the total 55 declarations involved only Customs.

AQABA DECLARATIONS FOR BONDED WAREHOUSE




% 1-2 3-6 7t DAYS(D) *1 * 2 *3 *4 *5 *6 *7 * 8 *9 ..................................................................... ..................................................................... 3 75 3

4 100 3 ..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY



AQABA DECLARATIONS FOR AUCTION CUSTOMS


...................................................................... ..................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED OF IN DAYS BY OTHER AGENCIES


% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 * 8 *9 .....................................................................

14 67 14

21 100 14 ..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY

*2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7: CUSTOMS LABORATORY *8: RSS *9 : OTHER


AQABA DECLARATIONS FOR CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

The sample size is 395 out of a population of 32,855 for the period (i.e. 1%).



% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 * 5 *6 *7 *8 *9 ..................................................................... .....................................................................

28 7 28 12 G 2

183 52 46 13 18 37 13 4 VET

18@3+D

395 100 28 163 183 21@ 130 106 13 39 61 13 4 4-llOD ..................................................................... .....................................................................

LEGEND *1: NO OTHER AGENCY *2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7: CUSTOMS LABORATORY *8: RSS *9: OTHER (VET IS VETERINARY DEPARTMENT)

AMMAN DECLARATIONS FOR CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

The sample size is 199 out of a population of 29,133 for the period (i.e., 0.7%) . ------i-------------------------------------------------------------- ..................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED OF IN DAYS BY OTHER AGENCIES


% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 *8 *9 ..................................................................... ..................................................................... 84 42 84 43 7 1 2 9 3 2

3 7 VET

3 2 MH

4 5 lVET 4 MH

6 9 19 12MH 2MS lMIT 4VET

199 100 84 47 68@ 90 59 17 55 9 6 14 19 33 7-ll+D ..................................................................... .....................................................................

LEGEND *1: NO OTHER AGENCY *2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7 : CUSTOMS LABORATORY *8: RSS *9: OTHER (VET IS VETERINARY DEPARTMENT; MH IS MINISTRY OF

HEALTH; MS IS MINISTRY OF SUPPLY; MIT IS MINISTRY OF INDUSTRY AND TRADE)

TOTAL OF ALL DECLARATIONS FOR AQABA AND AMMAN

The sample size is 828 out of a population of 71,706 for the period (i.e., 1%).

..................................................................... ..................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED

OF IN DAYS BY OTHER AGENCIES DECLARATIONS SPECIFIC

NUMBER OF % 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 *8 *9 ..................................................................... .....................................................................

188 23 188 55 13 1 31 3 2

89 74 2 24 4 3 24 3 7 VET

2 3 3 2 3 2 MH

1 4 2 5 4 5 lVET 4 MH

VET

Legend on next page.

LEGEND *1: * 2 : *3 : * 4 : *5: *6: *7: *8: *9:

NO OTHER AGENCY DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE DEPARTMENT OF STANDARDS AT MINISTRY DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE MINISTRY OF AGRICULTURE MINISTRY OF INFORMATION CUSTOMS LABORATORY RSS OTHER (VET IS VETERINARY DEPARTMENT; MH IS MINISTRY OF HEALTH; MS IS MINISTRY OF SUPPLY; MIT IS MINISTRY OF INDUSTRY AND TRADE)

COMMENTS ON DATP. FOR CLZARANCE DECLARATIONS

Due to the ommission of the date when signing the various documents involved in a Customs Declaration, it is not possible to determine from historical data how long the document spends in each department or agency. This being the case, it is not possible to directly relate the delayed clearances (anything over 2 days) to any specific agency.

In spite of this limitation, some inferences can be made from the summary data on the number of days it took to complete the Customs Declarations, especially if the historical data is considered in light of the I1liveH data which indicates that delays (arbitrarily defined herein as a period in excess of two days) are a function of the other agency involvement.

Prior to stating inferences, it is important to note that 77% of the clearances are delayed (i.e., they ta1:e more than two days). Other agencies were involved in 360 of the 640 clearances which took more than two days for clearance.

The first inference is that 56% of the delays may have been caused by other agencies.

It should be noted that the I1livel1 data (starting on the next page) presents more detailed information showirq that approximately 40% of the delays were caused by the importers and/or brokers.

The second inference is that out of 100 clearances: 77 were delayed; 43 of the 77 were delayed due to other agencies; 31 of the 77 were delayed due to the importers and/or brokers; and, 3 were delayed due to Customs. Delays due to Customs appear to be an astonishingly low 4% of the total delays, or 3% of the total clearances.

Two final inferences of interest are: approximately 20% of all clearance declarations involved the Department of Standards; and, approximately 12% involved the Ministry of Agriculture.

NUMBER OF DAYS FOR CUSTOMS CLEARANCE

"LIVE" DATA SHOWS NUMBER OF DAYS TO CLEAIt AND THE AGENCIES INVOLVED


The first three tables are an extraction of data from the report that follows.

ALIA DECLARATIONS FOR CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

The sample size is 41. There was one export declaration checked, which cleared in one day.



% 1 2 3 4 5 DAYS(D) *1 * 2 * 3 *4 * 5 *6 *7 * 8 *9 ..................................................................... ..................................................................... 6 15 6

12 29 12@4+D 2 1 3 2MINT 1 MIT

41 100 6 6 4 25@3+D 2 1 3 ...................................................................... ...................................................................... LEGEND *1: NO OTHER AGENCY

*2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7: CUSTOMS LABORATORY *8: RSS *9: OTHER (MINT IS MILITARY INTELLIGENCE; MIT IS MINISTRY OF

INDUSTRY AND TRADE)

In the case of the llliveVV data, the delays (a delay as previously defined, is considered more than two days to complete clearance) are related to the other agencies involved. In addition to these other agency delays, 11 were delayed for the following reasons:

Six (6) declarations were delayed by the broker. This was considered a broker delay.

Three (3) declarations were delayed because the importer could not pay the duty. This was considered an importer delay.

Two (2) declarations were delayed waiting for a price list. This was considered an importer delay.

AQABA DECLARATIONS FOR CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

The sample size is 106. There were three (3) intransit declarations checked, two (2) of which were completed in one day and the third was completed in two days.

..................................................................... ...................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED


NUMBER OF % 1 2 3 4 5 DAYS(D) *1 *2 *3 *4 *5 *6 *7 *8 *9 ..................................................................... .....................................................................

106 100 0 2 26 23 17 38@ 23 12 6 1 10 4 2 6-53D ..................................................................... .....................................................................

Legend on next page.

LEGEND *1: NO OTHER AGENCY *2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7: CUSTOMS LABORATORY *8: RSS *9: OTHER (MIT@AQ IS MINISTRY OF INDUSTRY AND TRADE AT AQABA;

MS@CH IS MINISTRY OF SUPPLY AT CUSTOMS HOUSE)

In the case of the I1livev data, the delays are related to the other agencies involved. In addition to these other agency delays, 52 were delayed for the following reasons:

Twelve (12) declarations were presented with inadequate documentation. This was considered a broker and/or importer delay.

Thirteen (13) declarations were delayed by the broker. This was considered a broker delay.

Nine (9) declarations were delayed by the valuation process (i.e., the declarations were sent to Amman because the values were too low.) This was considered a Customs delay.

Five (5) declarations were delayed in getting the goods ready for inspection. This was considered a Port Authority delay.

Six (6) declarations were delayed in valuation at Aqaba, with invoices considered by Customs to have too low a value. This was considered an importer delay.

Five (5) declarations needed a letter from the importing company verifying the goods were entitled to duty-free entry. This was considered an importer delay.

One (1) declaration was delayed because the importer could not pay the duty. This was considered an importer delay.

One (1) declaration was delayed because the invoice was not correctly filled out. This was considered a broker and/or importer delay.

AMMAN DECLARATIONS FOR CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

The sample size is 6. There was one export declaration checked which cleared in one day.



% 1 2 3 4 5 DAYS(D) *1 *2 *3 *4 *5 *6 *7 *8 *9 ..................................................................... ..................................................................... 1 17 1

6 1 0 0 1 1 1 1 2 1 1 ..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY

*2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT ('USTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7: CUSTOMS LABORATORY *8: RSS *9: OTHER

In the case of the "liveIt data, the delays are related to the other agencies involved. In addition to these other agency delays, one was delayed for the following reason:

One (1) declaration was delayed because the importer needed a license. This was considered a broker and/or importer delay.

NOTE: Although the sample size is small, it is in proportion to the volume of imports handled in Amman versus Aqaba.

TOTAL DECLARATIONS FOR CONSUMPTION (INCLUDING TEMPORARY IMPORTS)

..................................................................... ..................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED


NUMBER OF % 1 2 3 4 5 DAYS(D) *1 *2 *3 *4 *5 * 6 *7 * 8 *9

........................................................................ 7 5 7

3 2m1nt 1 MIT

153 100 7 9 31 24 19 63@ 2 6 1 2 6 1 10 5 5 4-531)

......................................................................

Legend on next page. 63

LEGEND *1: *2 : *3 : *4 : *5: *6: *7: *8: *9:

NO OTHER AGENCY DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE DEPARTMENT OF STANDARDS AT MINISTRY DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE MINISTRY OF AGRICULTURE MINISTRY OF INFORMATION CUSTOMS LABORATORY RSS OTHER (MIT IS MINISTRY OF INDUSTRY AND TRADE; MS@CH IS MINISTRY OF SUPPLY AT CUSTOMS HOUSE; MINT IS MILITARY INTELLIGENCE)

COMMENTS ON "LIVE" DATA FOR CLEARANCE DECLARATIONS

The data shows that 92% of the clearances took three (3) or more days to complete. Approximately 40% (64 out of 142) of the delays appear to have been due to the importers and/or brokers, with about half of these being delays caused by the brokers accumulating clearance declarations so that they could process them in batches.

Approximately 25% of the delays appear to have been due to the Department of Standards.

NOTE: The 92% delay factor compares to the historical data delay factor of 77%.

The data herein is based upon an "approximate" translation by Khaled Rababa, of the Customs Department, of an original Arabic document prepared by the Ministry of Planning.

Final report for the Aqaba Customs House, the Alia Customs House, and the Amman Customs House:

INTRODUCTION

The second stage of the study was accomplished which consisted of taking "liveIq samples at the three Customs Houses.

The first report covers the samples at Aqaba from September 4 through September 18,1988. The second report covers the samples at Alia from September 11 through September 30,1988. The third report covers the samples at Amman from September 27 through October 3,1988.

The following are the results of the nlivell sampling of Customs Declarations done at Aqaba Customs House:

FIRST: 112 I1livel1 samples were taken at the Aqaba House. Some of them were taken from the starting point (i.e., from the time of registration until all of the Customs Declarations had been completed).

SECOND: The approach for following up the Customs Declarations:

A. Follow all the procedural steps for Customs Declarations, having no problems in getting completed.

B. Investigate the problems or agencies that caused delays in the procedures for completing the Customs Declarations.

THIRD: The most important problems causing delays in Customs Declarations are:

1. Importer delays.

A. Intentional delays. The importer might choose not to clear the goods in the local market and try to transfer them to the Free Zones until he can sell the goods either in the local market or outside the country (e.g:, sample No. 1 in which the Customs Declaration delay was one month);

B. Insufficient funds to pay the duties (e.g., sample No. 92).

C. Discrepancies in pricing or llcheatingll on the invoices presented to the Customs Department. This delayed the Customs Ileclaration in the Valuation Section to verify the stated prices and correct the invoices (e.g., sample No. 89).

NOTE: It is an observation that in the context of invoices, the word "cheating1I appears to be used when the importer's invoice value does not agree with the value considered appropriate by Cust.oms. It cannot be said that any of the sanlples actually involved cheating.

2. Insufficient documentation for Customs purposes (e.g., sample Nos 2, 21, 23, 39, 45, and 86). In this case, Customs stopped the procedures for completing the Customs Declaration until the importer brought the necessary documents.

3. Accumulation of Customs Declarations. Many brokers have a tendency to accumulate Customs Declarations which delays the first ones they receive (e.g., if the broker knows he has several Customs Declarations which will soon be given to him, then he will wait until he has all of them processed through Inspection before he submits any of them for valuation.) This is particularly true of small brokers (e.g., sample No. 2 )

Many brokers leave Customs Declarations at several places in the process even when that part of the process has been completed. This is caused by the broker having too many Customs Declarations at the same time (e.g., sample Nos 3, 4, 5, 6, 9, and 69).

Many brokers are ignorant of the Customs Regulations and the Regulations of other agencies involved in the clearance process. An example of how this causes delays is the situation when a broker stands in the Classification line only to be told that he needs to have the signature of another agency before he can have the import classified.

4. Other agencies:

Customs Declarations transferred to other agencies (Ministry of Industry and Trade, Royal Scientific Society, etc.) was considered one of the problems to delay the completion of Customs Declarations. This transferring process may be long, especially if the sample must be sent to the agencies in Amman (e.g., sample Nos 6, 18, 94, 97, and 112).

FOURTH: 1. By following live samples to estimate the time and to clarify the problems that created delays in completing the Customs Declarations, we came to this conclusion: the average time to complete the Customs Declaration in Aqaba is approximately one to two days.

Declarations could be done in one day if the goods are ready for inspection. Due to the large volume of merchandise being handled at Aqaba, there is about one day spent in getting the products from the docks to the inspection areas. Getting cleared in one day really requires the follow up by the broker. This can only be achieved if there are no requirements by other agencies.

NOTE: The stated conclusion is not verified by the data. The data shows that only 2% of clearances are completed in one to two days.

2. The average time to have the Customs Declarations processed by other agencies (when transferred from Aqaba to Amman) is one to two days for the Ministry of Industry and Trade; one to two days for the Royal Scientific Society; and, two days for the Ministry of Health. The total time can be one week.

NOTE : The data does not verify the above statement.

3. The processing of Customs Declarations quickly depends upon several variables. These are:

The type of product. The procedure will longer for food products. These products transfer to other agencies in Amman. The factor is considerably less for non-food products.

be require time

B. The broker. The broker's experience and understanding of the Customs Regulations and other agencies are important factors in completing the Customs Declarations quickly. There is a need for continuous follow up.

C. The importer. The importer may delay completing the Customs Declarations because of a low market demand and a high cost of importing. Also, Customs Declarations cannot be completed if he does not have the money to pay for the duties.

The credibility of invoice values. This will delay the process of completing the Customs Declarations. Customs may wish to increase the stated prices and if the importer does not agree, then the problem must be resolved through a committee. This might take two or more days if the importer does not agree with the committee's decision.

E. Broker follow up.

Table number 1 clarifies the results of the ''liven samples taken in Aqaba .

TABLE 1

1. Two (2) Customs Declarations out of 112 (2%) were completed in one day. The goods were pencils, correcting fluid and certain equipment. The reason for the quick clearance was because they were in-transit entries.

2. Three (3) Customs Declarations were completed in two days. The goods were fabrics and paper. One of these Customs Declarations was in-transit.

3. Twenty-six (26) Customs'Declarations (23%) were completed in three days. Seven (7) needed permission from the Department of Standards in the Customs House. One (1) needed permission from Agricultural Marketing in the Customs House.

4. Twenty-three (23) Customs Declarations (21%) were completed in four days. Three (3) needed permission from the Customs Lab. Three (3) needed permission from the Department of Standards in the Customs House. One (I) needed permission from the Department of Standards in Arman. One (1) needed permission from the Ministry of Agriculture in Aqaba. One (1) needed the permission of Military Intelligence in Aqaba.

5. Seventeen (17) Customs Declarations (15%) were completed in five days. Four (4) needed permission from the Department of Standards in the Customs House. Two (2) needed permission from Agricultural Marketing in the Customs House. Two (2) needed permission from the Customs Lab.

6. Four (4) Customs Declarations (4%) were completed in six days. One (1) needed permission from the Customs Lab. One (1) needed permission from the Department of Standards in Amman.

7. Five (5) Customs Declarations were completed in seven days. One (1) needed permission from the Department of Standards in the Customs House. Two (2) needed permission from the Department of Standards in Amman. One (1) needed permission from the Ministry of Supply in the Customs House.

8. Ten (10) Customs Declarations were completed in eight days. Two (2) needed permission from the Department of Standards in the Customs House. Two (2) needed permission from the Department of Standards in Amman. One (1) needed permission from the Customs Lab. One (1) needed permission from Agricultural Marketing.

TABLE 1

9. Seven (7) Customs Declarations were completed in nine days. Six (6) needed permission from the Department of Standards in Amman. Three (3) needed permission from the Customs Lab. Three (3) needed permission from the Royal Scientific Society. Two (2) needed permission from Agricultural Marketing.

Thirteen (13) Customs Declarations took longer than nine days to complete. One (1) was completed in 31 days (parts for big lorries). Two (2) were completed in 13 days (ceramic tiles and clothes). Three (3) were completed in 15 days (mobile homes, refr-igerator parts, and kids' toys) . Two (2) were completed in 11 days (spare parts and water filters). One (1) was completed in 16 days (lorry). One (1) was completed in 12 days (newspaper). One (1) was completed in 17 days (filter). One (1) was completed in 53 days (musical instruments). 69

The following are the results of the l1livel1 sampling of Customs Declarations done at Alia Customs House:

FIRST: Thirty-one (31) samples were done. One (1) of them was a Customs Declaration for export to Qatar. The other samples were for consumption.


A. Follow all the procedural steps for Customs Declarations from the time of registration until the goods were cleared.

B. Investigate which samples needed permission from other agencies outside the Alia Customs House.

THIRD: Results and recommendations:

The procedures in Alia were necessary procedures. There does not appear to be any problems in completing the Customs Declarations.

There is no way to reduce the procedures in any stage because.every stage is needed for the following stage.

There was one sample taken of an Export Declaration. All of the Export Declarations are completed in one day; it usually does not take more than three (3) hours.

Six (6) Customs Declarations out of thirty (30) were completed in one day. These were done in one day because of broker follow up.

Six (6) Customs Declarations were completed in two days. Four (4) needed three days because the broker was following up other Customs Declarations.

Thirteen (13) Customs Declarations took more than three days to complete. One (1) was delayed because it needed the price list from the export country which took two weeks.

The percentage of Customs Declarations which needed four or more days to complete was 40%. One (1) was transferred to the Amman Customs House to get the product (auction) Customs fee. Two (2) needed permission from Military Intelligence. One (1) was delayed one week because it needed permission from the Ministry of Information and the Ministry of Industry and Trade. Two (2) needed permission from the Department of Standards in Amman. One (1) needed a price list from the country of origin. Also, Customs ~eclarations for meats take about 15 days because there are many agencies involved.

FOURTH: Some problems in completing the Customs Declarations are:

1. The importer.

Insufficient funds to the duties.

Discrepancies product valuation with Customs.

C. "Cheating" on invoices. This usually stops the Customs Declaration process until the importer brings Customs a price list or telex.

2. Military Intelligence staff:

This individual is available only two days per week at the airport. There is no replacement designated in his absence. There is a need to have him work all week.

3. The broker:

Many times the broker will be pursuing too many Customs declarations at the same time (e.g., he leaves a Customs Declaration in one section to finish another Customs Declaration.) Many times the broker has too much work to do.

4. Other agencies:

The need to obtain permission from other agencies and the transfer of the Customs Ceclarations to other agencies will delay completing the procedures. The percentage of Customs Declarations needing other agency approvals were: 6.6% needed permission from the Ministry of Agriculture; 10.0% needed permission from the Department of Standards; and, 3.3% needed permission from the Ministry of Information. Additionally, there were other Customs Declarations which needed to get previous permission before importing (e.g., permission to import drugs from the Ministry of Health).

The following are the results of the lllivell sampling of Customs Declarations done at Amman Customs House:

FIRST: Seven (7) samples were done.


Follow all the procedural steps for Customs Declarations from the time of registration until the goods were cleared.

THIRD: Results and recommendations:

A. All of the Export Declarations are completed in one day, taking two (2) to three (3) hours. This is provided all of the documents are available with the Export Declaration and if there is good broker follow up.

B. One (1) Consumption Declaration No. 8018/2086, dated 10-02-88, was completed in one day. The product was fertilizers, and the importer brought the previous permission and bill of lading from the Ministry of Agriculture. Also, fertilizers are free of duty. This was another factor which resulted in its being completed in one day. The main reason was broker follow up. Also, Declaration 33378 to Iraq was completed in one day, but it was an Export Declaration.

C. One (1) Customs Declaration 8127/448, dated 10-03-88, was completed in two days. This should have been completed in one day but, because the broker was doing other Declarations in the Inspection area, it was delayed.

D. One (1) Customs Declaration 1l3092/7303, dated 09-27-88, was completed in three days. It was delayed because the importer did not have an import license. The importer did not bring the import license for two days.

E. One (1) Customs Declaration No. 18093/73012, dated 09-27-88, was completed in four days. The cause of the delay was due to the Stardards Department at the Ministry of Trade. The product was cologne, but they (Standards) said it was an imitation of an international trademark. After three days the Department of Standards said it was not an imitation product.

F. One (1) Customs Declaration No. 7948/7310 was delayed for one day in the Valuation section because the prices were not correct. This Declaration ended up in a committee.

G. One (1) Customs Declaration No. 18082/1963, dated 09-27-88, was completed in five days. The product was parsley. It took two days in the Customs House where it should have taken only one day. It was delayed until the radiation test was received from the Royal Scientific Society. The actual test requires only thirty (30) minutes, but the administrative procedures take the whole day. After that, the procedures were completed and the goods were cleared under a conditional release until the importer could get the lab results from the Ministry of Health for human consumption. This took two days.

Recommendations for all three reports:

One of the biggest problems causing delays is transferring the Customs Declarations to other agencies for various permissions. These other agencies are the biggest part of the problem. In order to solve this problem, we have to consolidate the required agencies in one department at the Customs Houses and do all of the lab testing in one location. This department should have all the necessary equipment and full delegation of authority. Referral to other agencies should be on an "exceptions onlyM basis.

2. Other agency representatives are not located at the Customs Houses. Some examples follow:

A. The Ministry of Industry and Trade should have a section at the Customs Houses for following up on import licenses, issuing import licenses to the importers who need them, as well as solving all the other problems involving licenses. They should solve the problems of differences in names and product values.

B. A representative from Military Intelligence should be at the Customs Houses every working day instead of just two days per week.

C. A representative from the Ministry of Information Press Department should be available to clear books and video tapes.

3. The Customs broker is always concerned to get as much as possible for the fees charged . Therefore, he follows up more than one Customs Declaration usually by leaving one in a section while following up on Declarations in other sections. This causes delays.

Some brokers are lacking in qualifications, especially in understanding the Regulations. Some of them do not have offices and this is a problem. We should evaluate these companies and let them take part in training seminars in the clearance process. We should also require the new brokers to take examinations under the supervisjon of Customs.

4. Customs questions the credibility of the importer. In the case of pricing discrepancies, the importer should bring invoices with the true prices. Additionally, the Chamber of Trade and the Chamber of Industry should take the initiative in advising these importers to give true invoices to Customs. This will facilitate completing the Customs Declarations quickly. We need good cooperation between the private and public sectors.

5. There should be training seminars for Customs employees in the fields of Classification, Valuation, and Inspection to increase their efficiency and productivity.

NUMBER OF DAYS TO OBTAIN IMPORT AND EXPORT LICENSES

HISTORICAL.DATA SHOWS THE AGENCIES INVOLVED


The data herein is based upon an llapproximatelt translation (by May of the Ministry of Planning) of an original Arabic document. Only summary data is discussed herein, and the original document contains more details.

EXPORT LICENSE APPLICATIONS

The sample size is 193 out of a population of 7,147 for the period i.e., 2.7%).

QUANTITY APPROVAL PERIOD QUANTITIES PROCESSED OF IN DAYS BY OTHER AGENCIES

APPLICATIONS SPECIFIC NUMBER OF

% 1 2 3 4 5 DAYS(D) *1 *2 *3 *4 *5 6 *7 ..................................................................... ..................................................................... 193 100 193 60 53 21 6 2 4 40 ...................................................................... ......................................................................

LEGEND *1: NO OTHER AGENCY *2: DEPARTMENT OF STANDARDS *3: DEPARTMENT OF INDUSTRY *4: CENTRAL BANK *5: NATURAL RESOURCES *6: DEPARTMENT OF AGRICULTURE *7: OTHER

NOTES: 1. Some went to more than 1 agency.

2. Distribution of flotherIt: 40 to Trade Center.

The data shows that 100% of the export license applications were approved on the same day as they were initiated. Further, 31% required only the approval of the issuing department, and 69% were processed at the Ministry of Industry and Trade within the same building.

The data appears to contradict the large number of questionnaire comments (54 of comment number 2.) which indicated that it is I1too complicated to get other authorities for export licenses.11

Some factors to consider here are:

1. Although the process can be done in one day within one building for the majority of the cases, it does require a person to llwalkll the application thrcilgh the process. There were 54 of comment number 4. in the questionnaire which stated that "there should be no need for an export license.I1 This indicates that certain members of the exporti.ng community do not consider that there is a benefit to the licensing process.

2 . The p rocess may be p o t e n t i a l l y u s e f u l i n p reven t ing problems a t t h e t i m e of expor t ( e .g . , being n o t i f i e d by t h e Department of S tandards and t h e Cen t ra l Bank of t h e c o r r e c t requirements f o r expor t ing ) .

3 . There may a l s o be a need f o r expor t c o n t r o l s on c e r t a i n s t r a t e g i c products (products i n I tshort s u p p l y n ) . However, t h i s c o n t r o l could be r e a l i z e d by r e q u i r i n g an expor t l i c e n s e f o r j u s t t h e s e products .

IMPORT LICENSE APPLICATIONS

The sample size is 498 out of a population of 16,000 for the period (i.e., 3%).

..................................................................... ..................................................................... APPROVAL PERIOD QUANTITIES PROCESSED

QUANTITY IN DAYS BY OTHER AGENCIES OF SPECIFIC

APPLICATIONS NUMBER OF % 1 2 3 4 5 DAYS(D) *1 *2 *3 *4 *5 *6 *7 ..................................................................... .....................................................................

381 77 381 344 10 4 17 note 2

48 1 2 1 5 note 3

5 note 4

11 1 Min Tel

6 note 5

2 0 2@6D 2 note 5

1 0 1@7D 1 note 5

1 0 l@lOD 1 note 5

2 0 2@12 1 1 Min H

11 2 11@13 to 52 days. See note 5

498 100 381 57 25 12 6 17'3 430 1 15 5 29 6-52D ..................................................................... .....................................................................

LEGEND *1: NO OTHER AGENCY *2: DEPARTMENT OF STANDARDS *3: DEPARTMENT OF INDUSTRY *4: CENTRAL BANK *5: NATURAL RESOURCES *6: DEPARTMENT OF AGRICULTURE *7: OTHER

NOTES: 1. Some went to more than one agency.

2. Distribution of "otherw: 8 to Ministry of Supply; 2 to Ministry of Health; 2 to the University of Science and Technology; 1 to the Electrical Authority; 1 to the Water Authority; 1 to Military Intelligence; 1 to Customs; and 1 to Ministry of ~elecommunications.

3. Distribution of "otherl1: 2 to the Ministry of Health; 2 to Military Intelligence; and 1 to the Ministry of Supply

4. Distribution of Itother": 2 to the Ministry of Supply; 2 to the Water Authority; 1 to Ministry of Health.

5. These applications were for praducts that were similar to those for which licenses were issued in one to two days. It appears that the importers themselves delayed the license application process in these cases.

The data shows that 76% of the import license applications are approved on the same day as they are initiated. Further, 69% of the licenses approved in one day required only the approval of the issuing department and 93% were approved at the Ministry of Industry and Trade within the same building (i.e., the process was completed within the same building.)

The data appears to contradict the large number of questionnaire comments ( 99 of comment number 1. and 137 of comment number 2.) which indicated that there is Ittoo much red tape in getting an import licenseI1 and that it is Ittoo complicated to get other authorities for import and export licenses.11

Some factors consider here are:

1. Although the process can be done in one day within one building for the majority of the cases, it does require a person to Itwalk" the application through the process.

Is this expenditure of effort, plus the cost of the administration of the licensing department, worth the results achieved by the process? If the answer is that the major result achieved is the 5% fee, then this could alternatively be achieved by collecting the 5% during the import clearance process. If the answer is that there are other than revenue results achieved, then the benefits of these other results will have to be compared to the costs involved in maintaining a licensing process.

2. There is little question that the import licensing process provides a mechanism for controlling imports that is more efficient than simply not allowing irport clearance of goods that are landed in the country. The question is how volatile will the initiation and cancellation of "banned importstt become in the near future? Without the licensing process there could be problems with landed goods being refused clearance and this could be disruptive to the commerce of the country.

QUESTIONNAIRE

Although there were many private and public sector individuals interviewed, it was considered that input was required from a broader range. To accomplish this, a questionnaire was developed and distributed to the private and public sectors. The completed questionnaires returned were: 500 from importers; 250 from exporters; 50 from brokers; and, 20 from Customs employees.

The issues raised in the questionnaire, a tabulation of these issues, and an analysis are contained in the following twenty one (21) pages.

ANALYSIS OF QUESTIONNAIRE DATA

QUESTIONNAIRES WERE COMPLETED BY:

IMPORTERS 500

EXPORTERS 250

BROKERS 50

CUSTOMS EMPLOYEES 20

TOTAL 820

The following llapproximatell translation of the comments from the questionnaires was done by Mr. Eyad Kodah of the Ministry of Planning.

1. Too much red tape for getting import and export licenses. 2. Too complicated to acquire other agency approvals for import

and export licenses. 3. Too difficult to make changes to the import and export

licenses. 4. No need to get an export license. 5. Sample approval is required for fertilizers before getting

approval for Letter of Credit (LC). 6. Must authenticate the Certificate of Origin in the same

town as the product is produced . This is a problem when the certificates are signed by a headquarters not in the manufacturing location.

7. Cannot get an LC unless it can be shown that the funds are originating from outside of the country.

8. The 5% license payment must be paid every 12 months for deferred payments.

9. Approval of the Central Bank (which takes 2 weeks) for installment payments is needed, even ;?or product that will be subsequently exported.

10. Need 2 weeks for Central Bank to approve transaction if you do not have an import license.

11. Jordanian manufacturers are not adequately protected by the Chamber of Industry due to their practice of signing Jordanian certificates of Origin when there is less than 40% Jordanian content.

12. Too many forms for Country of Origin. 13. Approval period for established medicines is too long. 14. Department of Standards statement on LCs is a problem. 15. Must pay a 10% guarantee for exported products that the

foreign customer will pay within 2 months. This is a problem when shipping to distributors who do not pay until they sell the products. Chapter 13, article 88, para b. of the Central Bank exchange regulations covers this.

16. Same as comment 15. with the additional point that if the Jordanian exporter does not get paid then he loses the guarantee (e.g., spoiled food products).

17. Lack of trust between the private and public sectors, especially with Customs.

18. Too much time taken to clear samples at the Royal scientific Society.

19. Radiation checks must be done in Amman while 90% of the products requiring the check are imported through Aqaba.

20. Lack of competent Customs brokers. 21. Multiple checks of food imports by different agencies. 22. Customs is using the Harmonized System without training their

personnel. 23. Too many samples are sent from Aqaba to the Department of

Standards in Amman. 24. Must take documents for controlled price items to the

Ministry of Supply in Amman.

Must change the Declaration if the name of the exporter is not the same on the Customs Declaration as it is on the LC. Approximately 90% of the import invoice values are increased. The 150 fils per ton fee must be paid in Amman, even when importing through Aqaba. Department of Standards repeatedly checks the same imported product from the same exporter. The motive for working in the Customs Department is to get rewards from the "cases. tt The same product can be valued differently depending on the mood of Customs. Disagreement in product valuation. When the importer does not agree with the Customs valuation, then there is a committee convened. This takes too long (approximately 1 week). The Customs Department has no authority over other agency personnel at the Customs House. Also, these other agency personnel have very little authority to make decisions. The import and export clearance and inspection can result in damage to the product. Customs generally mistreats product during inspection. There are too many brokers. The brokers are not adequately trained on the Harmonized System and this affects their efficiency. Certain types of products should be cLeared only in Amman. Also, sometimes samples can be cleared only in Amman. For certain food products the Department of Standards does a test after the Department of Agriculture has done a test. When using the drawback system, there is no refund of the drawback fee. NOTE: Since the questionnaires were completed, the drawback

regulation has been significantly improved. There are times when a Jordanian expert manufacturer has to use Jordanian materials that are morE expensive and/or of a lesser quality than imported materials. All temporary and exempt imports must be approved in Amman, even when importing through Aqaba. The Port Authority at Aqaba take too long to unload, especially when using the floating dock. Customs does not release the guarantee for temporary imports until the exporter produces the form signed by the foreign Customs. The office at Aqaba that controls the. truck access to the Port closes at 1 p.m. Cannot do a temporary import for products that are similar to those made in Jordan. Cannot do a temporary import for exempt product, thus paying 7.5% for the license fee and other charges not applicable to temporary imports. Government employees do not care about the ordinary people. Procedures for import and export clearance are too complicated. Many importers are trying to smuggle. The maximum value allowed for commercial samples is too small.

The fees for the Chamber of Commerce and the Trade Centers are too high. Products stored in Customs warehouses are mistreated. Customs requires importers to produce English invoices and then does not use them. Commercial invoices must be stamped with the country of origin. Breaking bulk for containers takes a long time. Need special storage for temporary imports. The Chamber of Industry fees are too high for the Certificates of Origin. The loading, unloading, and transport fees are too high at Aqaba due to the Port's monopoly. Customs duty is too high. Customs classifiers and inspectors do not understand the products they are dealing with. Fees on certain duty-free and low duty items are too high. An exporter is allowed only 48 hours after Customs inspection to have the goods cross the border. Some inspection equipment is available only at Aqaba. There is too high a guarantee for temporary and drawback imports. The coefficients for temporary imports are misjudged by the committee. The requirement by the Department of Standards to have labels in Arabic.

The following table shows the quantity of questionnaire comments by five categories. The comments are available in Arabic from Mr. Eyad Kodah at the Ministry of Planning.

TABLE 1

IMPORT EXPORT CLEARANCE

IMPORT CLEARANCE FOR: CLEARANCE FOR : EXEMPT

COMMENT IMPORT EXPORT FOR : EXPORT TEMPORARY NUMBER LICENSE LICENSE CONSUMPTION REEXPORT DRAWBACK TOTAL ..................................................................... ......................................................................

TABLE 1 ( c o n t i n u e d )

..................................................................... ..................................................................... IMPORT

EXPORT CLEARANCE IMPORT CLEARANCE FOR:

CLEARANCE FOR : EXEMPT COMMENT IMPORT EXPORT FOR : EXPORT TEMPORARY NUMBER LICENSE LICENSE CONSUMPTION REEXPORT DRAWBACK TOTAL ..................................................................... .....................................................................

T o t a l s 222 229 727 70 50 1298

Percen t 17.1% 17.6% 56.0% 5.4% 3.9% 100.0% ..................................................................... .....................................................................

Eliminate all of the comments that are less than 1% of the total AND are also less than 1% within the category. This will eliminate the following comments referenced in pages 82-84:

7. Cannot get an LC unless it can be shown that the funds are originating from outside of the country.

8. The 5% license payment must be paid every 12 months for deferred payments.

9. Approval of the Central Bank (which takes 2 weeks) for installment payments is needed, even for product that will be subsequently exported.

13. Approval period for established medicines is too long.

24. Must take documents for controlled price items to the Ministry of Supply in Amman.

25. Must change the Declaration if the name of the exporter is not the same on the Customs Declaration as it is on the LC.

27. The 150 fils per ton fee must be paid in Amman, even when importing through Aqaba.

35. The brokers are not adequately trained on the Harmonized System and this affects their efficiency.

37. For certain food products, the Department of Standards does a test after the Department of Agriculture has done a test.

39. There are times when a Jordanian export manufacturer has to use Jordanian materials that are more expensive and/or of a lesser quality than imported materials.

41. The Port Authority at Aqaba takes too long to unload, especially when using the floating dock.

43. The office at Aqaba that controls the truck access to the Port closes at 1 p.m.

44. Cannot do a temporary import for proaucts that are similar to those made in Jordan.

45. Cannot do a temporary import for exempt product, thus paying 7.5% for the license fee and other charges not applicable to temporary imports.

49. The maximum value allowed for commercial samples is too small.

52. Customs requires importers to produce ~nglish invoices and then does not use them.

5 3 . Commercial invoices must be stamped with the country of origin.

5 4 . Breaking bulk for containers takes a long time.

60. Fees on certain duty-free and low duty items are too high.

64. The coefficients for temporary imports are misjudged by the committee.

NOTE: Comments 8, 9, 39, 44 and 4 5 were raised during the initial interviewing process; they were not addressed by anyone completing the questionnaires.

The elimination of these comments changes Table 1 to that shown as Table 2. This table includes the percentage that each comment represents within the categories.

TABLE 2 ..................................................................... ..................................................................... IMPORT

EXPORT CLEARANCE IMPORT CLEARANCE FOR :

CLEARANCE FOR : EXEMPT COMMENT IMPORT EXPORT FOR: EXPORT TEMPORARY NUMBER LICENSE LICENSE CONSUMPTION REEXPORT DRAWBACK TOTAL ..................................................................... ..................................................................... 1 92(43.0%) 6( 2.8%) 1( 1.4%) 99 2 82 (38.3%) 54 (25.2%) 1( 1.4%) 137 3 17( 7.9%) 9( 4.2%) 26 4 54 (25.2%) 54 5 2( 0.9%) 2 6 9( 4.2%) 2( 0.9%) 7( 1.0%) 18 10 2( 2.9%) 2 11 ll( 5.1%) 11 12 2( 0.9%) 1( 1.4%) 3 14 7( 3.3%) 11( 1.6%) 18 15 62 (30.0%) 12 (17.1%) 74 16 2( 2.9%) 2 17 75(11.2%) 3(4.3%) 2( 4.0%) 80 18 15( 2.2%) 1( 2.0%) 16 19 13( 1.9%) 13 20 1( 1.4%) 1 21 3 ( 1.4%) 28(4.2%) 1( 1.4%) 32 22 24( 3.6%) _ 3 ( 6.0%) 27 23 48( 7.2%) 1( 2.0%) 49 26 166(24.9%) 3(4.3%) 3( 0.6%) 172 28 2(0.9%) 24(3.6%) 1( 1.4%) 27 29 6( 0.9%) 1( 1.4%) 2(4.0%) 9 3 0 62( 9.3%) 2( 2.9%) 3 ( 6.0%) 67 3 1 1( 2.0%) 1 32 2( 0.9%) 17( 2.5%) 33 32( 4.8%) 34 3 6 28( 4.2%) 38 40 42 46 4( 1.9%) 47 55( 8.2%) 48 50 4( 1.9%) 51 13( 1.9%) 55 56 2( 0.9%) 57 6( 0.9%) 58 2( 0.9%) 14( 2.1%) 59 24( 3.6%) 61 62 63 65 T o t a l s 214 214 668

The following Table 3 shows the Table 2 data, with the comments sorted by descending number of occurrences:

TABLE 3

COMMENT QUANTITY COMMENT VALUE CUMULATIVE NUMBER OF COMMENT AS % OF TOTAL PERCENTAGE ................................................................ ................................................................

26 172 14.1 14.1 2 137 11.3 25.4 1 99 8.1 33.5

17 80 6.6 40.1 15 74 6 . ;- 46.2 47 74 6.1 52.3 30 67 5.5 57.8 4 54 4.4 62.2

23 49 4.0 66.2 33 44 3.6 69.8 2 1 32 2.6 72.4 3 6 30 2.5 74.9 22 27 2.2 77.1 28 27 2.2 79.3 59 27 2 . 2 81.5 3 2 6 2.1 83.8-

32 2 1 1.7 85.2 6 18 1.5 86.7

14 18 1.5 88.2 58 18 1.5 89.7 18 16 1.3 91.0 51 15 1.2 92.2 19 13 1.1 93.3 11 11 0 . I) 94.2 29 9 0 . 7 94.9 57 7 0.6 95.5 42 6 0.5 96.0

63 6 0.5 96.5 40 5 0.4 96.9 61 5 0.4 97.3 46 4 0.3 97.6 50 4 0.3 97.9 12 3 0.3 98.2 62 3 0 . 13 98.5 5 2 0.2 98.7

10 2 0.2 98.9 16 2 0.2 99.1 56 2 0.2 99.3 20 1 0.1 99.4 31 1 0.1 99.5 34 1 0.1 99.6 38 1 0.1 99.7 48 1 0.1 99.8 55 1 0.1 99.9 65 1 0.1 100.0

Total 1216

It can be seen that the 16 comments with the highest numeric values represent 83.8% of the total 45 conunents. These fftoplf 16 comments cover all of the numerically significant comments within the 3 categories relating to exporting (export license, export clearance for export or re-export, and import clearance for temporary imports), with the exception of comment numbers 11, 40, 42, 61, and 63.

Due to the importance of the exporting related activities, the bftoplf 16 comments plus the latter 5 shall be highlighted in this study.

Subsequent analysis of the questionnaire data shall be restricted to these 21 comments. These comments shall henceforth be referred to as the "significant commentsn or the "significant comment number^.^' This set of numbers is: 1; 2; 3; 4; 11; 15; 17; 21; 22; 23; 26; 28; 30; 33; 36; 40; 42; 47; 59; 61; and 63.

Table 4 shows the significant comment numbers for the category Mimport licensern in descending number of occurrences:

TABLE 4

COMMENT NUMBERS :

QUANTITY :

PERCENT OF CATEGORY: 43 38 8 1 ................................................................... ................................................................... Does questionnaire data correlate to:

1. Historical samples?

Approximately 9 3 % are completed in one day at the Ministry of Industry and Trade. This data appears to contradict the questionnaire data.

2. Initial interviews?

The questionnaire comments place more emphasis on the import licensing process than did the initial interviews.

NOTE: All of the answers to the questions following Tables 4 through 8. are a distillation of discussions held with the public sector. These are not verbatim answers.

Questions for Ministry of Industry and Trade:

Comment No. 1: What are the views of the Ministry?

Answer: The need to get other agency approvals is what makes the process bureaucratic.


Answer: Agree that there should be a none-stop" service provided by the Department of Trade.

Comment No. 3 : What are the steps involved in changing a 1 icense?

Answer:

General.

Answer:

Can make most changes without any problems. Must make these changes at the Department of Trade in Amman.

For other than strategic and prohibited goods, what would be the negative impact, if any, of eliminating the need for import licenses?

With the exception of some items, there would be no negative impact to eliminate the' import licenses. It is estimated that 20% of the current products should be controlled by license. 92

Table 5 shows the significant comment numbers for the category "export license," in descending number of occurrences.

TABLE 5 ................................................................... ...................................................................

COMMENT NUMBERS: 15 2 4 11 3 1

QUANTITY : 62 54 54 11 9 6

PERCENT OF CATEGORY: 32 27 27 6 5 3 ................................................................... ................................................................... Does questionnaire data correlate to:


100% of the export licenses are approved in one day. This data appears to contradict the questionnaire data.


The questionnaire comments place more emphasis on the export licensing process than did the initial interviews.

Questions for Ministry of Industry and Trade:


Answer : Same as answer under Table 4.

Comment No. 4: For other than strategic and short supply goods, what would be the negative impact, if any, of eliminating the need for export licenses?

Answer: Export licenses could be eliminated for almost all products with no negative effect. An exception would be subsidized products such as sugar.

Comment No. 3: What are steps involved in changing a license?

Answer: Same as answer under import licensing.

Questions for the Central bank:

Comment No. 15: What are views of the Cenrral Bank?

Answer: The period can be extended if requested.

Questions for the Chamber of Industry:

Comment No. 1: What are the views of the Chamber?

Answer : Chamber monitors as best as it can.

Table 6 shows the significant comment numbers for the category llimport clearance: for con~urnption,~~ in descending number of occurrences.

TABLE 6 ................................................................... ...................................................................

COMMENT NUMBERS : 26 17 30 47 23 33 21 36 22 28 59

QUANTITY : 166 75 62 55 48 32 28 28 24 24 24

PERCENTOF CATEGORY: 29 13 11 10 9 6 5 5 4 4 4 ................................................................... ................................................................... Does questionnaire data correlate to:

1. Live samples?

Yes. Data shows that 92% of import clearances take more than two days to complete.


Yes. Data shows that 96% of import invoices are increased by Customs and that 77% of the import clearances take more than two days to complete.


Yes. Both agree that procedure is too complicated and that most import invoices are increased by Customs.

Questions for Customs Department:

Comment No. 26: After reviewing the sample data showing a very high percentage of uplifts, what are the views of Customs?

Answer: It is considered that mosc of the increases in the 1% to 10% range (47% of the total increases) are due to the use of incorrect currency exchange rates and F.0.B pricing being used instead of C.I.F. Many of the remaining increases are justified because the data in the Customs files indicate that the import invoice pricing is below the standard pricing. There may be some cases of values being incorrectly increased, but this is not done routinely.

Comment No. 17: After reviewing the preliminary report, what are the views of Customs?

Answer: There is definitely a lack of mutual trust. Customs has experience which indicates that as few as 15% to 20% of the importers/exporters can be trusted in the matter of invoice pricing.

It should be noted that this percentage is increasing not decreasing. Good trend.

Comment

Answer:

No. What are the views of Customs?

Although the valuation personnel use data files and experience in world pricing, there is a degree of subjectivity in the valuation process. This does result, in a small number of instances, in different values being assessed on the same product.

Comment No. 47: After reviewing the sample data, what are the views of Customs?

Answer : Yes, procedures can be complicated. This is most often caused by the other agencies involved and the lack of authority that the representatives of these agencies have at the Customs Houses.

Comment

Answer:

No. What are the views of Customs?

The Customs inspectors do not open boxes for inspection. This is done by the broker or a representative of the importer. Inspectors do not routinely mistreat goods.

Comment No. 36: What are the views of Customs?

Answer :

Comment

Answer:

No.

This is necessary because some products must be processed by experts in Amman.

What are the views of Customs?

This is not true. Training has been provided by Customs to both public and private sectors.

Comment No. 59: Do inspectors and classifiers lack the product knowledge?

Answer : There is an ongoing training program for these personnel.

Questions for the Department of Standards:

Comment No. 23: After reviewing the sample data, what are the views of the Department of Standards?

Answer: Samples are sent to Ammar! because the equipment required for testing is in Amman. It would be very expensive to duplicate this equipment at Aqaba. The department will pursue the possibility of moving some of the equipment to Aqaba. The department will also pursue getting the radiation testing done in Aqaba. 95

Comment No. 21: What are the views of the Department of Standards?

Answer: This is required by law. Suggest that all of these tests be performed by the Department of Standards.


Answer : The department is working on extending time periods between inspections (e.g., for some electrical products it is now four months for products from the same manufacturer.)

Table 7 shows the significant comment numbers for the category I1export clearance for: export and/or re-exp~rt,~ in descending number of occurrences:

TABLE 7 ....................................................................

COMMENT NUMBERS: 47 15 33 17 26 30 36 59 63 1 2 21 28 40 42 61

QUANTITY :

PERCENT OF CATEGORY:25 21 16 5 5 4 4 4 4 2 2 2 2 2 2 2 --

Does questionnaire data correlate to:

1. Live samples?

No. Data indicated that export clearance is reasonably easy and usually completed in 1 day.


Same remark as for lllive" samples.


Yes. Data correlates.

Questions for Customs Department:


Answer: Same as for import clearance.





Comment No. 26: Why would export invoices: be uplifted?

Answer: Because the exporter understates in order to minimize the bank guarantee.

Comment No. 30: Why would Customs change export invoice values?

Answer : Same as answer to comment No 26. above.


Answer: Guarantee needed to cover potential liability.

Comment No. 40: Why can this not be changed?

Answer: Customs is in the process of providing this authority to all of the Custom Houses.


Answer: Need proof that the goods left the country.

Comment No. 61: Why can this period not be extended?

Answer: This period can be extended if requested by the exporter.

Questions for the Central Bank:

Comment No. 15: Why can the two-month period not be extended, especially for consignment sales?

Answer: Same answer as for export licensing.

Questions for the Department of Standards:



Table 8 shows the significant comment numbers for the category I1import clearance for: exempt and/or temporary and/or drawback," in descending number of occurrences:

TABLE 8 ................................................................... ...................................................................

COMMENT NUMBERS : 42 47 40 61 63 22 26 30 33 17 23 59

QUANTITY : 5 5 4 4 4 3 3 3 3 2 1 1

PERCENT OF CATEGORY: 13 13 11 11 11 8 8 8 8 5 3 3 ................................................................... ................................................................... Does questionnaire data correlate to:

1. Live samples?

Did not identify these

Historical samples?

categories separately.

Did not identify these categories separately.


Initial interviews did not place any separate emphasis on these categories.

Table 9 shows the total significant comments by agency, by descending number of occurrences of the total number of significant numbers for the five (5) categories. The bracketed numbers are the agency percentages of significant comments relative to the category.

TABLE 9

................................................................... ------------------------------------------------------------------- IMPORT

EXPORT CLEARANCE IMPORT CLEARANCE FOR :

CLEARANCE FOR : EXEMPT COMMENT IMPORT EXPORT FOR: KXPORT TEMPORARY NUMBER L I C E N S E L I C E N S E CONSUMPTION REEXPORT DRAWBACK TOTAL ------------------------------------------------------------------- ------------------------------------------------------------------- CUSTOMS 4 (2) 8 (4) 473 (82) 28 (67) 37 (95) 550(52) TRADE 108 (54) 61(31) 3 (1) 0 (0) 0 (0) 172 (16) STANDARDS 12 (6) lO(5) 71(12) 1(2) 1(3) 95 (9) CEN BANK 1 (1) 61(31) 0 (0) 11 (26) 0 (0) 73 (7) INDUSTRY 17 (9) 24(12) 5(1) 0 (0) o(0) 46 (4) SUPPLY 16 (8) 6(3) 4 (1) 0 (0) 0 (0) 26(2) AGRICULT 17 (9) 4 (2) 4 (1) 0 (0) 0 (0) 25(2) T R A D E C E N 2 (1) ll(5) 0 (0) 1(2) 0 (0) 14(1) P O L I C E 13 (7) 1(0) 0 (0) 0 (0) 0 (0) 14(1) R S S 0 (0) 1(0) 7(1)* 0 (0) 0 (0) 8(1) C O F I N D 0 (0) 8 (4) 0 (0) 0 (0) 0 (0) 8 (1) HEALTH 1 (1) 1(0) 3 (1) 0 (0) 0 (0) 5(1) A L L I N S T ' S 0 (0) 2 (1) 3 (1) 0 (0) 0 (0) 5(1) VETERINARY 2 (1) 1(0) 1 (0) o(0) 0 (0) 4 (0) M I L I N T E L 0 (0) o(0) 3(1) 0 (0) 0 (0) 3 (0) C I V DEF 2 (1) o(0) o(0) 0 (0) 0 (0) 2 (0) TELECOM 2 (1) o(0) o(0) 0 (0) 0 (0) 2 (0) C O F COM 0 (0) 2 (1) 0 (0) 0 (0) 0 (0) 2 (0) BROKERS 0 (0) 0 (0) 1(0) 0 (0) 1(3) 2 (0) MIN O F I N F 2 (1) o(0) o(0) 0 (0) O ( 0 ) 2 (0) MARKETING 0 (0) 1(0) 0 (0) 0 (0) 0 (0) 1(0) POSTAL 0 (0) 0 (0) 0 (0) 1(2) 0 (0) 1(0) MARITIME 0 (0) 0 (0) 0 (0) ** o(0) 0 (0) 0 (0)

Totals 199 202 578 42 39 1060 ......................................................................

* Due to the development of the "significant numbers,If this value does not include 10 comments that the radiation check should be done in Aqaba, not in Amman.

** Due to the development of the "significant number^,^^ this value does not include 6 comments that the Aqaba Port Authority is too slow in unloading merchandise, especially when using the floating dock.

The questionnaire considered 26 product categories, and the following 4 represents 91% of the total comments (not constrained to significant comments as previously defined); the other 22 product categories had only 1% or less of the comments.

................................................................... .................................................................... PRODUCT NUMBER OF PERCENTAGE CATEGORY DESCRIPTION COMMENTS OF TOTAL ....................................................................... 26 ALL OTHER PRODUCTS 985 76 14 FOOD SUBJECT TO PRICING 122 9 20 COMPUTER AND FACSIMILE 42 3 23 CHEMICAL PRODUCTS 37 3 ................................................................... ...................................................................

A complete list of the product categories is as follows:

.................................................................... .................................................................... PRODUCT CATEGORY DESCRIPTION ...................................................................

1. Non-fresh agriculture. 2. Fresh agriculture. 3. Charcoal. 4. Seeds and bulbs for planting. 5. Fertilizer. 6. Insecticides. 7. Olive oil presses. 8. Live animals. 9. Chickens for laying eggs. 10. Chickens for breeding. 11. Birds for pets. 12. Fodder for animals. 13. Bees and equipment. 14. Food commodities subject to price controls. 15. Food commodities not subject to price controls. 16. Gold and money counting mi~chines. 17. Electrical generators. 18. Radioactive products. 19. Postage stamping machines. 20. Computer and facsimile machines. 21. Printing machines, books and printing materials. 22. Medicine for humans and medical equipment. 23. Chemical products. 24. Explosives and weapons. 25. Sand for making glass. 26. All other products. ...................................................................

The following eighteen pages contain the prioritized list of recommendations (contained in Section V.), stated by the agency that should action the recommendations. Note that the number sequence is from the prioritized list.

CUSTOMS

1. Customs should establish llreliabilityll factors for import and export clearances by using the ntrack record1' of foreign suppliers, foreign countries of origin, importers, brokers, and product types. A mathematical model can be constructed which combines the various criteria, and an enquiry of the computer (or even of a manual list) will indicate to Customs what level of inspection the imports should receive. With this system, many of the imports will not be inspected at all (using this method in the United States results in 85% of imports entering the country without any Customs involvement other than processing the paperwork). This reduction in the inspection of many routine imports will also result in: the entire import process being less complicated; the importers being treated with more respect based on their documented good "track recordu; and, more Customs manpower being freed up to concentrate on the processing and inspection of imports with low reliability factors. This system can be achieved with a low level of computerization, or even manually.

This system will encourage mutual trust between Customs and importers; and as a result, the importers with good track records will be treated more efficiently, and the other importers wishing to receive the same treatment should improve their procedures so as to get on the good reliability list.

A separate project could be established for the implementation of this type of system.

2. Customs should establish a forum for regular dialogue between the public and private sectors. This could be accomplished by forming a special I1Operations Committeen which would consist of members from senior management of Customs, Ministry of Industry and Trade, the importing/exrorting private sector, and the brokers syndicate. This committee should be involved in monthly meetings to review such items as: pending changes in the regulations; problems being experienced as a result of current legislation; special projects; and, planning improvements for the future.

3. Customs should promote the elimination of many llaggravationll items, including some items which are imposed by other agencies. Some of these llaggravationll items are:

A. Review the fine that is imposed when the waybill does not match the commercial invoice with regards to shipping point.

102

B. Do not automatically treat commercial samples as suspect of being diverted to the local market. Even minute quantities of commercial samples are subjected to testing and the complete onerous import process.

C. Review the need to ship samples from Aqaba to Amman for a radiation check. These checks should be done at Aqaba.

NOTE: Customs states that radiation checks are now performed by them at their laboratory in Aqaba, and only those products failing the test are sent to Amman for further testing.

D. The lack of authority for Customs at Aqaba to approve temporary imports.

E. To be actioned by the Ministry of Agriculture.

F. Eliminate the practice of fees for live and dead animals. Customs should incorporate this fee into the duty rate. This would also save a double inspection.

G. To be actioned by the Aqaba Port Authority.

H. Address import procedures for spare parts. Customs appears to always be concerned that the imported part will not be used as a spare part but will be sold in the market, thus evading duty.

Re-evaluate current procedures that permit Customs to lock facilities (subject to production tax) after 1 shift. This practice restricts factory owners to 1 shift and can be dangerous in the case of fire if Customs has the only key.

J. Address country of origin certification issues for small foreign towns that do not have a Chamber. It can be a problem for Country of Origin certification.

K. Do not penalize brokers for making reasonable mistakes in classifying products under the new Harmonized System.

4. Customs should change the current reward system whereby Customs employees share a significant,. percentage of the fines and extra duties imposed when an importer/exporter loses a llcase.ll An alternative would be to put all of the extra revenue into the Treasury and then use these extra monies to provide salary increases to the diligent and competent Customs employees.

This would provide an incentive for all Customs employees, not just those who have an opportunity to share in llcasell money, and it would also eliminate the direct association between punishing the private sector and rewarding the public sector.

This system would also discourage Customs from trying to entrap importers into signing a document stating that the imported article is a certain classification, when Customs knows it is not, and then Customs institutes a "caset1 and the importer is fined. The Customs official then gets a reward, and the perception of Customs by the public is tarnished.

5. Senior Customs management should communicate to Customs employees interfacing with the public that their function is a vital part of establishing efficient commercial practices. They should be made aware that all unnecessary delays and added expenses to the importing/exporting community will eventually become an extra burden that the Jordanian consumer will have to bear.

6. Customs should enforce procedures to eliminate the very common practice of importers/brokers using incorrect exchange rates and F.0.B pricing instead of C.1.F pricing. This will remove the perception of unjust invoice increases for approximately 4 7 % of the incidences.

Customs should provide training to valuation personnel on world price ranges (there are no absolute world prices) for commonly imported products. Also, these individuals should have access to pricing data bases and other sources which will enable them to efficiently establish reasonable values for imported products. When the importing community knows that the valuators are competent and aware of world pricing, they will be careful to correctly state invoices and this will result in trust being earned by both sides.

NOTE: Dr. Rima Khalaf enquired about information on international companies that specialize in inspection and verifying prices. There are many different opinions regarding these companies, and while they can perform a valuable function, it is the importer that ultimately bears the added expense. As suggested by ITC1s Mr. Alain Chevalier, Jordan could request competitive bids to provide pricing data. In this regard, there are two points to be noted: international prices are very dynamic and can vary significantly over short time periods; and, the referenced agencies specialize in ensuring that importing governzrent agencies are not paying inflated prices. The latter is the opposite of the problem being experienced in Jordan.

To be actioned by the Ministry of Finance.

9. To be actioned by the Central Bank.

10. Customs should sponsor joint sem,inars and training sessions with the private sector. This will assist in establishing mutual respect.

11. To be actioned by the brokers.

12. To be actioned by the Ministry of Industry and Trade.


14. There should be "one-stopw services at: the Custom Houses. Customs should have control over the various agencies at the Customs Houses, and these individuals should be authorized by Customs to handle most transactions without having to refer to a headauarters function. In most cases, the importingjexporting community should have' to deal only with Customs at the port.

15. Customs should reduce the number of signatures on the Customs Declaration to the following:

A. Registration (1 signature), including any other functions done by the current first four.

B. Inspection (1 signature), including the two-step process that the inspector currently performs by signing twice. Eliminate the practice of a manager signing to allocate an inspector and an appraiser.

C. Valuation (1 signature), including the two-step process that the evaluator currently performs by signing twice. Eliminate the routine signature of the Chief Evaluator and have his signature only on Customs Declarations that require a higher level of authority. The regular evaluator should be trained sufficiently to handle most of the valuation issues, especially with assistance from a new group of experts employed ty customs (e.g., the textile engineers).

D. Other agencies (1 signature), including the functions of agricultural marketing signature currently required and the three signatures required for samples taken by Agriculture, Health, and Department of Standards.

E. Approval (1 signature) of sample after it has been approved at the Customs House or other facilities. This would include signing for receipt of the radiation test results.

F. Classification (1 signature). Eliminate the routine signature of the classification auditor. Customs does a 100% check at headquarters.

G. Payment of duties (1 signature). Eliminate the other two signatures currently required.

H. Final clearance (1 signature) instead of current two for final approval and clearance of the goods.

NOTE: Since July, the signatures have been reduced by four. 105

16. Due to the importance of promoting exports, Customs should appoint a senior member of the department to assist in solving the day-to-day problems experienced by exporters. The availability of this assistance should be made known to the exporting community.

The role of this senior Customs ffexport facilitatorM should be as broad as possible within the context of all import-export procedures. There are, of course, other requirements for improving exports which would not be within the scope of the facilitator, some of these being: tax incentives; marketing assistance; export sales financing; education on the product needs of export markets: and training on how to establish joint ventures.

Some items of assistance that could be provided by the facilitator are:

A. Form and chair a small (no more than 10 members) group of succesful exporters, with representation from the major types of export businesses. Meetings should be held once per month, with the location being alternated between each of the members facilities.

B. At the first meeting determine a priority listing of the import-export procedures, which are directly under the control of Customs, that can be improved. A secondary list should be made of the import-export procedures, which are not under the direct control of Customs, that can be improved. It is very important that these lists be representative of both the private and public sector concerns.

Establish a time-table to complete the steps required to implement the improvements.

C. Work with the private and public sectors to improve the mechanical steps that can be improved quickly.

D. Possibly the single most important assistance will be communicating to the exporting community that Customs considers the development of practical cost effective solutions to exporting problems to be a high priority.

17. Customs should make more of an effort to place sufficient infrastructure in Aqaba where approximately 90% of the imports come into Jordan.

While it is recognized that the Customs Headquarters function will remain in Amman, the following decentralized authority and infrastructure items could be instituted in Aqaba:

A. Approval of all matters concerning temporary and drawback clearances;

B. Approval of license applications and amendments;

C. Provision of equipment to perform the routine testing that is carried out in Amman for Aqaba imports.

18. Customs should establish and utilize a reporting system which will enable them to track and manage such areas as invoice changes and delays in clearances.



21. To be actioned by the importing community and enforced by the Ministry of Industry and Trade.

22. Customs should establish uniformity in classification to reduce to a minimum the the number oftimes that imports are given different classifications by different individuals.

23. Customs should establish a classification arbitration committee to handle the volume of classification issues that will arise as a result of implementing the new Harmonized System of classification on January 1, 1989. Additionally, during the first year (possibly longer) of using the Harmonized System, there should be a monthly meeting of importers, brokers, and Customs, with Customs providing a review of the previous month's classification decisions and the technical reasons for the decisicns. This will enhance the private sectorls understanding of the new classification system and also give that sector an opportunity to contribute constructive comments.

24. Customs should evaluate the administrative procedures for the protection of Jordanian manufacturers. Two examples cited were:

A. A manufacturer of paint (for export) imports a resin that is not made in Jordan. He must pay duties because another Jordanian company makes a resin (this product is not the same as the imported resin); and

B. The same paint manufacturer must buy Jordanian made cardboard cartons to use in exporting paint. These are 30% more expensive than cartons from Saudi Arabia.

25. Customs should sponsor an objective f:or Jordan to become a signatory to the General Agreement on Tariffs and Trade (GATT). The GATT has evolved, over a long period of time, many procedures for the inspection, classification and valuation of imported products.

26. Customs should address current procedures requiring importers to forward shipments arriving at Alia to Aqaba for Customs

lab inspection. Where possible, imports arriving by air should be inspected at Alia or Amman.


28. Customs should administer the policy of clearing food products at Aqaba within two days. Those products are not being cleared within the specified time period.

29. Customs should standardize the data requirements on import documentation (e.g., state the BTN and the ingredients on the import invoice).

30. Customs should establish higher export inspection standards. Inspectors of exported products are not always as careful as they should be. This results in damage being done to the exported product.

31. Customs should review the requirement for re-export authorization for goods imported under a temporary import status.

32. There is a 100% audit of Customs Declarations at Customs headquarters. This should mean that other individuals may not be performing audit functions.

33. Customs should enforce the practice of typing and proofreading all Customs Declarations to reduce the cleri&al errors caused by handwritten documents.

34. To be actioned by the Ministry of Finance.

35. The current Customs computerization program should be continued and enhanced to include commercially available data bases that are easy to program and use.

36. The recently started program of wconditional release" of goods while awaiting lab results sho~ld be continued as well as improved upon.

37. To be actioned by all brokers and enforced by Customs.

38. Customs should not issue any new broker licenses until there is a reduction in current licenses. It is apparent that the number of brokers per capita is very high (e.g., if the same per capita ratio existed in Jordan that exists in the United States, there would be approximately 15 broker companies in Jordan versus the actual number of 172). Jordanian per capita ratio is over 10 times that of the U.S.

39. There must exist a better sense of commercial practice in the Customs regulations and the individuals dealing with the import-export process (e.g., if it is suspected that an importation of samples may be diverted to the marketplace, then there should be a simple procedure for the articles to 108

be "damagedv' by Customs prior to clearance. This will make the sample unsuitable for sale.) Additionally, samples of small quantities should be duty-free and cleared without the normal tests (e.g., if a legitimate paint seller/manufacturer imports several cans of paint or other substances that are used to make paint, then these should be treated as truly commercial samples with no commercial value.)

There, of course, has to be a rule of reasonableness in this procedure to prevent an importer from importing samples on a daily basis when it is known that there is no commercial need to do so. In this case, Customs individuals well trained in commercial practices would be able to quickly and efficiently resolve any disputes.

40. It should be mandatory that all practicing brokers attend a minimum number of training hours per year. Both the private and public sectors should teach these training sessions. Customs should facilitate this training.

41. The importers/exporters whose practices and documentation are excellent should be identified and called upon to provide training seminars for the private sector. Customs should facilitate this training.

42. Customs should enforce the stricter penalties and jail sentences for repeat offenders of serious offenses such as smuggling.

43. Customs should encourage computerization in the private sector, especially by the brokers. Customs would be able to transmit regulation changes and other important information to the private sector on a very timely basis by means of modems.

44. To be actioned by the Central Bank.

45. The recent changes to the drawback regulations are excellent, and they have created an immediate incentive for companies to use drawback, as evidenced by the 30 companies that have just started to do so. This number compares to 1 company that was using drawback under the old regulations.

Additional improvements could be made to the drawback regulations that would encourage Jordanian companies, which normally import duty-paid raw materials for manufacture and sale in the domestic market, to break into foreign markets with the sale of production that is in excess of domestic needs. The mechanical steps involved in these improvements are:

A. Make optional the requirement to declare imports as being destined for duty drawback. This would alleviate the current situation of being able to claim drawback only on exports that have been imported for drawback. 109

B. Obtain Customs approval for drawback prior to exportation of products that contain duty-paid imported materials.

C. Develop straightforward formulae for claiming duty drawback on the valueless and valuable wastes that result from the Jordanian manufacturing process. This is known as claiming drawback on a basis of "appearing in,I1 Igused in,I1 or "used in, less valuable waste." Initially establish national standards by industry or product and revise them only when the system is running smoothly.

This is currently being partially achieved by the use of manufacturing coefficients. The administration of these coefficients can be cumbersome and the system could be improved.

D. Allow substitution of Jordanian product in the exported duty drawback product to encourage use of domestic materials. his is a common world standard.

E. Allow drawback on the exportation of articles which are exported in the same condition as they were when imported. This would be app1icab:e for the exportation of imported spare parts which are not involved in a Jordanian manufacturing process.

46. With the improved drawback regulations, it now appears that there are more benefits to using the drawback import system instead of the temporary import system. Further, there is no clear distinction between what imports should use one system versus the other. It is recommended that all of the benefits of the new drawback regulations be in::orporated into the temporary import procedures, and that the drawback regulations focus on the exporters getting duty drawback on the exportation of duty-paid goods. This could be achieved by implementing recommendation number 45.

Implementation of this recommendation (number 46.) would also provide a clear distinction between temporary imports and drawback imports. That is, any imported goods with a high probability of being subsequently exported would be cleared as a temporary import (under the improved temporary import system), and drawback would be used for imported duty-paid goods which are exported.

One important exception to implementing all of the benefits of the new drawback system under a new temporary import system would be the ability to transfer the non duty-paid imported goods into the domestic market without prior approval by Customs. If this were allowed, it could very easily result in abuses by the exporters to save cash flow on duty payments.

MINISTRY OF FINANCE

8. The Minister of Finance should promote the establishment of an llombudsmanH function under the jurisdiction of an agency outside of Customs (perhaps under the Justice Department). The ombudsman (an independent referee) would review cases of unreasonable treatment of the importing-exporting community by the agencies involved in the import-export process.

34. The Ministry of Finance should assist Customs in phasing in changes affecting the import-export process at regular periods. There are too many regulation changes from all of the agencies involved in the import-export process. It is very difficult for Customs to stay current without outside assistance.

MINISTRY OF-INDUSTRY AND TRADE

12. The requirements for import and export licenses should be eliminated with the exception of a limited number of products and possibly countries. Should the fees from these licenses be an important revenue item, then collect these same fees at the time o~f import or export.

NOTE: The import licensing system currently exists to provide a means for controlling imports. The system dates back to 1976, with its precursor originating in the 1930's. It is considered that there is no longer a need to enforce the prohibition of imports by means of an import licensing process, arid that this control can be achieved by self-enforcement, supported by formal notices to the importing community. Importers failing to heed the notices would carry the risk of having prohibited imports being refused import clearance.

13. The signature requirements for all of the other agencies and the departments within the Ministry of Industry and Trade, with the exception of the license issuing department, should be eliminated for the products that are determined to require the retention of the licensing requirement.

This can be done by giving the necessary authority to the license issuing department and providing it with guidelines that are currently being used by the other agencies and departments in the Ministry of Industry and Trade (e.g., list of products required to meet Jordanian standards).

19. The Ministry of Industry and Trade should review the operation of the Department of Standards with a view to reducing the amount of sample taking and testing. Also, it should not institute unique Jordanian standards unless they are absolutely required. More use should be made of international standards such as Underwriters Laboratory (UL) and the Canadian Standards Association (CSA).

Implementation of recommendation number 1. would result in a substantial reduction in the number cf samples for imports-exports. Until such time as this first recommendation is implemented, sample taking could be significantly reduced by increasing the cycle time between samples for products from companies that are internationally recognized as being high quality companies. This approach would result in much less sampling of products from many of Jordan's trading partners.

NOTE: It was observed by several merhers of the public and private sectors that the Depar,cment of Standards is expanding unnecessarily and that this growth is resulting in excess samples being taken. This does appear to be a legitimate concern.

20. The Department of Standards should make readily available to the importing/exporting community the Jordanian standards.

27. The Department of Standards should promote procedures that will permit pre-clearance of samples.

MINISTRY OF AGRICULTURE

3E. The fee of 150 fils per ton to the Ministry of Agriculture should be eliminated.

CENTRAL BANK

9. Currently importers-exporters have to provide the following guarantees:

A. That the duty and license fee shall be paid on temporary imports that are sold in the domestic market;

B. That the duty shall be paid on drawback imports that are sold in the domestic market; and,

C. That the value of exported goods will be paid by the export customer.

The standard, non-recoverable charge is 5% of the value of the guarantee. The high cost of guarantees could be reduced by allowing importers-exporters to post interest bearing bonds as surety for payment of duties, license fees, etc.

44. Central Bank should clarify the regulation in Chapter 13, article 88, paragraph b. of the Central Bank Regulations. Many exporters do not understand that this regulation enables them, to consign products to foreign distributors with the payment not being due until they, the Jordanian exporter, are paid by the foreign distributor.

PORT OF AQABA

3G. Liberalize the current minimum of 500 tons for use of the Aqaba refrigeration facilities. Recommend expanding the fee structure to handle smaller shipments.

BROKERS SYNDICATE

11. The brokers should significantly raise their standards by self-regulation and education. Some actions that could be taken are:

A. Promote the establishment of academic and practical education at the universities andjor technical institutes in the fields of freight forwarding, import-export regulations, and brokerage;

B. Promote the establishment of brokers operating out of a properly equipped office, instead of standing outside of the Custom Houses with a briefcase soliciting business;

C. Obtain training from experts in classification under the new Harmonized System. Do not depend on the Customs to do this. The classification of imported products is supposed to be done by the broker before presentation of clearance declarations. By understanding the classification process, the number of penalties issued by Customs for incorrect classification of product should be reduced.

NOTE: It has been recommended for Customs to change their policy of issuing penalties for ttunintentionaltt classification errors.

D. Do not delay import clearances by accumulating several declarations to be processed at the same time.

40. All practicing brokers should be required to attend a minimum number of training hours per year. Both private and public sectors should teach these training sessions.

43. Brokers should become computerized tc stay current on regu1,ation changes (Customs and other agencies). This will allow Customs to transmit regulation changes and other important information on a very timely basis by means of modems.

ALL IMPORTERS/EXPORTERS

21. The importers should make these Jordanian standards available to their suppliers. These should be enforced by the Department of Standards.

41. The importers/exporters whose practices and documentation are excellent should be identified and called upon to provide training seminars for the private sector.

OTHER AGENCIES

The following agencies involved in the import-export process should coordinate with Customs to implement the "one-stopn service concept: Ministry of Industry and Trade; Ministry of Agriculture; Ministry of Supply; Ministry of Health; Ministry of Information; Ministry of Interior; Ministry of Energy; Ministry of Communications; Security; Central Bank; and the Royal Scientific Society.

BACKGROUND NOTES TO THE REPORT

The PEDS Project

This study was conducted under the Private Enterprise Development Support Project. The PEDS Project is a five year (FY88 - FY92) $20 million project managed by the Bureau for Private Enterprise. In the first year of the project, PRE provided technical assistance in response to nearly fifty different requests from Missions and Bureaus. The PEDS Project is designed to provide a wide range of expertise in private sector development. Areas of technical assistance include the following:

Policy analysis related to private sector development Sector assessments and analyses USAID private sector strategy development Legal and regulatory analysis and reform Small-scale business development Trade promotion Investment promotion Free trade zone development Financial institutions and instruments Management and financial training The role of women in private enterprise Applications of MAPS: Manual for Action in the Private Sector

USAID Missions have the resources of thirteen contractors available to them through the PEDS Project.

a Arthur Young (prime) a Ferris & Company a SRI International a Metametrics a Management Systems International a Elliot Berg Associates a The Services Group a Robert Carlson Ass.

Trade and Development, Inc. Ronco a Multinational Strategies a Dimpex Associates a J.E. Austin Associates

The Consultancv

The Government of Jordan has formed a Steering Committee to reform and simplify Jordan's import and export procedures. The Steering Committee includes participants from the Ministry of Planning, Customs, the Central Bank, the Chamber of Commerce, the Chamber of Industry, and the Ministry of Industry and Trade.

The purpose of this consultancy was to provide technical assistance to the Steering Committee in its review of Jordan's import-export procedures. The consultant, Charles A. McCue, conducted his first field visit in June 1988 for a period of three weeks. He conducted a second field visit in November 1988 for three weeks.

The Author

Charles A. McCue is a partner and Director of the Customs Practice for Arthur Young United States. He has 30 years experience in the area of customs, including 15 years direct experience in working with customs officials in 20 countries and establishing import and export procedures for multi-billion dollar companies. Clients have included Apple Computer, Starkey Labs, International Multifoods, ARCO, Wyse, Western Sugar and others.

From 1980-1986, Mr. McCue was the president of McCue & Associates, a firm specializing in consulting on customs procedures and operations. He developed a customs management software system, a major component of which is a comprehensive duty drawback module.

Mr. McCue is a licensed U.S. customs broker and a committee member of the American Association of Exporter and Importers. He holds a B.S. degree in mechanical engineering, a B.S. degree in aeronautical engineering and a M.B.A. with a major in international business.

import export procedures in jordan

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