Securing global supply chains

SUPPLY CHAIN PROFESSIONALS stand to benefit from increased cross-border efficiencies as a result of the publication by the World Customs Organisation (WCO) of its Framework of Standards to Secure and Facilitate Global Trade.

The WCO is an independent inter-governmental organisation, founded with the mission to enhance the effectiveness and efficiency of customs procedures. It has 165 member governments ? representing more than 98 per cent of world trade ? and is the only organisation able to co-ordinate the legislative power of customs administrations under a single global framework to provide new levels of security and trade.

What does the framework say?

The framework is a set of 17 standards that are based on six key aims:

• Establish standards for supply chain security and facilitation at a global level to promote certainty and predictability.
• Enable integrated supply chain management for all modes of transport.
• Enhance the role, functions and capabilities of customs to meet the challenges and opportunities of the 21st century.
• Strengthen co-operation between customs administrations to improve their ability to detect high-risk consignments.
• Improve customs-business co-operation.
• Promote the seamless movement of goods through secure international trade supply chains.

Success in achieving these objectives will depend on effective relationships between customs organisations, and between the customs and business communities, in areas such as harmonising electronic cargo information and the implementation of consistent risk management procedures.

What are the implications for companies and supply chain professionals?

Supply chain professionals will benefit from more efficient and secure supply chains when routing and managing goods between WCO member nations.

Among customs administrations, this seamless movement of goods can be promoted through the timely and accurate exchange of information between members in managing risk and resource allocation. The eventual ability to reduce duplication through mutual recognition of controls will significantly increase efficiency and throughput for our supply chains.

At the business to customs level, companies involved in the international movement of goods that comply with predefined global standards will achieve ?authorised economic operator? status. Holders will benefit from faster processing of goods by customs and, in the future, from the harmonisation of international standards, establishing uniformity and predictability in global reporting requirements.

Is the framework compulsory?

The framework is considered to be a set of guidelines, rather than rules, and ultimately membership of the WCO is voluntary. However, there is a realisation in the international community that a holistic approach is required and that existing inter-governmental and bilateral agreements have practical limits. More important, however, is the long-term effects of opting-out, as non-members would face relatively inefficient supply chains and higher export prices, damaging their international trade.

Some observers expect this framework to be written into law, and take the view that it may never become truly effective unless all nations subscribe to this thinking.

Is the framework truly global?

The WCO was originally founded by 13 European governments, which later expanded and became truly global. The US, and other nations, currently have other inter-governmental agreements, which in theory cover the same objectives as the WCO framework. However, none are tackling the issue at such a global level. The framework will encourage the implementation of existing international standards and co-operative arrangements. It is worth noting that the implication of overcomplicating and duplicating procedures with parallel lines of reporting may inhibit any efficiency.

When does it come into effect?

Some components of the framework will be implemented immediately, while others will require significant capacity building, especially among less-developed nations. In all cases, a phased approach will be necessary and it may take some time for the majority of members to conform, which is a cause for concern. Every member country may potentially be at different stages of readiness and development, even though co-operation and trust among members is crucial for realising the efficiency gains.

Pascal D'Arc, State of Flux Consultant
CPO Agenda, June 2005