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In the humanitarian sector, particularly during emergencies, knowledge of import and export procedures is a key part of the supply chain process. Most countries have a designated customs authority that administers customs and excise laws of a country through local approved legislation.
The core business of the customs authority involves enforcement of prohibitions and restrictions, collection and accounting of revenue, enforcing security, trade facilitation, and compilation of trade statistics for economic planning.
How well these objectives are managed will influence the effectiveness and timeliness of response to needs, especially in a rapid on-set emergency. Understanding customs and knowing how to manage the customs process is essential in ensuring that goods can flow into an emergency context efficiently and in a timely manner. To enable this process, it is important that humanitarian organisations partaking in importing and exporting activities understand the particular procedures, rules and regulations that need to be followed to facilitate the movement of goods in and out of specific countries.
Common Terms in Customs
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Export
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Import
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Reexport
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Bonded Storage/Transport
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Clearing
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Agent
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Frustrated
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Demurrage
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Boundary
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Border
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Import Fees/Duties/Tariffs
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Customs and Humanitarian Aid
Any physical good crossing the national boundary or entering the incorporated territory of any country is obliged go through at least some level of government control procedure and formalities. These formalities are colloquially known as “customs,” however there may be specific agency names for each country in question. Customs regulations in virtually all contexts will apply to all private individuals and legally defined entities within the legal remit of the respective country in question. These legal regulations can have far reaching implications for violation or failure to comply, including impound and seizure of goods, fines, arrest and detention and full criminal prosecution. Every country will have its own standards and regulations pertaining to import or export of goods related to economic, judicial or cultural mores within the territories in question. Any person or entity operating in any country for any reason must be aware of these regulations and endeavour to be in full compliance with them at all times, even if compliance means following the proper exemption process.
Humanitarian organisations are sometimes at an advantage for the facilitation of customs clearance in emergencies; not only are registered non-profits frequently able to apply for some forms of tax or duty exemption in non-emergency settings, during emergency responses many import regulations on humanitarian responders are waived or loosened by the countries affected by disaster, or adjacent countries to the disaster. The United Nations often assumes the lead role in making appropriate arrangements with governments regarding quick access to emergency supplies as the physical flow of emergency relief is supplies is essential in the early days of response. The United Nations through the Office for the Coordination of Humanitarian Affairs (OCHA) has also developed a “Model Agreement” (approved by the Permanent Technical Committee in 1996) with the World Customs Organization (WCO). The Model Agreement can be adopted by any country, and lay the foundation for the process of exemptions, streamlining paperwork, pre-identification and expedited clearance of certain relief items, and overall smoothing of the import and export process. The Logistics Clusters on behalf of the UN Resident Coordinator (UNRC)/ UN Humanitarian Coordinator (UNHC) may try to leverage these advantages for all humanitarian organisations in an emergency.
Some of the problems encountered by humanitarian organisations during emergencies are:
- Complicated customs procedures causing delays resulting in congestion at port of entry (airport, road borders, sea port) that affect turn-around time for feeder vessels and railway wagons, so affecting the flow of goods.
- High volumes of emergency supplies flowing into a country causing a bottle neck to customs.
- Complex and non-transparent administrative requirements, often pertaining to documentation.
- High costs for processing trade information.
Role of Customs Authorities
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Common Terms in Customs
Export | Physically and legally transmitting goods from a the boundaries of a country or national territory. |
Import | Physically and legally transmitting goods into the boundary of a country or national territory. |
Reexport | Exportation from a customs territory of goods previously imported into that territory |
Bonded Storage/Transport | A method of storing or transporting goods that have either already been exported from an national territory, or have yet to be imported. The warehouse or truck are "international grounds." |
Clearing | The act of lawfully importing goods through a recognised import authority. |
Agent | Any third party who works on behalf of a contracting party. Most common in customs clearance are "clearing agents" and "forwarding agents." |
Frustrated | Cargo that is held up and unable to be imported to a country or territory for whatever reason. |
Demurrage | Fees that accrue from cargo behind held pre-customs. Frustrated cargo can greatly increase demurrage fees. |
Boundary | The physical edge when entering or leaving a country or national territory. |
Border | The actual physical crossing point of a boundary. |
| Port of Entry | Port through which goods are imported. |
Import Fees/Duties/Tariffs | The legally required fees charged by governments to import goods. Each country has vastly different regulations. |
| Exemption | When part or all of the import fees and / or process are exempted for specific goods or organizations, usually in response to extraordinary circumstances. |
Customs and Humanitarian Aid
Any physical good crossing the national boundary or entering the incorporated territory of any country is obliged go through at least some level of government control procedure and formalities. These formalities are colloquially known as “customs,” however there may be specific agency names for each country in question. Customs regulations in virtually all contexts will apply to all private individuals and legally defined entities within the legal remit of the respective country in question. These legal regulations can have far reaching implications for violation or failure to comply, including impound and seizure of goods, fines, arrest and detention and full criminal prosecution. Every country will have its own standards and regulations pertaining to import or export of goods related to economic, judicial or cultural mores within the territories in question. Any person or entity operating in any country for any reason must be aware of these regulations and endeavour to be in full compliance with them at all times, even if compliance means following the proper exemption process.
Humanitarian organisations are sometimes at an advantage for the facilitation of customs clearance in emergencies; not only are registered non-profits frequently able to apply for some forms of tax or duty exemption in non-emergency settings, during emergency responses many import regulations on humanitarian responders are waived or loosened by the countries affected by disaster, or adjacent countries to the disaster. The United Nations often assumes the lead role in making appropriate arrangements with governments regarding quick access to emergency supplies as the physical flow of emergency relief is supplies is essential in the early days of response. The United Nations through the Office for the Coordination of Humanitarian Affairs (OCHA) has also developed a “Model Agreement” (approved by the Permanent Technical Committee in 1996) with the World Customs Organisation (WCO). The Model Agreement can be adopted by any country, and lay the foundation for the process of exemptions, streamlining paperwork, pre-identification and expedited clearance of certain relief items, and overall smoothing of the import and export process. The Logistics Clusters on behalf of the UN Resident Coordinator (UNRC)/ UN Humanitarian Coordinator (UNHC) may try to leverage these advantages for all humanitarian organisations in an emergency.
Some of the problems encountered by humanitarian organisations during emergencies are:
- Complicated customs procedures causing delays resulting in congestion at port of entry (airports, road borders, seaports) that affect turn-around time for feeder vessels and railway wagons, so affecting the flow of goods.
- High volumes of emergency supplies flowing into a country causing a bottle neck to customs.
- Complex and non-transparent administrative requirements, often pertaining to documentation.
- High costs for processing trade information.
- High level of stress and large number of shipments in a short time, that can lead to errors in documentation and lack of understanding of import requirements.
Role of Customs Authorities
Customs relates to both the import and export of material goods. Import and export were classically limited to the transmission of physical goods across a legally recognised international boundary, however advances in technology and changes to trade policy have also grown to include – in some cases - the electronic transmission of electronic information such as proprietary software and even intellectual property such as manufacturing processes. Import is the transport of physical goods into the incorporated territory country, state, autonomous region, whereas export is the movement and shipment of goods out of said territory. To manage and oversee the legal and controlled import and export process, national authorities can and will identify and establish one or a limited few numbers of customs authorities which operate in the territory of the country in question and enforce national regulations. Depending on the country, customs authorities can have different names, and exercise different levels of both scrutiny and control.
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- Protects the environment, and public safety, health and morality by barring international trade in illegal substances and materials e.g. narcotic substances, arms and ammunitionsammunition, endangered animal species, hazardous wastes, and expired, counterfeit or sub-standard goods.
- Represents the political, economic and security interests of and takes legal direction from the central authority of the country, state or semi-autonomous region into and out of which goods flow.
- Generates revenue through collection and enforcement of trade tariffs.
- Liaises with other law enforcement agencies nationally and internationally to prevent trans-border crimes e.g. movement of drugs, stolen motor vehicles and smuggled goods.
- Enhances voluntary trader compliance through quality client service.
- Facilitates legitimate trade.
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It is essential that donors and decision-making organizations organisations at origin are aware about the implication of taxes on operating costs as they develop their response strategies.
The customs authorities might not qualify every single entity as “of public interest” or “charitable” and grant the duty waived privilege associated with it. Humanitarian organizations organisations dealing with local counterparts, must make sure that the local counterpart receiving the goods is a registered duty-free entity, and if local exemption is required, that their counterpart is the one taking care of the application for duty exemption and supplying all required documentation. For that purpose, the local counterpart must have the capacity to know the procedures, focal points and regulations within their administration, in order to lodge the application correctly. If they have not got this specific knowledge (what commodities are prohibited or restricted, quotas, etc.) or are just not familiarised with the requirements and paperwork, it is useful to ask advice at local ministries, other NGOs already operating, customs brokers, and tax experts. There are certain items globally that tend to cause more scrutiny than others, and may require special certification. Though regulations are country specific, exporters and importers should pay close attention to the following categories when planning response activities:
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Other respective governmental authorities and departments – Many government agencies might play a part in the import and export process, depending on the item, the circumstance or the parties involved, these entities might include the Ministries of Health, Agriculture, Ministry of Foreign Affairs, Ministry of Finance, Disaster Mitigation unit/office, Ministry of Communication, Military and Civil defense, or other involved parties.
Common Concepts
Harmonized Customs Harmonised Customs Procedures - Though regulations vary from country to country, there has been an effort to develop a standard nomenclature and numbering convention led by the World Customs Organization the (WCO). The more than 200 member states of the WCO have agreed on what is called a Harmonized Harmonised Commodity Description and Coding Systems, or frequently referred to as the Harmonized Harmonised System (HS) for short. The HS process has also been adopted and backed by the United Nations, through the Kyoto Convention or International Convention on the Simplification and Harmonization Harmonisation of Customs Procedures (Annex J, Chapter 5, specifically deals with relief consignments). Last updated in 2017, the HS codes allow customs authorities and exporters/importers support clearance of goods through simplified and harmonized harmonised customs procedures, thus facilitating international trade. Shippers can learn more about the HS process and look up HS codes for specific products on the WCO’s online system.
HS codes are six digits long, and are derived directly from the WCO's classification system, however many countries use eight or even ten digits to accommodate both regional and national legislation. The structure of the HS codes is derived from:
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International Commercial Terms (Incoterms) – In the customs process Incoterms denote at what physical point cargo may be delivered to and who bears the responsibility for clearing customs. Incoterms range from the importer having to do all the work regarding transport and clearance (FCA) all the way to carriers clearing customs on behalf of the receiving agency and delivering to a named place inside the country (DDP). For information on international trade, see International Commercial Terms used in international contracts of sale.
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Bonded Storage / Transport – a bonded storage facility is any facility that holds cargo that has not yet been cleared for import into a country, or cargo that has been pre-cleared for export from a country. In real terms, the inside of a bonded facility “international territory” for any cargo stored there. Bonded facilities are usually highly regulated and guarded, and penalties for removing cargo from a bonded facility without proper clearance can be very high. As cargo is imported into a country, usually customs authorities keep cargo in a bonded facility of some kind prior to clearing customs. Third party companies may also maintain bonded facilities if they have special arrangements with their respective customs authorities, or they operate in some kind free trade zone.
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Demurrage – Demurrage is the accrual of fees on any cargo items that are left in the holding of a customs authority or air/port side operation after a pre-defined time. Cargo that arrives via air/sea/land border is usually given a specific period of time to undergo clearance without additional charge. The duration of the free of charge period and the daily/hourly rates varies location to location, and is negotiated between the national authorities, the company/authority authorized authorised to run the air/sea portseaport, handling agents, and the transport companies. Demurrage accrued from air and railway shipping typically begins with 1-3 days, while demurrage accrued sea shipping can start as late as two weeks after arrival. Importers should be aware of what their demurrage rates can be, as long-term delays can lead to significant costs.
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Below is general overview how the regular steps for importing goods should work in non-emergency settings:
Diagram 4: Non-emergency supply chain
It should be noted that this process may be altered in the face of rapid-onset emergencies, but not always. Below is a possible overview of an emergency customs process: 
Diagram 5: Emergency supply chain
Upstream Planning
As the need for international shipments develop, there are key steps that any organization organisation or entity initiating shipping will need to undergo. ExportersResponse organisations acting as exporters/shippers will need to coordinate with the requestor/receiver for key data:take key actions to obtain information and coordinate shipments:
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| Strategies for Emergency Response Organisations |
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Downstream Planning
An organization organisation or an entity acting as importer or consignee intending to receive a shipment should also take steps to properly prepare and identify needs.
Importers/consignees should work establish and work out the legal mechanics for importation:
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| Defining the Importation Process |
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| Preparing to Receive Shipments |
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| Possible Customs Specific Regulations for Importation |
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| Strategies for Emergency Response Organisations |
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Documentation
The import process usually requires specific, and at times substantial documentation. A general overview of the import documentation might look like:
Diagram 1: Customs necessary documentation
In emergencies, the authorities will usually ask for originals or copies of the following documents:
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Other Import documentation often required:
- Letter/Certificate of Donations and/or Humanitarian Goods - Many agencies will included self made letters of humanitarian intent or donation to help facilitate the customs exemption process.
- Proof of duty exemption - May be required at the time of clearance, usually a registered humanitarian agency should be able to obtain some form of letter from the relevant tax revenue authority. A letter may be required for every import, however.
- Certificates of Origin (COO) - Usually generated and certified by the manufacturer, but can be done by the sending agency if required. Some countries have strict source origin requirements.
- Certificates of Inspection (COI) - COIs are usually associated with regulated commodities that may be consumed by humans - example: Medication - or may have adverse effects on human health - example: flammable plastic shelter material. COIs typically require certification from an outside laboratory testing facility, certified to test the specific chemical properties of the items in question.
- Certificates of Conformity (COC) - COCs are used to confirm that products meet or exceed a certain industry standard, and require inspection by outside testing and certifying companies.
- Phytosanitary Certificates - certification Certification attesting that imported plant based material meets the sanitary requirements of the country in question, usually from an outside laboratory.
- Special handling instructions (dangerous goods, cold chain, drugs, food).
Port of Entry Procedures
Most large sea ports seaports and international airports have the capacity to carrying out customs inspections, storage and clearance on site. For customs clearance to be official, there will need to be offices designated to the relevant customs authority and space for storage of goods undergoing customs.
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For arriving by sea:
- In the case of containerized containerised cargo, containers may be unstuffed in the port area before the cargo is presented for examination by Customs. Alternatively, containers may be taken to an inland container depot, or warehouse, or factory of the consignee where they are unstuffed and delivered to the consignee after completing Customs formalities.
- Carting or transporting of export cargo, if it is Break Bulk, is permitted at the berth where the ship is ready to load. In the case of containerized containerised cargo, carting is permitted to the location assigned to the shipping line by the port authority.
- Like imports, exports attract demurrage after the expiry of free time but port authorities sometimes waive this charge in the case of special cargo. Ports may defer acceptance of export cargo if there is a delay in the arrival of the vessel.
- When export cargo is taken to an inland clearance depot, Customs formalities are completed there and the cargo is stuffed into containers, which are then brought to the port for direct loading onto the ship. The same procedure may also be followed if containers are stuffed at the factory or warehouse of the shipper.
When planning arrival of cargo, it is extremely important to know if customs is an option, especially in post rapid-onset emergencies. There may be instances where planes or boats may be physically able to arrive at a sea port seaport or airport, but not actually able to legally import goods.
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The chart below outlines the general main steps in a customs clearance process:
Diagram 3: Customs Clearance Process Flow
The following steps detail the process through which cargo is handled and inspected by customs after arrival and offloading:
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Cash Payment - In very rare circumstances, customs authorities will request cash payments. Though it is becoming less common, cash based payments can occur, especially in the aftermath of rapid onset natural disasters. Wherever possible, cash payments customs clearance should be avoided as they are hard to trace and may lead to fraud. If a cash payment for customs is required, organizations organisations should request a receipt in full, detailing what each individual fee was for and the official within the customs authority with whom the transaction occurred.
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Least Secure | Open Account | Document Collection | Documentary Credit | Payment in Advance | Most Secure |
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- Payment in Advance - All import duties, fees and handling charges are paid in advance. In the event there are changes to the items, quantities or the overall anticipated fees are incorrect, the entity paying up front bears additional risk. If payment in advance is required, importers should try to use a letter of credit.
- Documentary Credit - The technical term for letter of credit.
- Documentary Collections - Instruction from an exporter (seller or supplier) to a remitting bank, normally the exporter’s local bank, to collect payment immediately or at a future date from an importer (buyer) against delivery of the relevant commercial documents. Documentary collections function like a letter of credit, however the burden of documentation and values are supplied by the seller/exporter. Importers should still monitor these communications to ensure agreed upon costs are still being used.
- Open Account - An agreement between an importer and an exporter whereby goods are supplied on the understanding that payment will be effected at an agreed future date. Payment can be made after goods have been imported. This method is used when there is a high level of trust between exporters and importers.
Templates and Tools
TEMPLATE - Certificate of Origin
References
- Country specific customs information can be found at the Global Logistics Cluster, Logistics Cluster Assessment (LCA) country pages.Training modules available at: Link
- Customs Model Agreement Between UN and State
- Kyoto Convention. Cp. 5 Annex J - Relief Consignments
Overview
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