Streamlining Customs Clearance Procedures to

Facilitate International Trade

(The Case of Ethiopian Import Procedures)
By:
Tekleweyni Tadesse
(World Bank Customs Consultant)

October, 2018
Malatya, Turkey
 Introduction
— The trade facilitation challenges in Ethiopia suffers from
excessive border bottlenecks, lack of reform and drawbacks
in private investment.
— The high cost of doing business across borders in Ethiopia is
said to have become a major constraint to economic
development.
— Ethiopia is one of the countries with the highest set of
challenges in cross border trade.
— This has affected Ethiopia’s international trade relation and
has hampered its trading across borders track record at the
face of global competition for foreign direct investment.
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 Streamlining Ethiopian Import
Customs Procedures
It is extremely important that when setting out to reform and
modernize Customs procedures, every effort must be made
to:
— Minimize the incidence of Customs interventions;
— Simplify and streamline the complexity of data and document
requirements, work and paper-flows, procedures, processes,
and controls;
— Ensure that the proposed reforms are in full conformity with
international Customs conventions, related recommended
best practices and agreed standards;
— Apply information and telecommunications solutions (ICT)
3 to support these Customs reform efforts.
 Typical Ethiopian Customs Import Clearance
Process
The Customs import clearance process in Ethiopia normally
consists of various distinct steps:
1) Cargo declaration by carrier to Customs
2) Temporary storage of arriving goods
3) Customs import goods declaration
a) Preparation and submission of the goods declaration by
importer/broker
b) Validation and acceptance of the goods declaration
c) Automated risk management/channeling

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 Typical Ethiopian Customs Import
Clearance….
d) Checking the goods declaration and supporting documents
e) Assessment of the goods declaration by specialized customs
officer (optional)
4) Physical inspection of the goods (optional)
5) Collection of duties/taxes by Customs (optional, by
commercial banks)
6) Release of the goods by Customs
7) Delivery of the goods to the importer
8) Post-clearance auditing of importer by Customs (optional)

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 1. Cargo Declaration by Carrier to
Customs
The carrier reporting procedure in Ethiopia is characterized by:
— Being totally paper-based (i.e., Customs not equipped to
accept electronic carrier manifest reporting). Consequently,
upon arrival of the conveyance, carriers must print multiple
hardcopies of manifests for Customs and other border
agencies.
— No advance electronic cargo declaration reporting.
— No automated risk management capability within the
Customs computer for processing carrier reports

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 Cargo Declaration by Carrier to
Customs…..
The Ethiopian customs should design electronic carriers
reporting system and the carrier’s cargo declaration to
Customs should:
— Include minimum data or document requirements normally
found on the carrier’s manifest
— Set the maximum time limit either prior to or after arrival
of the conveyance for the carrier to report to Customs the
cargo’s arrival; and,
— Allow the carrier to make the cargo declaration to Customs
on a pre arrival basis, that is, in advance of the conveyance’s
arrival at the border
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 Cargo Declaration by Carrier to
Customs…..
— Once the manifest data is in the Customs computer, the
system should be capable of automatically matching each
manifest item against each item on the Customs goods
declaration that is subsequently submitted by the importer
— The application will also automatically ‘acquit, jerk, write-
off’ each line of the manifest against each goods item
declared on the Customs declaration, in order to identify any
cargo that has been reported as arrived by the carrier but not
declared to customs
— The system should identify all discrepancies as well as any
‘unclaimed or undeclared’ cargo (i.e. cargo reported arrived
but not cleared by Customs)
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 2. Temporary Storage of Arriving
Goods
When assessing the effectiveness of Ethiopian Customs
temporary storage facilities, we can determine the need for
reform by looking at the following weaknesses:
— A lack of storage facilities, resulting in the conveyance being
held up for days and not being released for other commercial
activities;
— Insecure storage facilities, resulting in pilferage and damage;
— A lack of equipment to unload the goods from the
conveyance into the temporary store,
— Customs not allowing the trader to have access to his goods
in temporary storage,
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 Temporary Storage of Arriving Goods..
The Ethiopian customs should solve the problems of temporary
storage facilities by:
— Purchasing modern equipments and constructing additional
secured temporary storage facilities to unload the goods,
— Allowing importers to access their goods while the goods are
in temporary storage to check whether they conform to
contract conditions, or to undergo certain authorized
operations necessary to preserve the goods ,
— Granting an extension to the goods which are not removed
from the temporary store within the prescribed period, or
allowing transferring to a free zone, or be exported.
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 3. Customs Import Goods Declaration

3.1 Preparation and Submission of the Customs

Goods Declaration by Importer/Broker
When we see the Ethiopian customs, the following problems
are observed in goods declaration requirement:
— Many data element requirements on the goods declaration;
— High number of hard copies of Customs declaration;
— High number of copies of required supporting documents
(e.g. commercial invoices)
— Absence of ‘paperless’ Customs declarations (i.e., electronic
goods declarations with electronic signatures, electronic
commercial invoices, electronic certificates of origin, and
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import permits).
 Customs Import Goods Declaration…
To reduce transaction costs and cargo dwell times associated
with the Customs clearance of goods, every attempt of
Ethiopian customs should be made to:
— Minimize reporting and clearance processes by eliminating
or combining procedural steps and creating ‘one-window’ or
‘one-stop-shop’ customer service centers where all relevant
authorities can provide required services to traders;
— Streamline work/paper-flows;
— Minimize document requirements (both the Customs
declaration and supporting documents) and related data
requirements;
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 Customs Import Goods Declaration…
— Utilize a single, standardized document format and content
for multiple agency reporting purposes and customs regimes;
— Harmonize and standardize border authority requirements
and, to the extent possible, ensure these are consistent and
compatible with internationally-accepted trade documents;
— Minimize the number of approval authorities’ signatures or
stamps, and;
— Maximize the use of ICT systems, whereby data
requirements can be exchanged electronically using
standardized electronic message structures, wherever
possible in advance of the cargo arrival.
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 Customs Import Goods Declaration…
3.2 Validation and Acceptance of the Goods
Declaration
— At the reception desk, Customs officers are allowed to
undertake a very cursory check of the completeness of the
declaration package and confirm the acceptance of the goods
declaration package. However;
— There is no a facility or an electronic data interchange among
customs officers and customs brokers to inform the status of
each customs declaration and to submit additional enquiries
to customs brokers.

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 Customs Import Goods Declaration…
— A facility should be given to importers/brokers to allow
them to track/monitor the status of their goods declaration
in the clearance process.
— This can be accomplished by placing monitors in strategically
located public areas of the Customs office.
— These monitors can indicate the status of each goods
declaration number and/or whether there has been any
query raised by Customs and who to contact, etc.
— The customs management system should allow for exchange
of electronic messaging with importers and customs brokers

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 Customs Import Goods Declaration…
3.3 Automated Risk Management/Channelling
— The risk management system implemented in Ethiopia is at
its infancy level with high percentage of cargo inspected
physically. This is because of the following reasons:
— The risk criteria loaded into the risk management application
is not carefully monitored and regularly updated.
— Absence of information to update the profile of importers
— Lack of information technology to update the profile of
importers regularly
— Thus, the Ethiopian customs should solve the above problems
to enhance its risk management system and to facilitate
16 international trade.
 Customs Import Goods Declaration…
3.4 Checking the Goods Declaration and
Supporting Documents by Customs
— There is a problem with regard to communicating with
importers and putting the reasons why the officer decided
the goods to be inspected and the specific information
required from the inspector.
— Therefore, Ethiopian customs should design effective
customs procedure for checking of goods declaration and
supporting documents by:

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 Customs Import Goods Declaration…
— Enabling the customs system, to request the importer/
declarant to present additional information or documents to
support the declaration, make a correction to the
declaration, etc.
— Enabling the Customs system to record the specific reason
for inspecting the goods and the specific information that
should be gathered by the Customs officer assigned
responsibility for inspecting the goods. For example, the
officer checking the documentation may request: digital
photographs be taken; a sample be taken and sent to the
officer; the goods to be checked for marking, origin or
specific information to assist in verifying how the goods
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should be either classified or valued.
 Customs Import Goods Declaration…
3.5 Assessment of the Goods Declaration by
Specialist Customs Officers (Optional)
— In Ethiopia there is a specialized assessment unit in each
customs branch offices to provide a decision on issues related
with the value, tariff classification, or origin declared on the
goods declaration.
— Given the significant problems in checking the reasonableness
of the Customs values declared for specific goods, Ethiopian
Customs have developed valuation reference price databases
containing unit prices for all commodities.

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 Customs Import Goods Declaration…
— The Ethiopian Customs have experienced serious difficulties
in effectively operating the WTO Agreement on Customs
Valuation (ACV) due to:
— National Customs legislations not amended to effectively
incorporate the ACV provisions.
— Lack of ownership and poorly internalized Customs process
— Serious concerns about loss of revenue given the importance
of Customs duties/taxes to the state’s fiscal situation.
— ill-equipped to effectively check the reason of values before
release,
— Raising serious concerns for policymakers in applying the
20 transaction value;
 Customs Import Goods Declaration…
— Low managed Customs computer systems and the lack of
systems to create and maintain valuation reference price data
bases to assist officers in checking the reasonableness of
declared values;
— Corruption between Customs officers and traders.
— Failure to consistently apply severe penalties for presentation
of false invoices or for valuation fraud.
— Lack of regularly updating the unit prices in the database by a
research team responsible for examining invoices presented,
gathering catalogues and price lists, searching the Internet for
prices, attending trade shows, soliciting values from
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competitor firms, etc.
 Customs Import Goods Declaration…
— Ethiopian Customs also issue national rulings on how specific
goods should be classified.
— However, this service is not provided electronically and the
issued rulings are not available to the public on their Web site
or over their computer systems through a database containing
national HS rulings.
— The following problems are observed in the provision and
controlling of exemptions in Ethiopia:
— The goods declaration doesn’t include an exemption
authorization number
— Many number of other ministries or authorities allowed to
22 legally grant duty/tax exemptions
 Customs Import Goods Declaration…
— Providing exemption approvals to the importers rather than
sending directly to Customs by the authorizing agency
— Absence of exemption approvals stored in an exemption
database inside the Customs computer.
— Absence of an electronic system to apply online to the
appropriate granting authority for an exemption and to
electronically send the approval directly to Customs
— Absence of clear criteria for granting duty/tax exemptions,
— Lack of monitoring and evaluation to ensure that the costs of
the exemption do not exceed the intended benefits
— Absence of conducting rigorous end use audits for goods
23 imported under exemption or concession regimes
 4. Physical Inspection of Goods by
Customs Officer (Optional)
— Where more than one agency is involved in an inspection, it
is important that there is coordination between such agencies
so as to avoid duplicative inspections.
— Unfortunately, in Ethiopia there is no mechanism for
ensuring coordination between the various government
inspectors, leading to unnecessary delays.
— In addition, the absence of any system to schedule cargo
inspections causes unnecessary queuing and delays,
— To avoid queues and delays with cargo inspection, the
Customs automated system be enhanced to allow the trader
to schedule any physical inspection with Customs and other
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border agencies
 Physical Inspection of Goods by
Customs Officer….
— It is very important that Customs hours of operation coincide
with those of the other border agencies.
— Again, unfortunately in Ethiopia this is not the case, with
hours of operation of the various agencies not harmonized to
maximize service to the trader.
— Ethiopian customs have already invested in sophisticated
container scanning systems allowing officers to peer deep
inside a closed container or truck
— However, the digital images of the scanned cargo are
interpreted by more than one officer and that these images
are not stored and digitally linked to the goods declaration
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document.
 Physical Inspection of Goods by
Customs Officer….
— Given the high volume of import and export containers in
Ethiopia, there is insufficient time and it is not cost effective
to move all containers through the scanner.
— Unfortunately, Ethiopian customs doesn’t implement
Intelligence and profiling techniques to select which
containers to scan.
— Ethiopian customs have no enforcement intelligence database
which can contain intelligence information and look outs past
enforcement records;
— Thus, Ethiopian Customs needs to work closely with
stakeholders and other border agencies and Customs services
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in other countries for the exchange of vital intelligence to
more effectively combat customs offenses.
 5. Collection of Duties/Taxes

— The Ethiopian customs system normally calculates the duty/

tax payable on each declaration.
— However, Customs cashiers only accept cash payment order
(CPO).
— Therefore, the Customs computer system must be linked to
the systems of commercial banks, Society for Worldwide
Interbank Financial Telecommunication (SWIFT) to allow
traders to transfer funds from their bank accounts to a
Customs account, with electronic messages sent to all parties
confirming the transfer details.

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 6. Release of Goods by Customs

— Once Customs has decided to release the goods (and the

duty/tax has been paid), the importer/broker must be
notified electronically for physical removal of the goods from
the airport or port.
— However, goods declaration form is stamped or signed by a
Customs officer as proof of Customs release in Ethiopia.
— Thus, Ethiopian customs should improve its customs systems
to notify the release of shipments and to communicate
importers why consignments are not released and which
border agency has placed a hold on the consignment.

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 7. Delivery of Goods

— Sometimes, Customs release may not be sufficient to remove

the consignment from the exit gates at the airport or port.
— Normally, the port authority or cargo handling company will
not allow the goods to be delivered until any demurrage and
all port-handling charges have been paid.
— In Ethiopia significant cargo delays occur after the delivery
note is issued and until the goods are actually loaded onto a
truck and delivered.
— This is mostly caused by the delays by the cargo handling
company actually loading the goods onto the truck.

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 8. Post-Clearance Auditing of Importer
(Optional)
— In Ethiopia, goods declarations are selectively re-verified
after release of the goods.
— This is especially the case for those goods declarations that
have been granted immediate Green Channel release and not
been checked prior to release.
— However, automation is not used to process goods
declaration data against specific selection criteria maintained
by post-clearance audit teams.
— Thus, Ethiopian customs should support the selection process
for post clearance audit by information technology.

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 Thank You Very Much for Your Attention!!

Tekleweyni Tadesse
World Bank Customs Consultant
Email: [email protected]
[email protected]
+251920552744

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