EXPLANATORY MEMORANDUM: THE CONVENTION ON MUTUAL ADMINISTRATIVE ASSISTANCE IN CUSTOMS MATTERS

1. BACKGROUND

The Convention on Mutual Administrative Assistance in Customs Matters, the Johannesburg Convention, was adopted by the Council of the World Customs Organization (WCQ) on 27 June 2003 in Brussels, Belgium and has not entered into force as yet. The Johannesburg Convention is one of the main international agreements of the WCO aimed at providing a legal and binding framework for reciprocal cooperation between Customs administrations.

2. INTRODUCTION: MUTUAL ADMINISTRATIVE ASSISTANCE IN CUSTOMS MATTERS

2.1 Customs administrations face an increasingly complex, fluid and expanding global trade landscape, driven in large part by elements such as continued initiatives to liberalise trade, more complex trade rules, the proliferation of regional trade agreements and threats to national security.

At the same time, Customs administrations face increasing pressure to facilitate trade. International trade supply chains remain vulnerable to possible terrorist attacks which would bring international trade to a standstill and could spell disaster for the international economy.

Rogue traders and organized crime syndicates also exploit international trade supply chains through the evasion and avoidance of duties and taxes, the smuggling of goods, money laundering and trade in counterfeit goods. These activities threaten national economic security.

2.2 Traditionally, Customs administrations tended to focus on import control carried out in isolation from the controls undertaken by the export and transit administrations. This disjoint in controls remains a central vulnerability of the international supply chain and is compounded by the limited avenues available for Customs administration to exchange the very information that would enable a closer integration of controls throughout the supply chain.

2.3 With a view to promoting the security and facilitation of goods moved through international trade supply chains, the WCO Council has finalised international standards that are aimed at facilitating the seamless cross-border movement of goods. One of the cornerstones of these standards is to establish real-time cooperation between Customs administrations through advanced electronic transmission of Customs data, enabling Customs to identify high risk consignments prior to the arrival of goods.

2.4 The main objective of the Johannesburg Convention is to provide a binding and enabling legal instrument for reciprocal cooperation between Customs administrations, to assist them in obtaining information not available in their territories for the application of Customs law. Contracting Parties accept the obligation to provide each other with administrative assistance under the terms of the Convention. The scope of such assistance includes: the proper application of Customs law; the prevention, investigation and combating of Customs offences; and ensuring the security of the international trade supply chain.

2.5 South Africa is a Contracting Party to the Nairobi Convention on Mutual Administrative Assistance for the Prevention, Investigation and Repression of Customs Offences which also provides a basis for Mutual Administrative Assistance. However, the Johannesburg Convention is wider in scope, as it also addresses the proper application of Customs laws and accommodates the WCO's June 2002 Resolution on Security and Facilitation of the International Trade Supply Chain. The Johannesburg Convention also contains a number of provisions that take into account modem methods of cooperation, such as controlled delivery, hot pursuit and joint control and investigation teams.

3. STRUCTURE AND MAIN PROVISIONS OF THE CONVENTION

The Convention consists of 54 articles over 10 chapters. A number of these are mandatory articles that represent core provisions for a sound legal basis for providing mutual administrative assistance. These provisions are contained in articles 1 to 8, 11, 13, 18, 24 to 28 and 31 10 54. The 10 chapters deal with:

· Definitions: This chapter consists of one article with definitions;

· Scope of the Convention: This chapter consists of one article dealing with the purpose and scope of the Convention;

· General assistance procedures: This chapter consists of 2 articles dealing with the procedures for communicating requests for assistance, as well as for the spontaneous provision of assistance;

· Information: This chapter consists of 6 articles dealing with the purpose and type of information which could be requested and provided. The chapter also provides for voluntary automatic exchange. of information, as well as the advance exchange of information;

· Special types of assistance: This chapter consists of 8 articles dealing with special types of assistance which could be provided, such as surveillance, controlled delivery, notification, the recovery of Customs claims, the appearance of experts and witnesses, the presence of officials in each other's territories and arrangements for visiting officials;

· Cross-border cooperation: This chapter consists of 5 articles dealing withgeneral provisions for cross-border cooperation, as well as the types of cooperation involved, such as hot pursuit, cross-border surveillance, covert investigations and joint control and investigation teams;

· Use, confidentiality and protection of information: This chapter consists of 3 articles dealing with the conditions under which information may be used, the confidential nature of information and the manner in which it is to be protected, notably personal data;

· Centralization of information: This chapter consists of 6 articles dealing with the communication of information to a secure central automated information system, the establishment of such a central information system, the management thereof, the handling of non-personal information, information on natural and legal persons and other information;

· Security of the Central Automated Information System: This chapter consists of 2 articles dealing with the responsibility for security measures and the implementation thereof;

· Protection of Information in the Central Automated Information System: This chapter consists of 7 articles dealing with the provision of information, the use thereof, the retention of personal data, access thereto, the modification of information and relevant responsibilities and liabilities;

· Exemptions and reservations: This chapter consists of 2 articles dealing with the conditions under which Contracting Parties may dec1ine or postpone cooperation, as well as the reservations which may be entered against the non-core articles;

· Costs: This chapter consists of 1 article dealing with individual Customs administrations' responsibilities for costs relating to the provision of Customs cooperation; and

· Final provisions: This chapter consists of 10 articles which deal with issues such as the management of the Convention, signature, ratification, accession, settlement of disputes and entry into force.

4. BENEFITS OF ACCESSION

4.1 Accession to the Johannesburg Convention will enable Customs administrations to legally exchange information, including personal data, and provide assistance directly to each other, which is not possible under the current Nairobi Convention, as well as to exchange information on consignments in advance of their arrival at destination in order to secure the international trade supply chain.

Furthermore, Customs administrations will have available a WCO instrument on mutual administrative assistance in Customs matters under which it is possible to enter reservations in respect of all provisions which do not constitute basic principles of the Convention, an option that does not exist under the Nairobi Convention.

Also, Customs administrations can in this way extend mutual administrative assistance to cover many aspects of Customs work in a manner complementary to the principles of mutual legal assistance accepted by most Members in the United Nations' Palermo Convention. Most notably, the Convention will provide a legal base for a central automated information system; and provide an instrument to supplement bilateral agreements dealing appropriately with topical issues relating to the protection of society, administration of trade and the collection of revenue.

4.2 Accession to the Johannesburg Convention will also enable South Africa to form part of an enhanced global network of International Customs administrations and will strengthen South Africa's ability to clamp down on economic security fraud. The Johannesburg Convention creates a legal basis for Customs administrations to exchange information that can be used in legal proceedings against unscrupulous traders whose activities prejudice the South African economy. The offences include the smuggling of goods to evade duties and taxes, under-valuation to reduce duty and tax payment and round-tripping where refunds are claimed on exported goods that never leave the country or which are smuggled back into South Africa. It will also enhance South Africa's reputation as a trusted and respected trading partner.