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CENTRE FOR CUSTOMS & EXCISE STUDIES
Export Control & Duty Suspension Regimes
Module 2: Export Control – Export Control Administration
CUST 2301
[Type text] [Type text] Export Control & Duty Suspension Regimes
Module 2: Export Control – Export Control Administration
© CCES,
Published by: Centre for Customs & Excise Studies
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Export Control Administration
In this module we will examine the reasons for export controls on goods, including requirements determined by international obligations. It can be said that no country can view its export controls in isolation – there are compliance demands place on exporters by their countries international agreements and by post September 11 cargo security requirements imposed by recipient countries.
Reasons for controls
A country’s export control system will reflect its broad national interests and is the means by which consistency is achieved. The system in any country is controlled by law and Government policy to:
 prohibit the export of certain goods either absolutely or conditionally; and
 adequately record the country’s international trade statistics.
Total prohibition normally applies to the export of protected wildlife, selected weapons and other dangerous goods as well as selected heritage items. Goods that are conditionally prohibited from export may not be exported unless all required export permits/approvals are obtained from the relevant issuing agency. Usually not all goods require a permit for export – there are usually exemptions, including passengers’ baggage, goods with a de minimus value and low value products exported as part of courier shipments.
Export control policies and procedures are normally reviewed regularly in line with changing national interests and variations in the global security environment. To ensure consistency and to limit the risk of diversion of sensitive military exports, most countries are committed to cooperative arrangements and treaties with other countries. These will be examined later in this course.
In today’s security environment, unless specifically exempted, most countries will not allow goods to be exported or loaded on a ship or aircraft for export, unless a goods declaration has been lodged with the appropriate permit/approval, (if required) and Customs has given approval to export. In many countries this approval is obtained electronically, following the electronic lodgement of documents by the owner, broker or carrier.
Ships or aircraft may not depart unless Customs has issued a Certificate of Clearance which will not be forthcoming unless all Government requirements regarding the ship, aircraft or other conveyance and its cargo have been met.
Overview of Customs export requirements
In many countries, the majority of export declarations entries are lodged electronically directly by the owner, broker or carrier in accordance with legislated requirements. The system in modern organisations relies on a self-assessment regime and normally results in a prompt response with goods cleared for export. Delays in clearance occur when input errors occur or where an entry falls into a high-risk category and further information is required, or a decision is made to examine the cargo or the original permit/permission.
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Module 2: Export Control – Export Control Administration
Customs officers examine export cargo for a variety of reasons, including:
 verification of the goods against the declaration details
 compliance with product marking requirements
 detection of prohibited goods, or restricted exports that are not covered by an appropriate export permit.
Cargo received for export is subject to Customs control and, as such, may be examined. In addition to examining cargo, Customs may also encourage export compliance through training and awareness programs, compliance audits or sanctions.
At one stage many countries applied export duties or levies of some goods being exported. Generally, however, this approach has changed as such duties and levies increased the cost of exports and their competitiveness. Export duties are a significant revenue source for the Papua New Guinea Government (especially for logs – see Table 1 below) and imposes export duties on two primary produce items. Export duties must be paid prior to the departure of the vessel.
Table 1
Export Duties, Papua New Guinea HS Item Goods Rate Remarks 4103 Crocodile skins 5% 44031 Plantation logs Free The export of unprocessed timber, being balsa, black bean, cordial, ebony, rosewood, teak and all conifers is banned Sandal wood 15%
Timber logs and poles in the rough, whether or not stripped of bark or sapwood, or roughly squared (i.e. not downstream processed e.g. sawn timber), of all species (other than balsa, black bean, cordial, ebony, rosewood, teak and all conifers the export of all of which is banned.
28.5% of FOB value
1 PNG Customs Tariff (2007 Budget Amendment) Act 2006
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Figure 1
Export of
Logs,
Vanimo,
PNG
Source:
CCES
Reading 1
Customs and Border Protection Service – Export Control Volume 12; Division 4 – Export
Prohibitions, Restrictions and Permissions – Department of Agriculture, Fisheries and
Forestry
In Australia Customs and Border Protection service administers other export legislation on
behalf of a number of permit issuing agencies. In certain cases, restrictions or prohibitions
are not only expressed in the Customs (Prohibited Export) Regulations 1958 but also in
relevant agency legislation. The export of goods from Australia is controlled by laws and
Government policies to:
 prohibit the export of certain goods either absolutely or conditionally; and
 adequately record Australia’s international trade.
Total prohibition applies to the export of protected wildlife, some heritage items,
selected weapons and other dangerous goods. Goods that are conditionally prohibited
from export may not be exported unless all necessary export permits are obtained from
the relevant permit issuing agency.
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In summary, Customs role in the exportation of goods is to:
 ensure that export declarations are received for goods being exported (unless specifically exempted)
 administer controls on the export of restricted goods –in some cases this will be on behalf of other Government agencies
 prevent the export of prohibited goods
 undertake compliance auditing
 collect any export duties or levies
 collect statistical information regarding the nature and volume of exports to assist the government and industry in policy and decision-making.
Some introductory terminology
When goods enter, move about and exit a customs territory, they will also move in and out of Customs control. This means that we need to know the status of goods at any particular time and to understand the different rules that apply, depending on their status. In this section we shall look at each of these stages very quickly. Most Customs legislation will spell out in detail the very general principles that are set down in the WCO Revised Kyoto Convention RKC).
Customs Control
When goods are imported or exported they are subject to the control of Customs from the time they are imported until they are delivered for home use or are re-exported. The concept of Customs control is an important one for Customs and if you wish to read more on the subject, I suggest you examine the guidelines to Chapter 6 of the General Annex of the Revised Kyoto Convention.
Simply, Customs control requires all ships, vehicles, aircraft, trains, passengers and crew to report to a Customs port or border crossing when they first enter a country. Thus an aircraft is required to land at a declared airport for international flights which is manned by Customs staff. This gives Customs the power to examine the aircraft, passengers, cargo and crew.
This means that cargo, whether imported or exported is brought under the control of Customs before it is further dealt with. The control is often physical; i.e. it must be offloaded and stored in temporary storage in bonded premises before being re-exported or released into home use. However, this control is becoming more documentary in many administrations with the goods being reported electronically and cleared for export or release without being sighted by a Customs officer unless physical examination is required.
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Activity 1
Customs control
Examine your national Customs legislation. What section covers Customs control of
goods? When do goods that are to be exported become subject to Customs control?
In most cases, the goods will be brought into the Customs territory before the goods
declaration has been lodged, and may be in the territory for some time before the declaration
is lodged. At any time during the import or export declaration process, Customs may
examine the goods or require further documents to be produced. The goods may not be
removed or loaded on board the export vessel until Customs has issued an authority to deal
with them.
Goods that have been exported for a certain reason may be re-imported, and certain rules
may need to apply to the act of re-importation. Some goods may be introduced into the
customs territory for only a short period and will then be re-exported unchanged. These may
be goods in an exhibition, for example, often importers will bring goods into a country with
the intention that they be sold at a later time. In these circumstances, the goods may be held
in storage under a licensed warehouse system. Goods may be entered for warehousing and
held there until they are required for home consumption (or home use), at which time a
declaration is made and duty paid. Alternatively goods may be re-exported under bond – this
system is often used for goods going on board vessels and aircraft as stores.
Export of Goods
Compared with the different regimes that apply to the importation of goods, most countries
pay only limited attention to exports. This is not altogether surprising, as once goods leave
the Customs territory, they usually cease to be of interest to Customs unless they are
expected to be re-imported under provisions relating to outwards processing or are sensitive
military goods.
Indeed, in many countries, Customs authorities have been keen to provide maximum
facilitation for exports so as to assist with trade as much as possible. Nevertheless, there are
reasons why Customs cannot ignore exports:
 there are international conventions which prohibit the export of certain
proscribed goods
 there are some countries that impose duties on certain exports
 many countries exempt exports from goods and services taxes, and so
accurate records of exports are necessary to reduce the risk of fraud
 balance of payments data depend on accurate export statistics
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Module 2: Export Control – Export Control Administration
 some countries require pre-shipment inspections of the goods in the
country of origin to assist with verification of origin and value issues in the
importing country
 the US and other governments require the transmission of data on the
export goods (usually) 24 hours before they leave the port of departure.
There is now greater pressure on Customs to exercise effective controls over exports as well
as over imports. This pressure has developed particularly in the last few years and after the
revision of the Kyoto Convention.
Reading 2
World Customs Organisation 1999, Revised Kyoto Convention on the simplification
and harmonisation of Customs procedures, Specific Annex C Guidelines – Exportation,
Brussels.
Chapter 1 of Specific Annex C of the RKC is entitled Outright Exportation. It therefore deals
with circumstances where the goods concerned are not expected to return to the Customs
Territory (unlike goods that are departing for outwards processing). Annex C starts from the
presumption that goods being exported will be brought under export procedures through the
lodgement of an export declaration. The general provisions, relating to declarants (Standards
3.6 and 3.7 of the General Annex) and to declarations (Standards 3.11 and 3.12 of the
General Annex), also apply to export declarations.
The provisions of Annex C are very straightforward. Standard 1 is the basic provision saying
that outright exportation shall be governed by this Chapter. Recommended Practice (RP) 2
provides that goods may be declared in an alternative manner to the standard Goods
declaration, on the condition that it provides the necessary particulars relating to the goods to
be cleared. This is a facilitative measure which is intended to be available to all traders (not
just authorised traders). It is intended to allow Customs to use documents such as
commercial invoices or manifests to provide the information required to allow the goods to
depart.
Standard 3 provides that the Customs shall not require, as a matter of course, evidence of
the arrival of the goods abroad. This provision recognises that once goods have left the
Customs territory, they are no longer of interest to Customs. This is not the case, however, if
the goods are subject to special controls, require notification under regulations, or qualify for
repayment of duty or exemption from taxes. In those circumstances, Customs may seek
proof that the goods have arrived in the declared destination. Goods such as licit narcotics or
weapons may require such certification.
As you can see, the provisions of Annex C are very limited, even when those provisions of
the General Annex which also apply to exports are taken into account. It would not be
surprising to see Annex C being reviewed by the Kyoto Management Committee in the
future.
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Activity 2
Standard 3
Standard 3 of Specific Annex C states, inter alia, ‘when evidence [of arrival of goods]
…. must be furnished, Customs in the country of export would normally accept a
statement supplied by the consignee who received the goods and certified by
Customs in the country of destination’.
Can you think of any classes of goods where this procedure would not be considered
as satisfactory to a control administration in the exporting country?
Figure 2
Wildlife
officers
examine a
large number
of turtles
intercepted by
Australian
Customs
following an
attempt to
export them to
Japan
Source:
ACBPS
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Summary
As the result of increased security concerns, many countries have tightened control on reporting requirements for import and export cargo. While electronic lodgement improves reporting procedures, the principal purpose is to have electronic advice of cargo so that it can be checked against law enforcement databases to identify high-risk cargo requiring examination.
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Reading 1
Customs and Border Protection Service – Export Control Volume 12; Division 4 – Export
Prohibitions, Restrictions and Permissions – Department of Agriculture, Fisheries and Forestry
[Type text] [Type text] Export Control & Duty Suspension Regimes
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Reading 2
World Customs Organisation 1999, Revised Kyoto Convention on the simplification and harmonisation of Customs procedures, Specific Annex C Guidelines – Exportation, Brussels.
GUIDELINES TO SPECIFIC ANNEX C
Chapter 1
OUTRIGHT EXPORTATION
1. Introduction
These Guidelines are aimed at developing general principles governing the outright exportation procedure, the export formalities to be completed under the normal procedure and ways of simplifying the formalities and the procedures.
In accordance with the definition of ‘outright exportation’, this Chapter only applies to goods in free circulation that are intended to be permanently exported. Temporary exportations are dealt with under other Chapters of this Convention.
2. General principles
To place goods under the outright exportation procedure the declarant must make an export declaration. The export declaration is both an instrument by which the declarant states that he wants the goods placed under the outright exportation procedure and a formality enabling Customs to carry out the necessary controls and to collect any duties and taxes payable at exportation.
It should be noted that the exporter is the person on whose behalf the export declaration is made out and who may, in this capacity, enjoy relief from internal taxes and who must pay any export duties and taxes due.
In some countries the competent Customs office for lodgement of the export declaration and presentation of the goods is normally the office closest or most accessible to the exporter’s premises. Where applicable, the Customs office may be assigned a geographical area, and the exporters based in this area can be covered by that office. In addition, offices further from the exporter’s premises but located on a major trade route (port, airport, railway station, frontier post) selected by the exporter for the transport of the goods, could also be competent to accept the export declaration. In other countries, the office of exit is the only office where the goods are presented and the declaration is lodged for outright exportation. For further details on competent Customs offices, please see the Guidelines to Standard 3.1 of the General Annex.
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Standards 3.6 and 3.7 of the General Annex and their Guidelines contain information regarding the declarant. Likewise the General Annex Guidelines for Standards 3.11 and 3.12 give details pertaining to the contents, format and data requirements of a Goods declaration.
It should be noted that Chapter 3 of the General Annex also covers, in particular, facilities for a provisional or incomplete declaration, the lodgement and registration of the Goods declaration, examination and release of the goods. These procedures are especially applicable to this Chapter on outright exportation.
Chapter 6 of the General Annex on Customs control provides that Customs control must be limited to that necessary to ensure compliance with Customs law and that Customs shall use risk management in the application of Customs control. The degree of control with regard to goods to be exported, including means of transport, will depend upon the risk involved and the manner in which the outright exportation is carried out. In some Customs territories the goods and the Goods declaration for export are presented directly to the office of exit. In others the goods and the declaration are presented at an inland Customs office before being moved to the office of exit. Many Customs administrations offer special simplified procedures for outright exportation, for example allowing the export declaration to be lodged at the declarant’s premises before the goods are moved to the office of exit. (See Guidelines to Transitional Standard 32 and Standard 3.41 of the General Annex). A few countries have also entered into bilateral agreements under which they are developing the possibility to use the information submitted on the export Goods declaration as the information for the import Goods declaration. This is commonly referred to as an integrated transaction, and it is particularly pertinent for use by multinational companies in their intra-company international transfers of goods. This is intended to improve both facilitation and compliance by using a single set of the data regarding the goods.
The physical exit of the goods from the Customs territory can be certified by specific reference on the export declaration, either when the goods actually leave the territory or when the goods declared for export are placed under a Customs transit procedure within the Customs territory enroute to the place of exit from that territory.
Goods exported outright are not expected to return to the country of exportation. However, for various reasons the goods, in practice, may be returned and in this case they would normally be treated under the procedure for re-importation in the same state if they meet all the relevant conditions. This procedure is covered in Specific Annex B, Chapter 2. If the conditions for re-importation in the same state are not met, the goods would be treated as foreign goods.
3. Definition
E1/F1 ‘outright exportation’ means the Customs procedure applicable to goods which, being in free circulation, leave the Customs territory and are intended to remain permanently outside it.
All the definitions of terms necessary for the interpretation of more than one Annex to the Convention are placed in the General Annex. The definitions of terms applicable to only a particular procedure or practice are contained in that Specific Annex or Chapter.
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4. Formalities to be completed under the normal procedure
Standard 1 Outright exportation shall be governed by the provisions of this Chapter and, insofar as applicable, by the provisions of the General Annex.
The revised Kyoto Convention has a set of obligatory core provisions that are contained in the General Annex. The General Annex reflects the main principles considered necessary to harmonize and simplify all the relevant Customs procedures and practices which Customs apply in their daily activities.
As the core provisions of the General Annex are applicable to all Specific Annexes and Chapters, they should be applied in full for Outright exportation. Where a specific applicability is not relevant, the greater facilitation principles of the General Annex should always be borne in mind when implementing the provisions of this Chapter. In particular, Chapter 1 of the General Annex on General principles, Chapter 3 on Clearance and other Customs formalities and Chapter 7 on Information technology should be read in conjunction with this Chapter on Outright exportation.
Contracting Parties should particularly note Standard 1.2 of the General Annex and ensure that their national legislation specifies the conditions to be fulfilled and the formalities to be accomplished for Outright exportation.
In line with Article 2 of the Convention, Contracting Parties are encouraged to grant greater facilities than those provided for in this Chapter.
Recommended Practice 2 National legislation should provide that goods may be declared in an alternative manner to the standard Goods declaration on the condition that it provides the necessary particulars relating to the goods to be cleared for outright exportation.
As an additional facilitation to trade many Customs administrations permit goods for outright exportation to be declared in an alternative manner instead of using the official format of the Goods declaration as long as all of the required information pertaining to the goods is included in the alternative document or format. This is a facilitative approach to the acceptance of documentation that would be applicable in both the manual and electronic environments.
This alternative format is in lieu of the Goods declaration and is considered to be the only declaration required for the purpose of outright exportation. It is a facility made available to all the declarants, and this procedure therefore differs from the provisions of Transitional Standard 3.32 of the General Annex which are available only to authorized traders.
Customs usually specifies the types of goods that can be declared in this manner and normally extends the facility for goods which are in large volumes and of low risk or are unconditionally free of duties and taxes. This may include, for example, newspapers, journals and periodicals, and certain bulk construction materials such as cement or sand, etc. The alternative format to the standard Goods declaration could be a commercial document, for example an invoice or a transport document, as long as the necessary particulars relating to the goods to be exported are contained in the commercial document.
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Customs is usually satisfied with a commercial document where the goods to be exported are not liable to export duties and taxes and do not give rise to repayment of or exemption from internal duties and taxes, and where the Goods declaration is not used for the compilation of statistics.
A number of international efforts are underway to standardize commercial and transport documents (e.g. International Maritime Organization and International Civil Aviation Organization cargo declaration formats). The United Nations Economic Commission for Europe (UN/ECE) has adopted a Recommendation on an aligned invoice lay-out key for international trade which is an example of a standardized format for a commercial invoice. The use of any of these standardized formats for declaring goods for export in specified cases in lieu of a Goods declaration could be considered by administrations implementing this Recommended Practice.
Standard 3 The Customs shall not require evidence of the arrival of the goods abroad as a matter of course.
Normally the Customs office of export does not require evidence of the arrival of goods abroad when clearance has been given to goods for outright exportation. In general, the only cases when such evidence would be required are when the goods:
 are subject to special controls,
 require such a notification under certain types of regulations or
 qualify for repayment of or exemption from internal duties and taxes and evidence of exportation is not otherwise available, and there is a reason to fear abuse.
Examples of goods under special export controls or regulations could be arms and ammunition, narcotics exported for the production of medicines and hazardous or precursor chemicals.
When evidence not otherwise available must be furnished, Customs in the country of export would normally accept a statement supplied by the consignee who received the goods and certified by Customs in the country of destination.