Stepping up integrity in trade and customs: Going beyond policy principles to combat illicit trade at the border

Illicit trade has an extensive destabilizing impact on global security due to its central role in facilitating transnational organized crime and illegal flows of money, people and products across borders. Combating the twin devils of corruption and illicit trade is critical to unlocking the potential of clean international trade and protecting prosperity, profitability, global supply chains and natural resources.

Customs has a particularly important role to play in combating illicit trade, with Customs officers on the front-line conducting inspections and detecting and seizing illicit goods. If this role is compromised, such as when customs officers are not acting in accordance with their official duties because of the promise of, or receipt of a bribe or other undue advantages, the system fails and enables opportunities for illegal trade, criminal activity, illegal financial flows and trafficking in products and persons.

In spite of meaningful progress in some countries, corruption continues to plague customs administrations around the world regardless of their level of development. Recent high profile cases simply reinforce what we always knew – that no country is immune to the problem and that there are no quick-fix solutions available. The very nature of customs work makes it vulnerable to many forms of corruption and other serious criminal activities.[1]
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• In Mumbai, 19 Customs department officials were suspended due to ‘professional inadequacies of conduct’ that contributed to lost import duties and allegations of co-operation with smugglers.[2]

• In the Philippines, a congressional hearing investigated the Bureau of Customs in a drug smuggling case, where the illicit shipment made its way relatively unhampered through customs' so-called express "green" lane[3]. Several high-level officials were implicated as corrupt and complicit.[4]
• In the Ukraine, respondents to a survey carried out by the American Chamber of Commerce in Ukraine (ACC) amongst more than 180 domestic and foreign companies said that the fight against corruption should be the main priority for enhancing the country’s business climate. 54 per cent consider tax and customs authorities to be the main source of corruption.[5]

While some innovative approaches have shown genuine promise in addressing integrity risks, the problem of corruption and the challenges and vulnerabilities faced by customs administrations are ongoing and require constant vigilance and practical strategies to address the problem in a holistic way.

The OECD and WCO are at the forefront of addressing integrity in customs. To date, a selection of what the two organizations have developed includes:

• Ten principles of the WCO Revised Arusha Declaration on Integrity in Customs;
• G20 High Level Principles on Countering Corruption in Customs; and the
• OECD Integrity in customs: Taking stock of good practices.

However, the work does not end there. The OECD and WCO have come a long way in identifying what needs to be done and what has worked well on a national scale in addressing integrity issues in customs. Now is the time to bring these lessons and principles to life to address the remaining gaps.

TRACIT looks forward to advancing the integrity in customs agenda together with the OECD and WCO. Through our envisaged cooperation, we can involve the private sector in the collective action to fight corruption at the border and promote shared responsibility between the public and private sectors in achieving clean trade. By joining forces, we will be able to bring together the best and brightest on these issues to facilitate true knowledge exchange between government representatives in charge of integrity, trade and security issues; national customs authorities; key implementing IGOs; and private sector experts on trade and supply chain management.

The upcoming OECD Global Anti-Corruption and Integrity Forum provides an important venue for advancing the work on improving integrity in customs. We look forward to engaging with our partners and Forum participants in Paris in the end of March and beyond.
 
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Notes
[1] McLinden, G. & Durrano, A. Z. (2013). Corruption in Customs. World Customs Journal. 7 (2). 3-10.
[2] Dasgupta, A. (2017, November 3). A custom of corruption haunts Customs dept. Mumbai Mirror. Retrieved from https://mumbaimirror.indiatimes.com/mumbai/crime/a-custom-of-corruption-haunts-customs-dept/articleshow/61474969.cms
[3] Parpan, L. (2017, August 1). Senate alleges corruption and incompetence in customs bureau over biggest haul yet of shabu smuggled into PH. CNN Philippines. Retrieved from http://cnnphilippines.com/news/2017/07/31/senate-probe-customs-drugs-china-faeldon.html
[4] Nonato, V. F. (2017, August 8). Broker accuses BOC execs of accepting bribes. Philippine Daily Inquire. Retrieved from http://newsinfo.inquirer.net/921110/broker-accuses-boc-execs-of-accepting-bribes
[5] Emerging Europe. (2018, February 14). Perceived Corruption Continues to Hold Back Ukraine FDI. Emerging Europe. Retrieved from http://emerging-europe.com/in-brief/perceived-corruption-continues-hold-back-ukraine-fdi/

Transnational Alliance to Combat Illicit Trade
​The Transnational Alliance to Combat Illicit Trade (TRACIT) is a private sector initiative organized as a non-governmental, not-for-profit organization under US tax code 501(c)(6). TRACIT draws from industry strengths and market experience to build habits of cooperation between business, government and the diverse group of countries that have limited capacities for regulatory enforcement. Its work program focuses on strengthening the business response to illicit trade by exchanging information and mitigation tactics in and across key industry sectors and reducing vulnerabilities in supply chains, including transportation, digital channels, free trade zones and financial networks. TRACIT’s work program covers alcohol; agri-foods; counterfeiting and piracy; fisheries; forestry; pesticides; petroleum; pharmaceuticals; precious metals and gemstones; and tobacco. trafficking in persons, and wildlife. 
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www.TRACIT.org : [email protected]