Integrity in Customs

In many developing countries, high levels of corruption drastically reduce the effectiveness of key public sector agencies. Customs administrations are no exception and are frequently cited as among the most corrupt of all government agencies. Given the vitally important role customs plays in revenue collection, trade facilitation, national security, and the protection of society, the presence of corruption in customs can severely limit a nation's economic and social prospects and national development ambitions.

This chapter describes the scope and nature of the corruption problem in customs and identifies a range of practical approaches that can be employed to address it. The chapter is designed to provide a comprehensive framework for analyzing the potential effectiveness of a range of anticorruption strategies and provides practical guidance and advice to customs officials, consultants, donors, and other stakeholders engaged in the identification and implementation of sound anticorruption and integrity development strategies.

Attempts to deal with corruption in the past have often been frustrated by well-intentioned but totally ineffective calls for the adoption of industrial countries' standards of administrative honesty, effectiveness, and efficiency or, perhaps, the adoption of quick fix solutions designed to work around rather than deal with the problem. Recourse to preshipment inspection services has at times been inspired by such motives. To effectively tackle the problem of corruption in customs, a comprehensive and sustainable approach that addresses the underlying causes and consequences is required. There are no quick fix solutions. Rather, a pragmatic and situation-specific approach is necessary-one that draws on the lessons learned from previous efforts around the world and that takes into account the fundamental issues of motive and opportunity.

The first section of this chapter provides an introduction to the nature of the corruption problem in customs and describes some important considerations to take into account when framing an effective anticorruption strategy for customs. It also provides an overall framework based principally on the work of scholars such as Robert Klitgaard. The second section reviews the international customs community's response to the problem and outlines a comprehensive 10-point framework for tackling corruption, as contained in the World Customs Organization's (WCO's) Arusha Declaration on Integrity in Customs. The section also provides some practical guidelines on how to develop, implement, and monitor a national customs integrity action plan and how to establish a process and sustainable culture of continuous improvement. A series of key issues and questions are included in a simple checklist for each of the 10 points (see boxes 4.1-4.7 and 4.9-4.11). The final section presents the key operational conclusions derived from the chapter.

Consequences of Corruption in Customs

Customs plays a central role in every international trade transaction and is often the first window through which the world views a country. The implications of corruption in customs on a nation's capacity to benefit from the expansion of the global economy are obvious. Data obtained from the World Bank's Investment Climate Surveys indicate that 40 percent of firms included in the 80-country survey rate Customs/Trade regulation as a major or moderate constraint to business investment (World Bank 2003). As business and investment decisions by multinational companies are increasingly subjected to international competition, the presence of widespread corruption in customs can act as a major dis-incentive to foreign investment. In addition, corruption in customs takes on new significance in the current environment of heightened concern about the security of international trade. Sophisticated systems and procedures designed to detect weapons of mass destruction will offer little protection if they can be circumvented simply by bribing customs officials.

In many developing countries, customs' collections continue to represent a large portion of government revenue. Figures provided by the WCO suggest that in many countries customs collects over 50 percent of all government revenue (WCO 2003a), and delays in the processing of imports and exports can cause significant losses, increase the cost of doing business, affect the competitiveness of a country's firms, and scare away foreign investment. The presence of widespread corruption can, therefore, destroy the legitimacy of a customs administration and severely limit its capacity to contribute to government objectives. The adverse effects of corruption within a customs administration include the following:

* a reduction in public ...

If you are already a vLex customer, Access Here