Arab Republic of Egypt Ministry of Finance Customs

Arab Republic of Egypt Ministry of Finance Customs Reform Project 17 -20 April, 2004 Presented by Adel M. Radwan Director of the Customs Reform Unit

Presentation Outline Customs Reform Project Overview of Project output and activities The Main Achievements The Next Steps

Diagnosis: Symptoms § High transaction costs for importers with negative effects on external competitiveness § Imperfect compliance with multilateral agreements and international conventions § Relatively high number of disputes between Customs and the trade community § Limited use of IT in different sites § Ineffective duties relief schemes and customs systems § Customs administration burdened with bureaucracy

Diagnosis: Causes § Outdated legislative and regulatory framework § Cumbersome procedures and high clearance costs for importers § § Diversity and complexity of duty relief schemes High average tariff rates and complicated tariff structure Inadequate IT resources and systems Outdated organizational structure, training strategy and staffing policy

Our Vision § Integrate Egypt into the global economic system through full compliance with multilateral and bilateral agreements § Create partnership between Customs and the trade community § Enhance private sector external competitiveness through reducing transaction costs

Conceptualization Phase Reform Principles § § § § The legislative framework should be clear, flexible, and transparent Ports should be gates rather than warehouses The importer/broker should share responsibility with Customs Selectivity/risk management techniques should be used in document verification and physical inspection Post-release audit and severe sanctions should replace excessive controls Customs should operate in a fully automation / paperless environment Tariffs should be generally non-prohibitive and easy to apply

Project Preparation Phase 2002 Activities Q 1 Establish Advisory Committee Appoint Project Director Appoint Project Team Develop Plan of Action Secure Sources of Fund Q 2 Q 3 Q 4

Project Organizational Structure Minister of Finance Steering Committee Advisory Committee Customs commissioner Supreme Committee for law Project Director Assistant Director Financial & International Cooperation expert Technical Secretariat Legislation Human Resources IT Procedures IC Tariff Policy Anti- Smuggling Duties Relief/Exemptions E- COMMERCE Valuation Infra structures

Customs Reform Project Clearance Costs/Benefits to National Economy Project Cycle Direct/Indirect Benefits to National Econom Customs Reform Project spans a period of 3 -4 years from late 2002 until 2005/2006. Post-Project Evaluation Implementation/Monitoring/ Interim Evaluation Preparation Conceptualization Problem Identification 2001 Cost of Clearance 2002 2003 2004 2005

Customs Reform Project Reform Master Plan (Living Plan) Output New Customs Law Streamlined/Simplified Procedures Accurate Implementation of Article VII Simplified Duties Relief Schemes Restructured Organization Full IT Support in all Ports of Entry New Consolidated Tariff Structure 2002 2003 2004 2005 2006

Customs Reform Project Role of the CRU IMF Ministry of Finance Ministry of Foreign Trade Ministry of Transportation Technical Assistance/Coordination with Other Donors CRU EU Ministry of Industry Other Ministries and Government Agencies Trade Community Coordinate USAID Implement Monitor Financial/Technical Assistance (TEP-A, TEP-B, and TEP-C) Financial/Technical Assistance (Assistance for Customs and Trade Facilitation (ACTF) Project) WB The world Bank

Concluding Remark Participation of all Partners and the Support of the GOE are the Keys to Success Government of Egypt Legal Experts/Customs Law Legal Committee Advisory Committee Trade Community Donor Agencies and International Community Customs Commission /Project Team

Implementation Phase Legislation Committee 2002 2003 2004 2005 June 2005 Activities § § § New Customs Law Customs Code of Ethics Explanatory Notes for new law Legal references for Procedures manuals Review of inconsistencies and simplification of customs related regulations

Implementation Phase Procedures Committee 2002 2003 2004 2005 June 2005 Activities § Operate the Customs Office in the MCTC on a pilot basis § Operate the Customs Office at Ein el Sokhna Port and test new procedures § Develop a risk management system § Develop post-clearance audit § Develop valuation database § Centralize cashier functions and develop electronic means of payment

Implementation Phase Exemptions and Special regimes Committee 2002 2003 2004 2005 June 2005 Activities § Streamline temporary admission and duty drawback procedures § Issue relevant decrees to enhance duty relief schemes § Examine possible means to rationalize exemptions § Conduct an analysis of customs systems applicable to free zones

Implementation Phase Information Technology Committee 2002 2003 2004 2005 Dec. 2005 Activities § Automate all customs procedures at all ports of entry § Develop regional interfaces to connect all ports of entry § Provide MCTC IT support § Provide Ein el Sokhna IT support § Centralize data entry and cashier functions § Establish call centers, kiosks, and video conference facilities § Launch a dynamic website and EDI systems

Implementation Phase Human Resources Committee 2002 2003 2004 2005 Dec. 2005 Activities § Establish new departments and functions (e. g. , risk management unit, post-release unit) § Review the current structure and consider consolidating logically related functions § Develop new incentives and promotion systems § Train MCTC staff and regular customs staff on new procedures § Develop the curriculum and facilities of the Customs institutes

Implementation Phase Tariff Policy Committee 2002 2003 2004 2005 June 2005 Activities § Examine inconsistencies in the current tariff structure § Design alternative tariff structures § Study the impact of reducing tariff rates on revenues § Publish the integrated tariff on compact disks

Implementation Phase Valuation Committee 2002 2003 2004 2005 June 2005 Activities § § Adherence to the WTO Valuation Agreement Valuation database Trained customs staff Trained Stakeholder

Implementation Phase Information Center Committee 2002 2003 2004 2005 Oct. 2005 Activities § § § Develop system for Valuation database Risk management database Customs information available electronically

Implementation Phase Anti-Smuggling Committee 2002 2003 2004 2005 June 2005 Activities § § Inspection handbook Intelligence gathering methodology Redistribution of security resources Database of enforcement actions

IT Support to Modernized Ports Customs Web Site Customs Encyclopedia Valuation Manuals Pre-arrival release Risk Management System Exemptions Manuals Procedures Manuals

Workshops Quick Action teams Training staff in the customs valuation field Export encyclopedia Participating in developing Damietta Performance and programs balances system in the Egyptian customs

Interactive Integrated Tariff MFN Tariff Rates Insert 10 -Digit HTS Code Preferential Tariff Rates prices Laws and regulations Restrictions and Prohibitions

Procedures before Reform in the Egyptian Ports 1 Importer premises Registry Record#46 Customs Complexes 2 Physical Inspection and competent controls Advanced Center ON I AT NO IN D R OO C E-Data Entry Through General Organization for export & import Control GOEIC 3 Payment Cashier Release of Goods

Procedures at modernized ports 1 Data entry by the Importer 2 physical inspection and Competent controls EDI* Front window GOEIC Release of Goods E-PAYMENT THROUGH THE BANK One-Stop Shop * EDI: Electronic Data Interchange Customs port 3

Pre-arrival Process 3 Payment and review of release order 2 Classification and calculation of duties 4 Arrival of Goods physical inspection and Competent controls 1 Lodgment of declaration and presentation of documents MCTC Prior to the arrival of goods 5 Release of goods Contact point at port of entry

(MCTC) Model Customs and Tax Center Regional Offices MCTC Customs Commission Income Tax Department Sales Tax Department Advantages Test new procedures (e. g. , pre-processing of import documents and risk management techniques) Coordinate with Sales and Income Tax departments in post-clearance audits

Sohkna Port /MCTC Procedures Dekheila Alexandria Port Damietta Port Said Port Cairo Airport MCTC Sokhna Port Operational Short Term Medium Term) • Electronic linkages with the trade community and other agencies • Pre-processing of import documents • Electronic means of payment

Customs Web Site

Activation of the Customs Web Site Clients Service Model Customs Center (One stop shop) Modernization of Dammitta Port & Cairo Cargo Terminal Publishing of Encyclopedia Publishing of Manuals