2Corruption The abuse of official position for private gain. Corruption is a transaction that implies a two-way flow.In recent decades the rapid development of world trade has brought new challenges for the customs administration.On the one hand it has increased the need to facilitate and speed up trade, in order to benefit as fully as possible from the positive effects of trade on economic progress.On the other hand the possibilities for corruption and smuggling have increased markedly; if the customs regulations have not been modernized, corruption itself can present the means for the facilitation and speeding-up foreign of trade.
3CorruptionThe supply of corruption depends on the readiness of customs officials to provide it.Of course, that readiness is itself determined by numerous factors. Two major ones are:The salaries of customs officialsA corrupt organization
4Corruption The demand for corruption is influenced by many factors: Insufficient supply of customs servicesProtectionismThe high degree of regulations and complicated procedure
5Which is the best way to motivate customs officials to work better? The total number of answersCompetition in getting employment5.8Good salaries87.7Bonuses and premiums20.5Other kinds of benefits15Work evaluation and promotion44.7Training opportunities8.1Disciplinary measures10.2Professional ethics4.1Doesn’t know doesn’t want to answer3.7
6% of total number of answers The best measures for the improvement of work in customs-control points/unitsMeasures% of total number of answersBigger budget10Regularity in fund supply3More employees2More competent personnel5Better training7Higher salaries29Bigger independence for managers1Absence of political influenceResult related rewards11Better equipment13Better organizationBetter staff relations6Employee participation in decision making
7Opinions on the most important causes of corruption in society % answersPoverty33Moral crisis16Bad legislation4Heritage from previous regime5War, sanctions1Political-economic system3Lack of controlCivil servants’ small salaries28Human natureDon’t know
8The most efficient measures against corruption % of given answersBetter legislation14More frequent rotation of employees11Better control and supervision17More confidence in judiciary3Better cooperation with the policeBigger salaries for customs officials34Better organization of customs procedure8Fewer discretionary rights for customs officialsEducational measures7
9CorruptionThe United States’ Foreign Corrupt Practice Act (FCPA) of 1977 has made it a crime for American firms to bribe foreign government officials.Bribe: when a payment is made for someone to do something illegal.Grease payments (facilitation payments): payments for the purpose of expediting the performance of routine governmental actions.The US Amendment to the Foreign Corrupt Practices Act (FCPA) explicitly distinguishes facilitation payments from bribes, and allows payments used to facilitate the process of "routine governmental action" as long as they are not "inappropriately large."
10CorruptionFive general policies in dealing with corrupt government agencies:Never participateGrease payments onlyBribes as necessaryBribes whenever possibleMatch local standards
11Dangerous Goods (DG)Capable of posing an unreasonable risk when transported in commerce to health, to safety, and to property.Examples are explosives, compressed gas (such as oxygen, propane, aerosols), flammable liquids (such as paint, gasoline, diesel fuel), oxidizing substances, toxic substances (formerly called poison), infectious substances, corrosive substances, and miscellaneous goods that pose enough of a risk in transport to justify regulation.In the United States, the equivalent term is Hazardous Material.Hazardous Materials Regulations (Title 49 CFR Parts ) is the US transportation law on DG.The purpose of the DOT hazardous material regulations (HMR) is to promote the safe transportation of hazardous materials through the effective communication of information concerning the hazards of hazardous materials being transported.In Canada The Transportation of Dangerous Goods Act and Regulations set standards for the movement of harmful chemicals to protect both the public and people moving goods.
12Dangerous Goods (DG) IATA has regulations for DG in air transport. The IATA 'DG Center of Expertise' strives to lead industry efforts to ensure the safe handling of dangerous goods in air transport.Ocean cargo is governed by UN’s International Maritime Dangerous Goods Code.
13Dangerous Goods (DG) Main areas in the regulations: Identification: DG must be properly identified with its proper shipping name and the technical name.ClassificationMarking: Markings include the proper shipping name, ID number, technical names, up arrows on liquid packages.Labeling: All hazardous materials which meet one or more hazard class definition must be labeled as specified in the HMT.Placarding requirements apply to each person who offers for transportation or who transports a hazardous material.Placards must be displayed on each end and side of motor vehicle.Placards are required when aggregate gross weight is 1001 pounds or more of one or more classes of hazardous material.Placards may be required for any weight of explosives, poisonous gases or radioactive materials.Packaging: Performance oriented packaging must be used when transporting hazardous materials.These requirements are based on the United Nations (UN) recommendations on the transport of dangerous goods.Effective Oct. 1, 1996 shippers of hazardous materials must use packaging manufactured in accordance with these standards.Each package must be stamped with a UN designation which certifies that the manufacturer meets the performance oriented packaging standards.
14Dangerous Goods (DG)Documentation: Each person who offers a hazardous material for transportation shall certify that the material is offered for transportation in accordance with the regulations by including a shippers certification statement on the shipping papers.This statement might read:“I hereby declare that the contents of this consignment are fully and accurately described above by proper shipping name and are classified, packed, marked, labeled/placarded, and are in all respects in proper condition for transport according to applicable international and national governmental regulations”Emergency response: Any person who ships a hazardous material must provide a 24 hour emergency response telephone number for use in the event of an emergency.The phone number must be listed on the shipping papers.The telephone number must provide uninterrupted access to emergency information.Training: Employee training is designed to increase an employee’s awareness of safety considerations involved in transportation of hazardous materials, thereby helping to reduce the number of incidents and mitigate their effect.Transportation: The carrier is required to refuse any shipment if there is reason to believe that DG is being improperly transported and the shipment has not been offered according to the appropriate regulations.
15SecurityThreats of attack to both cargo and the people involved in logistics process.Statistics compiled by the Washington, DC-based International Cargo Security Council (ICSC) in 2006 indicate more than $25-billion worth of goods in transit are stolen annually in the U.S.Two greatest threats to cargo:Dwell time: when cargo is not physically moving.Changes in control: those points in a shipment where cargo is being passed from one party to another. Every transaction is a risk point.The great majority of theft involves insiders, especially with containerized cargo.Some businesses are reluctant to report thefts out of concern for their reputations or their insurance premiums.
16SecurityWhile theft of containerized and “loose” freight can occur anywhere, the FBI estimates that $1- to $2-million worth of cargo theft occurs daily in just three regions of the country but accounts for about 75% of the bureau's estimate for the nation's total cargo theft loss.The three hot spots as fingered by the FBI are:New York/New Jersey: More than $1-billion worth of cargo is stolen annually in this area alone.Miami: Cargo theft here is “tentatively” estimated as ranging between one-half and three-quarters of a billion dollars.Southern California: It's estimated that some $500 million worth of cargo is stolen annually in this part of the state.
17Security Some companies contract out security. Some companies prepare a security plan.The human factor in a security report is important.Terrorism is another security issue.Many national laws forbid companies from doing business with people suspected of terrorism, arm dealers.After September 11 there have been major changes in US in terms of security.Transportation Security Administration (TSA), formed immediately following the tragedies of Sept. 11. TSA is a component of the Department of Homeland Security and is responsible for security of the nation's transportation systems.TSA oversees security for the highways, railroads, buses, mass transit systems, ports and the 450 U.S. airports.Employs approximately 50,000 people.The known shipper is a concept designed to identify legitimate shippers.TSA maintains a database of known shippers.Shippers should protect their cargo from being used as a naïve host.
18SmugglingConveying goods or people, without permission, across the borders of a country or other political entity to evade customs duties or import or export restrictions.Smuggling is found in the following conditions:Large differences in tariffs between countriesLarge differences in wealthLow to medium political controlsBorders that are difficult to control.
19Smuggling Smuggled products are high-value and low-volume. Luxury articles, stolen art and other goods, electronic devices and software, and specifically prohibited items such as narcotics are smuggled worldwide.The United States polices smuggling through various federal agencies, including the U.S. Customs Service, the U.S. Border Patrol, the U.S. Coast Guard, and the Drug Enforcement Administration.
20Smuggling Smugglers use several methods to move goods: One is to move cargoes undetected across borders. Avoiding border checks, such as by small ships, private airplanes, through overland smuggling routes and smuggling tunnels. Ex: Smugglers move illegal narcotics from Mexico into remote areas of the Southwest United States using airplanes, trucks, and human "mules."The other method is one of concealment. For example, a smuggler may hide illegal narcotics in unlikely places on ships or cars, in baggage or cargo, or on a person.
21Smuggling Documentation plays a key role in smuggling. Since forged visa and quota documents create problems for legitimate traders, The Electronic Visa Information System (ELVIS) is developed by U.S. Customs and Border Protection.Foreign countries wanting to participate in the ELVIS, can transmit textile visa data electronically.After transmissions are accepted by U.S. Customs and Border Protection, visa results are returned to the country of origin electronically.
22Smuggling ELVIS data moves electronically between government systems. There is an immediate reduction in the chance that counterfeit paper visas will be used because the information provided by the importer must match the information transmitted by the foreign government
23Smuggling Transshipment plays a special role in smuggling as well. Smugglers use transshipment points where security is lax enough to get through but has a good enough reputation so as not to attract attention.Those which have large volumes of traffic so one shipment would not gain as much notice.