The 4th Industrial Revolution, characterized by convergence of technologies, blurs the boundaries of the product classification by which import and export regulations are applied. This imposes more burden on firms’ compliance with the import and export customs procedures. In customs procedures, the product classification is a key criterion for determining whether they are subject to import/export regulations or customs tariffs. Still, there are often differences of opinion on item classification among related government agencies. Efforts at home and abroad to harmonize product classification are continuing, but not fast enough to keep up with the pace of the 4th Industrial Revolution.
For this reason, the applicable regulations for import and export products are rarely predictable for companies. Companies often get lost about which government agency they should contact, when, and what kind of work they should complete. Customs clearance is being delayed, and costs are increasing. In the 4th Industrial Revolution era, the cost of customs procedures for import and export companies is soaring as such.
This study explores ways to rationalize firms’ compliance costs with a single window for customs procedures. Single Window is a system that simplifies the processes of completing all trade-related legal requirements in one submission. The Korea Customs Service (KCS) also introduced a “Customs Clearance Single Window” in 2006 to unify the requirement verification procedure to check firms’ compliance with import and export regulations and the import and export declaration procedure of customs. This study aims to analyze the status of efforts to simplify customs procedures with the Customs Clearance Single Window (CCSW), and seek improvement measures and implications for Single Window in the era of the 4th Industrial Revolution.
This research consists of five chapters. The background, purpose, methods, and construction of the study are explained in the first chapter. In the second chapter a literature review is conducted on inter-government information sharing, the concept of Single Window, and the status of international Single Window implementations. The third chapter includes analyzing the current procedure unification under CCSW from technological, organizational, and institutional perspectives. The fourth chapter states why the convergence of the customs procedures is necessary for the 4th Industrial Revolution era and presents a U.S. Customs Border Protection (CBP) Single Window model. The fifth chapter is for the research results summary, and also elaborates the implications for the improvement of CCSW. Further issues dealt with within the research are explained in more detail in the following sections.
Chapter 2 summarizes previous studies on inter-government agencies’ information sharing. The reasons and solutions for the failure in introducing e-Government in the 1990s are summarized. Based on the review, this study emphasizes the need for government organizations to fulfill their role as a “steward” rather than owners of public information, promote institutional and organizational coercion, and activate sub-networks to build trust. In addition, this chapter examines the global adoption status of single windows based on the survey results of 58 World Customs Organization (WCO) member states in 2010. It also introduces the U.S. government’s efforts over the past 26 years to build a legal and organizational framework for Single Window implementation.
Chapter 3 summarizes the analysis results on the status of integration and unification of import and export customs clearance procedures at CCSW in terms of technology, organization, and institution. From a technical point of view, the merger between the import/export declaration and the requirements verification process was insignificant. About 95% of the verification requests, 63 related standard forms from 31 agencies, are processed using CCSW. Still, as most import and export companies utilize user programs for export and import declarations, the two procedures are performed separately.
The legal framework for CCSW is also vulnerable. The establishment and operation of a single window, the scope of integration and simplification of business procedures, the purpose of the system and evaluation of operational performance, and the roles and responsibilities of the operating and participating organizations are not stipulated in the Customs Act. In addition, there is no memorandum of understanding or service contract defining operating services and methods of cooperation with the operating organization. There is also no provision for granting access rights that guarantee access to the data log the other party maintains, even when necessary for risk management or litigation.
This study concludes that the CCSW corresponds to stage two of the five stages of single window evolution of UN/ECE and is close to a “single submission portal” by UN/CEFACT standards. The CCSW was highly valued compared to countries where customs modernization or computerization was backward, and there was a misunderstanding in the evaluation in international reports. However, the CCSW, without adequate legal authority, leadership or cooperation, and agreement on the usage of the legacy programs, is not regarded as a valid single window.
Chapter 4 explains the need to integrate import/export declaration and requirement verification procedures to relieve firms’ compliance burden amid the 4th Industrial Revolution. This chapter also introduces the U.S. CBP’s case of procedure integration for establishing a single window. Separate systems used by U.S. government agencies were integrated into a single window, and a data model was developed to send and receive data to and from this integrated system. The private program developers can freely design user programs for import and export companies. Developed programs that have passed the customs test are released to the public, and companies can choose the programs according to their needs. The U.S. government has released a wide range of technical documentation required to develop user programs, giving companies greater autonomy in compliance with the law and expanding options to choose the appropriate program minimizing the overall compliance costs.
Chapter 5 summarizes the previous discussion and outlines implications for building a valid single window that reduces firms’ compliance in the era of the 4th Industrial Revolution. First, government agencies should integrate information to increase data value and faithfully fulfill their “stewardship” responsible for the accuracy, integrity, and security of data. The development of user programs should be left to the market. The Korea Customs Service and the participating government agencies should direct their administrative resources toward integrating inter-agency systems and developing data models. To this end, it is necessary to strengthen capacities in customs systems to build data models that process import/export customs information. For the “datafication” of technical information related to import and export customs procedures, a systematic human resource program should be launched to discover, nurture, evaluate, and reward talents in each ministry.
There should also be support for establishing governance based on the autonomy of import and export enterprises. The customs clearance program market in Korea is not active, and it is difficult for new developers to access. Government support should back up start-up companies collaborating with customs brokers to revitalize the market. A system to test the quality of the developed program should also be established.
In addition, it is necessary to create a legal framework for a single window to clarify the purpose of a single window for customs, the scope of simplification, and the role and responsibility of the operating organization. The roles and responsibilities under the cooperation should be clarified in a memorandum of understanding or agreement between the operating organization and participating organizations. Access rights for mutual risk management and dispute resolution should also be stipulated.
In this process, the operating institution must have strong leadership and policy driving force and activate the arena of cooperation, communication, and network activities. Lastly, an education system with which all participating institutions can continuously develop the required capacity and a robust feedback system through which all the interest parties can continually provide their opinion at the policy level should be established.