• Topic: knowledge management risk management 

 

The newly released book “Cross-Border Logistics Operations: Effective trade facilitation and border management” discusses the role of customs and other border agencies within the wider context of logistics and supply chain management. We invite you to read an excerpt from the book1 on extensive compliance requirements and to watch the interview with the author Prof. Dr. Andrew Grainger. The interview took place during the 2nd global webinar Books on Customs, on 16 December 2021.

The regulatory requirements that apply to the trade in goods between countries can be extensive. The World Trade Organization (WTO), however, sets two fundamental principles that apply to all of its members – which at more than 160 member states encompasses all of the world’s largest markets – to make sure that trade is fair:

  • The first is the Most Favoured Nation (MFN) principle for the trade in goods. It holds that countries cannot normally discriminate between their trading partners (GATT, 1947, Article 1). Any favours granted to one partner must be extended to all other WTO members – they are as such all ‘most favoured’. But exceptions within the framework of more comprehensive preferential trade agreements (including free trade agreements, FTAs) are allowable (Trebilcock et al,2013); and with another 300 of them in place, they are a key feature in today’s global business environment (WTO, 2020).
  • The second principle is ‘national treatment’, where any imported and locally produced goods should be treated equally (GATT, 1947, Article 3).

Despite these principles, trade is seldom ‘free’. Import tariffs frequently apply to protect certain industries from foreign competition.

Most countries also have concerns about safety and security and will seek to protect themselves from risk that are associated with the cross-border movement of goods. These can, to give a few examples, relate to the smuggling of arms or to making sure that the vehicles used to carry goods are safe and operated in line with national transport legislation (Lowe and Pidgeon, 2020). Likewise, most countries enforce strict measures to safeguard against environment- and health-related risks. Such measures frequently apply to foods, products of animal origin and of the soil. Compliance requirements with such sanitary and phytosanitary requirements can be particularly complex. Inspections along with tests and mandatory border checks are often necessary. Many types of business regulations concerning market and consumer protection frequently spill over into border compliance requirements, too (see Box 1.1).

BOX 1.1 

Regulatory regimes frequently applied at national borders: examples

The collection and payment of import tax, including tariffs

  • Customs tariffs, which are usually a percentage figure based on the value and origin of the goods.
  • Value added tax (VAT), which applies in many countries around the world and requires businesses to pay tax when selling goods, including imports (so-called Import VAT); VAT regimes often also allow businesses to claim back VAT that has been paid on inputs and zero-rate (ie not charge VAT) when exporting goods.
  • Excise duties, which are additional taxes that apply to some types of goods and need to be paid when sold to customers whether domestically produced or imported; the range of goods subject to excise duties depends on the country concerned, but typically includes mineral oils (like petrol), tobacco and alcohol products.

Tariff quotas and restrictions (economic trade policy measures)

  • Anti-dumping and countervailing measures which are designed to offset the advantages of unfairly priced imported goods; for example, because they are sold for export at prices lower than at home, or where the manufacturer has benefited unfairly from financial subsidies.
  • Tariff quotas, where importers may temporarily benefit from tariff suspensions or tariffs rates that are below the normal rate. These are subject to application and often come into play where domestic production can bear some limited competition from foreign producers, or where goods are seasonal, and the protection of domestic production conferred through customs tariffs is not required when out of season.

Safety and security

  • Export controls and licences are often enforced by countries that seek to restrict or prohibit certain types of exports. Often this applies to goods that can have military uses (even if designed for civilian use) or are at risk of being diverted to countries against which trade sanctions have been imposed; they often also apply to goods of national heritage.
  • Interventions to stop clandestine and deliberately mis-declared cross-border traffic.
  • Immigration controls, to make sure the operators of vehicles moving goods are compliant with applicable immigration conditions.
  • Vehicle checks and procedures to make sure that the vehicles moving goods are safe. The requirements and practices will differ significantly from one type of transport mode to the next as well as one country to the next. Objects of control will often extend to vehicle and operator licensing, weight constraints and insurance certification.
  • Radiological checks, that might be enforced routinely to intercept illegal trade in radioactive materials; but also specialist checks to identify radioactive contaminations in goods such as soil and metals that have been exposed to nuclear disasters (eg the Chernobyl and Fukushima disasters).
  • Dangerous goods procedures, to make sure that goods that are hazardous (eg because they are explosive, gasses, flammable, oxidizing, toxic, infectious, radioactive or corrosive) are appropriately handled.

Environment and health

  • Phytosanitary controls that apply to ‘products of the soil’ with the aim of protecting against pests harmful to plants and plant products. The extent of control can differ significantly from country to country. A subset of phytosanitary controls are those specific to wood packing – including wooden pallets, crates and dunnage – that are widely used in international trade operations.
  • Veterinary controls that apply to living animals as well as ‘products of animal origin’ (eg meat, bone and leather). The aim of these controls is to prevent the spread of animal-borne diseases to both livestock and humans.
  • Quarantine controls, which is an umbrella term used in many countries for both phytosanitary and veterinary controls; often the acronym SPS – standing for sanitary and phytosanitary – is used.
  • Live animal controls concerning safeguards to ensure animal welfare. 
  • Food controls that range from conditions about hygiene and handling to safeguards against ‘high risks’, such as aflatoxins in nuts, pesticides in farmed goods, traces of antibiotics in farmed fish and meat, illegal dyes in chilli products, and any other food contaminants.
  • Endangered species of wild flora and fauna controls, especially those falling under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES, 1973).
  • Ship’s waste, which in many parts of the world needs to be accounted for at so-called ‘port reception facilities’.
  • Ozone-depleting substances, such as chlorofluorocarbons used in older refrigeration systems and halons used in older fire extinguishers, are subject to strict prohibitions or licensing requirements.

Market and consumer protection

  • Strict product safety standards for electronics, toys and cosmetics, which for the European market includes the CE label that must be attached to applicable products.
  • Product labelling requirements, including details about product ingredients and product descriptions – including compliance with so-called geographic indicators like ‘Scotch whisky’ or ‘Parma ham’.
  • Intellectual copyright and trademark protection, where border agencies have been tasked with intercepting breaches, including the importation of counterfeit and pirated goods.
  • Horticulture and marketing standards, which apply to the description of quality for fruit and vegetables and are subject to official inspections – which in many countries also apply to importers.


The steps to clear goods can be extensive, especially when considering the fact that most borders have two sides and that both export and import procedures apply. Many import procedures are also conditional on requirements that must be met in the country of export. For instance, if businesses wish to take advantage of preferential origin or free trade agreements (see Chapter 2), they must normally provide proof that their goods are eligible by reference to the applicable ‘preferential origin rules’ (Box 2.2). Without that proof the importer would have to pay the full import tariff rate and is likely to procure from elsewhere. Additional transport and logistics conditions can (but not in all agreements) apply, such as the need for direct shipment and non-alteration as well as restrictions on handling, including splitting cargo into multiple consignments.

The volume of trade-related paperwork – or its electronic equivalent – can also be extensive. The BBC, for example, reported that 71 pages of paperwork is necessary for the export of one lorry load of fish from the United Kingdom (UK) to the European Union (EU) (Jones et al, 2021). Although the trade in fish is particularly prone to paperwork, the described procedures will be recognizable to seafood traders elsewhere in the world, too (Figure 1.1). Next to the commercial arrangement between the exporter and buyer (including transport), arrangements also need to be made for health certificates, catch certificates (to prove fish is not illegally fished from depleted stocks – a requirement in the UK and EU), preferential origin documents to prove eligibility to free trade arrangements, customs export documents, import inspection documents, and customs import clearance documents.

The example of trade in fish is one of many. Important to note is that each procedure and document might have additional requirements. For example, Customs along with other border agencies in the country of import, such as the Fish Health Inspectorate, need to be notified that the goods are coming (see Chapter 3). Arrangements for the payment of duties and fees need to be put in place. Subscriptions to electronic compliance systems are often necessary. Usually, copies of relevant documents (or their electronic equivalent) need to be retained. Some procedures are also subject to post-clearance controls. Each agency involved is likely to have its own specific additional requirements (see Chapter 4). 

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1Reproduced by permission of Kogan Page Ltd. The copyright notice included in the Work: © Trade Facilitation Consulting Limited, 2021. A free sample chapter can be downloaded here https://www.koganpage.com/product/cross-border-logistics-operations-9781789666724 

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