Customs and the denaturalization of its function

The Argentine Customs is an institution whose career staff has a very high level of experience and training; in return for this, it has been systematically used as a trade barrier, a situation that has also led to some acts of corruption.

This introduction serves to illustrate the fact that Argentine Customs, if it fulfilled its specific control functions, would be an invaluable aid to Argentine foreign trade.

What has been happening, almost since the birth of this outstanding institution, is that on several occasions it has been led to a functioning that it should not be, transforming it into a dam to contain foreign trade transactions, according to the commercial and economic policies of the central administrations in power.

It should be noted that this body has a constitutional origin in terms of its jurisdiction and competence. And it is this primary and fundamental rule that preaches free trade for the nation.  

From Brussels, the World Customs Organization itself has been developing specific schemes in an attempt to carry out a coordinated evolution of customs, outlining frameworks to transform an institution of immense importance for the world community into bodies that exercise control in accordance with the precepts of free and fluid trade.

In accordance with the above, Customs and its officials do not define policies on limiting the entry or exit of merchandise from the country, but must only apply the rules contemplated in customs legislation.

This is when we consider that Customs cannot be used as an impediment to the proper exercise of trade. Today, Customs has become an organization that has transformed its competence by restricting international commercial transactions, which shows a deviation from its correct purpose. For several decades, both the World Customs Organization and the World Trade Organization have given guidelines for a bridge customs office, not a barrier one.

Denaturalization of the customs function

We have mentioned that one of the greatest assets of this organization is the quality and suitability of its staff, who perform technical, operational and administrative control tasks.

This work is based on mechanizing reviews of the classification, valuation, and regime to be applied when inspecting the merchandise, but always with the due purpose of ensuring compliance with the customs regulations that weigh on the international traffic of cargo.

Now, when this process is based on regulatory premises that focus their vision on restricting international trade, undoubtedly such action by the customs service exposes an objective contrary to the precepts of facilitating international trade.

This is where it is unfair to criticize an organization such as Customs, and therefore the men and women who carry out such activity, by disqualifying their actions, when observing an institution that ceases to be a bridge and becomes a full-fledged barrier.

Customs only performs a control function based on the rules that prevail for such activity. If these regulations are based on restrictive purposes, it is clear that such conduct cannot be channeled by blaming the institution, but rather by blaming those who improperly establish regulations that are far removed from the international agreements that protect free trade, taking advantage of the jurisdiction and competence of the customs service to guide the restrictive course of trade. Obviously, Customs only applies the law, with the law being what regulates its general function, both from the administrative and operational point of view.

The magnifying glass on regulatory frameworks

Remember that goods, depending on their type (whether food, medicine, machinery, fabrics, electronic devices, etc.), will be regulated, authorized or restricted by other state agencies that have specific responsibilities over them, and Customs will be the one to exercise its control function.

In the case of medicines, the Ministry of Health and ANMAT regulate and issue the guidelines, authorizations and certificates so that such products can enter the country. Food, on the other hand, is protected by SENASA as the enforcement authority and it is this body that is in a position to determine whether the merchandise can enter or leave the country. Equipment in general would be the responsibility of Industry or Production, and we could also list the requirements for prior licenses.

This set of regulatory frameworks for certain goods comes from specific authorities and, given such particular conditions, the Argentine Customs, in its jurisdiction to control the international traffic of goods, will verify whether the requirements established by other agencies to enable the entry or exit of a good have been met, after such supervision has been delegated.  

Despite this, and since the enforcement authorities that deal with specific areas are the ones who must determine the particular conditions for a merchandise to be authorized to enter or leave the territory, it is important to note that the eventual regimes that can be conceived in the different types of merchandise (whether due to its purpose, use, destination, subject that enters or leaves) do not support the application of prohibitive schemes to trade, curtailing or limiting operations. 

The conditions for the entry or exit of the various goods into the country must be set forth by the enforcement authorities, and it is before them that the interested parties should be able to question such eventual restrictions, making their claims or requests, if there are issues that merit considering rights curtailed. Of course, for this, the regulations should enable the exercise of the right of defense in these situations that add to the control of Customs the detention of operations and even the prohibition of entry or exit of products.

Thus, the issue would not be a matter for debate within the customs administration but rather for the body that imposes certain measures that could be seen as undue barriers to trade.

This situation would make it possible to visualize with greater transparency who is preventing free trade and would allow for a real differentiation between a legal action and one that is not in compliance with the law, taking into account the analysis of normative frameworks of a higher hierarchy than mere regulations. In this way, Customs is not forced to subsume these requests (perhaps many of which cannot be applied) in states of characterization of prohibited goods, with their infraction consequences, even when they should not be classified as this type of charge.

It is important to remember that the Customs Code, in its first chapter of Section VIII, establishes the understanding of what constitutes prohibited merchandise for import or export, differentiating between relative, absolute, economic or non-economic character. But the mere imposition by another agency of collections, should not necessarily lead to placing the product as prohibited, and with it, the Customs generate the infraction reproach. Being the customs service that exercises control and applies for its release norms outside the customs scope because the inspection of such budgets has been transferred, it is always the customs that ends up, justly or unjustly, in preventing the entry or exit, and with it denounce the state of prohibition.

In order to avoid this distortion of what is conceived as a source of customs control, the requirements imposed by other agencies should be able to be challenged quickly and independently before each authority that imposes them, thus removing the customs service from the decision as to whether or not one is dealing with prohibited merchandise. This qualification must come from the authority that imposes the measure and not from the customs body.

Non-customs measures that vary the powers of Customs

For several years now, it has been required (prior to the release of goods) that each importer, depending on the type of product, has a license, which may or may not be automatic. However, in all cases, the lack of such an instrument prevents the authorization of the release of goods, with the aggravating circumstance that the regulatory bodies consider that such a situation qualifies the product as prohibited.

The guidelines that establish such prior precautions are based on sources of statistical controls, as indicated in Resolution 523/2017, but certainly in practice it is observed, in many cases, that the situation is used to prevent the entry of merchandise or, what is worse, to restrict the outflow of payments that must be made up of commercial transactions.  

On the other hand, the Central Bank of the Argentine Republic joined in the control of licenses and with it, to determine the scope of payment authorizations, influencing a qualification of these licenses, depending on the product and purpose of use.

This type of action seeks objectives that are far removed from the scope of the GATT Agreement, since it is not based on statistical measurement but on restricting transfers abroad due to the lack of sufficient foreign currency from the BCRA. This forces Customs to exercise oversight of these measures, the result of which is a competition that is outside the function of the customs service, even when technical, operational and administrative tools are used for this purpose that do respond to its work.

In practice, all of this is obscured by confiscatory actions or prohibitions that Customs is forced to exercise in the absence of clear regulations from the responsible entities.

The consequences are wide and varied; sometimes they give rise to legal disputes, seizures of goods, fines or “solutions” that should not occur and which, in many cases, end in acts of corruption.

The State does not collect taxes until the underlying issue is resolved, which certainly takes years and consumes unnecessary time and resources, delaying transactions, making them often abstract. This implies a loss for the State and for businessmen, as a consequence of economic losses and physical and human resources.

Customs works well with clear rules to follow. If the regulatory frameworks are based on the purpose of avoiding foreign currency outflows (whether or not the intention is valid), when Customs is in charge of restricting, they transform the very purpose of this body, defined by the National Constitution and the Customs Code, as well as by the new vision of the WCO on customs, obliged to carry out control work on modern, intelligent premises and with a view to facilitating trade instead of curtailing it.

The horizon towards a bridge customs

International trade requires the modernization of customs and many of these measures have been imposed at the time of taking office as a customs official, observing, among others, the unification of the Metropolitan Customs of Buenos Aires, divided in the previous administration, on which the Ezeiza Customs Directorate, the Campana Customs Department and its dependent unit and the Customs of La Plata, San Nicolás and San Pedro will depend.

On the other hand, the interior was divided into five regions: Northwest, Hydroway, Central, Pampas and Patagonia, under the responsibility of the Interior Sub-directorate, in order to establish a separate Sub-directorate for the Hydroway region, due to its role as a fundamental backbone in foreign trade.

The legal area was also given a higher status, creating the Legal Directorate. In addition, the Investigations and Drug Trafficking areas were integrated at a national level, under the control of the Control area (AFIP Provision 79/2016).

Considering the capacity and experience of the Customs personnel distributed throughout the country, interior officials were appointed to head important operational units, such as those that make up the metropolitan structure of Buenos Aires.

Necessary regulatory standards were immediately established, such as the Courier and Mail regime (AFIP General Resolution 3172/2016), returning to the door-to-door system, required by society.

In addition, the correct framing of the primary zones was resumed, adapting the fiscal warehouses and the areas that make up these control zones (AFIP General Resolution 3871/2016), for a better customs operational quality, incorporating non-invasive and effective control elements through computer and digital systems.

The Argentine Foreign Trade Single Window (VUCEA) regime was established, through which the procedures related to declarations, permits, certifications, licenses, authorizations and management necessary to carry out import-export and transit operations of all types of merchandise are administered (Decree 1079/2016).

New frameworks were established to facilitate guarantees through possible bonds within the reach of the administrators, such as insurance policies and not limited to cash deposits, in the event of alleged violations and/or values ​​or criteria subject to review.

The relationship with the World Customs Organization (WCO) was deepened, incorporating global requirements to transform Customs into a digitalized and capable body.

In this way, the Customs team deepened a reengineering process so that the institution adapts to global challenges, controls the actors to facilitate trade and incorporates the new vision of CUSTOMS in the 21ST CENTURY: objectives that must endure and expand, with priority interference.

Conclusion

Moving away from this approach to a modern Customs service, in a world where the task of modernizing this organization is necessarily imposed (training its men and women, providing it with technological and computer elements to make trade agile and better for the benefit of the community), would lead to discouraging progress and going back to the beginning of Customs, contrary to the current vision that the World Customs Organization advocates with its guidelines.

For this reason, it is considered that the Argentine Customs should be conceived as an organization that gives priority to modernization, in line with a bridge customs office, and not as a barrier to international trade. Otherwise, we would return to those times when the organization was first established, which have clearly been forgotten.