structures - in the 21st century. While the EU’s precise organisational structure and processes are specific to Europe, its underlying principles reflect the future:

-interdependency;

-tolerance for varying degrees of autonomy within larger political frameworks;

-consent-based policies;

-harmonisation and simplification of standards, procedures and systems;

-enhanced information exchange; and

-enhanced coordination and cooperation for border management

Obviously a Customs administration does not need to be part of a customs union to modernise and become expert in both protection and facilitation. This primarily comes down to decision making at the national level. There is no evidence that one particular kind of organisational structure is suitable as a model for all Customs administrations, and for this reason we focus on principles and key concepts that all Customs administrations can usefully draw upon. Unfortunately there is also insufficient evidence that economic benefits will result from modernisation. When the risks and costs are high, and the procedural steps many, a process of change must pay close attention to local context. There is no ‘one size fits all’ blueprint for success.

As noted earlier, there is, however, evidence that delays caused by Customs processes economically hurt the home country, especially a developing country reliant on fresh agricultural exports. Based on this fact, another way of planning is to conceptualise what sort of delays in the management of ‘flow’ are acceptable to a country, and with what possible increase in risk, or loss of protection, should ‘speed’ be more important than protection. Put diagrammatically, in Figure 7 below, the worst-case scenario is depicted as the top line, where there are high delays (goods rotting in warehouses, waiting to be cleared) irrespective of the risk level involved and the desired level of protection required. In other words, Customs is not distinguishing between categories of risk, and is not facilitating ‘flow’.

Figure 7: The impact on flow of different approaches to protecting the border

Scenario of change Scenario of change

Worst Scenario

Scenario of change

Delays to Flow

Ideal scenario

Ideal Scenario

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Protection Required

The best-case scenario is where the border management systems are able to achieve consistently high protection, with minimal increases in delays. The scenario of change shows a Customs administration still struggling to balance its role in facilitating flow with its role of protection; with the result that when greater risks are perceived and more protection required, Customs reverts to conservative protection methods, reliant on physical inspection.

The constraints and limitations faced by the majority of Customs administrations trying to modernise are numerous and substantial. Of the 171 members of the WCO, approximately 80% have transitional or less developed economies. Around 80 of the 171 WCO members have very vulnerable contexts and high poverty levels, low human development indices, are struggling with violent conflict or post-conflict environments, but are functioning despite uncertain political stability. Figure 8, which shows the proportion of regional tax revenue obtained through Customs duties by different regions, points to the different contexts and priorities around the globe. It is notable that the most robust and well-resourced customs administrations in the OECD draw the lowest (and still decreasing) proportion of tax revenue from customs duties. Although not inevitable, it is most likely that trade liberalisation will continue in the decades to come with ever decreasing tariffs and income from Customs. Customs administrations (in Africa particularly) will need to plan ahead to manage this future scenario.

Figure 8: Proportion of tax revenue from Customs81

Africa

Middle East

Non-OECD

Asia/Pacific

Non-OECD Western Hemisphere

OECD

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