THE CHALLENGE OF ESTABLISHING e-customs WITHIN CEFTA 2006 THE CASE OF THE REPUBLIC OF MACEDONIA

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1 Irena Kikerkova, Ph.D. Katerina Toshevska Trpchevska, Ph.D. Elena Makrevska Disoska, Ph. D., Ljuben Kocev, MSc. THE CHALLENGE OF ESTABLISHING e-customs WITHIN CEFTA 2006 THE CASE OF THE REPUBLIC OF MACEDONIA

2 The Customs Administration of the Republic of Macedonia became a member of the World Customs Organization in Since, it has been abiding by its principles on security and facilitation of international trade, including simplification and harmonization of customs procedures. The lack of financial resources made the establishment of new electronic practices almost impossible and the Customs Administration had to look for ways of raising funds until In 2007 the Customs Administration of the Republic of Macedonia started the process of customs modernization, computerization and simplification of most of the procedures, trying to follow up the European Integration System, as well as the good practices that would lead up to trade facilitation. The process of Customs modernization, computerization and simplification was effectuated in two stages: - The first stage was introducing new, more effective systems for some of the processes, and - The second stage is focused on upgrading the current systems.

3 Single Window System EXIM The introduction of the information technology within the Customs in Macedonia started in 2008 when the Single Window System known as EXIM was established. It is an electronic Single Window System on issuing import, export and transit licenses and allocation of tariff quotas. With this electronic system which is free of charge, the economic operators can apply and receive about 60 different import and export licenses and tariff quotas from 17 government bodies and agencies. The application process is enabled through a special internet WEB site administrated by the Customs Administration and anyone who wants can apply by using a computer connected to the internet from anywhere in Macedonia, if they meet the requirement of having a digital certificate. Benefits: 1. The service is available 24 hours a day 2. The electronic submission of applications generates time and cost savings for the companies 3. The efficiency of the process of issuing licenses and tariff-rate quotas is increased 4. License requests and issued licenses can be tracked electronically

4 Electronic Document Management System - EDMS In order to ease the information flow and obtain paperless environment in 2010 the Macedonian Customs Administration has introduced the Electronic Document Management System (EDMS). EDMS encompasses storage and processing of electronic documents and electronic copies of paper documents, circulation of electronic documents and electronic signatures, electronic tracking of documents status from the aspect of preparing, distribution, movement, storage, location, authenticity, security and history.

5 The application for procedures with economic impact In 2012 the CARM introduced the WEB application for electronic applications and approvals for customs procedures with economic impact (outward processing, temporary admission, processing under customs control, inward processing and customs warehousing). The application provides the possibility for the economic operators to apply electronically for authorizations of all procedures with economic impact and for monitoring of discharging the inward processing procedure through exchange of electronic messages between the holders of authorizations and the customs authority competent in surveillance. This type of customs procedures is an important segment of the economy in the Republic of Macedonia, having on mind that there are a lot of companies in the country that are using this procedure.

6 TIR-Electronic Pre-Declaration TIR-EPD is a WEB application which is free of charge, available in 18 languages that allow transport operators to send information on goods transported under TIR procedure ahead of time. Data received in advance allow customs authorities to assess the risk profile of transported goods before the goods arrive at the border. Customs officials do not need to enter data manually, contributing to faster and easier processes. As a result, the waiting time on the borders decreased by one hour on average making transport faster and more efficient. TIR-EPD application made the work between the Customs Administration of the Republic of Macedonia and transport operators easier and more effective.

7 The New Computerized Transit System - NCTS On the 1st of July 2015 the Republic of Macedonia joined the Conventions on a Common Transit Procedure and on the Simplification of the Formalities in Trade in Goods. This system is fully compatible with the transit system of the European Union. Thus a mutual system for transit between the European Union, the EFTA countries, Turkey and Macedonia is provided. The accession to the Conventions enables easier and faster movement of goods due to the realization of the transit procedure by submitting a single transit declaration in electronic form in the place of departure which is valid for the entire journey until the place of destination within the contracting parties of the Conventions. The transit declaration is simultaneously used as a so-called entry summary declaration which should be submitted for commodities entering any EU member state.

8 Benefits for the traders: 1. Direct electronic data exchange with the Customs 2. Less administrative workload 3. Early discharge at office of departure 4. Reduced costs Benefits for the Custom Administration: 1. Direct data exchange between administrators 2. Better planning of human resources 3. Elimination of fraudulent document manipulation 4. Selective controls based on risk analysis 5. Reduction in number of enquiry procedures

9 The improvement of the Customs Administration of the Republic of Macedonia The Doing Business Report from 2017 ranked the Republic of Macedonia on the 27th place among 189 countries in regard of the indicator Trading Across Borders, which was a considerable improvement compared to the 127th place recorded in However, the Customs Administration of the Republic of Macedonia is still striving to ensure paperless environment which would ultimately lead to trade simplification for both the economic operators and the Customs Administration.

10 Import, Export and Transit licenses issued The average time for obtaining licenses , hours ,751 3 hours Registered users of the system Every year, the Customs Administration of the Republic of Macedonia is working on upgrading and improving this system in order to ensure a quicker and more simplified environment for the economic operators.

11 2017 EXIM RELATED TRADE STATISTICS (source CARM 2108) Number of agencies involved 17; Number of licenses that can be obtained via EXIM - 60; Registered system users 6,710; Issued import, export and transit licenses via EXIM 91,593; Applications for tariff quota through EXIM 7,214; Average time for obtaining a license via EXIM 1.6 hours.

12 EU AND EFTA COMMON TRANSIT SYSTEM (source CARM 2018) In 2017 were: processed 64,830 declarations in common transit to EU and EFTA; registered 20,059 transit movements from EU and EFTA where Macedonia was the final destination point; registered 39,893 transit movements through customs territory; the Macedonian granted 134 NCTS authorizations to economic operators and 55 bank guarantees in common transit authorizations to principles.

13 New software for customs declarations processing The project should replace the outdated ASYCUDA system; The project is part of the efforts for introducing e- Customs; The system is in the final stage of testing, should become fully operational by the end of 2018.

14 In 2017 the Customs processed 1.02 million customs declarations of which: 44.59% in imports; about 31% in transit; 21.8% in exports and 2.6% in re-export. About 27.96% of the total export/import procedures were simplified procedures.

15 Last year the Customs issued: 248 authorizations for customs representation activities; 1,143 licenses to individual holders customs brokers; 215 authorizations for simplified customs procedures, of which 48 for local clearance of import; 68 for local clearance of export; 60 for authorized consignee in transit; 32 for authorized consignor and 7 for incomplete declaration submission.

16 The Customs realized 73% of the total target for tax revenues for the country for 2017; Collected revenues by the Customs created 42% of the total revenues of the State Budget of the Republic of Macedonia.

17 Cost intensity of the establishment and maintenance of the already established e-platforms in the Customs The installment of the platforms has already created expenses for the Macedonian budget of about 8.4 million Euros in total, and the cost of maintenance of the platforms per year created additional 68,000 thousands of Euros expenses. Having on mind the very fast technological changes within the IT sector, and the ever higher standards that should be fulfilled in order to comply with the systems and e-platforms of EU trading partners, which are the most important trading partners for all CEFTA-2006 member-states, it is logical to expect and calculate with additional costs in order to keep up pace with technological, compliance and long term sustainability of the introduced e- platforms. The experience of the Macedonian Customs already confirms that results from the introduced reforms and modernization within the Customs are obsolete if the process is effectuated with individual national effort instead of multilateral cooperation and creation of

18 CONCLUDING REMARKS There is a necessity of joining resources and capacities in the creation of compatible electronic Customs system for all CEFTA-2006 member-states. Thus countries within the region will avoid duplication of efforts and costs, and would increase effectiveness, as well as efficiency of the e-customs system; Sharing individual national experiences should enable avoiding duplication of steps and costs; Better exploitation of the opportunities offered by the Regional Training Center World Customs Organization in the Republic of Macedonia and finding donors that would support regional trainings for the needs of the Customs and the business community.

19 THANK YOU FOR YOUR ATTENTION!