Pre-Arrival Processing Project Peru
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1 2015/SOM2/CTI/A2C2/005 Session 3 Pre-Arrival Processing Project Peru Purpose: Information Submitted by: US-ATAARI Second APEC Alliance for Supply Chain Connectivity Meeting Boracay, Philippines 19 May 2015
2 Pre-Arrival Processing Project - Peru 19 MAY 2015 LINDA WILCOX-DAUGHERTY A joint project of the U.S. Agency for International Development, the U.S. Department of State, and Asia-Pacific Economic Cooperation. What is Pre-Arrival Processing (PAP)? The processing of import data by customs agencies before arrival of the goods to decrease the time, cost, and uncertainty of moving consignments throughout the region. Results: reducing delays and congestion at entry point, supporting just-in-time delivery, reduction of storage, insurance and transaction costs 1
3 Components of PAP 1. Information Customs advance receipt of specific pre-arrival documentation/information. 2. Release - Action by Customs to permit goods to be released to an interested party. 3. Clearance Accomplishment of necessary customs formalities. It involves, final determination and satisfaction of Customs duties, taxes, fees, charges and OGA requirements. PAP Elements Immediate release of cargo when no further government action is necessary, Using pre-arrival data to plan government action and procedures such as: risk assessment, assignment of customs staff, and use of customs facilities, Pre-arrival coordination between customs and other partner government agencies, 2
4 PAP Elements, continued Using pre-arrival data to improve the efficiency of cargo movements in customs yards and warehouses, and Communication with private sector stakeholders (including freight forwarders, shipping agents, carriers, clearance agents, and importers) as early as possible in the import process. PAP Assessment Structure & Goals Two person team meetings with stakeholders of Superintendencia Nacional de Administracion Tributaria (SUNAT) Assist Peru in promoting and increasing utilization of PAP Identify recommendations for greater realization of benefits from PAP Propose capacity building plan Expand private sector buy-in and participation 3
5 PAP in Peru: Overview Implementation of PAP Standard and Accelerated program in 2010 according to the US-Peru Trade Promotion Agreement (PTPA) Significant growth of PAP through 2013 utilization of up to 35% of import declarations (DUAs) Concern over use slowdown in only a 1% increase was realized compared to the previous year PAP Overview - cont. Peru s Customs Code for Imports: Anticipated Procedure (Despacho Anticipado) two programs, standard and an optional accelerated clearance, release of goods within 48 hours of unlading (Levante 48 horas) Exceptional Procedure - post arrival filing within 30 days after the goods are unloaded. Urgent Procedure for time sensitive goods 4
6 Peru s PAP Programs: Standard and Accelerated Standard includes clearance duty and other fees paid, and applicable OGA requirements met, before goods arrival. Goods available in bonded area (port or off dock) Accelerated allows for release under bond pending clearance. Benefit to importer of fully conforming goods with no document discrepancies Goods at disposal of importer 5
7 Exceptional Import Procedure (not PAP) Speed of clearance controlled by importer or Broker, Declaration usually not made until goods have been verified, necessary corrections made and the accuracy of declaration confirmed, Law allows for pre-clearance storage of goods in off-dock warehouses, giving importer control over timing of duty and tax payment. Disincentive for PAP utilization 6
8 Exceptional Clearance Process PAP Assessment: Observations The Exceptional procedure provides greater benefits to some importers than PAP. Customs Code requires the carrier to transmit the load manifest 48 hours prior to vessel arrival. Off Dock Terminals discourage importers from participating in the accelerated clearance regime. Customs guarantees/bonds are expensive and not a priority with financial institutions. 7
9 Observations cont. Deferred payment of duties with a bond available for both Exceptional and Accelerated less potential for penalties under exceptional. Use of letters of credit by SMEs would allow them to take advantage of PAP. Risk Management - 97% of PAP shipments are Green channel, released without examination. PAP Assessment: Conclusions Regulatory and practical obstacles are preventing companies from taking advantage of the PAP Standard and Accelerated 48-hour release option. A strong Customs business partnership is critical to TFA implementation. Provision of readily available pre-arrival information must be made mandatory. Fines and penalty scheme gives the advantage to the Exceptional procedure. 8
10 PAP Assessment: Recommendations Establish and promote clear economic and operational benefits of PAP vis-à-vis Exceptional clearance. Eliminate the Exceptional procedure. Determine whether specific manifest or customs declaration data fields should remain open to amendment after submission. Create a PAP marketing plan that includes high volume importers and brokers not currently participating in PAP. Recommendations cont. Develop a work plan that allows bank and insurance company partnerships with Customs Ease obtaining Global or Specific Bonds/Guarantees Create cost efficiencies Expand use of Letters of Credit 9
11 Recommendations cont. Require Pre-Arrival receipt and processing of advance cargo information (10 + 2) mandatory Assess the requirement that all imported cargo not covered by the Advance Procedure, PAP, be moved into temporary storage prior to the filing of a customs declaration. Revise the fines and penalties scheme for importers taking advantage of PAP. PAP in Peru: Current Movements Extension of 15-day time limit for full document submission for PAP Accelerated Processing to 30-days. Make PAP advance receipt of information a mandatory component of Peru s supply chain procedures IAW International Best Practices. 10
12 Follow-on Workshop Goal is to engage both internal and external stakeholders to increase use of PAP and realize benefits in reduced costs and time. Establish Strategic Planning Committee Chaired by Customs. Recommended key areas for discussion and development by the committee Import Collaborative system Adjust regulations and processes Improve predictability Reduce Cost Implement Assessment recommendations QUESTIONS? COMMENTS? THANK YOU! 11
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