Customs (trade) compliance
- Topic: risk management
What is customs compliance?
Customs compliance means compliance with legal rules and procedures applicable to goods brought into or taken out of the customs territory.
Do customs compliance and trade compliance mean the same?
Customs supervise cross-border trade; therefore, the terms ‘customs compliance’ and ‘trade compliance’ are often used interchangeably, meaning compliance with the legal rules and procedures applicable to goods brought into or taken out of the customs territory.
What is governed by the legal rules?
Customs supervises trade contributing to fair and open trade, to the implementation of policies having a bearing on trade, and to overall supply chain security. Taking this into account, customs control:
- duties and taxes to be paid, and the correct classification of goods, their value and origin;
- application of product health requirements, veterinary, phytosanitary and quality regulations;
- compliance with environmental legislation (hazardous chemicals and pesticides, substances that deplete the ozone layer, waste, etc.);
- application of product safety requirements and other market regulations (marking, labelling, certificates, etc.);
- compliance with security and safety regulations (fight against terrorism, trade in dual-use and military goods, sanctions, embargoes, etc.);
- compliance with intellectual property rights (counterfeited goods), etc.
Where are the legal rules set out?
The legal rules are enshrined in international conventions, bilateral and multilateral trade agreements, customs union legislation, and countries’ national legislation.
The primary source of the rules of a customs territory is its customs-related legislation. For example, the Union Customs Code in the EU, and the Taxation (Cross-border Trade) Act 2018 in the UK.
How complex is it to comply with the rules?
The legal rules cover broad regulatory areas and are constantly changing. Therefore, management of customs compliance might become a very complex task for business, depending on the type and number of goods traded, and the target markets.
- Market: Global