Iran’s WTO membership is a major challenge for Customs Office

Based on the Third Economic Development Plan (2000-2005), the export of non-oil commodities would rise to $35 million over a five-year period, which is two times more than what was pursued by the Second Plan (1995-2000). Promotion of non-oil exports necessitates a mechanism free of over-regulation and formalities for trade exchanges. Iranian Customs Administration plays a significant role in paving the way for such a mechanism, and moreover, the globalization of economy and the issue of Iran’s WTO membership would bring about a major challenge for the Customs to review its regulations in line with those objectives. Here is a brief report on the plans and policies the Customs Office is to implement based on the Third Development Plan.

The Customs can play a major role in a number of fields according to the Third Plan: The first is supporting the export of non-oil products and development of exports as a whole. The Customs is also charged with supervision and implementation of regulations in border points where goods are imported and exported. Second, is the elimination of tariff barriers in export in line with the policies adopted by the World Trade Organization (WTO) in order to draw up transparent trade regulations. Once non-tariff policies are reduced, the role of Customs would be more sensitive, because Customs is an organization which controls the income of the Treasury and at the same time protects the interests of manufacturers and consumers. The third field in which Customs would be more active in the next economic plan is changing the Special Economic Zones to Free Trade Zones (FTZs). Generally speaking, the role of Customs is to support the export and manufacturing, and a more careful supervision over the implementation of Customs rules.
Unfortunately, the Customs has not been heeded as an important organization in the past years. However, measures have been taken recently for restructuring the Customs: automation and implementation of ASICUDA Plan is indicative of such a restructure. In this line, the Customs has signed a contract with Industrial Management Organization for reengineering of its structure based on international paradigms. In order to have a powerful Customs Office, necessary investments should be made. For example, permits should be issued by relevant organizations for the employment of new members for the “Customs Guard” whose current members are on the verge of retirement, while since the victory of the Islamic Revolution, no new staff have been hired to replace them. The Guard plays an important role in fighting illegal drug trafficking, contraband goods and protection of people’s property, and its absence would make serious problems for the Customs.
In non-oil exports, the commodity should be marketed first and then the exporter should remove many obstacles, but based on the Third Economic Development Plan the number of supervising organizations has reduced and the role of Customs has been more prominent. The function of Customs in non-oil export is checking the documents regarding the hygienic condition of goods, quarantine, controlling standards and estimating the value of goods. Another duty of the Customs is to compare the worth of exported goods with imported ones in terms of foreign exchange.

Under the Third Economic Development Plan, automation of Customs service would allow merchants to export and import goods from their offices

The first problem of Iranian exporters at the moment is to enter the international markets. Iranian goods should be able to compete with European and American products regarding quality and their prices must be as low as the goods made in Malaysia, Indonesia, Singapore, India and African countries in order to find a strong foothold abroad. In order to do so, in the domestic scene bureaucracy should be eliminated for non-oil commodities. If the exporters face problems in their country in addition to problems they face abroad for selling their goods, then economic development would not be realized.
According to the Third Plan two mechanisms have been considered for Customs’ improvement: First, the automation of the organization including online exchange of customs information. Most of the problems related to software necessary for transit of goods in the country have been solved with the assistance of the Roads and Transportation Ministry. Second is reforming the Customs rules and regulations. Training of staff and developing their skills is another measure to be taken by Customs in the future in line with national development policies.
At present, importers have to pay various duties, which would be included in the government’s commercial profits. The problem is that the Parliament includes these duties in revenues foreseen in the annual budget bill and this would create difficulties for the country’s trade. In the past months, Minister of Finance and Economic Affairs, Hussein Namazi, proposed the government to combine all duties into one single duty payable by importers. But this motion has not yet been on the agenda of the government’s Economic Commission. Raising the number of duties received from traders means lack of transparency in Iran’s trade relations and this is against the country’s strategies for attraction of investments.
The role of Customs is not limited to increasing the national income, but is to supervise the economic performance and national trade and should be able to reform the trade structure of the country. WTO has 136 members and 30 countries are in the waiting list to join the organization including China and Saudi Arabia whose membership would be approved until 2002. This means that in two years, 90% of the world trade is controlled by WTO member countries so that non-members would be faced with many restrictions. It is then imperative for the country’s commercial organizations to make a decision in this regard as soon as possible.
The Customs executes the country’s trade policies and does not draw up policies and regulations itself. The fact is that as long as the trade policies are not based on international standards in terms of quality, the performance of Customs can not be evaluated. Therefore, authorities should revise trade policies and regulations before the reviewing of Customs’ performance.
The government has taken some measure recently in order to raise trade exchanges through the country’s borders. Setting up of border markets and cooperatives has been in line with that policy. Customs offices in northern borders play a significant role in luggage trade as well, which is a source of income for residents of border towns. From March 21- November 21, Iranian tourists from northern borders have exported $82.8 million worth of goods. In border markets trade exchanges can be done up to $5 million worth of commodities. The only problem of these markets is that they are under the control of Governor’s Office, and Customs is only a supervisor. The differences existed between these two organizations would sometimes make difficulties in running the border markets.
Another provision of the 3rd Plan for Customs is to eliminate tariff and non-tariff barriers in a bid to promote Iran’s international trade, while taking into account the Islamic principles. Anything which is not forbidden by Sharia can be imported into the country, Customs officials announced recently.
Customs has also been commissioned to draw up a timetable for reforming tariff equivalent rates and announcing it as customs tariffs. Lifting the ban on export of goods is another positive measure to be taken by the government in the 3rd Plan through which Iranian traders can be more active in the international markets.
A major difficulty in the Iran’s foreign trade is overt and covert monopolies, which could be eliminated through transparent trade regulations. For example, the prohibition of importing automobiles is because the Commerce Ministry refrains from issuing permit for auto importers and this is only to the detriment of consumers. The government should protect domestic industries but this protection does not need to be at the cost of quality or consumers. Customs officials believed some monopolies are created by the activities of governmental organizations which receive permits to provide a better opportunity for their affiliated companies. It is hoped that under the Third Plan proper atmosphere would be created for a healthy competition in the field of trade.