International trade and global supply chains are filled with goods that are criss-crossing the globe and international borders many times on their way from the supplier to the end customer. Customs is perhaps the most important element that facilitates these cross-border movements. That is why managing customs risk should be an integral part of managing global supply chain risks. For businesses, failing to comply with customs requirements may result in delayed shipments and serious disruptions in the supply chain, but customs risks are unfortunately absent from much of the supply chain risk literature. This book puts customs risk back into the supply chain.
Customs risk and the business
The first chapter illustrates how the different business functions contribute to customs risk in different ways, i.e. Management, Finance, Procurement, Sales and customer service, Manufacturing, repair and service, Logistics, Information technology. These are just some of the business functions that can be a source of customs risk. There are indeed many more and this book deals with most if not all of them.
Customs Risk and Customs Authorities
Chapter Two explains the role of customs authorities, how they operate, how they assess consignments, how they assess "risky" consignments, and what businesses can do to avert this risk, simply by being more customs-compliant in their documentation and internal procedures.
Chapter Three deals with classification, and how important it is to describe the same product in the same way in different languages across the world. Essentially, this chapter describes the Harmonized Commodity Description and Coding System, or Harmonized System in short, whereby all conceivable goods are precisely described using a six-digit code.
Chapter Four looks at valuation. Valuation is the process used to calculate the value of a goods for customs purposes. This value is the taxable base upon which duties and taxes are levied. Consequently, valuation is an important area for customs, since the taxable base is critical to their revenue collection.
Rules of Origin and Trade Agreements
Trade agreements between countries often result in reduced duty rates or even nil duties for certain goods. Chapter Five describes the different methods that are used to determine origin or a combination of origin and how these methods can be a source of risk as well as an opportunity.
Chapter Six details different customs procedures, and how a trader should select the correct procedure that matches the purpose of the transaction. Here too, some procedures may present risks, while others if used advantageously, may come as opportunities.
Chapter Seven describes the security initiatives undertaken by customs authorities to address a number of security issues and how companies need to comply with them.
This book has opened my eyes to a new set of supply chain risks that I have been unaware of : Customs risk. This book deals exclusively with this topic and after reviewing it I think that it should be required reading for anyone dealing with logistics and/or supply chain maangement.