International Relations

Revised Kyoto Convention

International Convention on the Simplification and Harmonization of Customs Procedures

What is the Revised Kyoto Convention?

The Revised Kyoto Convention is widely regarded as the blueprint for modern and efficient Customs procedures in the 21st century. If implemented, it will provide international commerce with predictability and efficiency required by modern trade. The Revised Kyoto Convention elaborated on key governing principles, chief of which are:

Transparency and predictability of Customs actions;
Standardization and simplification of the goods declaration and supporting documents;
Simplified procedures for authorized persons;
Maximum use of information technology;
Minimum necessary Customs control to ensure compliance with regulations;
Use of risk management and audit-based controls;
Coordinated interventions with other border agencies;
Partnership with the trade

Incidentally, the RKC was ratified by former President Gloria Macapagal-Arroyo in March 16, 2009 and the Senate concurred through Resolution No. 220 in February 1, 2010.

What is the current status of the Philippine membership to the Revised Kyoto Convention?

As of June 2010, there are 71 contracting parties to RKC out of the 179 members of the World Customs Organization. Philippines is the 70th and Kenya was the 71st.

The Philippine Customs deposited the Instrument of Accession of the Philippine government to the RKC at the World Customs Organization Headquarters in Brussels, Belgium last June 25, 2010.

Ten out of 21 member countries of the Asian-Pacific Economic Cooperation are signatories, namely, Australia, Canada, China, Japan, Korea, Malaysia, New Zealand, United States of America, Vietnam, and the Philippines. However, all APEC and Association of Southeast Asian Nation countries have agreed to simplify and harmonize their respective customs procedures with the RKC.

Is the Revised Kyoto Convention adapted to the needs of developing countries?

Simplifying the procedures to move goods across borders will reduce administrative barriers, thereby encouraging small and medium-sized enterprises to become involved in international trade and attracting foreign investment. This leads to greater economic development.

Will implementation of the Revised Kyoto Convention allow Customs to maintain controls while focusing on trade facilitation?

The principles in the Revised Kyoto Convention promote trade facilitation, but also ensure that the statutory functions of the Customs are not compromised. Cross-border movement of goods is the key element in any international trade transaction and Customs presence is an essential and statutory feature for the movement of such goods.

The manner in which Customs provide for swift and efficient clearance of these goods reflects the quality of service provided by the government to the public.

The Revised Kyoto Convention provides a comprehensive set of uniform principles for simple, effective and predictable Customs procedures with effective Customs control. It, thus, responds to the key needs of both modern day Customs administrations and the demands of the international trade by providing a balance between the Customs functions of control and revenue collection and that of trade facilitation.

What does accession to the Revised Kyoto Convention mean for the Philippines?

Accession to the Revised Kyoto Convention is a strong signal to the international trade community and governments around the world that the Philippines stands firmly behind customs procedures that facilitate the secure movement of legitimate trade across national borders. It is a manifestation that the public and private sector can truly work together to facilitate trade towards the promotion of economic growth, national security and customs integrity at both national and international levels.

Accession to the RKC will give the Philippine government:

Protection against the passage or issuance of national legislation that are against the principles and provisions of the RKS
Solid legislative foundation for reforming and strengthening customs and related institutions
Benchmark for assessing the status of Philippine trade efficiency and competitiveness
Availability of shepherds and technical teams of experts to guide the reform process
RKC management committee providing foreign companies and countries with recourse for expressing grievances when the customs service does not comply with RKC
Most effective way of declaring globally that trade and investments are facilitated in the Philippines and that the regulatory environment compares with the best in the world
Economic growth stimulus through the modernization of Customs which attracts trade and investments
Assurance of modern and efficient Customs service to the economy, allowing it to participate better in the international trade environment

The implementation of the standards and recommended practices of the Convention lead to the following benefits to the economy:

Lower cost of imported goods
Lower cost of production
Increased economic competitiveness of national goods in the world market
Attraction for international trade and investment
Lower cost to consumers
Increased national revenue

For Customs, the benefits are:

More efficient use of customs resource
Faster, predictable and efficient customs clearance
Enhanced customs control
Increased trade facilitation

For the trading community:

Transparent and predictable procedures mean reduced opportunities for extortion facilitation/grease payments
Greater facilities for complaint traders
Lower business costs in terms of time and the cost of clearing imports with customs
Clear information concerning rights and obligations

(WCO estimates that inefficient global customs procedures add 5% to 7% to the cost of goods traded globally)

What are the main contents of the RKC?

The RKC is composed of three parts the body of the agreement, the General Annex, and the Specific Annexes. The body of the agreement provides the management of the Convention, including its scope, ratification, application, dispute settlement and amendments. The General Annexes has standards and recommended practices.

A contracting party is a required to accept both the Body of Convention and the General Annex in its entirety. They may accept the Specific Annexes as a whole, or in part, subject to its evaluation. A contracting party may enter reservations on standards and recommended practices in the Specific Annexes.

What is the General Annex?

The General Annex contains the general principles of modern customs administration, recommending that a modern Customs administration should implement.

Standard simplified procedures;
Continuous development and improvement of customs control;
Maximum use of information technology; and
partnership approach between customs and trade

The ten chapters of the General Annex are as follows:
1.   General Provisions
2.   Definitions
3.   Clearance of Goods
4.   Duties and Taxes
5.   Security
6.   Customs Control and Risk Management
7.   Use of Information Technology
8.   Relationship between Customs and Third Parties
9.   Customs Information, Decision and Rulings
10. Appeals in Customs matters

Upon accession, a contracting party is given 36 months to implement the standards of the General Annex and 60 month to comply with transitional standards.

What are the Specific Annexes?
The Specific Annexes contain Standards and Recommended Practices which are contracting party may or may not accept following accession to the Body of the Agreement and the General Annex.

Standards are provisions aimed at achieving harmonization and simplification of Customs procedures and practices. There are ten specific annexes as follows