1. Understanding the International Customs Law
for better Logistics
Lalith Edirisinghe
Head of School
City Branch
CINEC Maritime Campus
In any economy the Customs plays a crucial role in trade operations and revenue collection.
From a trade and industry perspective, it directly affects the private rights and obligations of
citizens thus Customs Legal Framework plays a very important role. An effective border
management system should therefore compliment the growth trajectory to achieve the
government’s vision for 2016, primarily to increase per capita income to USD 4000 and
sustaining the present economic growth of 8%. Fundamentally, a comprehensive and modern
legal framework is the foundation upon which an effective Customs and trade facilitation regime
should be built. Obviously, a clear understanding of the international customs law is the key in
developing a comprehensive border management system that fully support the new requirements,
procedures, systems, and controls and allow for the implementation of related international
instruments, agreements, and standards. On the other hand the stakeholders in the trade, industry,
shipping and Logistics also need to be sufficiently aware of the frequent changes that take place
in the customs and other border management agencies and their procedures in order to reap the
real benefits that are resulted from the new reforms.
A comprehensive and modern legal framework is the
foundation upon which an effective Customs and trade
facilitation regime should be built. Thus a clear
understanding of the international customs law is the
key that allows for the implementation of related
international instruments, agreements, standards new
requirements, procedures, systems, and controls. This
ultimately demands that professionals in Logistics and
Supply Chain Management need to be fully conversant
with the modern approaches in customs and other
border management procedurs in order to play an
active role in today’s competitive logistics arena.

2. International Customs Law
International Customs Law is the body of international conventions, treaties, norms and
standards which Customs agencies are entrusted by their Governments to implement and observe
and which, if breached, would constitute a breach of that Government’s legally binding
international obligations. The World Customs Organization (WCO) has introduced the Revised
Kyoto Convention (RKC), to establish benchmarks by which Customs services can best manage
their responsibilities in relation to the movement of goods. It is believed that since its inception
in 1952, the WCO has been working to develop Modern principles. The simplifying and
harmonizing of customs procedures was reflected in the Kyoto Convention, which was adopted
by the WCO in 1973 and entered into force in 1974. The realities of modern international trade
have prompted modernized customs legislation internationally. Because outdated customs laws
constrain social and economic progress by acting as significant nontariff trade barriers. On one
hand they prevent effective revenue collection, discourage foreign trade and investment, while
creating a potential threat to social and national security.
Revised Kyoto Convention (RKC)
RKC was developed to standardize customs policies and procedures worldwide. Over the years
economies have realized that it embodies best practices of national legislation around the world.
On the other hand this contributes towards compatibility of the rules of the World Trade
Organization (WTO) because implementation of RKC would enable countries to meet
international commitments concerning trade and border procedures. The resultant revision of the
Convention due to globalization, rapid transformation of international trade patterns, and
advances in information technology (IT), is today known as the RKC. To become party to the
Convention, a state must accept the Body of the Convention and the General Annex. Sri Lanka
signed the Revised Kyoto Convention (RKC) in 1999, subject to ratification. The Department of
Customs of Sri Lanka use both printed and electronic media to publish regulatory and
administrative changes related to trade. Therefore visualizing the structure of the general
annexure is a prerequisite of understanding the International Customs Law.
The intensifying global interconnectedness make it vital for countries to cross borders thus
customs administrations will be increasingly important for managing the impact of the changes
at the border. A solid and modern legal framework is the foundation of effective customs
operations. This legal framework benchmarking should be based on internationally accepted
standards and best practices as set out in the RKC which provides important guidelines for the
design and operation of a modern and efficient customs organization.

3. The structure of RKC General Annex
Source: Author
It is not difficult to understand that the size of the local economy in Sri Lanka preclude a
domestic demand driven strategy for attaining sustained 8-10 per cent growth, thus SL has to
improve its export performance significantly. This may need more foreign investors to
commence export driven industries in the country. In order to create such investor friendly
atmosphere in Sri Lanka the relevant indicators such as Logistics Performance Index (LPI)
published by the World Bank should be maintained at competitive levels. In the year 2012 Sri
Lanka’s Logistics Performance is ranked in the 81st
position. When compared to the 137th
position in the previous report in 2010 this is a great achievement by the logistics sector in Sri
Lanka. The stake holders in the country’s Logistics and Supply Chain activities should therefore
develop a vision to place Sri Lanka in the “Top Ten” in the LPI ranking during next few years.

4. The World Bank’s LPI analyzes countries’ performances in six components including, a) The
efficiency of customs and border management clearance; b) The quality of trade and transport
infrastructure; c) The ease of arranging competitively priced shipments; d) The competence and
quality of logistics services; e) The ability to track and trace consignments; and f) The frequency
with which shipments reach consignees within scheduled or expected delivery times.
The good news is that SL is ranked at 71 with regard to Customs which is relatively better
performance than the overall LPI. But this should be and could be further improved. India and
Pakistan are ranked at 52 and 46 respectively with respect to customs while their overall LPI
stand at 46 and 71 respectively. Therefore improving knowledge and skills should be the key and
such approach would have an equally effective impact on the competence and quality of logistics
services that is identified as the fourth pillar of LPI.
Risk Management Process Matrix
(Source: RKC chapter 6 14.2.1-contents reproduced in a new illustrative model by author)
A comprehensive and modern legal framework is already in existence in SL through the RKC as
the foundation upon which the Customs and trade facilitation regime has been built. Many
customs reform program that supports the new requirements are made possible to some extent

5. through existing customs laws, regulations, administrative guidelines and standard operating
Procedures are in place.
The key governing principles of RKC
Source: Author
The initiative that are already in place regarding, simplified customs procedures ,the use of
modern information technology and communication, modern Customs systems and procedures,
such as risk management, post-clearance audit based controls and adequate automation should be
strengthened from the customs administrative perspective. The transparency and predictability
especially in valuation issues is vital. Maximum use of information technology is one potential
area given the rapid improvements in infrastructure and high computer literacy rate of majority
users in related fields. But the knowledge and awareness of the employees who actually play in
the ‘modernized customs environment’ should be equally broadened and upgraded in order to
make the real use of those facilities effectively and efficiently. In a summary, ‘professionals in
Logistics and Supply Chain Management therefore need to be fully conversant with the modern
approaches in customs and other border management procedures in order to play an active role in
today’s competitive logistics arena’.
***

6. through existing customs laws, regulations, administrative guidelines and standard operating
Procedures are in place.
The key governing principles of RKC
Source: Author
The initiative that are already in place regarding, simplified customs procedures ,the use of
modern information technology and communication, modern Customs systems and procedures,
such as risk management, post-clearance audit based controls and adequate automation should be
strengthened from the customs administrative perspective. The transparency and predictability
especially in valuation issues is vital. Maximum use of information technology is one potential
area given the rapid improvements in infrastructure and high computer literacy rate of majority
users in related fields. But the knowledge and awareness of the employees who actually play in
the ‘modernized customs environment’ should be equally broadened and upgraded in order to
make the real use of those facilities effectively and efficiently. In a summary, ‘professionals in
Logistics and Supply Chain Management therefore need to be fully conversant with the modern
approaches in customs and other border management procedures in order to play an active role in
today’s competitive logistics arena’.
***