Directions to amend regulations on temporary import for re-export activities

A Cao Bang Customs official inspects a temporary import for re-export container. Picture: T.Bình.

Not managed strictly

Besides the results achieved in promoting trade for some local activities having border gates, temporary import for re-export are supposed as a business type has many shortcomings. Because of that, at the end of 2012, the Prime Minister issued Directive 23/CT-TTg to strengthen State management for this business activity However, the conclusion of the inspection report by the Government Inspectorate in July 2016 continued to mention these shortcomings of this business type. In particular, in recent years, functional forces have arrested many violations of trade fraud through activities such as temporary import for re-export such as incorrect type declaration and origin of goods. But the punitive deterrent is not enough, much lower than the profit and cost to handle the consequences of the violations, particularly those affecting the environment, food safety etc which leads to many businesses taking advantage of the temporary import for re-export activities for trade fraud such as using the business code of frozen products, but declared as second-hand goods, excise tax goods etc.

This fact is also admitted by Mr. Tran Thanh Hai, Deputy Director of Export-Import (MOIT) in an interview with Customs News. Temporary import for re-export business activity has exposed some certain limitations in management and control, especially control and preventing the misuse of the provisions on temporary import for re-export for the trafficking of prohibited goods, trade fraud and tax evasion.

With these shortcomings, the Ministry of Industry and Trade has conducted consultation of ministries, branches and localities to implement the review and amendment of current regulations having inadequacies, unrealistic about the temporary import for re-export, including the construction of a Circular which replaces Circular No. 05/2014/TT-BCT. Reportedly, two issues are: competence, responsibility of ministries, branches and provincial People's Committee; responsibilities for providing information and reporting regime of the customs agencies and localities have received many comments. Because decentralization and coordination of the units to manage temporary import for re-export activities are also limited.

In this regard, the Government Inspectorate has proposed to amend Circular 05 by concentrating on decentralization, accompanied with clearly defining responsibilities between the implementing agencies (the localities) and lead agency (the Ministry of Industry and Trade). The Ministry of Defense has recommended to supplement responsibilities for the Border Guards such as responsibilities for coordinating inspection and monitoring of goods, providing and exchanging regular information, unscheduled; managing, and regulating the temporary import for re-export activities at the border, and border crossings in Article 20 of Circular 05.

About the problems of responsibilities for providing information and reporting system of the Customs agencies, as stipulated in Clause 4, Article 20 of Circular 05, the General Department of Customs is responsible for "monthly supply to the Ministry of Industry and Trade with the following information to regulate commodity and have timely treatment measures”. The Ministry of Finance says that the provisions of the Customs agencies to provide information monthly lead to increased workload for the Customs agencies. Besides, under the provisions of Clause 6, Article 15 of this Circular, enterprises engaging in trading of re-exported conditional goods groups have to make monthly reports directly, thus, proposes to revise this content.

Clearly define responsibilities

On the basis of the contributions of the relevant bodies, so far, the Ministry of Industry and Trade has completed the 1st draft Circular replacing Circular 05. The draft has some adjusted and amended contents. Accordingly, the Ministry of Industry and Trade has been fully receptive of comments towards supplementation and clarification of the responsibilities of the ministries, branches and localities in managing the temporary import for re-export business activities; adjustment of responsibility for providing information and reporting system of the Customs agencies, local authorities and related businesses; adjustment the regulatory provisions on goods and commodity jurisdiction.

In particular, the Ministry of Industry and Trade has added to its responsibility as follows: “To organize, guide and urge the related ministries, branches and localities to implement, guide, inspect agencies, organizations and traders involved in the implementation of the provisions of this Circular”, instead of the old regulations “inspect and certify conditions of the enterprises’ warehouse” and “chaired and coordinated to recovery enterprises’ code as prescribed”.

For recommendations of the Ministry of Finance on the amendment on the regulations that the General Department of Customs provides monthly information, the Ministry of Industry and Trade proposes that the direction is correct, “the General Department of Customs reports quarterly on the situation of temporary import for re-export based on the reporting form prescribed by the Ministry of Industry and Trade (quantity and value of temporary import for re-export goods...) to serve the executive”. The General Department of Customs is also responsible for notifying the Ministry of Industry and Trade of violations of regulations on temporary import for re-export business in transiting, and bonded warehouses; the status of backlog and congestion commodities at seaports, border gates as soon as possible in order to coordinate to have timely treatment measures.

The Ministry of Industry and Trade has also suggested, the provincial Departments of Industry and Trade Related every 6 months or upon under the authorization of the Ministry of Industry and Trade inspect the maintenance of implementation of temporary import for re-export business conditions as stipulated in Decree 77/2016/NĐ-CP; inspect the implementation of temporary import for re-export of related enterprises.

In addition to the above contents, the Ministry of Industry and Trade has added some items to the list of goods banned from temporary import for re-export trading including: sensitive goods affect security, the environment (scrap, waste and scrap banned for export, those banned to import as scrap rubber, scrap iron, and steel.), explosives, weapons and ammunition; wild animals and products from wild animals under CITES. Besides, the ministry has added a number of other provisions aimed to strengthen the management such as: enterprises are not delegated and entrusted to temporary import for re-export in the list of conditional business; provides for reimbursement of temporary import for re-export codes of enterprises.

Related to the purpose of adjustments to business conditions of temporary import for re-export goods stipulated in Circular 05 (prescribed margin, warehouse and some other conditions), due to the Ministry of Industry and Trade has reviewed towards the elimination of incompatible provisions; inherited a number of regulations which have remained steady and consistent to put in Decree 77/2016/NĐ-CP, the Ministry of Industry and Trade has not considered to adjust this content in the Circular to replace Circular 05.