WORLD TRADE
ORGANIZATIONG/C/W/440
27 November 2002
(02-6549)
Council for Trade in Goods Original:  English
THE E-CUSTOMS EXPERIENCE OF THE SEPARATE CUSTOMS TERRITORY OF
TAIWAN, PENGHU, KINMEN AND MATSU
The following communication, dated 25 November 2002, has been received from the
Permanent Mission of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.
_______________
1. Introduction
With the rapid pace of globalization and growth of international trade, WTO Members will no
doubt face two major problems:  a) the demand for rapid cargo movement from trade communities
and b) the concerns of border securities. Further, trade facilitation has become an issue of great
importance to the WTO. In this connection, the Council for Trade in Goods has conducted many
heated discussions on this matter to review Article V, VIII and Article X of the GATT 1994 pursuantto the Work Programme contained in the Doha Ministerial Declaration.
To cope with the increasing volume of trade,  and to meet the needs of the trade community,
our Customs has no option but to enforce comprehensive improvements in the field of trade related
administration and operations. It goes without saying that Customs plays an important role in trade
facilitation. In the last ten years, Customs has devoted itself to strengthening its automation,
facilitation, and transparency. Our hard work has borne fruit.
2. The Infrastructure of Customs Automation
Computer Upgrades for Cargo and Risk Management
In order to ensure the success of facilitation and risk management, the Customs administration
must build a sturdy infrastructure. An infrastructure is a foundation that underpins the progress of an
organization or project development, just as tran sportation, communication, public utilities, education,
etc., act as a foundation to economic development.  The Customs’ computer system is used to
expedite clearance, as well as to provide prompt querying and analytical functions for risk
management.  As such, a computer system with a large capacity and prompt response is required.
Our Customs began implementing air cargo clearance automation and ocean-going cargo
clearance automation in 1992 and 1994, respectively.  However, by the year 2000, its original
computer capacity could no longer meet the needs of the Customs Service.  As a result, with a total
budget of US$ 5 million, we upgraded our air cargo clearance automation system in 2000.  Now weare planning to set up a similar system for ocean-going cargoes, which is expected to be finished in
2004 with a total budget of about US$6.5 million.G/C/W/440
Page 2
Establishing Internet Declaration Environment and Application Services Provider (ASP)
Our Customs has established an Internet Declaration Environment and ASP, which will offer
multiple channels for Customs clients filing declarations to obtain access to Customs.  In addition to
the cargo clearance network, importers or their brokers can also file their declarations directly withCustoms via the Internet.  This will help in reducing transmission fees, facilitating clearance
processing and promoting trade competitiveness.  These projects involve:
1. Setting XML (Extensible Mark Up Language) standards and creating XML message
interchanges and a processing system;
2. Setting up ASP for air cargo declarations;
3. Setting up ASP for ocean-going cargo declarations;4. Setting up duty-paying system on the Internet.
Establishing a Computer Gateway
A computer gateway has been created for promptly providing import and export information
to relevant government agencies, as a reference for decision-making, thus increasing governmentefficiency as a whole.
3. Cargo Clearance Facilitation
Over the past few years, Customs has implemented many trade facilitating measures, such as
clearance automation, risk management, and paperless operations, greatly expediting Customsclearance.  Currently, the average clearance time for ocean-going cargo and air cargo has been
reduced to 1.95 hours and 0.38 hours, respectively.  In addition, we are carrying out various
supplementary measures, so as to fulfill a round-the-clock (24/7) clearance service.  Some of these
measures are as follows:
Pre-Entry Clearance
Importers may declare imported goods to Customs prior to the arrival of the goods if the
means of transportation has left the last foreign air/sea port and the carrier has transmitted the
manifests to Customs.  By applying automatic duty payment mechanisms, such as post-release duty
payment or the on-line duty payment system, these cargoes, if selected as bypassed shipments, will be
released before arrival and can be claimed immediately upon entry without being warehoused.
Simplified Express Consignment Clearance
Based on WCO’s Customs guidelines for Express Consignments, our Customs have
categorized express consignment as follows:
Import:  X1 (Letters/Documents)
X2 (Low-value, Non-dutiable, DPV under US$ 87)
X3 (Low-value, Dutiable, DPV:US$ 87-US$ 1,450)
X4 (High-value, Dutiable, DPV over US$ 1,450)
Export: X6 (Letters/Documents)
X7 (Low-value, FOB no more than US$ 1,450)
X8 (High-value, FOB over US$ 1,450)
Items within the categories X1, X2, X3, X6 a nd X7 can enjoy simplified, paperless clearance,
in which cargo manifest information and import/export declaration information are combined as one
declaration, and clearance types are reduced from C1 (bypass), C2 (document review), and C3G/C/W/440
Page 3
(document review and goods examination) to only C1 and C3.  Their examination rate has been
reduced to the level of under 5 per cent.
In addition, this Administration implemented the Duties and Taxes Bond System in
September 2002.  As a result, a duty receipt can be issued at the time when express consignments arereleased, which enables express carriers to collect pre-paid duties and taxes from consignees while
delivering express consignments.  This system not only facilitates the clearance of express
consignments, but also reduces express carriers’ cost.
Paperless Clearance Procedures
To expedite clearance and save both Customs and relevant parties’ resources, the following
items have become paperless:
1. Bypassed import/export declarations
2. Simplified express consignment declarations
3. Import/export manifests4. Import/export release notice
5. Warehousing certificates of export goods
6. Statements of the goods in warehouses
7. Statements of the goods released from warehouses
8. Customs notice of cargo examination9. Customs General Discharging Permits/Special Permits
Computer Interface between the Customs and Licensing Agencies
Customs computers are linked to those of licensi ng agencies, so that the licensing write-off
operations can be done electronically, and more shipments can be bypassed without physical
examination and document review accordingly.
Advance Ruling of Classifications
Prior to importation, importers or the parties entrusted may apply to port Customs for advance
classification by submitting a required form (it can be downloaded from the Customs website),samples, catalogues and other related information.
Consolidated Clearance Operations for Transit and Trans-shipment Cargo
Imported shipments in transit through Science-based Industrial Parks or Export Processing
Zones may be cleared at the port of entry, and then directly transported to their destinations without
having to go through Customs clearance procedures again.  As to trans-shipped cargo, regardless of
whether it is imported to a seaport and then re-exported via an airport, or vice versa, it can also be
cleared at the port of entry, without having to go  through Customs clearance procedures again at the
port of re-exportation.
Establishment of Strategic Partnerships with Stakeholders
To facilitate the movement of import/export goods, Customs has established strategic
partnerships with reputable firms including carriers, warehouses and express operators (See Annex:Basic Requirement and Preferential Treatment Applied to Firms Engaged in Strategic Partnership
with Customs Administration.)  Firms having strate gic partnerships with Customs work closely with
Customs in combating smuggling. In return, they enjoy privileges such as a lower cargo examination
rate, and waivers of cargo-escorting and the unloading of goods from containers for examination.   G/C/W/440
Page 4
 
Intensified Post-Clearance Auditing
In order to speed up Customs clearance through the use of bypassed declarations, Customs
has adopted a post-clearance audit system.  Currently about eighty percent of air cargo and sixtypercent of ocean-going cargo are exempted from document review and physical examination.  As a
result, the average clearance time for ocean-going cargo and air cargo has been greatly reduced to
1.95 hours and 0.38 hours, respectively.
Duty Payment Facilitation
(i) Post-Release Duty Payment
Under the post-release payment system, a guaranty in lieu of cash payment or a cash deposit
may be furnished to Customs, in advance, in order to obtain the release of imported goods before duty
payment.  The amount of guaranty is recyclable and may be decided by the duty-payer or Customs
broker according to the estimated duty payable in a period.
(ii) On-Line Duty Payment
By placing a deposit in the bank, the duty payer can use a computer to conduct on-line duty
payments instead of going to the bank to make the payment in person.
(iii) Consolidated Duty Payment
Instead of paying duties for individual declarations on a daily basis, the duty payer may
choose to pay duties at the beginning of each month, but only for shipments declared in the preceding
month.  This measure simplifies payment procedures, defers duty payment, and thus reduces business
costs for importers.
Stronger Risk Management and Lower Examination Rate
Divisions of Information Collection, and Cargo Selectivity and Entry Summary have been
established. They are for screening high risk groups, eliminating ineffective and non-useful selectivity
criteria, narrowing the focus and bringing the examination rate down to less than 5 per cent.
 
4. Customs Clearance Transparency
To give importers and exporters a clear picture of declaration processing and to prevent fraud
by unworthy brokers or Customs officers, Custom s has created a mechanism that allows them to
check with clearance units by calling the ombuds man at the clearance site or by browsing the
Customs website for information.  For this purpose, the Customs home-page provides the following
key information:
Inquiry on Customs Clearance Database
The Customs clearance database provides in-time information on warehousing, declaration
registrations, manifest write-offs, classifications and valuations, cargo examinations, duty payments,cargo releases, etc.  Importers and exporters may check such information by keying in Customs
declaration numbers (or bills of lading in the case of  air cargo) and fully monitoring the flow of cargo
clearance, thus expediting cargo clearance and increasing their competitive edge in international
markets.G/C/W/440
Page 5
Customs Tariffs and Duty Rates Inquiries
A full text of Customs tariffs is posted on the Customs website to answer any inquiries
regarding current tariff classifications, duty rates, trade control codes, etc.  Such information may be
downloaded to avoid the trouble of having to purchase the latest version of tariff schedules whenevertariffs are revised.
Advance Tariff Rulings Inquiries
This website function provides importers with access to tariff rulings and tariff rates for the
cargo they want to import.  They can therefore assess their import costs in advance.  The search
function also helps to enhance the transparency of clearance procedures, reducing the incidence o
disputes between Customs and importers, and accelerating the clearance process.  Before importingtheir cargo, importers or their agents can fill out an application form (which can be downloaded from
the Customs website).  Attached are samples, original catalogues, as well as relevant documents
applying to the Import Division of district Customs for tariff rulings, which having been made will be
posted on the Customs website for inquiries.
Trade Statistics Inquiries
Import and export statistics are available on the website.  Any individual or firm involved in
international trade is able to access the site, and find out about import and export values and trends for
all industries.  This can serve as a reference source for future investments and cuts out the necessity tovisit Customs office or make telephone inquiries.  This represents major savings in terms of the time
and cost previously associated with the gathering and buying of statistical publications.
Full Text Searches of Customs Information
By using the Customs information full text search, visitors to the website can help themselves
with an easy, interactive and flexible service.  The search facility includes such topics as Customs
laws and regulations, executive orders, declaration manuals, clearance codes, and news bulletins. It
reduces time spent browsing the website, allowing users to find the clearance information they need
quickly.
Single Window Service for Clearance Problems
If the information on the website cannot fully answer the questions being sought, users may
dial the single window service number for the Custom s clearance units.  Staff of the units will answer
such supplementary questions.  The website also provides an up-to-date directory.
5. Conclusions
To expedite clearance operations without any national security risks has become one of the
greatest challenges for Customs. However, based on experience gained over the last ten years, we
have managed to overcome the challenge by carefully considering the following areas:
(i) Risk management
Customs services around the world today cannot carry out their mission successfully without
deploying risk management techniques, especially in view of the amount of commercial fraud and
smuggling. By targeting high-risk consignments for physical examination and using risk assessment
techniques, not only can Customs ensure the normal flow of legitimate goods and passengers, but alsoG/C/W/440
Page 6
effectively crack down on the illegal trading practices. We strongly recommend that the WTO
promotes the use of risk management techniques in Customs enforcement.
(ii) Automation
Over the past decade, with the burgeoning development of international trade, Customs has
become faced with a tremendous workload.  To process the ever-increasing amounts of cargo and
passengers, it is essential for Customs to embrace information technology in order to intensify the
level of enforcement. In this area, Customs has developed a cargo clearance automation system that is
achieving excellent results.  As a member of the international Customs community, we are very
willing to share our experience with other Customs administrations.  We would like to propose to the
WTO that it should consider developing an assistance programme to help other countries who do not
possess an efficient or effective automated clearance system.
(iii) Pre-arrival processing
To facilitate the smooth execution of international trade, Customs operates a pre-arrival
process. This enables importers to file their entries prior to the arrival of merchandise at the port of
entry. Importers may claim their goods immediately after importation if they are not selected fordocument review or physical examination. With the just-in-time inventory system been widely used in
the trading and business community, we would urge the WTO to give further promotion to the pre-
arrival processing approach among its Members.
Over the past decade, we have simplified Customs formalities, automated Customs operations
and prevented illegal trade practices. As a member of the international Customs family, we would be
happy to exchange our experiences with other Customs administrations, and we hope that a more
favourable international trade environment can be created under the auspices of WTO in the future.G/C/W/440
Page 7
ANNEX
BASIC REQUIREMENT AND PREFERENTIAL TREATMENT APPLIED TO
FIRMS ENGAGED IN STRATEGIC PARTNERSHIP WITH CUSTOMS
ADMINISTRATION
Basic Requirement:
1. A reputable firm having been established for at least 10 years, and having been evaluated and
approved by the Customs Administration for no violation of customs laws and regulations
within the latest 5 years (minor violations excluded).
2. A firm operating normally, having personnel management systems regarding employee
recruitment, performance evaluation, and training program, and not hiring people with
criminal record. If any employee deals in smuggling or tax evasion activity, the firm willreplace or punish him immediately.
3. A reputable firm having installed special computer system to check if its name has been
illegally used for making entries; and also having designated a specific person to conduct
checking on daily basis. If any irregularity has been found, the firm will inform the Customs
immediately to jointly crack down on the smuggling and tax evasion attempts.
4. A firm whose import and export raw materials, components, and finance are managed by
computer system, which has the crosscheck or audit function.
5. A firm being able to inform Customs office of any irregularities discovered during
documentation process or when its name has been illegally used for making entries.
6. A firm being able to inform Customs office when it discovers other peer firms are importing
the goods not normally needed in the domestic market, or are carrying on unusual operations,
or are suspected of smuggling.
7. A firm being able to assist Customs to identify the products related to its business field, and
able to provide relevant preventive technique and information to the Customs.
8. A firm being able to provide relevant documents to the Customs and to accept post-audit
when deemed necessary by the Customs.
9. A firm being able to assist customs officers to survey the crew and the loading/unloading
operations of the vessels nearby when discharging cargoes from self-owned wharf and to
inform Customs of any suspected smuggling activity.
10. A firm being able to engage reputable, well- managed customs brokers, with employees well
behaved and without criminal record, to handle import/export cargo clearance on its behalf. Ifany suspicion arises, the firm will immedi ately conduct proper investigation and make
replacement whenever necessary.
11. A firm being able to apply pre-entry tariff classification according to Regulations Governing
the Implementation of Advanced Ruling System for Tariff Classification to accelerate cargo
clearance.
12. A firm being able to educate its employees on customs practice, laws and regulations, penalty
of Customs fraud when holding on-the-job training, and to arrange classes on risk
management, preventive concept and techniques.G/C/W/440
Page 8
13. A firm being able to evaluate and exchange viewpoints on cargo clearance with Customs at
irregular intervals and to provide constructive suggestions.
14. A firm being able to exchange management experience with Customs so as to jointly uplift
administrative efficiency and service quality.
15. A firm being able to set up a contact unit and assign an authorized person to take charge of
informational communication to and from Customs.
Preferential Treatment Accorded by the Customs Administration
1.   In case the firm has certain emergency import/export goods, Customs may grant facilities of
24 hours cargo clearance if such goods are other than C2 (document scrutiny needed) entries.
2.  The Customs shall consider lowering down the examination rate of the import/export goods.
Basically, “Simplified Examination” will apply if import goods are to be examined by the
computer random choice. If export goods are to be examined when selected by computer,
Customs may waive the examination or empower  the firm to check on its own, or conduct
post-audit if necessary.
3.   Import cargo clearance will be based on “Post-release Checking” except for those requiring
Import Permit or letter of concurrence from competent authorities. Customs may also waive
the escort of goods, which might be needed if goods belong to the firms other than Customs
strategic partner.
4.   Export cargo clearance declaration will be accepted by the Customs without having to check
the computer message of “goods warehoused” in advance.
5.   Customs sets up “Single Business Window for Handling Cases of Unreleased Goods,” to
answer inquiries and solve problems regarding customs procedure. If the difficulties of cargo
clearance result from regulatory provisions of competent authorities, Customs will help to
negotiate and solve the problem.
6.   If a firm has self-owned cargo discharge wharf, Customs shall allow the firm to designate
specific person to issue “Container/Cargo Note” (Wharf Entry/Exit Permit) and allow cargoes
to be examined and released at its own premises.
7.  Customs shall continually provide training and information regarding the prevention of
narcotics, arms, ammunition, and environmentally hazardous and IPR infringing goods.
Training and information on interdiction of endangered species and identification of goods
commonly involved in smuggling or tax evasion are also provided.
8.   Upon request, Customs may dispatch officers to popularise laws and regulations and
disseminate anti-smuggling technique in the firm’s training program.
9.   Customs shall provide the latest information on laws and regulations to the firm, and take the
firm’s opinions and viewpoints into consideration when revising the relevant laws and
regulations.
10.  Other convenient services approved by the Customs Administration.
__________