RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/247
1 February 2001
(01-0516)
Council for Trade in Goods Original:  English
TRADE FACILITATION
National Experience by the Czech Republic
The following communication, dated 25 January 2001, has been received from the Permanent
Mission of the Czech Republic.
_______________
Introduction
Customs administration belongs to areas in which the national experience is rather specific
due the wide ranging process of transformation from centrally-planned to market economy. Prior toprofound changes, there had been only 50 state controlled companies involved in foreign trade
activities. The abolition of the foreign trade monopoly and related systemic changes aimed at
liberalization of trade provoked an enormous upsurge in the number of entities showing interest in
trading internationally. Within a relatively short period of time, more than 100,000 companies started
exporting and importing.
This development posed a real challenge to the then small customs administration whose
functions had been previously dictated by the needs of a centrally planned economy. Therefore, the
rapid transformation of the customs service in terms of its ability to perform all standard tasks
required by a market economy became one of the priorities of the Government in its effort to set up an
appropriate institutional framework. To achieve this objective, it was necessary to recruit new
personnel (up to 9000 people), ensure training, establish good communications between customsoffices, modernize and computerize customs procedures.
The magnitude of the computerization can be illustrated by the number of hardware.  At the
beginning of the nineties, there were about 400 PCs processing  self-written programmes for duty
collection and payments tracing. Today,  the Customs Declaration System consists of some 6500workstations, 350 servers and other networking a nd communication equipment. Previously, software
modules were used on stand-alone computers. Data had to be collected by means of magnetic media.
In 1995, the first satellite communication system was introduced. Although still operational,
nowadays it serves as a backup system, the main communication system being the TCP/IP digital
network.
Digitalization of Data Submissions
First steps to collect data from declarants in electronic format were made from 1994 – 1995,
but the use of that data at the time was rather limited.  However, nowadays this method of entering aG/C/W/247
Page 2
declaration has become an important means of data collection. Electronic forms of import, export and
transit declarations have been devised and made publicly available.
Most electronic data is submitted on diskettes or through local networks. However, since this
system is not very efficient, and because the loca l networks connecting customs offices and individual
traders' systems cause a security threat, data transmission methods are continuously improved. The
objectives are the redirection of all external communication links to a central point where necessary
security measures apply and the acceptance of digital signatures, which would ensure a legally
binding status for all electronic documents.
New Customs Transit System (NCTS) Project
The Czech Republic became a signatory to  the European Transit Convention in 1996. Since
then, it has taken active part in the NCTS project introduced in 1995 by the European  Communities
as an attempt to reduce fraud in the Common Transit regime. In 1998, the Czech Republic
volunteered as a pilot country and as of June 2000 its national application programme successfullypassed conformity tests for connection to the system.
The NCTS is a valuable initiative on a plurilateral regional basis for structured and automated
co-operation between the national customs systems. The exchange of relevant information is made
through a highly secured communication netw ork (CNN/CSI) in the UN/EDIFACT format.
Simplified procedures
Frontier truck queues have emerged as one of the market-opening related drawbacks in
Central and Eastern Europe. Drivers and goods are blocked for hours and even days due to, inter alia,
insufficient capacity of customs border stations.  One of the ways to speed up customs clearance at the
border is the introduction of “simplified customs procedures,” the access to which is still reserved to
authorized traders only, and electronic processing.
Electronic customs clearance (ECC)
The ECC Project is based on an exchange of electronic files between parties involved, e.g.
customs authorities and individual traders and electr onic processing of those files. Such a procedure
does not only help to speed up the customs clearance but is also less burdensome for all parties
involved. Moreover, when using the ECC, it is easier  for customs to set up risk analysis processes for
selection of goods for physical checks.
The ECC is intended to apply to all customs regimes. However, priority is given to
consignments entering under the NCTS. Thirteen subsets of EDIFACT messages have been chosen
for use, and a variety of scenarios of message exchanges in the course of customs processes werespecified. The EDI server is being tested and a series  of pilot projects with some traders are underway.
The ECC system in the Czech Republic is built on EDI and has a number of proposed policy
objectives.
The first objective aims at enhancing the effectiveness of Customs and performing respective
tasks more quickly, reliably and in a less costly way. Electronically submitted data is available at the
right time and at the right place for automated risk analysis. Due to risk analysis it is possible to
reduce dramatically the number of physical checks of goods, hence maintaining or even improving theG/C/W/247
Page 3
overall effectiveness of the customs process. Moreover, it is possible to apply fully automated
clearance to certain groups of customs regimes, groups of goods and groups of declarants, saving time
and money. Yet another benefit of electronic customs clearance might be seen in limiting the scope
for corruption, as it is possible in the ECC process to separate, at least partially the customs processes
from personal interactions between the traders and the customs officers.
The second objective is motivated by the need to create an appropriate environment for
development of trade through measures facilitating export and import procedures. The ECC perfectly
fits this purpose. As the electronic process is generally quicker, it results in shortening or even
eliminating queues at both inland offices and border stations. Furthermore, the ECC does not require
the physical presence of the declarant at the customs office during the customs process. Lastly,
communications between traders and the customs authorities through the EDI link results in fewererrors and less ambiguity on both sides of the operation.
The final goal is to introduce a continuous (24h/365d) customs operation for certain regimes
and traders. This feature is sure to be welcomed, in particular by the "just-in-time" operators.
Conclusions
The whole process of creating a performing system of customs clearance is far from a simple
and straightforward exercise, due to its technical aspects and also for organizational, procedural andeven psychological reasons. What looks like another quite simple technological operation at the
beginning, proves to be a de facto  customs revolution.
As the system is not fully established yet, it is difficult to assess all benefits and risks relating
to the introduction  of the new customs clearance methods. However, we are confident that thefollowing principles could be offered for consideration to those who intend undertaking the same
exercise:
- a clear and firm support, including also financial resources, to be provided by the authorities,
in particular by the Government;
- accurate analysis of a point of departure;- formulation of clearly defined objectives (in priority order);- appropriate preparation time before introducin g a new system during which customs officials
have to be trained;
- a well-prepared information campaign within both the Customs authority and the
entrepreneurial community;
- building upon the positive experiences from authorized traders and their support for the
system;
- keeping conformity with standards applicable in  this area, including participation in national
and international standardization processes; following "best practice" cases while using,
wherever possible, the experience of the World Customs Organization;
- investments on both sides (customs and traders);G/C/W/247
Page 4
- a well prepared and executed migration plan covering steps to be taken in the period before
and after new system is operational. Development of sophisticated information systems is a lengthy
and sometimes rather risky process.  For this re ason, it is preferable to opt for an incremental
approach: instead of tackling the entire operation in one go, it would be preferable to proceed step-by-
step.
__________