The World Customs Organisation is the inter-governmental body, based in Brussels, which brings together 150 Customs Administrations. We were established by an international Convention which came into force in 1953. The United Kingdom of Great Britain and Northern Ireland was a founder Member of the WCO and continues to give active support to our work. Our role is to help improve the efficiency and effectiveness of our Members and we do this by managing a number of international Conventions to simplify and harmonize customs procedures and practices and by providing technical assistance on all aspects of Customs work. It is not the function of the World Customs Organisation to evaluate or comment on the activities of individual Members and we have no information to enable us to give an opinion on such matters as Customs' success in securing compliance or the potential for a merger with direct tax authorities.

  However we would like to make two more general comments which we hope the Sub-Committee will find of assistance. The first is that HM Customs & Excise is acknowledged in international Customs fora to be one of the most successful and professional Customs Administrations in the world. British Customs expertise, particularly in the areas of compliance and enforcement, is used extensively to support similar activities in many developing countries and in countries in transition to market economies. British Customs has contributed substantially to training courses developed by the World Customs Organisation and these are being used to the benefit of Governments around the world. We believe that these activities also produce substantial benefits for United Kingdom enforcement and control efforts by increasing the volume and effectiveness of international co-operation and mutual assistance in efforts to combat cross-border crime. If any changes are to be made to the organisation and management of Customs activities in the United Kingdom, we do hope they will not be detrimental to the world class reputation that HM Customs rightly enjoys. We also hope that the ability to pass on this expertise to other countries and the substantial contribution that the United Kingdom makes to Customs activities at the international level will not be constrained.

  Our second comment is that we are aware that a number of countries have combined their Customs Administration with the direct tax collection organisation. In a number of developing countries the combined organisation is often called a Revenue Authority and the primary reason for their establishment has been to give sufficient autonomy in the areas of staff remuneration and conditions of service to enable internal corruption problems to be overcome. It is our experience that within such integrated tax organisations the non-revenue collection activities of Customs, such as the protection of society from illicit and restricted goods, tends to suffer as the overall focus of the integrated organisation is on tax collection. In most developed countries the border control activities of Customs and increasingly devoted to detecting illicit narcotics, firearms, pornography, endangered species, counterfeit goods, hazardous material, etc. However nearly all Customs Administrations are responsible for the collection and control of excise and sales taxes on imported goods and it is essential that there is close co-operation and information exchange with the tax collection arrangements on domestically produced equivalents.

  A further problem of integrated Revenue and Customs organisations is that the methods of applying controls are often fundamentally different. Direct tax authorities normally operate paper based controls on records and accounts and auditors certificates. Customs controls, frequently targeted towards the identification of prohibited and restricted goods, are more physically based and often require examination of goods and means of transport. Different legislation has developed to support the different control philosophies. Integrating these different methods of operation is unlikely to be practicable.

  The need for Customs to carry out their work in a way that facilitates international trade to the maximum practicable extent is also becoming more important and is being promoted as a significant element of the World Trade Organisation' proposed Millennium Trade round. Whilst we recognize that there may be some benefit to commercial organisations in dealing with a single revenue collecting organisation, we would ask the Sub-Committee to consider that the perceived benefits will have to be balanced with the potential damage that could arise if the efficiency and effectiveness of border control activities is reduced. HM Customs & Excise has demonstrated to the rest of the world how to achieve a good balance between the application of import and export controls and the facilitation of legitimate trade. It would be unfortunate for the United Kingdom's international trading community and for the protection of UK society from external social and environmental threats if this balance was distorted because of the integration of Customs activities into the direct tax collection machinery.

  We will be pleased to expand on these points if the Sub-Committee would find it helpful.

September 1999