Re-examining Border Clearance in the Age of E-Commerce

Abstract

Traditional customs clearance processes for goods arriving in ports or at border crossings involve declaration, inspection, revenue collection, and release procedures focused in time and space at the point of arrival. This paradigm for government management of cross-border trade in goods has been incrementally impacted in the 21st century by change drivers ranging from heightened concerns about security and safety risks in international supply chains to the increasingly sophisticated use of prearrival data collection and IT automation in border management processes. Over the past decade, the rapid growth of online retailing, sometimes referred to as e-commerce, has led to an exponential increase in goods, often individually packaged, shipped directly from the seller to consumer. Existing border clearance models for international goods shipments were established in the context of an environment dominated by business-to-business commercial shipments of cargo for further distribution (for example, by retailers) in the country of destination. The rapidly expanding volume of cross-border direct-to-consumer shipments generates large numbers of small package consignments, presenting a challenge for existing goods clearance models in many countries. Contemporary border clearance processes may not be ideally suited to the rapidly expanding volumes of such shipments, and the limited reporting requirements often associated with such consignments may make effective risk management and revenue collection very difficult for governments. Border management modernisation initiatives spearheaded by multilateral organisations have generated some clarity in confirming that e-commerce’s effects do challenge traditional border clearance models, highlighting many of the underlying issues, but they have not generated a clear path forward on policy solutions. As a result, individual countries have been re-examining their national border clearance processes and are starting to take actions to tackle the e-commerce border clearance challenge on their own, highlighting the need for further multilateral work in this area to develop a consensus on policy measures to address the border management concerns identified.