The E-Commerce Revolution & Cross-Border Goods Clearance: Time for Fundamental Change?

Research output: ThesisDoctoral Thesis

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Abstract

Customs clearance processes for commercial goods shipments arriving in ports, airports or at border crossings involve standard requirements specifying reporting (provision of data electronically or via documents), risk management, inspection, revenue collection or assurance, with these clearance procedures administered at the national level by Customs at the border crossing point. This paradigm for government management of cross-border trade in goods has been impacted in recent decades by change drivers ranging from heightened concerns about security and safety risks in international supply chains to the increasingly sophisticated use of pre-arrival data collection and IT automation in border management processes.
More recently, the rapid growth of online retailing, sometimes referred to as e-commerce, has led to an exponential increase in cross-border goods shipments, mainly parcels, shipped directly from the supplier to the consumer. Many existing border clearance processes at the national level incorporate streamlined clearance procedures for low-value goods, typically packaged in parcels, designed to enable faster clearance at lower cost than the standard process. These streamlined processes often do not incorporate pre-arrival data collection to the same extent, leading to a situation where Customs is unable to assess risk in relation to an arriving parcel without opening it for a full inspection. The rapidly expanding volume of cross-border direct-to-consumer shipments, in conjunction with the insufficient data collected for clearance in the streamlined parcel clearance channel presents a challenge for Customs, as resources may not be available to inspect the parcels prior to clearing them into the national market. The streamlined parcel channel has been identified as subject to a high risk of abuse for the importation of illicit goods, and for avoidance of import revenue collection.
Using desk-based study in conjunction with a policy analysis methodology we confirmed that a downstream effect of e-commerce’s rapid growth, the proliferation of cross-border shipments, usually parcels, does present significant challenges for Customs, but that this problem is not related to e-commerce per se, nor is it seen in conjunction with shipments (generated by e-commerce or otherwise) cleared by standard goods clearance procedures. Through further research, we were able to identify that the problem in focus (huge volumes of parcel shipments arriving for clearance without sufficient data) was directly related to the streamlined parcel clearance procedures themselves, which are based on principles embedded in (outmoded) guidance of multilateral policymaking bodies relevant to the border clearance environment. The streamlined clearance procedures used for parcels diverge significantly from those in the standard clearance processes, incentivising shippers to use the parcel channel, and also enhancing the probability of its abuse for illicit, regulated, under-valued or otherwise non-compliant goods importations, while limiting Customs’ ability to detect such abuse.
Having identified the problem, and determined that change is justified, we utilised a qualitative cost-benefit analysis methodology to identify three potential solution options for government policymakers, all of which are based on either elimination or adjustment of current streamlined parcel clearance procedures to enable Customs to fulfil its border goods clearance mission, through a combination of increased data and adjusted operational parameters for the clearance process. Although all of the options presented would likely lead to a resolution of the identified problem, one displays clear advantages over the others, but it also represents the most fundamental change vis-à-vis the existing paradigm (whether standard or streamlined) for goods clearance, positing a direct role for the e-commerce platform in the border goods clearance process.
Finally, recommendations are presented to policymakers, both in terms of the preferred option (as well as an alternative option), distinguishing the two and providing an overview of factors which may impact their implementation.
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • Charles Sturt University
Supervisors/Advisors
  • Widdowson, David, Principal Supervisor
  • Kashubsky, Mikhail, Co-Supervisor
Place of PublicationAustralia
Publisher
Publication statusPublished - Oct 2023

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