Meeting the eCommerce challenge Post-Customs Electronic Data Exchange

1. Meeting the eCommerce challengePost-Customs Electronic Data Exchange WCO Knowledge Academy 4th July 2014 Harald Weyerich Director UPU Postal Technology Centre

2. Agenda • Postal Supply Chain & Electronic Data Flow • Formal Basis Documents • Motivation for Electronic Exchange • Electronic Messages • The UPU Customs Declaration System (CDS) • Steps to the Electronic Data Exchange • Pilot countries • The Postal Export Guide (PEG) • CDS screenshots (Annex)

3. Postal Supply Chain & EDI message flow EDI (XML) message Post-Customs:

4. The UPU Electronic Message Network • Standard EDI network (POST*Net) operated by UPU • Since 1996 • Private peer-to-peer network through internet, 24*7 100% availability • Secured transport (VPN, SSL) • Business continuity • Performant (0-5 min processing) • Monitoring & alerting service • Used by 170 postal operators • Very affordable (cost-based) • Could be used also by other Int’l Organizations Carrier POST*Net Track & Trace (barcodes) Import customs Export customs Transit post • Level of detail: • Item, bag, dispatchconsignment • Consignment • Item (declaration) • Item (query) Sender Receiver Export post Import post

5. Agenda • Postal Supply Chain & Electronic Data Flow • Formal Basis Documents • Motivation for Electronic Exchange • Electronic Messages • The UPU Customs Declaration System (CDS) • Steps to the Electronic Data Exchange • Pilot countries • The Postal Export Guide (PEG) • CDS screenshots (Annex)

6. Basis for the Customs treatment of postal items • Kyoto Protocol Annex J • Standard declaration forms

7. Basis for the Customs treatment of postal items (2) • WCO PTC decision (2011) • At its 191st/192nd Sessions (22 to 25 March 2011), the WCO Permanent Technical Committee • (PTC) decided: • 141. Following this examination the focus group had concluded that in principle the WCO • was in a position to endorse the data requirements of the CUSITM/CUSRSP, on the • understanding that it was a living information technology (IT) messaging guide which could • be improved continuously based on developments in this field, including the results of • ongoing pilot projects. To that end, the focus group had also recognized that in the future, • any minor gaps could be filled through mutual consultation between the two Secretariats • 146. The Meeting took note of the analysis carried out by the IMSC, and of the UPU’s • presentation on the CUSITM/CUSRSP. It endorsed, in principle, the design and content of • the CUSITM/CUSRSP as a tool developed jointly by the UPU and the WCO, and agreed • that it should be called “WCO-UPU Customs-Post Electronic Messages”.

8. Basis for the Customs treatment of postal items (3) • UPU Convention Article 9 (2012) • 1 Member countries and their designated operators shall observe the security requirements defined in the UPU security standards and shall adopt and implement a proactive security strategy at all levels of postal operations to maintain and enhance the confidence of the general public in the postal services, in the inter­ests of all officials involved. This strategy shall, in particular, include the principle of complying with requirements for providing electronic advance data on postal items identified in implementing provisions (including the type of, and criteria for, postal items) adopted by the Council of Adminis­tration and Postal Operations Council, in accordance with UPU technical messaging standards.The strategy shall also include the exchange of information on maintaining the safe and secure transport and transit of mails between member countries and their designated operators. • 2 Any security measures applied in the international postal transport chain must be commen­surate with the risks or threats that they seek to address, and must be implemented without ham­pering worldwide mail flows or trade by taking into consideration the specificities of the mail network. Security measures that have a potential global impact on postal operations must be imple­mented in an internationally coordinated and balanced manner, with the involvement of the relevant stakeholders.

9. Basis for the Customs treatment of postal items (4) • Under development:« Postal Model » for Security-related electronic pre-advice

10. Agenda • Postal Supply Chain & Electronic Data Flow • Formal Basis Documents • Motivation for Electronic Exchange • Electronic Messages • The UPU Customs Declaration System (CDS) • Steps to the Electronic Data Exchange • Pilot countries • The Postal Export Guide (PEG) • CDS screenshots (Annex)

11. Whyelectronicpre-advice for postal items ? • Legalrequirements • US, China, EU • Security requirements • Pre-advice to be sent before item leaves country of origin • Confirmation of correct export processing to destination Customs and transport airlines • Providepossibility for securityalerts back to origin • Reduce / maintain customs processing time • Customs decisionmakingwhile item is on route • Possibility for « automated » Customs decisions for low-risk items • Postal volume increasing but not Customs staff • Direct inject possible fromshippers/online shops

12. How cancostbeminimised ? • Usage of UPU-WCO standard • AvoidscostlybespokeIT interfaces • Planned interface with ASYCUDA (end 2014) • Usage of standard software • UPU CDS iscurrently the only IT system for postal customs declaration & security • More volume with same staff • By having the electronic declaration in advance (even before the item leaves the origin country), there is enough time to do risk analysis and rating • Automated pre-arrival preliminary decisions on selection for inspection and/or tax/duty rating for low-risk items saves manual workload, speeds up the import process and supports trade facilitation • Of course any pre-arrival decision can be overridden anytime

13. The cost of inactivity • Postal items piling up • With growing international eCommerce volume and no staff increase, bottleneck situations will occur • Impact • Increase of elapsedtime retailer-to-buyer = decreased citizen satisfaction • This will then be the opposite of Trade Facilitation

14. Major benefits • Reduce handling time at Posts and Customs and increase throughput • injection of electronic declarations directly from large mailers or internet • Data entry by customers – not by the post ! • declaration data can be fed into customs risk management systems – • better targeting, trend analysis and reaction to security incidents/threats • concentrate Customs resources on highest threat areas • advance sender/recipient information for security checks • better communication between Post and Customs • faster Customs clearance of mail items and improved service quality for postal customers • Pre-advice and Pre-clearance can be used to collect duties/taxes in advance • Security information/alerts can be fed back to origin country

15. Agenda • Postal Supply Chain & Electronic Data Flow • Formal Basis Documents • Motivation for Electronic Exchange • Electronic Messages • The UPU Customs Declaration System (CDS) • Steps to the Electronic Data Exchange • Pilot countries • The Postal Export Guide (PEG) • CDS screenshots (Annex)

16. Common UPU-WCO Standard • Electronic Exchange Post-Customs EDI (XML) messages: • CUSITM • electronic version of paper customs declarationforms CN22,CN23,CP72 • CUSRSP • electronicanswerfrom Customs/Border Control to Post • item to bepresented(mandatory) • duties/taxes/other information (optional, if possible) • security-related messages • ITMATT • reservedonly for customs data interchangebetweenPostal Operators compliantwith WCO Data Model V3 e.g. do-not-loadmsg

17. Message Flow CUSITM/CUSRSP/ITMATT Post in origin country • Item level details captured at origin country • Individual enters data online or at post office • Post office enters data • Shipper submits data via IT interface • Capture at Hub or OE Post in destination country ITMATT CUSITM CUSRSP CUSITM copy CUSRSP CUSRSP CUSITM Customs in origin country Customs • in destination country • Styles: • Normal flow • Optionaladditional flow

18. Agenda • Postal Supply Chain & Electronic Data Flow • Formal Basis Documents • Motivation for Electronic Exchange • Electronic Messages • The UPU Customs Declaration System (CDS) • Steps to the Electronic Data Exchange • Pilot countries • The Postal Export Guide (PEG) • CDS screenshots (Annex)

19. UPU Customs Declaration System (CDS) • The UPU createdwith CDS a full management system for • Postal electronicpre-advice of merchandise to the destination Post/Customs • Withseparatedfunctions for • Postal use (capture & route pre-advice message) • Customs use (pre-select, decide, rate & taxation) • Security use (referrals/alerts to be sent to import and/or export post) • Based on the joint WCO-UPU message standard • Customs can use CDS directly or interface itwithitsownrisk/rating system • CDS isready to use since 1st Jan 2013 ! • Use central solution hosted at UPU or • Implement local solution (at post and/or Customs)

20. UPU CDS V1 Work & Data flow UPU eCommerce POST*Net Feedback CUSRSP • Configure • Selectivity rules • Rating rules (Tax calc.) • Feedback-to-originrules ITMATT CUSITM Shipper’s system Post Office CUSITM CUSITM CUSRSP OE OE CUSRSP IPS CDS IPS CDS RiskMgt RiskMgt export Post import Post export Customs import Customs optional flow Partial information flow configuration CUSITM/CUSRSP flow

21. Functionalityoverview: PostalCustoms • Declaration data capture (web service) X • Import/export declaration data (files or API interface) XX • Route declaration to partner Post (ITMATT message) X • Route declaration to Customs/border control (CUSITM message) X • Create response from Customs (CUSRSP message) including Xdecision and feedback information to be forwarded to origin Post • Receive response from Customs (CUSRSP message) and possibly forward feedback information to origin Post X • View/review/list/select declarations X X • Cancel declarations X • Transfer link to an image of the item (if provided by origin Post) X • Selectivity rule engine X(automaticaly select action for items based on rules) • Rating rule engine (automatically calculate tax/duty based on rules) X • FX (foreign exchange rate) management and conversion (convert currency values to local currency) XX • Audit trail (track and trace for actions on a declaration) XX • Interaction withIPS (UPU mail mgt. System) X • All Customs configurations are hidden to postal users !

22. UPU CDS V2 new functionality CDSv2 SP2 release in April 2014 • e-Commerce pre-clearance support. Option to sendduties&taxesresponseto origin • Ability to define multiple rules for a given customs decision/auto-response • E.g. Present if item is EMS fromSwitzerland or Parcelfrom Canada. • Ability to defineyourown user groups • Daily exchange rates feed • Improved user interface • Declarationlayout, sorting of search, better support of non-standard mail item IDs, declared value in local currency • Operationalprocess • Decision code and reasondisplayedon pop up screens in IPS, focus removedfrom «Close» button. Overall message look and feelimproved (IPS 2013 SP3)

23. Integration of CDS intoothersystems Postal systems Customs & security Point-of-Sales Back-office / Sorter Office of Exchange Security RiskMgt/ fiscal e.g. ASYCUDA Postal website • Web.API(automated & synchronous) • Web application interface – direct call with SOAP protocol • File (automated & asynchronous) • Files containingdeclarations / responses in CUSITM/CUSRSP format • Web Human Interface (manual) • Web screens for entry/query Shippers / large mailers Online shop CDS Purchase system

24. Agenda • Postal Supply Chain & Electronic Data Flow • Formal Basis Documents • Motivation for Electronic Exchange • Electronic Messages • The UPU Customs Declaration System (CDS) • Steps to the Electronic Data Exchange • Pilot countries • The Postal Export Guide (PEG) • CDS screenshots (Annex)

25. The steps to electronic Customs data exchange • Cooperatewith Posts • Agreeprocesses, show available UPU standards (CUSITM/CUSRSP) and tools (CDS) • Participate in a Post-Customs coordination team • Agree a pilot phase • Using CDS Central at the UPU to learn, test and review updated process together with the Post • Use samplesfrompartners (real data) loadedinto CDS • Identify a possibly pilot corridor with one country • No costinvolvedbesidesworkload for the Post-Customs coordination team

26. The steps to electronic Customs data exchange (2) • Agree on the data to be sent back to the Post • Decision, e.g. pre-clearance (beforearrival in country) of low-risk items • Feedback on import duties/taxes/other charges • Feedback on additonal documents needed • Possiblysecurityrelatedmessages • Possibilityto forward import cost feedback from destination customs to origin post  whichcanforward to shipper/online shop • Assess impact on both postal and customs processes • Use opportunity to identifyimprovements in the process • Identify usage of IT systems (e.g. Customs canstart to use CDS, if they have no own system or theycreate an interface) • Plan the Integrationproject • To implement the electronic exchange of data

27. New Opportunities • Prepayment of Customs taxes/duties by sender or receiver • Avoidskeeping items in warehousejust for tax collection reason • Watchdog service • Shippermay cancel shipment and stop merchandisewhileitis in the postal supplychain (atoutbound or inbound scans) • Customs can use the functionality to manage referrals and interdictitems

28. Agenda • Postal Supply Chain & Electronic Data Flow • Formal Basis Documents • Motivation for Electronic Exchange • Electronic Messages • The UPU Customs Declaration System (CDS) • Steps to the Electronic Data Exchange • Pilot countries • The Postal Export Guide (PEG) • CDS screenshots (Annex)

29. UPU CDS Central – pilot exchanges (May 2014) Own solution – ready to send/receive ITMATT to/from CDS CDS user PT BR IN > 100 000 declarations HU CA (prod) CZ GB MA CL AU UY ZA US (prod) RS HR UG

30. UPU CDS Pilot partners: • Canada Post • USPS Are ready to exchange withany CDS user ! • South Africa • Nigeria • SwissPost • Austria • Philippines • Thailand • Brazil • Chile • Morocco • India • Malaysia • Belarus • Uruguay • Local Pilot environment installations • CzechRepublic Q4 2013 • Canada Q1 2013 (production planned Q2 2014) • Portugal Q4 2013 • Australia Q3 2014 • Piloting / Testing/ Planning (CDS central) • Rep. of Serbia • Croatia • Latvia • Portugal • Hungary • Australia • Estonia

31. Agenda • Postal Supply Chain & Electronic Data Flow • Formal Basis Documents • Motivation for Electronic Exchange • Electronic Messages • The UPU Customs Declaration System (CDS) • Steps to the Electronic Data Exchange • The Postal Export Guide (PEG) • CDS screenshots (Annex)

32. Postal Export Guide (PEG) – Context The PEG replaces two UPU publications by a Web Service with enhanced possibilities for users. It can be separated in two sections: PEG Customs Matters Guide Prohibited and restricted articles • Customs Matters Guide – Single WCO–UPU Customs publication • Result of a Questionnaire filled in jointly by Customs and Posts • Electronic list of prohibited and restricted items • Search facility by country, HS code and description

33. Postal Export Guide &Customs Matters Guide - usage Edit Validate Public Postal Operator and Customs UPU Web services from any 3rd party application Queries via a web interface Consult the PDF

34. Customs Matters Guide - usage « P » information by Post « C » information by Customs

35. Customs Matters Guide - usage Post-Customs relationship

36. Postal Export Guide - Prohibited and restricted articles • by UPU: • Import the WCO HS Codes, maintain the system • by country: • Translate each WCO HS Code description into the country language. • Set the admissibility rules at level of code or range of codes • Attach documents • Import procedures (local or global notes) • Charges • Manage WCO HS Codes extensions at country level • Textual search and code search. • Display all code results for a word search

37. Postal Export Guide - Prohibited and restricted articles live turkeys prohibited preparations of turkey meat are allowed

38. Prohibited and restricted articles – edit restriction • Now the global note is attached to the selected good, further details can be added such as: • Charges ( ): monetary charges. • Attachments ( ): for example a form to fill. • Notes ( ): more information about the restriction. • Origin countries ( ): if this restriction applies only to certain origin countries.

39. Prohibited and restricted articles – edit restriction edit restriction on banknotes

40. Prohibited and restricted articles – edit restriction restriction shows on the overview

41. Thankyou ! Questions ? please contact: Harald Weyerich Director Postal Technology Centre, UPU harald.weyerich@upu.int

42. Agenda • Postal Supply Chain & Electronic Data Flow • Formal Basis Documents • Motivation for Electronic Exchange • Electronic Messages • The UPU Customs Declaration System (CDS) • Steps to the Electronic Data Exchange • Pilot countries • The Postal Export Guide (PEG) • CDS screenshots (Annex)

43. CDS Example user interface Main user screen (Customs admin)

44. CDS Example user interface customer at Post office filling in a Customs Declaration Reserved for image (if available)

45. CDS Example user interface (Customs user) Select a Declaration.. ..and sort By columns

46. CDS Example user interface (Customs user) View a Customs Declaration & decide Automaticcalculation (if rules are defined)

47. CDS Example user interface (Customs user) View Declaration history Whodidwhat On the declaration

48. CDS Example user interface (Customs admin) Manage Automated Customs Responses (select rule) Rules for eachdecision code

49. CDS Example user interface (Customs admin) Manage Automated Customs Responses (editrule) Flexible logical expression for ruledefinition

50. CDS Example user interface (Customs admin) Manage Automated Rating rules (editrule)