CUSTOMS-BUSINESS PARTNERSHIP IN CHINA CUSTOMS
4.5 Barriers and Challenges for the CBP
Consolidating the research findings by other scholars and empirical observation and interviews, the researcher found certain barriers and challenges are in place for customs and business to pursue and build a mutually-beneficial partnership.
4.5.1 Power Imbalance
In the interactions and transactions between customs and business, a power balance is obvious. This power balance was originally mandated by customs-related laws and regulations, which grant customs monopoly and authority over the trade community. The asymmetry of information also gives customs an advantage. Though transparency in customs matters develops significantly, the technical nature of customs work creates a lot of opportunities for customs to manipulate information for its own convenience.
Specific to the CBP, the above discussion demonstrates that customs is the dominating sides for the initiation of all the arrangements despite the fact that it responds to the pressures and requirements of the business community. Consequently, business is a “passive” recipient. For example, as observed by Fan Haikun (2011), in the various versions of the CMEP, the criteria for classifying enterprises, stipulating MOUs, the evaluation of the enterprise compliance level, facilitative measures have been mainly formulated and decided by customs. In spite of various communication and consultation mechanisms, the real needs of business may not be adequately heard or addressed. In this process, the role of trade associations is also not adequately played out.
As informants from both sides confessed, there is even an embarrassing phenomenon that can be termed “abused service” (Fan, 2011). That is to say, customs offers “services” in a one-sided manner, which regrettably imposes an unnecessary burden on business. For example, customs intensively conducts field visits and holds
consultation meetings at companies, and this disrupts the normal operations of the company, as Fan Debiao, with the Shanghai Huahong Grace Semiconductor Manufacturing Corporation, which was certified as an AEO by the Shanghai Customs District in 2013, stated:
We are proud of being granted as AEO status and receive tangible benefits. However, we don’t want to be an experiment model for Customs. International trade is only one part of our operations; it seems Customs is still self-centered to sell certain extra services to us.
It is bit annoying, as business, we just want fair, fast and efficient clearance.
4.5.2 Compliance Culture
The regulatory compliance culture in China generally and in the customs context specifically is not as adequate as the public expects. Regulatees have a strong tendency to cheat and commit commercial fraud in taxation, product safety, and many other areas. The main reasons for this compliance culture are: first, the market economy has not maturely developed and the credit management system covering all individuals and entities is still at the initial stage; second, a long tradition of “guanxi”
(special connection) still plays a role in many aspects of the society. People and organizations have the tendency to employ “guanxi” for rent-seeking; third, specifically for customs, much room for administrative discretion exists. Even the enterprises under Class AA seek illegal interests.
Inertia exists on the customs side. On the one hand, customs promotes the CBP, and on the other hand, customs needs to maintain a deterrence enforcement strategy in the background to find and punish noncompliant traders.
4.5.3 Customs Integrity
Integrity has long been a key theme and an important component in customs as promoted by the WCO. It is the same with China Customs. It should be admitted that corruption problems after the “Integrity Storm” have been fundamentally transferred, and rampant corruption has been contained throughout China Customs.
Nevertheless, one cannot be optimistic about potential threats and prospects. During each year’s China Customs Director-General Conference, the Customs Conference on Integrity and Fighting Corruption is held in parallel to identify weak areas in integrity and to chart corresponding strategies.
From the perspective of the CBP, corruption is clearly against the rationale and principle for a mutually-beneficial relationship. However, in reality, business has mixed feelings in this regard. On the one hand, businesses think that the credibility and trust of customs lie in integrity. On the other hand, when business encounters actual problems in customs clearance, it will seek “under-the-table practices” that may facilitate the procedures. On the front-line of customs operations, it is implicit for business representatives to keep a good relationship with customs officers. Such a good relationship is fueled by providing lubricating “benefits” to customs officers like free meals and commercial membership cards like golf. me
4.5.4 Fragmentation of Policy
The fragmentation of policymaking and enforcement for border management also poses challenges in building the CBP. It is well recognized that customs is only one government agency in international trade processing and border management. In China, a wide number of government agencies and entities such as authorities on commerce, foreign exchange, tax, quarantine, maritime management, immigration, ports, railways, banks, etc. are part of the administrative and commercial chain. With different jurisdictions, philosophies, and procedures, these agencies and entities themselves are not adequate in their coordination. In spite of the “Integrated Clearance Program” and “China E-port,” there is a great deal of distance from the requirements under the principle of Coordinated Border Management promoted by the WCO. Usually, a company needs to build up partnership arrangements with different government agencies, and unnecessary costs are incurred.