Customs union causes confusion

From the start of this year, the GCC is supposed to be operating as a single customs zone.

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By  Mark Sutton Published  January 12, 2003

From the start of this year, the GCC is supposed to be operating as a single customs zone.

It is a bold move, that could have enormous benefits for business in the region, allowing much more timely management of logistics into and within the GCC.

But while the customs union has been discussed at very high levels for a long time, it seems that putting the actual mechanisms into place may take longer.

In the UAE, the single Federal Customs Authority has only just been officially launched—twelve days into the start of supposed GCC-wide customs union.

Now the Federal Customs Authority has to begin co-ordination with each of the different emirates customs authorities, and with the other GCC member countries.

It has to create the necessary infrastructure, to standardise paperwork, charges, arrange collection of customs duty, integrate communications systems with other members and a host of other tasks.

The situation is the same across the Gulf—countries that are supposed to working as one already have all yet to put in basic mechanisms to enable the union to operate properly.

The situation is causing concern to many businesses as confusion and delays to logistics processes arise. Some customs posts seem to be demanding that duty is paid to enter certain countries, even if duty has already been paid to enter the new unified single customs zone. Other countries are still charging duty at their previous rates.

Many logistics carriers simply refused to accept shipments at the start of the month until they could get to grips with what exactly the situation was on the ground in each country. Distributor Tech Data is even offering resellers discounts on shipping charges to help them absorb any pain from the changeover.

Customs union had to come, and hopefully, it will promote further co-operation among the countries in the GCC, and create a fair and simple import/export process.

For the channel it will allow distributors to hold more stock in-country, without having to worry about getting charged duty every time they move it. This will mean quicker time to market and improved RMA stocks.

An improved customs infrastructure and a level playing field may also aid customs authorities to combat problems such as under invoicing. But the authorities should have made sure that the systems were in place before enacting such a bold move.

Customs union seems to have caught many people unawares, not least the customs authorities themselves, with the resulting confusion that we see now. A project of this size requires more than just years of discussion before it can go live, it required years of careful planning too, otherwise the long term benefits are easily overshadowed by the short term problems.

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