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Rıza Mehmet KORKMAZ
Director General of UGM
The main factors that disrupt trade by causing breaks in the international supply chain include epidemics such as the recent Covid-19 outbreak, terrorism, war, civil war, riots, major social events, financial shocks, significant accidents (e.g. the Ever Green accident in the Suez Canal on March 23, 2021), environmental disasters, significant strikes in various industries and transportation sectors, and natural disasters (earthquakes, floods, forest fires, volcanic eruptions, storms, tsunamis, etc.). ).
It is helpful to evaluate these phenomena, which are often unpredictable, disrupt the normal state of affairs, and adversely affect the natural flow of economic activities and trade, and which are characterized as crises in contemporary language and which are often referred to as force majeure in legal terms, from two perspectives. In the first perspective, the impact of these crises on foreign trade and in which cases they are considered force majeure; in the second perspective, what kind of measures can be taken to facilitate customs procedures in these disasters.
Impact of major natural disasters on supply chain and foreign trade
Disasters, unusual situations, and developments that adversely affect foreign trade and cause supply chain breaks bring many negative consequences. It is possible to list some of these as follows:
- Some periodic changes in the trade patterns of economies:
- Urgent and robust demand for first aid, rescue, health supplies and equipment, basic foodstuffs, shelter (containers, tents, houses), hygiene products,
- Supply problems and supply chain disruptions due to traditional suppliers being unavailable, unable to produce, provide services, or having limited production and services,
- The emergence of trade requirements to replace imported or exported products with substitutes,
- Changes in offshore suppliers and transportation routes,
- Failure to use the roads used in air, sea, and land transportation due to unfavorable conditions, change of routes/routes,
- Problems in transportation and entry/exit at significant sea and air ports or periodic unavailability of these ports, as happened in Hatay airport and Iskenderun port during the recent earthquake in our country,
- Price increases in transportation and logistics costs,
- Disorder, chaos, delays, and congestion in ports and main transportation corridors, and the additional costs arising from that place; customer losses due to late deliveries or no deliveries at all,
- Employment problems arising from the loss of qualified workforce in the supply chain,
- Financial problems that importers and exporters may experience due to difficulties in payments and the supply of goods, and crises that may arise in the banking system,
- Demands from the public, industry, and government to speed up the shipment of goods, and the challenges of racing against time in the face of disaster,
- Increased costs or supply difficulties due to new measures, restrictions, or taxes on foreign trade.
When all these challenges occur on a global scale, as in the recent pandemic, they negatively impact world growth and trade. As can be seen from the table below, world trade, which grew by 1.4% in 2019, shrank by 8% in 2020, the year of the pandemic. In 2009, when world trade shrank by 10.4%, it was seen that the global crisis, which started financially in the USA and spread worldwide in 2009, was adequate.
Force Majeure in International Trade
In cases where international trade is disrupted due to natural disasters, the rules determined by the contracts concluded between the parties and the rules of international law are essential in determining the parties' liability for the resulting damage.
Article 79, paragraph 1 of the UN Convention on Contracts for the International Sale of Goods (CISG, Vienna Convention), which was signed in 1980 and to which 95 countries are parties as of 2022, titled "Release from Liability," reads as follows: "1. A party shall not be held liable for non-performance if it proves that an obstacle beyond its control caused its failure to perform one of its obligations and that it could not reasonably have been expected to take this obstacle into account at the time of the conclusion of the contract or to avoid or overcome the obstacle and its consequences..." with this provision, it has drawn a framework regarding the concept of force majeure in the purchase and sale of goods in international trade.
According to the Vienna Convention, a situation can be considered force majeure if it meets three key conditions. Firstly, it must be an obstacle beyond the control of the debtor. Secondly, it must not have been reasonably foreseeable at the time of the contract. And thirdly, it must not have been reasonably possible to overcome. Understanding these conditions is essential for grasping the concept of force majeure in international trade.
It is of great importance that the force majeure clauses in the contracts to be made by the parties in foreign trade are written appropriately, on a definition basis, to avoid any material damage in the future. Force majeure clauses should be drafted to interpret them similarly, even in different legal systems applied in other countries. It should be known how the force majeure clause will be evaluated according to the legal system to be used in the contract and its elements and consequences according to this legal system.
International regulations on customs services in natural disasters
In the face of natural disasters, specific provisions have been introduced by the following international rules to facilitate the customs procedures to be applied to ensure the smooth and timely delivery of the aid materials intended to be sent from all over the world to the disaster-stricken country.
- A non-binding disaster law agreement on 'Customs Facilitation in Humanitarian Relief' may exist between the affected country and the UN.
- The country may be a signatory to the "World Customs Organization (WCO) Customs Cooperation Council Resolution on the Role of Customs in Natural Disaster Relief."
- The country may have incorporated specific provisions of the International Disaster Response Laws (IDRL) Guidelines into its national legislation.
- The country may have ratified Special Annex J of the Revised Kyoto Convention.
- The country may have ratified UN General Assembly Resolution 46/182.
By becoming a party to these arrangements, a country has expressed its political willingness to implement simplified customs procedures during a disaster. For humanitarian organizations and international voluntary organizations (INGOs), this means ensuring that aid shipments are cleared quickly and easily through customs and are free of duties and taxes. If a country has not adopted any internal regulations above due to a lack of political will or motivation, the time required for customs clearance of relief goods will remain high.
World Customs Organization Revised Kyoto Convention
To ensure the timely and complete delivery of various aid materials sent by human beings from all over the world to disaster areas in response to natural disasters, certain facilitations have been linked to specific international rules and standards with the Revised Kyoto Convention on Simplification and Harmonization of Customs Regimes (Special Annex J, Section 5, Guidelines on Aid Shipments), which was issued by the World Customs Organization and which was ratified by 133 countries, including Turkey, and entered into force in 2006.
According to these provisions, Aid shipments consist of the following materials sent as aid to those affected by the disaster:
• Vehicles and other means of transportation,
• Foodstuffs,
• Medicines,
• Clothes,
• Blankets,
• Tents,
• Prefabricated houses,
• Water purification and water storage materials,
• Other primary need materials,
• Disaster relief personnel, during their duty period in the disaster area, All equipment, tools, equipment and other means of transportation, supplies, personal belongings, and other materials that will help them perform their duties and live and work in the disaster area,
• Specially trained animals.
According to the same provisions, the basic principles in customs procedures regarding aid materials are:
• Standard 1: Customs clearance of aid consignments shall be subject to the provisions of this Chapter and, to the extent applicable, the requirements of the General Annex.
• 2nd Standard: Export, transit, temporary acceptance, and import procedures of aid shipments are carried out on a priority basis.
• 3. In the case of Standard Aid shipments, Customs Authorities will ensure that:
Submission of a simplified customs declaration or a provisional or incomplete declaration regarding the goods, depending on the completion of the declaration within a certain period (incomplete declaration is also accepted),
Issuing and recording the goods declaration and its supporting documents before the arrival of the goods or ensuring that the declaration is checked before the arrival of the goods and their release upon arrival,
Ensuring that customs clearance is carried out outside the specified working hours or away from the customs administrations and that no fee is charged in this context,
o Inspection and sampling of goods only in exceptional cases.
• 4. Recommended practice: Declaration of aid shipments must be provided regardless of the goods' country of origin, country of origin, or destination.
• 5. Recommended practice: Aid shipments should be exempt from export bans, restrictions, export taxes, or other financial obligations.
• 6. Recommended practice: Consignments of aid received as gifts for use by or under the control of approved organizations or for distribution free of charge by or under their power should be considered exempt from import duties and other taxes and import prohibitions and restrictions.
Main difficulties encountered in customs clearance of aid supplies
When a disaster occurs and a request for international assistance is received, many units try to intervene as quickly as possible and respond to the needs of the population affected by the disaster.
With the information obtained from relevant parties such as donor governments, local governments, aid organizations, private logistics companies, international non-governmental organizations, international aid organizations, the most obvious reasons behind customs delays in disasters are revealed through some research. The following critical variables are examined in these studies:
• Inquiring about lost or delayed goods from carriers,
• Time taken to track lost goods and respond to shippers,
• Customs clearance time of the goods,
• Customs approval time for transactions,
• Backlogs at the customs entry point to initiate the customs approval process,
• Overtime hours,
• Tiredness,
• Concluding transactions with minimum costs,
• Applications require a large number of information records and complex transaction processes,
• Performance quality of transactions,
• Political willingness/motivation,
• Unwritten procedures in practice,
• Quality IT systems and infrastructure,
• Non-binding disaster law model contract,
• Information about current policies of international organizations and INGOs,
• Volume of external and internal goods coming from international organizations,
• Ability to serve beneficiaries,
• Filling out defective customs documents or not having a local buyer,
• Negative perceptions of international organizations regarding corruption in customs.
Countries exposed to disasters should comprehensively determine and implement what kind of action they will take in the face of such natural disasters, with well-prepared emergency and disaster plans. At this point, coordination and rapid decision-making and implementation are of great importance.
One of the first government institutions that institutions and organizations coming from abroad to help the country affected by the disaster encounter when they arrive in that country is the customs administration. Unfortunately, very few customs administrations respond to requests for assistance that arrive in a short period of time and lead to a large volume of requests; It is prepared to manage vehicle, goods and human traffic without any problems. In addition, routine practices and intensive procedures in customs clearance also lead to unnecessary bureaucratic bottlenecks that slow down the entry and distribution of aid. Aid providers are frustrated by unnecessary delays and high costs. Customs administrations caught unprepared may also face the inability to cope with problems and public criticism. It is known that in many natural disasters, such as the tsunami disaster that occurred in Indonesia in 2004, there were serious problems in delivering aid sent from various parts of the world to the places where the disaster occurred, or the materials could not be delivered at all. The effectiveness of humanitarian aid depends largely on the speed with which it can be provided. For this reason, customs administrations must be as facilitative as possible and ensure that goods transferred as aid as a result of natural disasters are quickly cleared from customs.
Customs procedures must be completed immediately before the evacuation shipments arriving at the customs entry point, waiting for the customs approval process to begin, accumulate. Otherwise, the backlog will grow and customs officials will work more working hours for customs procedures in the backlog. When officials work 24/7 in the immediate aftermath of a disaster, fatigue sets in, making the initial action they attempt to correct difficult; The approval process per shipment takes more time. On the other hand, the existence of more unwritten procedures in actual practice also increases approval processes and processing times.
Foreign governments, international organizations, INGOs and all other elements who want to send assistance regarding customs processes must be informed in advance and through the correct channels about how the process will work.
In this regard, it will be useful for the information on the websites of the Customs Administration, National Aid Organizations (such as AFAD, Red Crescent), Ministry of Foreign Affairs, Embassies and Foreign Representations of the country to be sent to include up-to-date information and procedures published in foreign languages and to easily access this information.
Another difficulty in aid processes is that only a limited number of NGOs registered in that country can benefit from legal facilities in the country to which aid will be sent, and there is an obligation to act together with these NGOs in order to provide tax benefits to foreign NGOs.
The arrival of shipments that are not suitable due to poor quality or are not urgently needed at the time will only become a burden on the government of the country affected by the disaster. Failure to comply with the standards and procedures required when importing aid materials and equipment due to a disaster may lead to the entry of many non-standard and essentially useless materials into that country.
On the other hand, international organizations making the first shipments quickly sharing their experiences as feedback with other senders via social media and other communication channels will also contribute to accelerating the processes.
Another factor that affects the approval time at customs is the condition of the infrastructure of that region and/or the quality of IT systems after a disaster. If the infrastructure has been damaged during the disaster or is already inadequate, it will be very difficult to deliver relief materials to the region in a timely manner. In the disaster area, there may be situations where the airport is not working, the electricity is out, the internal transportation system is damaged, the IT systems are not working, or even the customs administration cannot provide service because some customs officers are dead or injured. Individuals and organizations who want to send assistance regarding this entire process must be informed correctly and must be guided with a correct logistics plan by the organizations responsible for coordination within the framework of a well-functioning disaster plan. Otherwise, situations will be encountered where rescue teams from aid organizations cannot reach the disaster area for hours.
Automating applicable customs regulations and processes can greatly reduce the time it takes to approve shipments. For this reason, the good functioning of IT systems, the existence of disaster centers and the immediate activation of backup systems are even more important in the event of a disaster.
Customs administrations need to establish a very good balance between their responsibility to protect public health and safety by controlling imports and the need to react correctly to the disaster and deliver relief materials to the disaster area as soon as possible, and therefore their employees must be well trained in emergency situations. Inefficiencies resulting from lack of motivation can be reduced if customs administrations better motivate their employees by providing improved job security, better wages and/or additional training.
On the other hand, the length of customs procedures and the difficulty of the processes will discourage new initiatives that want to send aid to the disaster area. Organizations that are not properly informed about why goods are delayed, lost or rejected during the customs approval process, and do not see their goods reach the beneficiaries, assume that they may have been stolen, which further strengthens their negative perception of customs efficiency. In fact, although opportunistic behavior sometimes applies to goods not reaching the intended user, this is usually not the reason why aid shipments do not reach the beneficiary. Goods that are typically rejected or examined more closely during a disaster are goods that can greatly impact the market, such as vaccines or bulk pharmaceuticals.
Particularly due to negative perceptions about the customs administration of the country to which assistance will be sent, in some cases, sending goods deliberately or accidentally, without completing the appropriate documents or without the local recipient, will also increase the time required for customs to examine and approve the shipment. Even if the transactions of the goods are completed quickly at customs, if a local buyer is not interested in those goods and does not take them for distribution, the goods may remain in customs warehouses without being cleared. This situation, which can easily turn into a negative perception on the part of the international community, may actually be due to a reason as simple as the sender not having a local recipient.
Conclusion
Customs administrations have a crucial role in ensuring that the materials needed in times of disaster are delivered to disaster areas quickly and smoothly. Fulfilling this function correctly requires good coordination, awareness strengthened by training, an advanced administrative capacity, well-functioning communication channels, and the ability to make and implement flexible decisions in times of crisis with a correct management approach.
In the last earthquake disaster in our country, the Ministry of Commerce and the Turkish Customs Administration managed the process well by giving a good test in this sense. They were able to ensure that aid materials were delivered to the areas in need without any delay and in full. Therefore, at this point, it is necessary to congratulate customs employees for their careful and devoted work. We wish that such disasters never occur again in our country or anywhere.
