Major International Transit Procedures: the TIR

GUARANTEES (2)

Major International Transit Procedures: the TIR

The previous section describes a set of procedures attached to the country of transit. International transit procedures stipulate the harmonization of procedures and documentation, as well as an internationally accepted guarantee system. Hence, international regime facilitates transit further, compared to a chain of national procedures. The Transport International Routier (TIR) is a “best practice” that sets the standard in this domain and is discussed in detail in this Chapter.

The TIR Convention: general principles

The TIR Convention, based on the UN Customs Convention on the International transport of Goods under Cover of TIR Carnets (1960), is not only one of the most successful international transport conventions, but also the only existing universal Customs transit system. In this sense, it serves as a benchmark for any future effective (regional) transit frameworks and as such, deserves a detailed examination.

The TIR Convention allows the temporary suspension of customs duties, excise duties and VAT payable on goods originating from and/or destined for a third country while under transport across the territory of a concrete customs zone. Such suspension remains in place until the goods either exit the customs territory concerned, are transferred to an alternative customs regime or the duties and taxes are paid and the goods enter free circulation. The TIR specifies five main pillars:

Secure vehicles: the goods shall be transported in containers or compartments of road vehicles, which are so constructed that there is no access to the interior when secured by a customs seal, so that no goods can be removed or added during the transit procedure and so that any tampering will be clearly visible.

International guarantee valid throughout the journey: in the situation that the transport operator cannot account for the customs duties and taxes due, this system ensures that the customs duties and taxes at risk are covered by the national guaranteeing system of the operator.

National associations of transport operators: they control the access to the TIR procedures by transport operators and issue the appropriate documents and manage the national guarantee system.

TIR Carnets: This is the standard international customs document accepted and recognized by all Members of the TIR Convention.

International and mutual recognition of Customs controls measures: the country of transit and destination accepts control measures taken in the country of departure.

In essence, TIR operations can be carried out in participating countries by a truck operator member of a national association or another participant, with the national association (or rather the network of national association) acting as guarantor.

The TIR system has been very successful. The number of TIR carnets issued rose from 3,000 in 1952 to 2.7 million in 2001. The main reason for its success to date is that all parties involved (Customs, other legal bodies, transport operators and insurance companies) recognize that the system not only saves time but also money, due to its efficiency and reliability. The TIR Convention is simple, flexible, and cost reducing and ensures the payment of Customs duties and taxes that are due for the international transport of goods. Further, it is constantly being updated according to the latest developments mainly concerning fraud and smuggling. The TIR is used mostly in European countries but is also used in transit operations in Central Asia, the Caucasus, the Maghreb and in some parts of the Middle East.

Insurance and Issuance of TIR Carnets

The national guaranteeing association is recognized by the customs administration of the country. In most cases it is an association that represents the transporters. The association guarantees payment within that country of any duties and taxes which may become due in the event of any irregularity occurring in the course of the TIR transport operation. The amount payable is at a maximum of US$50,000 for normal carnets and US$200,000 for tobacco/alcohol carnets. The national guaranteeing association is not a financial organization; therefore, its obligations are usually backed by insurance policies provided by the market. The IRU can help national guaranteeing associations in finding such services.

There are three types of carnets, each of which contains 2 sheets for each country of departure, transit and destination.

The regular TIR Carnet.

The Multi-modal TIR Carnet, which was introduced in 1987, and specifically caters to the requirements of regional and intercontinental multi-modal transport. This Carnet contains an additional sheet identifying the persons who compose the transport chain.

The Tobacco/Alcohol TIR Carnet, which became an integral part of the TIR Convention in 1994.

The transporter should conclude a contract with the National Guarantee Association, which would include the obligation to meet all requirements set in the TIR convention, to return the used TIR carnet after completion of the TIR transport and to pay any amount of duties, taxes and other charges on first demand of the National Guarantee Association.

To ensure the security of the revenues, the TIR system is only applicable to containers or road vehicles with load compartments to which there is no access to the interior after a customs seal has secured it. If tampering does take place, this will be clearly visible.

The Sequence of the Transit Operation under TIR Cover

A TIR transport is an international transport operation. It is a transit operation of goods, across one or more borders, of which only a part of the transit has to be made by road. The transit operation itself involves the movement of goods from one country (country of departure) to another country (country of destination), through a third country (transit country). All countries involved should be active members of the TIR Convention.

The customs office in the country of departure administers the seals. Both the country of transit and the country of destination accept the control measures taken in this country. Thus, at custom offices en route (at border points between countries of departure and transit; between countries of transit and country of destination), only the seals and containing body are inspected. The goods itself are not inspected, unless irregularities are suspected. Such spot checks, however, should be exceptional. The customs office of the destination country removes the seals and controls the goods.

During this transit process various steps can be discerned regarding the issuance of the carnet as well as the insurance situation. To better illustrate the functioning of the system, an outline of a TIR transport from Rotterdam (the Netherlands) to Moscow (Commonwealth of Independent States) is given below.

Step 1: TIR Carnet presented at the Customs Office of Departure

The truck driver should present the TIR carnet at the customs office of departure in Rotterdam. Before loading the goods, Customs will check the TIR certificate (stating that the loading space of the truck fulfills the requirement of construction and can be customs sealed properly) and will customs seal the loading space after the loading of goods has been completed. After this, the customs office of departure will validate the TIR carnet (put customs stamps on the manifest, and on each of the sheets for the countries that will be passed between the Netherlands and the CIS (two copies for each of these countries). After this, Customs remove one sheet of the TIR carnet and forward this copy to the Dutch CCO. The rest of the TIR carnet is returned to the truck driver and he can leave Rotterdam en route to the exit customs office.

Step 2: TIR carnet presented at the customs office of exit of the departure country

The Netherlands is a Member State of the EU, which is a customs union, so that no customs formalities need to be fulfilled at the internal border between the members. Therefore the customs office of exit of the EU is, in this example situated at the Polish-German border.

The truck driver presents himself/herself with the TIR carnet at the German customs office of exit in Frankfurt (Odder, Federal Republic of Germany). German Customs inspect the Dutch customs seals and whether or not the loading space of the truck is still intact. If no irregularities are found, German Customs remove a copy from the TIR carnet and stamps the remaining part of this copy in the TIR carnet. The TIR carnet is returned to the truck driver and he is allowed to leave the European Union and drive to the Polish customs office at the same border. German Customs forward the copy they removed from the TIR carnet to the Dutch CCO.

Copies from the TIR carnet received from the customs office of departure and exit are compared at Dutch CCO if no irregularities are determined, duties are not payable. However, if the second copy does not arrive at the central customs office, goods are considered to have remained in the EU and the duties and taxes applicable in the EU become due. The principal of the TIR carnet (i.e. the transporter) is obliged to pay these duties and taxes. If the principal is not willing to pay or cannot pay these duties and taxes on demand of Customs, the National Guaranteeing Association need to pay the demanded amounts.

Step 3: TIR carnet presented at the customs office of Entry of the transit country

The truck driver presents himself/herself with the TIR carnet to the Polish customs office at the Polish-German border. Polish Customs inspect the Dutch customs seals and whether or not the loading space of the truck is still intact. If no irregularities are found, Polish Customs removes a copy from the TIR carnet and stamps the remaining part of this copy in the TIR carnet. After completion the TIR carnet is returned to the truck driver and he is allowed to leave the Polish customs office and drive to the Russian-Polish border. Polish Customs forward the copy they removed from the TIR carnet to the Polish central customs office.

Step 4: TIR carnet presented at the Customs office of exit of the transit country

The truck driver presents himself/herself with the TIR carnet at the Polish customs office of exit at the Russian-Polish border, and the procedure that took place at the German border is repeated.

Copies from the TIR carnet are received from the customs offices of departure and exit and are compared at the Polish central Customs office. If no irregularities are determined, duties are not payable. If the Polish Customs does not receive the documents or if irregularities are observed, the duties are payable. In such case, the Polish customs can turn to the guaranteeing Polish national association for payment of the demanded amount. The Polish association will then recover this amount from its Dutch counterpart.

Step 5: TIR carnet presented at the Customs office of entry in the country of destination

The truck driver presents himself/herself and the TIR carnet at the Russian customs office at the Russian-Polish border and performs the controls that were described for leaving the German exit border before sending of the driver and the transit truck to Moscow. This part of the journey is identical to a national transit operation. Russian Customs files the copy they removed from the TIR carnet to monitor the clearance.

Step 6: TIR carnet presented at the customs office of the country of destination

The truck driver presents himself/herself with the TIR carnet at the customs office in Moscow. Russian Customs inspect the Dutch customs seals and whether or not the loading space of the truck is still intact. If no irregularities are found, Moscow Customs removes a copy from the TIR carnet and stamps the remaining part of this copy in the TIR carnet. After completion, the TIR carnet is returned to the truck driver. The TIR transport operation is now completed. Moscow Customs forward the copy they removed from the TIR carnet to the Russian customs office of entry.

The copy of the TIR carnet received from the Moscow customs office at the Russian customs office of entry is compared with the copy of that specific TIR carnet in the files of that customs office. If no irregularities are determined, duties are not payable. However, if the second copy does not arrive at the Russian customs office of entry, goods are considered to be in free circulation in Russia and the Russian duties and taxes become due. The principal of the TIR carnet (i.e., the transporter) is obliged to pay these duties and taxes. If the principal is not willing to pay or cannot pay these duties and taxes on demand of Russian Customs, the Russian National Guaranteeing Association needs to pay the demanded amounts. The Russian National Guaranteeing Association will recover this amount, via the Dutch National Guaranteeing Association from the Dutch principal of the TIR carnet.

Step 7: TIR Carnet discharged by the Customs of the country of destination

After discharge, the principal/holder returns the TIR carnet to the Dutch National Guaranteeing Association. The Dutch National Guaranteeing Association returns the TIR carnet to the IRU for control and archiving.

Advantages of the TIR system

The TIR system has been devised to facilitate, under customs control, to the maximum extent possible, the international movement of goods. The system provides transit countries with adequate guarantees to cover the customs duties and taxes at risk. TIR is a win-win arrangement between the public sector and the private sector. The counterpart of the simplification of procedures is more responsibility exercised by the private sector through the national associations.