Greening of Customs: A Step Toward Sustainable Trade

Rasim Huseynov Managing Editor of Seamless Trade from Baku, COP29

The greening of customs has been an evolving process since the inception of the United Nations Environment Programme (UNEP) Green Customs Initiative. This program, launched to address the environmental challenges associated with international trade, seeks to equip customs administrations with tools and knowledge to combat the illicit trade of environmentally sensitive commodities. By fostering collaboration between customs officials, international organisations, and environmental experts, the initiative plays a pivotal role in promoting sustainable trade practices globally.

At COP29 in Baku, Azerbaijan, this mission was highlighted during a side event titled "Green Customs: Advancing Sustainable Trade through Facilitation, Innovation, and Standards." The session brought together global leaders in trade, customs, and sustainability to discuss the critical role customs administrations play in safeguarding the environment while facilitating legitimate trade.

The event, moderated by Daan van der Wekken of the British Standards Institute, featured distinguished panelists including Gael Grooby from the World Customs Organisation, Shahin Bagirov representing State Customs Committee of Azerbaijan, AnnMarie R. Highsmith from U.S. Customs and Border Protection, and Silvio Dulinsky of the International Standards Organisation. Each speaker offered insights into their organisation’s efforts to integrate sustainability into customs operations, highlighting innovations, challenges, and the importance of global collaboration.

This article provides an account of the side event discussions and features an exclusive interview with Ms. Gael Grooby, Acting Director for Tariff and Trade Affairs at the WCO, on the future of sustainable customs operations.

Green Customs: Advancing Sustainable Trade through Facilitation, Innovation, and Standards. COP29, Baku, Azerbaijan — 18th November 2024

Panelists

• Moderator: Daan van der Wekken, Head of Sustainability, British Standards Institute (BSI)

• Gael Grooby: Acting Director, Tariff and Trade Affairs, World Customs Organization (WCO)

• Shahin Bagirov: Chairman, States Customs Committee of the Republic of Azerbaijan

• AnnMarie R. Highsmith: Executive Assistant Commissioner, Office of Trade, U.S. Customs and Border Protection (CBP)

• Silvio Dulinsky: Deputy Secretary General, International Standards Organisation (ISO)

From left to right: Daan van der Wekken, AnnMarie Highsmith, Shahin Bagirov, Silvio Dulinsky, Gael Grooby

Opening Remarks: The Role of Green Customs

The panel discussion opened with a strong emphasis on the importance of "green customs" in facilitating sustainable trade and safeguarding the environment. Customs agencies, acting as gatekeepers at international borders, have a critical role in tackling environmental challenges, from combating illicit trade to supporting the transition to environmentally friendly practices.

Key Takeaways from the Panel

1. Why Green Customs Matter (AnnMarie Highsmith, CBP)

AnnMarie highlighted how customs connect divided borders and play a key role in addressing environmental challenges:

• Illicit Trade: Tackling issues like illegal logging, waste trafficking, and wildlife trafficking, which cost the global economy trillions in damages.

  
  

• Green Trade Strategy: The CBP’s strategy is built on four pillars:

  
  

  1. Incentivising Green Trade: Removing barriers for environmentally friendly goods.

  2. Strengthening Enforcement: Targeting environmental crimes like wildlife trafficking, while recognizing that once illicit goods such as poached animals or illegally logged trees cross borders, they cannot be returned to their original state, resulting in an irreversible loss to the environment.

  3. Accelerating Innovation: Collaborating with the private sector and NGOs to enhance enforcement through cutting-edge technology, such as satellites for methane tracking.

  4. Improving Internal Operations: CBP oversees 65,000 employees, 900 facilities, and 358 ports of entry and aims to green its operations.

     
     

“We are not here to merely contemplate solutions; we are here to act. Customs must safeguard the environment while facilitating legitimate trade.”

2. Azerbaijan’s Green Customs Initiative (Shahin Bagirov)

Shahin Bagirov welcomed attendees to Baku and outlined Azerbaijan’s initiatives to integrate sustainability into customs practices:

• Green Agenda: Exempting electric vehicle imports from tariffs and taxes to promote environmental sustainability.

• Digital Transformation: Using AI to streamline border processes and analyse vast amounts of data for risk assessment.

• Energy Efficiency: Implementing paperless and digital customs operations to reduce waste.

  
  

“Green customs ensure trade is both secure and sustainable, balancing environmental protection with trade facilitation.”

3. ISO’s Role in Green Standards (Silvio Dulinsky)

Silvio emphasised the role of global standards in facilitating sustainable trade:

• Environmental Standards: ISO has developed 500 environmental standards, with 42 focusing on water quality and other climate considerations.

• Global Alignment: Urged the need for consensus on critical materials like plastic to ensure effective recycling and sustainable production.

• Simplification: Advocated for equitable and practical standards to support both developed and developing countries.

  
  

“Standards are the backbone of sustainable trade, but they must evolve to meet today’s challenges.”

4. WCO’s Harmonised System and Green Goods (Gael Grooby)

Gael discussed the importance of aligning the Harmonised System (HS) with environmental priorities:

• Evolving Standards: WCO is adding new HS codes to classify environmentally important goods, including those from recycling.

• Challenges: Classifying products like “green steel” requires international certifications and permits to ensure credibility and enforceability.

• Supporting Developing Countries: Simplified, global standards help nations with limited resources participate in sustainable trade.

  
  

“The Harmonised System alone cannot solve all problems, but it plays a critical role in facilitating the trade of environmentally significant goods.”

Technological Innovations in Green Customs

1. Digitalisation and AI (Shahin Bagirov)

• AI-Powered Processes: Leveraging AI to streamline vehicle crossings and identify risks efficiently.

• Support for Legitimate Trade: New computer systems enhance data analysis and risk management.

  
  

2. ACE 2.0 Modernization (AnnMarie Highsmith)

• Global Single Window: Aims to improve global interoperability standards, enabling customs administrations to segment risk and facilitate legitimate trade.

• Tracking Goods: Testing secure digital passports to track commodities from production to shelf.

Collaboration and Verifiable Credentials

On Standards and Enforcement

• AnnMarie emphasised the need for verifiable credentials to ensure transparency in goods’ lifecycles.

• Gael highlighted the challenges of aligning HS codes with certifications for goods like recycled materials.

• Silvio warned against over-reliance on labels, advocating for robust technical specifications.

  
  

“Environmentally significant goods must be visible in tariff classifications to incentivise trade and ensure compliance.” — Gael Grooby

Closing Remarks

The panel concluded with a unified call for collaboration between customs administrations, international organisations, and the private sector. Innovation, digital transformation, and global standards are essential for advancing the green customs agenda.

“We are at the stage where we must act. Let us innovate, collaborate, and drive the change the world needs.” — AnnMarie Highsmith

Following the panel, Ms. Gael Grooby spoke exclusively about the WCO’s efforts to adapt to evolving trade and environmental challenges.

Exclusive Interview with Ms. Gael Grooby, Acting Director for Tariff and Trade Affairs of the World Customs Organisation (WCO), conducted on the fringes of COP29 in Baku, Azerbaijan, on 18 November 2024

Gael Grooby Acting Director for Tariff and Trade Affairs at the World Customs Organisation

Rasim Huseynov: In the recent developments in trade regulation and changes, can the World Customs Organisation also cater to the interests of private enterprises in international trade?

Gael Grooby: We work very closely with the Private Sector Consultative Group, which represents the industry, and they meet with us at the WCO. We have an ongoing consultation with them as a major voice of the private sector. In addition, we are trying to produce as much material as possible, and this is an area we are expanding. We are also trying to help our members with changes to the Harmonised System, including the new HS that is coming in. We spend a lot of time talking to our members about the upcoming changes and their impact so they can communicate these to their trade partners. Customs and trade go hand in hand. Customs exists because trade exists, and we value that relationship—it is absolutely vital. Trade needs to have informed compliance and understand the requirements so that trade flows smoothly. For that, we need communication. If you have particular concerns, you can talk to our Private Sector Consultative Group (PSCG) or your customs administration, and they can bring those concerns to us. This is a significant matter. We need to have a conversation, and we are publishing a lot of materials to explain this. Over the next few years, if you keep an eye on our website, you’ll find a lot more resources.

Rasim Huseynov: How do you think the new legislative requirements related to goods introduced unilaterally will affect the global trade scene? Will customs administrations and traders be able to cope?

Gael Grooby: To some extent, this is a question to be addressed at the national level because we operate globally. (From the editor: The WCO, through its green initiatives, deals with Multilateral Environmental Agreements and not individual legislative measures.) We speak on behalf of customs administrations, not for each piece of legislation in every country. I think this is what we discussed during the panel. It’s about coordinating between countries and trying to establish systems that are as cohesive and universal as possible to make them easier for trade. This issue is very close to my heart because I work with the Harmonised System, which was introduced precisely to address this problem. We used to have entirely different tariff structures in every country, making international trade incredibly difficult. I believe we’ll see similar evolution for all customs requirements. They may begin in individual countries or regions, but over time, they will become globalised to provide consistency for trade.

Rasim Huseynov: Do you think that in our globalised world, trying to find answers to everything in tariff classification can make trade a hostage to various, sometimes conflicting, policies?

Gael Grooby: Well, we all know that the Harmonised System is not a solution for everything. But it does need to reflect what governments and societies aim for. It’s a bit of a two-way street. There is much more we can do in the Harmonised System to recognise goods that are important to society today. And I think it’s important to remember that we individually name and recognise those HS codes that matter to our members. I don’t believe the HS code is a hostage to politics. I think it responds to needs. That said, I acknowledge that it cannot do everything, and other systems need to step in where the HS cannot help.

Rasim Huseynov: So, in other words, societal values matter. What help can be expected in this field, and how can we ensure these values are fulfilled?

Gael Grooby: Societal values do matter, of course. First, don’t forget that we are highly practical. So, what we aim to do is administratively feasible. If something is manageable for customs, it must also be manageable for trade. We frequently receive requests where we have to say, “No, this will be impossible to prove,” and we don’t include those. What we try to do is make necessary changes in a way that works. Because if changes are not designed so that trade can comply with them, and if customs can’t recognise and enforce them, there is no point.

Rasim Huseynov: Then it would simply waste time and resources and contribute to compliance fatigue. Is part of the challenge ensuring that businesses are not overwhelmed unnecessarily?

Gael Grooby: We are in a period of change. There will always be some problems, issues, and difficulties, but this is also part of how the world evolves. As the world changes, different priorities emerge, and new needs arise, leading to a period of adjustment. But trade is incredibly resilient, and traders are smart people. As long as we ensure these changes are necessary and implemented in a way that customs and trade can work with, I believe the short-term pain is worth it for the long-term gain.

Further Reading

1. WCO Private Sector Consultative Group

2. Green Customs Initiative

3. CBP Green Trade Strategy