Definitions

customs

customs union

Trade agreement by which a group of countries charges a common set of tariffs to the rest of the world while allowing free trade among themselves. It is a partial form of economic integration, intermediate between free-trade zones, which allow mutual free trade but lack a common tariff system, and common markets, which both utilize common tariffs and allow free movement of resources including capital and labour between members. Well-known customs unions include the Zollverein, a 19th-century organization formed by several German states under Prussian leadership, and the European Union, which passed through a customs-union stage on the path to fuller economic integration. Seealso European Community; General Agreement on Tariffs and Trade; North American Free Trade Agreement; World Trade Organization.

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or customs duty

Tax levied upon goods as they cross national boundaries, usually by the government of the importing country. The words tariff, duty, and customs are generally used interchangeably. Usually assessed on imports, tariffs may apply to all foreign goods or only to goods produced outside the borders of a customs union. A tariff may be assessed directly, at the border, or indirectly, by requiring the prior purchase of a license or permit to import specified quantities of the good. Examples of tariffs include transit duties and import or export taxes, which may be levied on goods passing through a customs area en route to another destination. In addition to providing a source of revenue, tariffs can effectively protect local industry by driving up the price of an imported item that competes with domestic products. This practice allows domestic producers either to charge higher prices for their goods or to capitalize on their own lighter taxes by charging lower prices and attracting more customers. Tariffs are often used to protect “infant industries” or to safeguard older industries that are in decline. They are sometimes criticized for imposing hidden costs on domestic consumers and encouraging inefficiency in domestic industries. Tariffs are subject to negotiation and treaties among nations (see General Agreement on Tariffs and Trade; trade agreement; World Trade Organization).

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Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods including animals, personal effects and hazardous items in and out of a country. Depending on local legislation and regulations, the import or export of some goods may be restricted or forbidden, and the customs agency enforces these rules. The customs agency may be different from the immigration authority, which monitors persons who leave or enter the country, checking for appropriate documentation, apprehending people wanted by international search warrants, and impeding the entry of others deemed dangerous to the country.

A customs duty is a tariff or tax on the import of or export of goods. In England, customs duties were traditionally part of the customary revenue of the king, and therefore did not need parliamentary consent to be levied, unlike excise duty, land tax, or other forms of taxes.

Commercial goods not yet cleared through customs are held in a customs area, often called a bonded store, until processed. All authorized ports are recognized customs area.

Red and Green Channels

Customs procedures for arriving passengers at many international airports, and some road crossings, are separated into Red and Green Channels. Passengers with goods to declare (carrying items above the permitted customs limits and/or carrying prohibited items) should go through the Red Channel. Passengers with nothing to declare (carrying goods within the customs limits only and not carrying prohibited items) can go through the Green Channel. Passengers going through the Green Channel are only subject to spot checks and save time. But, if a passenger going through the Green Channel is found to have goods above the customs limits on them or carrying prohibited items, they may be prosecuted for making a false declaration to customs, by virtue of having gone through the Green Channel.

Canada and the United States do not operate a red and green channel system.

Airports within the EU also have a Blue Channel. As the EU is a customs union, travellers between EU countries do not have to pay customs duties. VAT and Excise duties may be applicable if the goods are subsequently sold, but these are collected when the goods are sold, not at the border. Passengers arriving from other EU countries should go through the Blue Channel. Luggage tickets for checked in luggage within the EU are green-edged so they may be identified.

Privatization of customs

Customs is an important part of the government involved in one of the three basic functions of a government, namely, administration, maintenance of law, order and justice and collection of revenue. However, in a bid to get Customs rid of corruption, many countries have partly privatized its Customs. This has occurred by way of engagement of Pre-shipment Inspection Agency who examine the cargo and verify the declared value before importation is effected and the nation Customs is obliged to accept the report of the agency for the purpose of assessment of leviable duties and taxes at the port of entry. While engaging a preshipment inspection agency may appear justified in a country with an inexperienced or inadequate Customs establishment, the measure has not really been able to plug the loophole and protect revenue. It has been found that evasion of Customs duty escalated when pre-shipment agency took over. It has also been alleged that such involvement of such agencies has been causing delay in the shipment process. Privatization of Customs has been viewed as a fatal remedy.

See also

Customs service by country

References

External links

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