from people other than the task managers, who may not be in the best position to take the initiative in sharing. Sharing can lead to better guidelines for new operations. Narrative and problem solving notes, however, are likely to be more useful than formal guidelines. • Expectations for success should be realistic. The World Bank’s experience shows that the success rate of projects in fragile states—though it has been increasing over the years—is substantially smaller than in the rest of its portfolio. Projects implemented in countries with lower Country and Policy Institutional Assessment (CPIA) ratings have a lower probability of success. Staff working on these projects should recognize these constraints, and any later failures should not necessarily affect their career prospects. If these lessons are kept in mind during project design and implementation, they are sure to improve the chances of success for projects aiming at border management improvement in fragile states. Border management in fragile states: key elements of the institutional framework
Border management comprises the activities of all government agencies with responsibility for ensuring that imports satisfy environmental, security, industrial, and phytosanitary standards as well as customs requirements. The importance of these agencies shifts somewhat over time and with circumstances. Experience has shown that developing countries that rely heavily on customs revenues give customs great importance. Consequently, standards inspection often is given much less importance in such countries—as reflected in the scarcity of resources and staff for standards inspection, or even by the relevant agencies’ total absence from border posts. Th is emphasis on customs revenue generation is even more acute in fragile states than in developing countries in general. In fragile states the agencies responsible for generating domestic revenue often are incapable of functioning properly, leading local governments and donors to look at foreign trade as the sole tax base for necessary budget revenues. Donors—under pressure from their own constituencies to gradually reduce their financing in fragile
Border management considerations in fragile states
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states—operate under the strong belief that using foreign trade as the tax base is both expedient and, in the short term, the only alternative available. Hence they tend to concentrate on strengthening the role of customs in generating budget revenue, not on strengthening the roles of most other border agencies. Often the mission of customs to stem weapons smuggling is also very high on the priority list, as restoring national security is a precondition for normalizing economic activity and fostering development. To many it seems that raising customs revenues is rather simple compared with levying income taxes— or most other taxes. Officers control the movement of imported and exported goods across the border, and they apply the statutory tax rates to the values of these goods; goods are released only when taxes and duties are paid. In reality, however, the procedures for raising customs duties and taxes are rather complex, and trader compliance often leaves much to be desired. Simplifying somewhat, one may say that customs clearance procedures comprise taking control of goods that traders intend to bring across the border, processing declarations, obtaining payment on duties and taxes, releasing the goods, and undertaking a postclearance audit. Processing customs declarations requires that customs determine the value of goods, the applicable tariff rate, and exemption status. If a preferential tariff applies importers must also present a valid certificate of origin. Some cargo enters the country duty free or for transit purposes, and special customs regimes deal with these trade flows—each with its own operational complexities. These tasks require an adequate legal framework backed by a judicial system and an effective institutional infrastructure, as well as a functioning management structure and adequate resources. Much has been written on these processes and the enabling environment that permits customs to effectively and efficiently meet its responsibilities. But nearly all the available documentation pertains to countries in a position to implement the guidelines detailed in the World Customs Organization’s Revised Kyoto Convention (see chapter 11)—or to countries where these guidelines are at least pertinent and their correct implementation has a realistic chance of success. Efforts by customs and by the donor community to support customs modernization in developing countries have broadly followed these guidelines.