Express Consignments and Low-value Shipments

What are express consignments and low-value shipments?

With the advent of e-commerce in the digital economy, the Universal Postal Union (UPU) has recognized the increasing “parcelization” of trade. In fact, over 80% of cross-border goods bought online are small packets weighing up to 2 kilograms, and the majority of those packages (roughly 70%) are delivered through the postal system. This has changed the needs of customs processing as more and more shipments are sent by individual or small sellers with different capacities.

Why does it matter for MSMEs?

MSMEs may not have the expertise to comply with customs requirements, or may be deterred from entering trade altogether given the paperwork and requirements to ship commercial packages abroad. Making tax/duty information readily available and easy to understand in order to calculate expected costs is a first step in the process.

What can policymakers do?

Some governments have introduced new approaches to deal with low value shipments. For example, Australia applies a goods and services tax – known as GST – which takes the form of a broad-based tax of 10% applied to sales of most goods, services and other items consumed domestically. Canada has developed a generic harmonized system for household imports, which has been proposed as a model for developing a standard application programming interface with standard classification headings for harmonizing identification codes for low value shipments. Other group of countries have decided to apply a flat import rate at a reasonable level that replaces all duties and taxes. On the basis of these approaches, the Global Express Association (GEA) has conceptualized three broad options that policymakers can consider for collecting taxes and duties on low-value shipments. For more information, see the GEA’s Proposal on Tax/Duty Collection on Imported Low Value Shipments.

Where can policymakers access more resources?

• The Universal Postal Union has a number of resources, including a mobile phone application for submitting electronic advance data (EAD) for customs declarations, along with guidelines and guides, recommendations, and standards.

Where can policymakers access good practices or national examples?

• Australia’s GST system applies to goods imported into the economy as well as domestic production. An explanation of how Australia’s GST system works can be found here and an explanation of importing goods with GST is available here, along with a presentation on Australia’s e-commerce experience.
• Canada’s generic harmonized system for household imports is described in the GEA’s a proposal on tax/duty collection on imported low value shipments. There is also a presentation on Canada’s low-value shipments policy.
• The Enhanced Integrated Framework (EIF) and UPU, in conjunction with the United Nations Conference on Trade and Development (UNCTAD) have launched a project in Vanuatu to facilitate the efficient post–customs clearance of postal packages through the exchange of pre-arrival/pre-departure information. An additional 23 least developed countries (LDCs) in which the national interfaces between UPU’s Customs Declaration System (CDS) and UNCTAD’s ASYCUDA (a computerized customs management system) can be established quickly have also been identified. For more information, visit the EIF’s Trade for Development News.
• New Zealand, similar to Australia, also has a GST system in place. More information on GST for overseas business in New Zealand is available here.
• UPU publishes both case studies and best practices, such as Easy Export to develop a simplified and easy export system for MSMEs. Originally created for Brazil, Easy Export is now being applied in other economies as well, including Tunisia and Morocco.