Customs convention on the international transport of goods

• India is gearing up to sign the Transports Internationaux Routiers (TIR), or the customs convention on the international transport of goods, as it eyes seamless trade connectivity with both Eurasian region and Southeast Asia.

What is TIR convention?

• With over 50 countries using the procedure, the TIR system is the international customs transit system with the widest geographical coverage. As other customs transit procedures, the TIR procedure enables goods to move under customs control across international borders without the payment of the duties and taxes that would normally be due at importation (or exportation). A condition of the TIR procedure is that the movement of the goods must include transport by road.
• Goods move from a customs office of departure in one country to a customs office of destination in another country under cover of an internationally accepted customs transit document, the TIR carnet, which also provides a financial guarantee for the payment of the suspended duties and taxes. The guarantee system is managed by an international organisation, which is currently the International Road Transport Union (IRU).

Background

• Under the auspices of the United Nations Economic Commission for Europe (UNECE), the TIR transit system was developed soon after the Second World War in order to help revitalise the economies of post war Europe. The TIR Agreement was concluded in 1949 and its success led to the establishment in 1959 of the first TIR Convention.
• The 1959 Convention was replaced by the current Customs Convention on the International Transport of Goods Under Cover of TIR Carnets in 1975 (TIR Convention 1975).
• The TIR Convention is maintained by the UNECE.
• The TIR Convention 1975 is dynamic in the sense that it has been amended many times over the years in order to reflect changes in respect of each of these main principles. In recent years the amendments have been structured and taken forward in discrete phases.

Analysis:

• TIR is the only global customs transit system that provides easy and smooth movement of goods across borders in sealed compartments or containers under customs control from the customs office of departure to the customs office of destination.
• It plays an important role in boosting regional connectivity and facilitating cross-border trade flows, according to connectivity experts.
• The TIR system has a globally accepted electronic control system for integrated transit operations.
• This convention will allow India to take full benefit of International North South Transportation Corridor or INSTC, which enables access to Eurasian region via Iran, and Bangladesh-Bhutan-India-Nepal Motor Vehicles Agreement.
• Aligning with the TIR system will also enable India to take full advantage of the Eurasian Economic Union (EEU). EEU, comprising Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan, have an integrated single market of 183 million people and GDP of more than $4 trillion in purchasing power parity.
• The TIR system can also make Bangladesh-Bhutan-India-Nepal Motor Vehicles Agreement efficient for sub-regional cooperation on India’s eastern flank.

By: Vishal