The added value of academic research

Dutch Customs has long been involved in all types of research projects, at home and abroad. Which projects are currently underway and what are they expected to deliver?

With the arrival of a designated Research Agenda, Dutch Customs is showing once again that it harbours serious ambitions when it comes to scientific research. Customs’ head of trade relations, Frank Heijmann, and two university professors tell us about collaborations between the service and the academic world. “This programme will translate directly into strengthening enforcement as well as offering immediate benefits for businesses.”

“Research gives us the chance to explore and develop desirable innovations in a neutral setting in conjunction with scientific institutes and the industry, without Customs becoming involved in a direct client relationship with the market players involved”, Heijmann begins. “In this way, we hope to achieve a number of things, such as a better balance between enforcement and trade facilitation – one important element in our Pushing Boundaries vision. The Research Agenda offers a multi-year plan for issues that deserve to be investigated in the context of the realisation of this vision. Our Innovation Coordination Group maintains this agenda and evaluates research proposals, among other things. Our Management Team makes the final decision about participation.”

Fundamental and applied research
Customs has always been very practical, Heijmann continues. “We started a long time ago with hands-on, applied research, so that we could put the results into operation right away. Funding this type of research by Topsector Logistics takes place via Connekt, the implementing authority of the Ministry of Infrastructure and Water Management, at the recommendation of the Customs-Business Consultation. This makes up the steering committee for the activities falling under the roadmap for Trade Compliance and Border Management. A nice example is the report Economic Benefits of Customs, where the focus has been placed on the added value of the Customs authorities’ performance for the economy. Additionally, we also take part in fundamental research, for instance where doctoral students explore a scientific problem under the supervision of a faculty member. The advantage of this is that students get to know our service in the course of their studies, which makes us more visible on the job market.”

Harmonisation of laws and procedures
A project that just started in November, Harmonisation regulation for cross-border movement of goods, is a good example here. This research, led by Erasmus University of Rotterdam, is dedicated to the potential harmonisation of laws and procedures affecting the cross-border movement of goods. Heijmann: “There are numerous laws and requirements, both national and European, that goods have to meet as soon as they cross the border into another country. And these regulations often have their own definitions. For instance, one talks about importing into the Customs union, another uses the concept of bringing something on the market, and a third speaks of import or the free circulation of goods. These differing definitions make it quite difficult for everyone. The aim of this research project is to prevent doubling up of procedures for the various enforcement authorities and optimal re-use of the same data flows. In that way, the formalities in respect of crossing borders only have to be met once, which means we lower the pressure of regulations and can facilitate trade even better.”

Alternative models for levying taxes
Another example is a Leiden University four-year research project – funded just like the two Rotterdam projects by TKI Dinalog, the Dutch Institute for Advanced Logistics – into alternative declaration models for VAT on e-commerce goods: Revising VAT in Global E-commerce. “This research is aimed at the calibration of European VAT legislation for internet purchases at the point of import, which will enter into effect in 2021”, Heijmann discloses. “The assumption here is that the number of platforms and fulfilment companies is much smaller and can be better managed than the number of e-commerce suppliers doing business from third countries. Experts, however, have reservations about the degree to which the legislation can be implemented and enforced. The investigation is directed at understanding the impact of the alternative models for levying taxes and the accompanying legal implications, to name but two research goals.”

For Customs this type of research can contribute to influencing the European legislative agenda in the long-term, according to Heijmann. “We hope the outcomes of the research investigations just mentioned will offer a good rationale for submitting proposals to the European Commission for potential amendment and improvement of existing laws and procedures. We expect both government authorities and the business world to profit from this.”

Golden triangle
Academics are also attracted to this approach. Yao-Hua Tan, Professor of Information and Communications Technology at Delft University of Technology: “I’m delighted that Customs has formed its ambitions into a Research Agenda. But apart from what I personally may think: the programme is productive, and translates into direct benefits for businesses. And the general public can see that the ‘golden triangle’ of entrepreneurs, authorities and researchers results in pushing the Netherlands way ahead of other countries when it comes to trade facilitation. This leading position is also evident in various rankings, such as the Logistics Performance Index and Doing Business.”

Albert Veenstra, Academic Director of TKI Dinalog and Professor of Trade Facilitation & Logistic at Eindhoven University of Technology agrees wholeheartedly. “The interest in innovative solutions has been around for a long time at Customs. For that reason I regard the Research Agenda as a development of the policy that the service has been pursuing for around 15 years. Lately we’re seeing a shift from applied to academic research, and that isn’t necessarily restricted to IT issues.”

Still lots of work to be done
The answers to some questions require the long-term approach offered by fundamental research. Tan: “Depth is really essential if you want to further develop concepts such as data analytics and the data pipeline. As far as the latter is concerned, up until now primarily case studies have been done. It’s now time for research into the underlying design principles of the data pipeline: is the most suitable IT architecture service oriented, or would it be better to choose blockchain technology? And how do you organise the security around this?”

“Pilot projects such as that of RoyalFlora Holland within the CORE programme, or around the sealing of EU customs traffic at Schiphol, offer all kinds of useful insights,” Veenstra reveals. “But the question now is how do you get more return from such a test project, or ensure that a new approach like this becomes embedded in the regular procedures? The bottleneck is often on the operational side of things: departments who already have their hands full with their own tasks and duties, or inadequate budget capacity. So this turns it into more of a problem of organisation rather than innovation. But this too is an interesting challenge for the academic world.”

Tan recognises this challenge. “To narrow the focus to data analytics: how can you embed an innovative algorithm in the existing IT, and what does this mean for staff members? In risk analysis, it’s still the experts who are taking the crucial decisions. Imagine that you could support them with smart neural networks. These can’t deliver an intelligible explanation about the how and why of their decisions. How then do you make the results of their calculations acceptable for experts? As an extension: data analytics also offers the possibility of quickly consulting a huge number of public sources. For example, in order to check the reliability of the sender – something that customs staff don’t have time for. This may well be an answer when it comes to e-commerce. But here too there’s a question: how do you incorporate that into the existing working methods, ensure that your staff can get on with the procedures quickly and efficiently? So you see, for us there is still lots of work to be done.”

 

Research under various umbrellas
Many of the academic projects Customs is involved in fall under ISCOM (Innovation in Supply Chain Compliance). This multi-year plan was set up by the Customs-Business Consultation and is financed by the Netherlands Organisation for Scientific Research (NWO). In the Netherlands, Topsector Logistics is the primary driver of research projects, while TKI Dinalog (the Dutch Institute for Advanced Logistics) operates as the ‘top consortium’, where companies, knowledge institutions and government authorities partner in the designated programme of innovation.

In international partnership with knowledge institutions and companies, Customs is working on research programmes financed by European granting agencies, such as Horizon 2020. Other examples are ITAIDE, Integrity, Cassandra and CORE (with a focus on increasing security within international supply chains), Axcis and Cosmic (aimed at innovating scanning technology), and PROFILE (revolves around developing algorithms for risk analysis).

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