1. Necessity for revision

(a) The automated customs clearance reform since 2016 has substantially changed the landscape of custom clearance and the pattern of customs supervision and enforcement, the Draft Revision is to reflect such changes.

(b) The embodiment of the Entry-exit Inspection and Quarantine Authority into GAC trigger the need to integrate such new functions by way of revising the Customs Law, thus functions of Chinese Customs consist of five ones: (i) supervision of imported and exported goods, (ii) collection of duties and taxes, (iii) combating smuggling, (iv) protection of intellectual property rights, and (v) implementation of inspection and quarantine duties.

As far as Entry-exit Inspection and Quarantine function is concerned, the Chinese Customs has the power to administer and supervise inspection and quarantine laws and regulations regarding national health, entry and exit animal and plant quarantine, food safety and commodity inspection.

2. Customs measures

Facing the risk posed by the automated clearance, the Draft Revision authorized such customs measures (powers under the current law) as regular ones (Article 14), measures against suspected violations (Article 16), risk management measures (Article 27), and control measures (Article 28). As part of the risk management measures, Chinese Customs will process inspection, verification, conformity assessment, quarantine measures, bond or guarantee requirement based on risk assessment. Risk assessment elements include risk patterns of import and export trade, and the credit standing of the parties to the trade.

With regard to "control measures", the Draft Revision equips Chinese Customs with the following new powers: (a) it may suspend or refuse to carry out customs procedures; (b) it may suspend or cancel the privilege for exporting specific goods to the territory of China; (c) it may restrict or prohibit the import or export of specific goods and articles from specific countries (regions); (d) it may inspect electronic equipment and facilities; (e) it may recommend to other  authorities the inclusion in the list of unreliable entities or other control lists and other control measures. Such control measure can be imposed on a given entity singularly or multiply.

3. Verification and audit

A distinction is made under the Draft Revision as between customs verification (Article 34) which limits itself to "routine import and export activities" and customs audit which targets on activities suspected of customs law violation (Article 35).

4. Smuggling and liabilities

(a) The Draft Revision remove such qualification of "smuggling" (Article 89) as evading customs supervision.

(b) For smuggling resulting tax evasion, the Draft Revision does not require confiscation of smuggled goods and articles other than confiscation of illegal income. Vehicles used exclusively or repeatedly for smuggling is amended as "may be confiscated" instead of “shall be confiscated” (Article 90).

5. Trade agency

(a) The Draft Revision provides that matters such as agency and sub-agency in the process of handling customs affairs shall be implemented in accordance with the relevant provisions of the Civil Code of the PRC (Article 112).

(b) Such revision is unclear as to whether the agent or the importer or export of record shall be liable in case there is any irregularity in customs clearance and duty payment.

6. Risk assessment on importer and exporter of record

(a) The Draft Revision adds risk management of import and export parties as a guiding principle (Article 3). The risk management tools include assessment, advance warning, monitoring, information gathering and other measures.

(b) Such risk assessment would mean possible submission of information and materials if demanded by customs regarding credit standing and performance of the import and export company.

7. Declaration of 10-digit tariff codes

Under the Draft Revision GAC is authorized to stipulate items for import and export declarations (Article 54). This legalizes the obligation to declare 9- and 10-digit tariff codes in practice, and the importer or exporter of record will be liable for incorrect classification.

8. Customs inspection clarification

Under the Draft Revision (Articles 57 & Article 107), the customs inspection not only means regular inspection which also covers inspection and quarantine.

9. Foreign flag transport craft calling at Chinese ports

Under the Draft Revision, during entry into the customs territory the foreign aircraft or ship shall not be transferred or used otherwise unless upon completing customs procedures and paying upon import duties and taxes. (Article 45 & Article 95)

10. Criminal liability

(a) The Draft Revision itself establishes criminal crimes of violation of customs laws by itself (Article 106).

(b) The Draft Revision can be quoted as a basis in criminal defense or prosecution or judgment, where the current law is silent on criminal crimes.