Regional Arrangements 333
in certain sectors.^2 Th is type of arrangement is diff er-
ent from bilateral cooperation agreements between
two countries in commercial areas that have little im-
pact, if any, on GFS.^3
A5.7 In compiling GFS for members of a customs
union, the main issue is the recording of custom duties
in the accounts of the member governments partici-
pating in the union. Duties on imports from countries
outside the customs union are usually collected on a
mutually agreed basis at custom union entry points.
As these entry points may be concentrated in one
or a small group of members of the customs union,
revenue-sharing formulas among member countries
are implemented. Recording customs duties in the
GFS of individual members of the customs union is
thus aff ected by the institutional and administrative
organization of the customs union.
A5.8 Th e following paragraphs set out four pos-
sible types of regional arrangements:^4
- A designated agency levies,^5 collects, and distrib-
utes the proceeds from the duties. - A designated agency levies and distributes du-
ties, but member governments collect duties on
behalf of the designated agency. - Member governments have collective rights (i.e.,
the right is shared by everyone in the group) to
levy, collect, and distribute the duties. - Member governments have collective rights to
levy the duties, but only one member collects and
distributes the duties.
(^2) Examples of such arrangements are: the Mercosur, which com-
prises Argentina, Bolivia, Brazil, Paraguay, Uruguay, and Venezu-
ela; and the Southern African Customs Union, which comprises
Botswana, Lesotho, Namibia, South Africa, and Swaziland.
(^3) Bilateral trade agreements may also be observed between a
regional arrangement and third countries or between regional
arrangements. “Free trade agreements” generally fall under this
category.
(^4) Th ere could be other, less formal or less complete arrangements.
In the case of Mercosur countries, for instance, duties have so far
been recorded for each individual country as taxes on interna-
tional trade and transactions, as goods from third countries tran-
siting from one union member to another are regarded as imports
and exports among diff erent custom union members. In 2010,
Mercosur members agreed on a customs code that will allow the
fi nal confi rmation of a genuine customs union and the redistribu-
tion of customs duties among members.
(^5) To levy a tax implies that the agency has the authority to impose
the tax, either as principal or through the delegated authority of a
principal, and the agency has fi nal discretion to set and vary the
rate of the tax.
A5.9 In all four scenarios where there are eco-
nomic arrangements involving a small group of
economies, it is recommended that the governments
involved agree on common, appropriate recording
procedures to avoid bilateral asymmetries.^6 Th e re-
quired information should be readily available from
customs services. If a portion of the amount of cus-
toms duties is retained as collection fees (regardless of
how the amount is calculated by the collecting agency
or government), these fees should be recorded gross
of the grants expense when the customs pool is dis-
tributed to the members. Th e retained amount should
be recorded as incidental sales by nonmarket establish-
ments (1423) in the accounts of the collecting agency
or government, and use of goods and services (22) in
the accounts of the member government receiving the
grants.
A5.10 Tax attribution rules (see paragraphs 5.33–
5.38) should be used to determine the attribution of
customs duties revenue and the transfers associated
with sharing the revenue pool among the members.
Th e recording of such customs duties and grant trans-
fers for four types of arrangements are discussed in
paragraphs A5.11–A5.18.
A designated agency levies, collects, and distributes the proceeds from the duties
A5.11 In this case, the designated agency has
the right to levy and collect the customs duties and
distribute the proceeds. If the designated agency
is recognized as an institutional unit, it may sat-
isfy the criteria to be an international organiza-
tion (see paragraphs 2.16–2.21), in which case all
the transactions described should be between this
international organization and the member gov-
ernments. Otherwise it would be a resident of one
member country, in which case all the transactions
described should be between that government and
all the other member governments. If the desig-
nated agency is not a separate institutional unit, it
should be classified with the government unit that
controls it.(^6) Member countries of the Central American Common Market
(CACM) (Costa Rica, El Salvador, Guatemala, Honduras, Nicara-
gua) apply a common external tariff for products manufactured
and imported from outside of the CACM. However, each CACM
member is allowed to determine any product exceptions.