Objects, other than personal effects, which are moved across frontiers are subject to customs regulations. The complexity of such regulations, particularly when objects have to be moved through several countries in succession, creates considerable obstacles to legitimate movement and may cause considerable delay. This aggravates problems of trade but also seriously hinders the movement of educational, scientific and cultural materials into the country in question.
Use of the term 'formalities' indicates that the problem is not simply one of documents but also of the procedures which give rise to them. These procedures originate from various sources. From the commercial aspect there is the obvious need for a supplier of goods to specify his sale and render a demand for payment. Conversely a receiver of goods needs to verify what he is receiving. There may also be a need for a document of title to enable the goods to be resold during transit whilst in many cases proof of shipment is required to give effect to documentary credits or to secure bank finance for the exporter. During the transport phase there is the corresponding need for carriers and any others, such as port authorities and insurers, involved in the transaction to know what is being carried, where to, and on what terms, in order properly to fulfil their contract for services being rendered. Lastly governments, in regulating their external trade by financial and fiscal measures, unavoidably have to create documentary procedures. The creation of burdensome formalities tends primarily to stem from the actions of governments which, when taken independently, lead to proliferation of paperwork.
All modes of transport are now going through a period of technological change, notably in the areas of air freight and containerization. Consequently goods are being moved much more quickly than hitherto, so much so that in an increasing number of cases they are arriving at critical points in the movement cycle, such as airports or customs clearance centres, before the necessary formalities required to release them can, under present circumstances, be completed. Frustrating and costly delays then result. In addition, quite apart from the regular procedures and documentation connected with the levying of duties on goods across frontiers, there are still a number of onerous formalities and requirements such as special customs invoices or declarations demanded by some countries which may also be discriminatory .
International trade is overwhelmed by a mass of formalities. Some of these are unavoidable but often they are merely traditional and remain a hindrance to the expansion of world trade. Furthermore compliance involves the wasteful expenditure of much time and money.