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Delegated Legislation Committee Debates

Draft European Communities (Definition of Treaties) (The Convention on Mutual Assistance and Co-operation between Customs Administrations (Naples II)) Order 2001

Second Standing Committee

on Delegated Legislation

Wednesday 17 January 2001

[Mr. John Cummings in the Chair]

Draft European Communities (Definition of Treaties) (The Convention on Mutual Assistance and Co-operation between Customs Administrations (Naples II)) Order 2001

4.30 pm

The Paymaster General (Dawn Primarolo): I beg to move,

    That the Committee has considered the draft European Communities (Definition of Treaties) (The Convention on Mutual Assistance and Co-operation between Customs Administrations (Naples II)) Order 2001.

Good afternoon, Mr. Cummings. It is nice to see you in the Chair. This is the first time that I have had the pleasure of being guided by your chairmanship. I am sure that we shall deal with the order efficiently under your supervision.

Today's organised criminals are intelligent and sophisticated, whether dealing in tobacco, drugs, firearms or paedophile material. They are also as adept at working across national boundaries as they are in one country. To combat such crime, Governments must be able to match and surpass the ability of criminals to work across national boundaries. At the special European Council summit in Tampere in October 1999, member states committed themselves to depriving criminals of any hiding place in the European Union. The convention on mutual assistance and co-operation between customs administrations, known as Naples II, will give effect to the necessary, practical co-operation in the area of customs. The United Kingdom played a leading role in the development of the convention, so I am pleased to introduce the order to the Committee.

The proposal for a Naples II convention originated in 1991. The idea was to update the 1967 Naples convention on customs co-operation to provide a framework for modern cross-border investigation techniques. That framework was regarded as desirable, given the removal of routine border controls on goods at internal frontiers brought about by the creation of the single market on 1 January 1993. Although that development served as a boost to intra-European Community trade, the removal of border controls presented opportunities for abuse which has been exploited in an increasing number of areas by illicit traders and criminal organisations. The gangs perpetrating such crimes are sophisticated organisations that operate internationally. They exploit the difficulties with cross-border operations to avoid the reach of law enforcement agencies. There is therefore a need for cross-border co-operation arrangements to be formalised and enhanced to address the problem.

The 1967 Naples convention made provision for mutual assistance between member states' customs administrations through two principal means: the sharing of information on contraventions of customs laws and the investigations of contraventions on request by another member state's customs administration. In particular, it allowed customs officials to appear as witnesses or experts before the courts of other member states, and for customs officers to be present during investigations of contraventions by customs authorities in other member states.

Naples II builds on that by developing the administration and co-ordination of mutual assistance activities, and by adding several other forms of co-operation, such as hot pursuit, cross-border surveillance, covert investigations, controlled deliveries and joint special investigation teams.

Signatories to the convention can opt out of each of the first three of the forms of special co-operation by making a declaration to that effect. The Government intend to opt out of the provision on hot pursuit. Likewise, signatories can make a general declaration that weapons may never be carried into their territory. The Government intend to make such a general declaration that weapons may never be carried on United Kingdom territory.

In addition, there are provisions dealing with the protection and use of data and the role of the European Court of Justice. The ECJ has been assigned a role in resolving disputes over the interpretation or application of the convention. Member states can make a declaration giving the ECJ jurisdiction over preliminary rulings. Although we accept the court's role in resolving disputes about interpretation or application of the convention, the Government do not intend to make a declaration allowing the ECJ to make those preliminary rulings.

The 1967 Naples convention is automatically repealed on entry into force of this convention. The draft text of the convention cleared the scrutiny procedures for European legislation on 17 December 1997. As the preamble to the convention requires that any action taken under its provisions must comply with the principles of legality, must be necessary and not achievable by less significant means, and must be proportionate, the Government can confirm that the convention is compatible with the Human Rights Act 1998.

Having covered the background to the draft Order in Council, I turn briefly to its purpose. The draft order ratifies the Naples II convention as a Community treaty under section 1(2) of the European Communities Act 1972. Such specification removed the need for primary legislation to give effect to the convention. It is proposed that the order should be made under section 1(3) of the Act. That provides that treaties entered into by the United Kingdom after 22 January 1972 will not be regarded as Community treaties as defined in section 1(2), unless specified as such in an Order in Council.

Section 1(3) further provides that no treaty will be specified unless a draft of the order has been approved by resolution of each House of Parliament. The specification of the order under section 1(3) is required to enable the obligations arising from the Naples II convention to become Community law under section 2(1). That enables the Commissioners of Customs and Excise to give effect to the provisions of the convention under section 9 of the Customs and Excise Management Act 1979. They are required, for the purpose of implementing Community obligations, to co-operate with customs services in other member states on matters of mutual concern. They are also required to give effect to reciprocal arrangements. No other implementing legislation is required. Our obligations will be carried out simply by means of the Commissioners providing the information and other assistance required by customs authorities in other member states.

I hope that the Committee will forgive me for explaining, briefly, the relation of the convention to the Community treaties, as it is necessary for the record. To approve this order for specification by the Privy Council, the Joint Committee on Statutory Instruments must first satisfy itself that the Naples II convention is a Community treaty as defined in the 1972 Act. Section 1(2) of the Act defines Community treaties as

    any . . . treaty entered into by any of Communities, with or without any of the Member States, or entered into, as a treaty ancillary to any of the treaties, by the United Kingdom.

Naples II is a third pillar convention made on the basis of article K3 of the treaty of the European Union, as agreed at Maastricht. Article K3 is contained in title VI of the treaty. Measures under title VI are not Community treaties for the purpose of section 1(2). It is therefore necessary to consider whether the convention has a sufficient connection with the Community to be regarded as ancillary to any of the treaties.

There are many reasons why Naples II can be considered ancillary. When given effect, Naples II will replace the original Naples convention of 1967. The 1967 convention was specified as a Community treaty as part of UK accession to the European Economic Community. The preamble to Naples II recognises that customs co-operation assists in the prevention, investigation and prosecution of infringements, not only of national law but of Community customs regulations. Those national laws include those maintained by virtue of articles 30 and 296 of the EC treaty, whereas the Community rules are necessary for the proper functioning of the internal market.

The convention was drawn up by the Council, which is to have a continuing role in relation to disputes over interpretation and, together with the Commission, amendments to the convention proposed by member states, as well as being the depository. The convention applies to the territories referred to in article 3(1) of Council Regulation (EEC) No. 2913/92 of 12 October 1992, which establishes the Community customs code. The official languages of the convention are those of the Community.

The European Court of Justice is given jurisdiction regarding the interpretation of the convention when member states are in dispute with each other or the Commission. The convention is only open to future accession by countries which become members of the European Union. The depository must publish progress reports on adoption, amendment and so on in the official journal.

Hon. Members should recall that in 1997 the Europol convention was specified as a Community treaty despite being a third pillar instrument. It was felt that specification was appropriate due to a number of factors, many of which are also relevant in this case.

I apologise for the technical nature of the second half of my speech, but it is necessary to explain clearly where the agreement will fit within treaty obligations. For all the reasons that I have stated, Naples II can be regarded as ancillary.

4.43 pm

Mr. James Clappison (Hertsmere): First, I associate myself with the Paymaster General's opening remarks about the great pleasure of serving under your chairmanship, Mr. Cummings. I hope to conduct the Opposition's scrutiny of this statutory instrument as efficiently as possible.

We support the objective of improving co-operation and assistance between customs administrations. We acknowledge that the need for co-operation between those administrations has never been greater, given the evidence of a serious and growing problem of cross-border smuggling. I certainly agree with the Paymaster General's assessment of the character of that illegal activity—and the fact that organised crime is behind a great deal of it.

I congratulate the Minister on her gallop through the technical aspects of the treaty and how it fits into the procedure on treaty making. I hope that the Committee will not think me remiss if I fail to give all such matters proper scrutiny in Committee, but I do not intend to follow her down that avenue. Proper though it was for her to go down such an avenue, it is not incumbent on me to do so as well. I shall concentrate on the substance of the matter and how it relates to improving co-operation between customs administrations.

I note, however—I do not intend this as a criticism of the Paymaster General, because the matter was discussed under the previous Government—that the convention was agreed as long ago as 1997. Out of curiosity, I would be grateful if she told us what has been happening since then. If the delay is connected to the technical matters to which she has just referred, that explanation need not be too long—but it would be useful to the Committee. I would also be grateful if she told us when the convention is likely to come into force. That is the most important point. When will customs administrations be able to avail themselves of the new facilities in title IV of the convention?

As the Minister said, the predecessor of the convention—Naples I—was agreed between the then member states of the European Community. The convention that we debate today updates the 1967 convention while including many of its provisions. I do not propose to go through the repeated provisions in any detail, except to say that they are in titles II and III. Title II deals with requests for assistance from the customs authorities of one member state to another. Title III deals with what member states do and what they should do without receiving a request from another member state, or what is expected of them when they come across suspicious circumstances. That is described as ``spontaneous assistance''. The convention makes it clear that each of the articles under titles II and III are based on the provisions of the 1967 convention, which in some cases seem to be a repetition of them. Title IV contains new provisions, which are described as ``special forms of co-operation''. Those are the substance of the order and I will take a little time to go over them, because I seek answers from the Minister on several points.

In general, the provisions of title IV go beyond those of the earlier convention and create a legal basis for the operation of the customs authorities of one member state in another member state's territory. Some of the special forms of co-operation were mentioned by the Minister, and I jog the memory of Committee members on them: hot pursuit across borders, cross-border surveillance, controlled delivery, covert investigation and the use of joint special investigation teams.

Given the geography of the United Kingdom, the provisions are of particular relevance to the border between Northern Ireland and the Republic, especially in the light of cross-border smuggling. There is a serious problem with fuel smuggling because of the disparity in fuel duty between the Republic, where petrol costs approximately 53p a litre, and the north where it costs approximately 76p a litre.

Turning to the particular forms of co-operation set out in title IV, hot pursuit under article 20 means that officers from one member state may continue to pursue a suspected offender into another member state, and may do so without prior authorisation in urgent circumstances. In an explanatory note to a House of Lords Select Committee, the Government suggested that they would not apply the provisions on hot pursuit, and the Minister has implied the same today.

The explanatory note, which the Government gave by way of justification for opting out of the article, refers to ``obvious special security considerations'' that apply to Northern Ireland. I acknowledge that there are wider considerations in such matters in the case of Northern Ireland. Likewise, the Government state in the explanatory note that, because of the geographical separation of the United Kingdom, they see no

    operational necessity to provide for cross-border surveillance without prior approval. It intends that the UK should opt to be bound only by that part of Article 21—

the article that relates to cross-border surveillance—

    which allows cross-border surveillance with the prior approval of the Member State in whose territory the surveillance will take place.

I did not catch a mention of cross-border surveillance in the Paymaster General's opening remarks, although she mentioned carrying firearms. I should be grateful if she would spell out clearly the Government's attitude to it.

Opting out of cross-border surveillance will presumably mean in the case of Northern Ireland that Customs and Excise officers from both the United Kingdom and the Republic who carry out surveillance on suspects will be able to continue their surveillance on suspects who cross the border only if prior approval has been granted. If that is so, by what procedures will such approval be requested and granted? Given that suspects are unlikely to confide in Customs and Excise officers exactly when and where they will cross the border, for what period will approval for surveillance be granted?

Opposition Members are anxious, as, I am sure, is the Paymaster General, for the problem of cross-border smuggling to be tackled as effectively as possible. The problem is having a serious social and economic effect on Northern Ireland. I invite the Paymaster General to take into account the serious impact of fuel smuggling, in particular across the Irish border between the north and the south. I am sure that she is aware of it.

Do the Government accept, as I believe they do, that cross-border smuggling is resulting in a substantial loss of revenue? In a written answer on 20 March 2000, the Paymaster General said that Customs and Excise estimated that the total revenue lost in excise duty and VAT through cross-border shopping and smuggling of road fuels in Northern Ireland in 1998 was in the order of £100 million. Will she give us the figure for 1999—and for 2000, if it is not too early to do so—and for the amount lost through smuggling as opposed to legal shopping across the border? Will she confirm the widely held view that the problem is getting worse? Does she have an estimate of how many tonnes of motor fuel are smuggled across the border? Is she aware that retailers estimate that 60 of 700 retailers in Northern Ireland have gone in the past two years alone? In light of that, what percentage change has there been in revenue raised through fuel duty in Northern Ireland over, say, the past five years?

I understand that the Government appreciate the seriousness of the matter. In a recent written answer they said that are increasing

    by a factor of four the resource devoted to tackling oils fraud in Northern Ireland.—[Official Report, 7 November 2000; Vol. 356, c. 122W.]

That being so, I should be grateful if the Paymaster General told us how many Customs and Excise officers that means and what scale of increase there has been in their number as a result.

What steps are being taken to facilitate co-operation between the United Kingdom and the Republic? Co-operation clearly has an important role to play. When did Treasury Ministers last meet ministerial counterparts from the Republic to discuss such issues? Is the Paymaster General aware of the view held in many quarters in the north, and probably in the south, too, that there is a connection between the smuggling of motor fuels and paramilitary, or previously paramilitary, organisations, and that such organisations have been its beneficiaries?

More generally, the Government say that they are keen for the convention to be agreed and implemented. In their explanatory note to the House of Lords, and implicit in the remarks of the Paymaster General today, the Government say that the convention should increase pressure for improved co-operation across Europe to tackle all forms of smuggling. We would all say amen to that.

How easily does the Minister feel that the Government's attitude towards articles 20 and 21, on which the Government are apparently going to opt out, sit with the desire for co-operation and for other countries to sign up to improve co-operation, which is the key of this matter? How many other EU member states have signed up to the convention and how many have opted out of particular articles in the way in which our Government have opted out of articles 20 and 21?

We recognise the need for co-operation and the extent of the problem, including the problem of smuggling alcohol and tobacco. Members of the Committee may have seen an interesting article in the Evening Standard on 15 January about large-scale tobacco smuggling from certain countries. One extreme example was how, at one point every man, woman and child in Andorra apparently had a 140 cigarette-a-day smoking habit, if the statistics for tobacco exports to that country are to be believed.

I am sure that the Minister would agree that tobacco smuggling, as well as being an evil, undermines law and order generally and benefits organised crime. Members of the Committee may be familiar with the scale of the problem. The Government have estimated—some estimates are even higher—that 18 per cent. of all cigarettes are smuggled and that the proportion of hand-rolled tobacco being smuggled is even higher. It is estimated that a smuggled packet of 20 cigarettes costs £2.50 compared with £4.20 for a packet of 20 legal cigarettes.

The Government have estimated that in 1999 tobacco smuggling cost £2.5 billion in lost revenue—a figure given in the Government document ``Tackling Tobacco Smuggling''. Has the Paymaster General a figure for 2000? Could she give us the same figure for four years ago? What are the Government's views on whether tobacco smuggling has gone up or down over the last four years and on whether that is having an effect on the overall consumption of tobacco?Does the Paymaster General make a connection between the incidence of tobacco smuggling and the apparent levelling off in the declining consumption of tobacco, which has been apparent for a few years? What is her view on the effect of the availability of relatively cheap tobacco on smoking among children and young people?

Against that background, will the Paymaster General say where the convention fits in with other action that is being taken against tobacco smuggling? In March 2000, the Government published ``Tackling Tobacco Smuggling'', which set out their strategy for 2000-01 and succeeding financial years. Could the Paymaster General give us an outline of how that strategy is progressing and where the measures in this convention fit in? How many smuggled cigarettes were seized in the first six months of the current financial year and how does that compare with the first six months of the preceding financial year?

More seizures may indicate not only more effective detection, but that more smuggling is taking place. In ``Tackling Tobacco Smuggling'' the Government forecast that the market share of smuggled tobacco would reach a peak in the current financial year and then begin to decline according to the targets that the Government have set on the basis of the actions that they say should be taken. We certainly share the objective of reducing the market share of smuggled tobacco. Perhaps the Minister could outline the role of the order on international co-operation as enshrined in the convention, and what role that will play in achieving the Governments' objective.

When those who are engaged in this illegal trade are apprehended through international co-operation and through the operation of the provisions of the convention in the various articles under title IV, they should face appropriate and condign punishment. The investigative work of Customs and Excise through techniques such as controlled delivery under article 22, and joint special investigation teams under article 24 of the convention, are, among other things, apparently designed to get at the people who are behind the tobacco smuggling trade—the organisers, or, in ordinary parlance, the Mr. Bigs, rather than couriers at the borders.

To be effective, the provisions in the convention must be supported by prosecution and punishment of those concerned, and I think that the Government accept that proposition in ``Tackling Tobacco Smuggling'', the document to which I have already referred. Against that background, I recently asked the Chancellor of the Exchequer how many persons had been prosecuted for offences relating to tobacco and alcohol smuggling in each year since 1990. In a written answer on Monday, I was told that the numbers prosecuted between 1998-99 and 1999-2000 were 575 and 645 respectively. [Interruption] That comment from the other side may reflect my own feeling that those figures seem a little low, given the scale of the problem.


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Prepared 17 January 2001