5 CUSTOMS
(a)
(27107)
15380/05
COM(05) 608
+ ADDs 1 & 2
(b)
(27108)
15381/05
COM(05) 609
+ ADDs 1 & 2[41]
|
Draft Regulation laying down the Community Customs Code (Modernised
Customs Code) — Implementing the Community Lisbon programme
Draft Decision on a paperless environment for customs and trade —
Implementing the Community Lisbon programme
|
| Legal base | (a) Articles 26, 95, 133 and 135 EC; co-decision; QMV
(b) Articles 95 and 135 EC; co-decision; QMV
|
| Documents originated | 30 November 2005
|
| Deposited in Parliament |
19 December 2005 |
| Department | Revenue and Customs
|
| Basis of consideration |
Two EMs of 18 January 2006 |
| Previous Committee Report |
None |
| To be discussed in Council
| Not known |
| Committee's assessment | Politically important
|
| Committee's decision | Not cleared; further information requested
|
Background
5.1 The Community Customs Code, which establishes the general
rules and procedures applicable to goods brought into or out of
the customs territory of the Community, was set out in Regulation
(EEC) No 2913/92. Since 1992 the Code has had some limited amendments
but it has not kept abreast of recent changes in the global trading
environment. In its Communication of July 2003 on customs operations
and the Code, the Commission foreshadowed the introduction of
a simple and paperless environment for customs and trade —
eCustoms.[42] In its
Communication of April 2005, the Commission outlined its proposals
for improving Community cooperation amongst customs and taxation
authorities beyond the current programmes, Customs 2007 and Fiscalis
2007, including in relation to information technology systems.[43]
In its Communication of October 2005 about the contribution of
taxation and customs policies to the Lisbon Strategy the Commission
noted its intention to propose legislation for a modernised Code
and said that, amongst other things, this would be the legislative
pillar of eCustoms.[44]
The documents
5.2 The draft Regulation (document (a)) is a complete revision
of the Community Customs Code, designed to modernise and simplify
it and to make it compatible with operational changes in international
trade, the greater use of electronic communications and the evolving
role of customs authorities. The most significant changes are:
- expansion of the Authorised Economic Operator (AEO) arrangements,
under which traders meeting conditions concerning compliance,
records and security can benefit from simplifications with regard
to customs controls, so as to provide for a reduced guarantee
or a guarantee waiver to be available to AEOs for their comprehensive
guarantees covering debts that may be incurred, to allow Customs
to authorise AEOs to use simplified declarations to release their
goods and waive the obligation to present goods to Customs and
to provide a facility for AEOs to lodge simplified and summary
declarations in electronic form in the Member State where they
are established irrespective of the Member State in which the
goods actually enter in or leave the Community;
- adaptation of pre-arrival and pre-departure summary
declarations to take account of implementation of proposed new
electronic customs systems, such as the Automated Import System
(AIS) and Automated Export System (AES), which will transfer information
between Member States;
- simplification of customs procedures with economic
impact (special procedures), which provide for the treatment of
goods imported or exported under duty suspension, so as to be
more easily understood and used by the trade;
- introduction of a general two-month limit for
Customs to make a decision regarding Customs rules in response
to a trader's request;
- simplification of requirements in relation to
Customs debts and provision for debt to be extinguished for non-compliance
with customs rules if there is no deception or harm to Community
resources;
- provision that Member States have administrative
and criminal penalties that are effective, proportionate and dissuasive;
- abolition of the current ability Member States
to restrict the right of representatives (agents) to make customs
declarations to those operating in that Member State and provision
for to allow representatives to be authorised as AEOs; and
- transfer of some detail in the current Code to
the new Implementing Provisions for the revised Code in the form
of Commission Regulations, incorporation of the current Council
Regulation concerning duty reliefs including traveller's allowances
into the new Implementing Provisions and change of rules of procedure
of the comitology Customs Code Committee from regulatory to management.[45]
5.3 The Commission says of its proposal that it will:
- implement the e-Government
initiative in the area of Customs;
- fulfil the commitment to the "better regulation"
initiative in this area;
- enhance the competitiveness of companies doing
business in and with the Community, thus creating economic growth;
- increase security and safety at the external
border;
- reduce the risk of fraud;
- improve coherence with other Community policies
such as indirect taxation and agricultural, commercial, environmental,
health and consumer protection policy; and
- ensure an effective decision-making process for
implementing provisions and information matters and provide for
the Commission to be able to request a Member State to withdraw
a decision.
5.4 The draft Decision (document (b)) is intended
to promote implementation of interoperable and accessible automated
customs systems that are co-ordinated across the Community, committing
the Commission and Member States to re-engineer Customs activity
for the electronic age within specific timescales, in order to
achieve the objective of a simple and paperless environment for
customs and trade. The intention is to establish electronic interfaces
for traders with Member States' systems. These would be:
- a system of centralised clearance
enabling collection, repayment or remission of import duties to
be handled by the customs office responsible for the place where
the importer or exporter is established in the Community —
to be established within three years of publication of the Decision;
- a register of traders engaged in international
trade — within three years;
- a common customs portal enabling traders to obtain
all the necessary information, including the relevant legislation,
for the conduct of their import and or export business free of
charge — within three years;
- a single access point permitting traders to conduct
their customs business anywhere in the Community from their place
of business — within five years;
- a one-stop-shop system of interoperable computerised
systems between Customs and other administrations or agencies
(for example the Department for Environment, Food and Rural Affairs)
involved in the movement of goods within the same Member State
so enabling traders to submit information only once in order to
fulfil their obligations and all required controls to be co-ordinated
— within six years.
5.5 Responsibility for implementation is to be shared
between the Commission and Member States. The Commission would
draw up a management plan setting out specific tasks for the Commission
and Member States respectively, with deadlines for each of the
projects. Member States would estimate and make available the
necessary budget and human resources to deliver the national components.
The Commission and Member States would share responsibility for
trade consultation and development of the information technology
infrastructure.
The Government's view
5.6 The Paymaster General (Dawn Primarolo) tells
us that the Government welcomes modernisation of the Customs Code
and the associated eCustoms programme to provide a modern environment
for international trade. It fits in with the Government's intention
to create a paperless environment giving increased effectiveness
and a better use of resources. In relation to the proposals in
the draft Regulation, document (a), the Minister says:
- the changes proposed for AEOs
are an improvement necessary to make the arrangements attractive
for the trade to participate. Centralised clearance is important
to simplifying trader's dealings with customs authorities in the
Community. But a Commission working group is looking at questions
on the Member State share of customs duty collected and national
requirements for statistics and taxes, especially ways in which
collection of national taxes and statistical information could
be handled in a less burdensome way for traders operating centralised
clearance, and the Government will consider carefully the emerging
proposals;
- the Government fully supports the reform of special
procedures. It thinks proposals for a mandatory requirement for
guarantees for special procedures should be linked to risk, but
it accepts that the proposed reduced guarantee provisions and
guarantee waivers for AEOs will minimise any adverse impact;
- allowing customs debt to be extinguished, in
cases of non-compliance that do not damage the Community, is as
a necessary reform — it should reduce the occasions where
customs debt acts as a penalty on traders for errors in applying
customs rules;
- the Government recognises the need for greater
harmonisation of administrative penalty levels across the Community,
but it will seek to ensure that Member State competence is respected;
and
- the Government considers that in general high-level
principles should remain in the Customs Code rather than being
part of the Implementing Provisions. It will ensure that the correct
balance is maintained in the new Code. The Commission have proposed
Guidelines to assist Member States in interpretation of the Code
and its Implementing Provisions. Close attention will be given
to the development of these Guidelines and their legal status.
5.7 In relation to the draft Decision on eCustoms,
document (b), the Minister adds the Government welcomes and supports
this proposal, which is very much in line with its Customs Blueprint
— "a high-level strategic document, which sets out
the way in which customs will simplify and modernise the customs
process for international trade".[46]
She says:
- the Government is aware of
the need to improve and facilitate supply chain logistics and
customs processes;
- customs clearance needs to become more efficient,
administrative burdens should be reduced and trade should be facilitated;
- improving processes should enhance electronic
risk management systems and customs interventions, thereby improving
the security of international trade supply chains; and
- once implemented the proposals will considerably
enhance the competitiveness of UK trade.
5.8 The Minister also notes, in relation to the eCustoms
proposal, that in the absence of detailed specifications it is
difficult to assess the financial commitment required to update
electronic systems in the UK. So the Government will seek a more
flexible timescale built around clear specifications, so that
it can properly evaluate and assess realistic delivery timescales.
5.9 More generally on the financial implications
of the proposals, the Minister says that, as in other Member States,
the Government and UK traders will need to invest to ensure that
customs clearance systems and other electronic interface systems
are in place and reflect the changes in the modernised Customs
Code. As already noted, it is difficult to assess the total costs,
but the Government thinks Member States will be committed to the
provision of substantial financial resources within very strict
timescales. Taking projects already planned, an initial estimate
for the UK is £60 million. This does not include staff costs
or that of associated projects, for example harmonisation of the
data elements required for a customs declaration. The Commission
has a total indicative financial cost of £123.45 million
to implement Community components of eCustoms. As for costs/benefits
to the Commission and Member States, it indicates a break-even
point for 2010. It also predicts that when both proposals are
in place, at the earliest in 2009, the estimated savings to the
trade are expected to be £1,713 million per year. Finally
on this issue, the Minister says the Government has begun its
own assessment of costs and benefits.
5.10 The Minister tells us that, in addition to comprehensive
consultation by the Commission, the department has consulted the
UK trade interests extensively during the development of the proposals.
She also provides us with initial Regulatory Impact Assessments
(including one on the overarching Multi Annual Strategic Plan)[47]
which will inform the further, formal, consultation on both proposals
which the department is about undertake with the UK trade interests.
Conclusion
5.11 These important proposals could lead to significant
improvements for traders in regard to customs. But before
considering the documents further we should like to hear about
the outcome of the Government's formal consultation and more about
the likely costs of implementation.
5.12 We should also like to be kept informed of
progress on the issues related to Member State shares of customs
duty, collection of national taxes and statistical information,
respect for Member State competences (notably in relation to the
imposition of criminal penalties under the EC Treaty), the balance
between the modernised Customs Code and its Implementing Provisions
and the proposed Guidelines to which the Minister has drawn our
attention.
5.13 Meanwhile we do not clear the documents.
41 Note that the documents 15381/05 ADDs 1 & 2
are the same as 15380/05 ADDs 1 & 2. Back
42
See (24790) 11837/03: HC 63-xxxi (2002-03), para 3 (10 September
2003) and HC 42-i (2003-04), para 12 (3 December 2003). Back
43
See (26504) 8189/05: HC 34-i (2005-06), para 61 (4 July 2005). Back
44
See (26989) 14042/05: HC 34-xii (2005-06), para 23 (30 November
2005). Back
45
Comitology is the system of committees which oversees the exercise
by the Commission of legislative powers delegated to it by the
Council and the European Parliament. Comitology committees are
made up of representatives of the Member States and chaired by
the Commission. There are three types of procedure (advisory,
management and regulatory), an important difference between which
is the degree of involvement and power of Member States' representatives. Back
46
See: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&
propertyType=document&columns=1&id=HMCE_CL_001512. Back
47
See (24790) 11837/03: HC 63-xxxi (2002-03), para 3 (10 September
2003) and HC 42-i (2003-04), para 12 (3 December 2003) and OJC
205 of 5 December 2003. Back
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