11 Customs
| (33713)
6784/12
COM(12) 64
| Draft Regulation laying down the Union Customs Code (Recast)
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| Legal base | Articles 33, 114 and 207 TFEU; co-decision; QMV
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| Department | HM Revenue and Customs
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| Basis of consideration | Minister's letters of 9 September and 14 October 2013
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| Previous Committee Reports | HC 86-xxxv (2012-13), chapter 11 (13 March 2013) and HC 428-lviii (2010-12), chapter 4 (25 April 2012)
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| Discussion in Council | 27 September 2013
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
11.1 The Community Customs Code, in its latest form the Modernised
Customs Code (MCC) made under Regulation (EC) No. 450/2008, along
with its yet to be agreed Implementing Provisions, set out the
customs rules for trade between the EU and third countries. The
key aims of the MCC are to deliver the strategic objectives of
the Customs Union by modernising and simplifying the customs rules
and procedures, facilitating legitimate trade, strengthening controls
and increasing safety and security. It will replace the current
Community Customs Code that dates back to 1992 and which, despite
some amendment, has not kept pace with changes in the global business
trading environment. The MCC entered into force on 24 June 2008
but will only become applicable when its Implementing Provisions
come into force.
11.2 With this draft Regulation, presented in February
2013, the Commission proposed a recast (consolidation and amendment)
of the MCC, before it is due to take effect, in order to:
· postpone
the 24 June 2013 implementation date;
· align
the code with the Lisbon Treaty and rename it, as the Union Customs
Code (UCC); and
· adjust
the text to reflect essential changes.
11.3 The Commission emphasised that:
· the
UCC would not change the original policy objectives of the MCC
or the substance of its provisions in respect of customs procedures
and requirements; and
· the
proposal would replace the MCC with an amended Regulation that
was aligned to the Lisbon Treaty, incorporated necessary changes
to reflect recent legislative and procedural developments in customs
and other areas concerning the movement of goods between the EU
and third countries, and provided sufficient time for the IT systems
needed to support implementation to be funded, developed and delivered.
11.4 However, the Commission acknowledged that most
of the provisions were impacted to some extent by the proposed
changes, particularly alignment under the Lisbon Treaty.
11.5 When we considered this proposal, in April 2012,
we commented that, whilst this recast was clearly necessary, we
noted the Government's concerns about some aspects of the proposal,
particularly in relation to delegated and implementing powers.
So before considering the draft Regulation further we asked to
hear about progress in the negotiations. We asked to hear also
about the views expressed about the measure by UK businesses in
the Revenue and Customs' Joint Customs Consultative Committee
(JCCC).[21] In March
this year we heard that the matter was about to go to Trilogue
discussion, following improvements in the text, including in relation
to delegated and implementing powers and to most of the issues
of concern to the JCCC. We asked, before the draft Regulation
was to go to the Council for final endorsement, for a report on
the thrust of the Trilogue discussions, in particular as to whether
the improvements had been secured and whether the situation in
relation to mandatory guarantees (a JCCC concern) had been further
improved. Meanwhile the document remained under scrutiny.[22]
The Ministers' letters
11.6 In his letter the then Economic Secretary to
the Treasury (Sajid Javid) told us that Trilogue negotiations
had concluded with an agreed text which was a balanced package
of measures representing a good deal for the UK. Outlining some
of the detail the Minister first explained that:
· the
text retained the mandatory requirement that businesses provide
financial guarantees for goods held under special procedures prior
to payment of customs charges (duty suspension arrangements);
· this
was not unexpected as the UK was isolated in the Council in attempting
to get this provision removed from the compromise text and similarly
the European Parliament had no appetite for changing it;
· however,
while the Government did not welcome the requirement for a mandatory
guarantee, the final text secured a good compromise measure that
would allow the guarantee to be waived for those businesses that
met the required standard;
· the
Government considered the waiver to be an essential facility for
reducing the additional burden that would otherwise result;
· an additional
success had been achieved, which would reduce the cost of the
guarantees required from those businesses operating duty deferment
arrangements;
· the
text originally required a business to provide a 100% guarantee
with no waiver facility;
· the
Government secured a provision in the agreed text that would allow
trusted businesses, Authorised Economic Operators (AEOs), to obtain
a reduction in the amount of the guarantee to be provided;
· this
change would contribute to increased benefits for AEOs, which
businesses had said they were very keen to see extended in this
way;
· alongside
the guarantee provisions was an associated proposal to introduce
an EU-wide transaction-based guarantee monitoring system —
the Government had expected this to be dropped as a result of
reservations expressed by the UK and other Member States; and
· a very
general reference to the need to monitor guarantees remained in
the text — the scope and detail would not be known until
2014 when the proposals for Commission acts were due to issued
for discussion and agreement with the Member States.
11.7 Secondly, in relation to delegated and implementing
powers, the Minister said that:
· the
outcome of the Trilogue discussions reflected a substantial shift
in the European Parliament and Commission positions on delegated
and implementing acts towards the Government's view;
· the
original proposal was unacceptably weighted in favour of delegated
acts;
· the
Council adopted a negotiating position based on the principle
promoted by the UK that delegated acts should set out 'what' needs
to be done and implementing acts should cover in more detail 'how'
it should be done;
· this
approach had helpfully shifted the overall balance in favour of
implementing acts — the number of delegated acts had been
reduced from 49 to 39 and implementing acts had increased from
35 to 48; and
· the
Government considered this to be an excellent result, especially
given the European Parliament's usual preference for delegated
acts.
11.8 The Minister concluded that:
· the
Government considered that the UCC text agreed in Trilogue to
be a good overall result and a sound deal for the UK;
· its
key concerns had been largely addressed and where necessary acceptable
compromise measures had been included; and
· the
text was likely to be voted on at Coreper, on either 16 or 18
September, before being adopted at Council in the following weeks.
11.9 We were unable to consider this letter during
the Conference Recess and with her letter the present Economic
Secretary to the Treasury (Nicky Morgan) updates us on the UCC.
Reiterating that the Government considers the result of the negotiations
to be a very good result for the UK the Minister tells us that:
· following
the discussions previously reported to us the legislation has
been finalised by both the European Parliament and the Council;
· the
proposal went to the Council on 27 September and, while the UK
abstained on scrutiny grounds, the other Member States voted in
support; and
· the
UCC was published in the Official Journal of the European Union
on 10 October as Regulation (EU) No. 952/2013.
Conclusion
11.10 We are grateful to the Ministers for their
accounts of the largely successful outcome on this draft Regulation
and now clear the document.
21 See http://www.hmrc.gov.uk/consultations/jccc.htm Back
22
See headnote. Back
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