10 Customs: mutual assistance
| (35610)
17110/13
+ ADDs 1-2
COM(13) 796
| Draft Regulation amending Regulation (EC) No. 515/97 of 13 March 1997 on mutual assistance between the administrative authorities of the member states and cooperation between the latter and the commission to ensure the correct application of the law on customs and agricultural matters
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| Legal base | Articles 33 and 325 TFEU; co-decision; QMV
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| Document originated | 25 November 2013
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| Deposited in Parliament | 3 December 2013
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| Department | HM Revenue and Customs
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| Basis of consideration | EM of 17 December 2013
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| Previous Committee Report | None
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| Discussion in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared, further information requested
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Background
10.1 Regulation No. 515/97 provides for mutual assistance
between Member States and with the Commission to ensure that customs
and agriculture legislation is applied correctly and that the
threat of financial fraud is minimised. Currently, the Regulation
requires Member States to give the Commission information on goods
breaching customs or agriculture legislation. It permits information
exchange and other cooperation between Member States and with
the Commission and establishes computer systems to assist in this.
It also permits Member States to share information with third
countries under suitable arrangements.
The document
10.2 The Commission has reviewed the working of the
present Regulation and, having identified four particular problems
that it argues need to be addressed, proposes this draft amending
Regulation. The problems it perceives are:
· mis-declaration of origin — if incorrect
origin information is entered on customs documents, some importers
could evade anti-dumping duties, claim preferential duty rates
or evade quotas;
· mis-description of goods — if goods
are mis-described for customs purposes the wrong rate of customs
duty might be paid and specific controls avoided, such as Common
Agricultural Policy measures, preferential rates or quotas;
· misuse of the transit system, with the
risk of goods passing through Member States under customs transit
procedures being unloaded or replaced in the EU, being wrongly
described or disappearing — if this occurs then EU and national
taxes are evaded in addition to other risks such as unsafe goods
entering the EU; and
· speeding up OLAF (the Commission's European
Anti-Fraud Office) investigations — OLAF wants to improve
its performance in reducing customs duty losses by adopting a
more centralised working model that uses new computerised analyses
and involves requesting information direct from economic operators
instead of asking customs authorities to collect it on its behalf.
10.3 To address these risks, the Commission proposes
extending the present Regulation's scope so that economic operators,
chiefly importers, exporters, freight forwarders and shipping
companies, supply certain customs-related information, such as
container numbers, direct to the Commission. Both the Commission
and Member States would be able to access this data for risk-assessment
purposes. As part of the proposal, the Commission also suggests
changes in data protection, security, and storage rules, which
would specify who could enter and change data, who could access
this data and how long it could be kept. The provisions would
allow data to be shared with other parties in certain circumstances
and would require Member States receiving personal data to have
appropriate legislation.
The Government's view
10.4 The Economic Secretary to the Treasury (Nicky
Morgan) tells us that:
· the Government agrees protecting EU financial
interests is important and that Member States should cooperate
with each other and the Commission to help ensure that revenue
losses from customs and agriculture-related regimes are minimised;
and
· it is, however, sceptical as to whether
the Commission's proposal is a proportionate response to the problem
it has identified.
10.5 She then sets out five key policy questions
for the Government, concerning Commission responsibility for identifying
customs fraud and risk issues, the impact on economic operators,
centralised databases, delegated acts and agriculture.
Commission responsibility for identifying customs
fraud and risk issues
10.6 Noting that the Commission's proposal would
enable it to increase the detection of customs fraud related to
the mis-declaration of the goods' origin, mis-description of goods,
and misuse of the transit system and has a similar approach in
relation to speeding up OLAF investigations, the Minister says
that:
· the Government supports actions that improve
the detection and successful prosecution of fraud;
· in this context, better collection and
use of information by Member States and the Commission is to be
welcomed;
· the draft Regulation would, however, move
the Commission into work areas in which it has not been involved
previously;
· the Government remains resolute in its
support of efforts to tackle financial loss, but believes that
aspects of the proposal, though not breaching the principles of
subsidiarity, extend too far; and
· it will challenge any attempt to impinge
upon the authority and roles of both HM Revenue and Customs and
the Border Force, especially if this could affect how resources
are allocated.
Impact on economic operators
10.7 The Minister says that:
· the requirement for economic operators
to supply information to the Commission could increase business
costs;
· the Government notes though that the Commission
has said it has developed in consultation with members of the
World Council of Shipping a solution that it believes delivers
the required information without businesses incurring disproportionate
costs; and
· the Government will consult UK economic
operators to test the accuracy of this claim and if they have
concerns it will offer alternative cheaper solutions.
Centralised databases
10.8 The Minister tells us that:
· the Government remains to be convinced
that the proposed expanded central databases are necessary and
would provide better value for money — nor is it clear at
this stage whether this approach would incur additional costs
for Member States;
· the Government is currently unclear whether
the proposed databases are intended to be additional to similar
customs databases suggested for development by a different part
of the Commission under different legislation; and
· the Government will, therefore, test the
balance of costs and benefits carefully and seek to ensure that
burdens on business are either avoided or minimised, while also
avoiding increased demands on HM Revenue and Customs and Border
Force resources.
Delegated acts
10.9 Noting that the draft Regulation contains Articles
that would empower the Commission to introduce delegated acts
for some parts of the proposal, the Minister says that:
· this could be problematic because under
such acts the Commission is not obliged legally to consult Member
States; and
· the Government will consider whether these
proposals are appropriate.
Agriculture
10.10 The Minister tells us that the draft Regulation
and associated papers make little reference to agriculture, though
it falls within the scope of the present Regulation, and the Government
will seek to clarify what impact, if any, this would have upon
agricultural matters.
Data protection, security, and storage
10.11 The Minister says that the proposed changes
in data protection, security, and storage rules are acceptable
to the Government.
Financial implications
10.12 Finally the Minister says that:
· there are limits to how much UK officials
are able to verify or challenge the Commission's impact assessment
estimates of future costs of EU-wide solutions;
· the Government will, however, continue
to seek information from the Commission to justify its cost assessments;
· the Commission's legislative financial
statement, estimates that the costings of the draft Regulation,
when amortised over eight years, will total €60.5 million
(£50.4 million), of which €11 million (£9.2 million)
is allocated to administrative expenditure and €49.5 million
(£41.2 million) for operational costs, such as developing
the databases; and
· the Government will also seek to test
these costings during negotiations.
Conclusion
10.13 Given the Government's doubts as to whether
this draft Regulation is a proportionate response to the perceived
problem, we presume that it will, particularly in the light of
comment it might receive from UK economic operators, oppose its
adoption unless significantly improved during Council working
group negotiation.
10.14 Accordingly, before considering the draft
Regulation again, we wish to hear about both the views of UK economic
operators and developments in Council working group consideration
of the proposals. Meanwhile the document remains under scrutiny.
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