COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 09.10.1996 
COM(96) 477 final 
COMMUNICATION FROM THE COMMISSION 
THE FUTURE OF TRANSIT SYSTEMS : INTERIM REPORT 

L The context : a continuous action of the Commission in reinforcing the efficacy and 
security of transit systems 
Customs transit allows the movement of goods inside the Community and between it and 
numerous third countries without charging duty and tax normally due at import or 
applying any supervision measures or restrictions. It does not only allow the simple 
passage through a given territory. Above all it is an instrument for bringing goods to their 
place of declaration and, where appropriate, moving goods under a customs suspensive 
regime about the Community. 
Since the origin of the Community the customs transit systems have been essential for the 
Customs Union and for trade with our partner third countries in the framework of a 
common trade policy. They are now suffering the consequences of far reaching political 
and commercial changes in respect of their efficiency and security. This weakness is 
being exploited and abused by organised crime which creates a considerable threat to 
public budgets and to legal commerce. 
The Commission has underlined the seriousness of this situation and the urgent need to 
counteract it in its two Communications on fraud in transit dated 29 March 19951 and 3 
April 19962 . The Court of Auditors has underlined in several of its reports some of the 
malfunctions of the system. The European Parliament found the consequences for the 
financial interests of the Union so worrying that it set up a temporary Committee of 
Inquiry on Transit on 12 January 1996. Taking into account financial and economic 
implications of this question, the Commission also informed the ECOFIN Council on 8 
July 1996. This Communication is completely in line with these initiatives. 
The last Commission Communication sets out a number of proposed actions to combat 
fraud while preserving the essential economic advantages offered by transit. Some of 
these actions are being undertaken and the corresponding measures have been announced. 
Other actions envisaged have to be the subject of a more global analysis by the services 
of the Commission in order to have a complete in depth picture of the situation in which 
transit finds itself. This will allow us to target the reform of these systems in a balanced 
manner and with full knowledge of what is involved. 
H. A framework for work and action : the interim report on transit 
Object of the report 
The result of this global analysis is contained in the Interim Report on Transit which is 
annexed to this Communication. It is in the form of a working document of the services 
of the Commission which represents an essential stage of the reform process. It marks the 
intention of the Commission not to hide any difficulty or any suggestion and to seek, via 
the involvement of all the actors in transit in the most open way, the best definition of 
the transit systems for the future. 
That is why the Interim Report undertakes, from a technical point of view, a critical 
analysis of the difficulties with which transit is confronted and of the suggestions from 
all parties for improving it, which translates into a preliminary identification of the 
possible objectives for a future reform and the methods which could be used to achieve 
this. 
Its interim status means it can be used as the factual and open framework for a discussion 
with all the parties concerned with transit to which it is given. They will have the 
1 COM (95) 108 final, "Fraud in the transit procedure, solutions foreseen and perspectives for the 
future" 
"" SEC (96) 290 final, "Commmision action to counter transit fraud" 
opportunity to debate freely on this basis in order to help the Commission to define, 
whilst exercising its right of initiative, the framework which should in the end be adopted 
for the reform of transit. 
Contents of the Report 
The report, which has six explanatory annexes, is in a framework defined by three 
fundamentals and gives a technical synthesis of the various contributions given over a 
period of about a year. 
A. Fundamentals 
L Transit at the centre of the Customs Union and trade policy 
Transit regimes are essential for the administration and the protection of the internal 
market, for the special trade relationships that the European Union wishes to keep with 
the EFTA countries, and for the pre-accession strategy with the central and eastern 
European countries. In the form of common transit and equally TIR, transit contributes 
to a new economic integration on a continental scale. Its success with trade shows it is 
equally a fundamental element for their commercial strategy. 
2. Systems in crisis against a background of profound change 
The political events in Europe together with the globalisation of the economy in a general 
context of lower commercial barriers and the multiplication of preferential agreements 
have permitted a considerable expansion of trade. This has caused an unexpected growth 
in the need for transit. This situation, combined with a reduction of staff allocated to 
transit, has overloaded the documentation procedures which are still based on the manual 
handling of paper. It has weakened the security of the systems and favoured their abuse 
by criminal organisations and could lead to the loss of important amounts of import duties 
and national taxes. This financial loss, which concerns the Community budget, with 
regard to the non-recovery of traditional own resources, but which also, for a large part 
of the amounts at stake, concerns national budgets, is accompanied by a commercial loss 
because the goods lost in transit go onto the black market and represent a unfair 
competition for the legitimate trade and a threat to employment. 
3. The efficacy of any transit reform demands the setting up of a framework 
favorable for management and co-operation 
The efficacy and security of the transit systems rely not only upon procedures capable Of 
meeting the needs of trade. They also rely on the same unified and loyal approach to their 
application and control, which in turn implies permanent co-operation between the various 
administrations involved, notably on the basis of a better knowledge of the reality of these 
systems. It should be obvious that a reform of transit legislation will not have a real effect 
unless it can depend on : 
. a set of rules, both in the Community and internationally, that is clear and accessible 
and which ensures the coherence of the transit systems as well; 
. a policy of information and training; 
. the allocation of the necessary resources; and above all 
. a redefinition of the relationship between the customs administrations and their 
responsibilities for the proper running of the Customs Union. 
At least for the Community, some of these preconditions go beyond the strict limits of 
the transit system, but it is clear that implementation of the "Customs 2000" programme, 
yet to be adopted, could partially respond to this. 
B. A synthesis for debate 
In this context, the interim report sets out an inventory of the problems and the 
corresponding suggestions advanced by all the players, contained in a synoptic table of 
five sections : 
- the monitoring and writing-off of transit operations in order to have an effective system, 
- the surveillance and control measures needed to ensure the security of movements, 
- the definition of the roles of the players in relation to the risks generated by transit, 
- the quest to obtain an adequate cover for these risks via financial guarantees, 
- and a certain number of more general supporting measures essential for the effectiveness 
of the reforms. 
Starting from this five broad categories of objectives to be met emerge: 
. an effective management of secure regimes; 
. a close co-operation between customs administrations and between them and the 
Commission; 
. a permanent, coherent and constructive dialogue between the customs authorities and 
the trade; 
. clear, coherent and accessible law and instructions 
. well trained customs officers who are properly led and supported and who are aware 
that they provide an essential contribution to the proper over-all working of the transit 
regimes. 
At the head of these priorities it must again be stressed that only a rapid and ambitious 
computerisation of procedures will really be able in itself to respond to most of the needs 
for effectiveness and security. This will enable us to master the flow of international trade 
under transit, and offers us an instrument for real time analysis of the risk inherent in 
each movement. 
!1L A tool to be used openly 
The Interim Report, in order to achieve its object, which is to fully associate the actors 
in transit in the redefinition of the rules, will be sent to the customs administrations of 
the Member States and the partner countries as well as to the trade organisations 
representing the day to day users of the system. 
It is by using the reactions to the Report from all the players and their contributions that 
the Commission, knowing all the elements, will be able to rapidly define a global action 
programme both at operational and legislative level. It is only then that the Commission 
can make further proposals. The Commission also feels that its initiative and that of 
Parliament, in the framework of its Temporary Inquiry on Transit, should proceed side 
by side and mutually support each other. This is in any case the approach the Commission 
will continue to adopt towards its reform of the transit systems. 
^ 
ISSN 0254-1475 
COM(96) 477 final 
DOCUMENTS 
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ISBN 92-78-09893-0 
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