COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the desirability to renew the action programme for customs in the Community (Customs 2007)

1. Introduction

Community action programmes for customs (Customs 2000 [1] and Customs 2002 [2]) have existed for almost seven years. The Customs 2002 programme extended considerably the scope of the original programme by adding the maintenance and development costs of computer systems and training actions to the actions covered by Customs 2000. The main objective of all actions undertaken in the framework of these programmes is the proper functioning of the internal market of the Community.

[1] Decision No 210/97/EC of the European Parliament and of the Council of 19.12.1996 (OJ L33 of 04.02.1997, p. 24), covering the period 1 January 1996 to 31 December 2000

[2] Decision 105/2000/EC of the European Parliament and of the Council of 17.12.1999 (OJ L13 of 19.01.2000, p. 1)

The recent "Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee concerning a strategy for the customs union" [3] outlines the present customs policy.

[3] COM (2001) 51 final of 8.2.2001

The Commission is required to submit, under Decision 105/2000, a communication to the European Parliament and the Council on the desirability of continuing the programme, accompanied, if necessary, by a suitable proposal.

The Commission concludes that it is necessary to propose a new programme 'Customs 2007'.

2. The Customs 2002 programme

The Customs 2002 Programme covered the period 1 January 2001 - 31 December 2002. It prolonged the first action programme for customs in the Community (Customs 2000), and replaced the Matthaeus programme [4].

[4] An action programme providing for the training of Community customs officials (Council Decision 91/341/EEC of 20 June 1991 on the adoption of a programme of Community action on the subject of the vocational training of customs officials (Matthaeus programme), OJ L 187 of 13.07.1991 (p. 41))

The main differences between Customs 2002 and Customs 2000 are:

- Integration of training actions (formerly under the Matthaeus Programme) and Customs IT projects

- Establishment of a formal Customs Policy Group (where a common approach regarding the customs policy shall be drawn up) and of a Customs 2002 Committee (where the measures for the implementation of the programme shall be adopted);

- Increase of the Programme's budget to 135 MEURO for the period 1996 to 2002;

- Extension of the Programme's duration to 31 December 2002;

- Opening the programme to applicant countries.

In accordance with Article 17 of the Decision, the Customs 2002 Programme has been subject to evaluation after a period of one and a half year. The more detailed report is available in Commission working document [5]. The main results are summarised hereafter.

[5] SEC(2001)1329 of 31.07.2001

3. Evaluation

A. Summary

The Commission's Interim report on the Customs 2002 Programme has concluded that first results are positive and encouraging. The programme is now much more geared to operational and practical improvements than was the case under the previous programme. The report also shows the need to ensure that more is done to set tighter measurable objectives with indicators to show the practical impact of the specific activities.

The report specifically welcomes the new working structure for the programme. In addition to the creation of the Customs 2002 Committee, much was done to create a close and practical working relationship between the participants in the activities. This began with the identification of five key areas. Progress is closely monitored by Management groups, which oversee and plan the work in each area and also ensure the coherence of the programme by reporting back to the Committee.

Actions are implemented using any of the programme instruments but activities are mostly run by operational project groups, comprising Member States and Commission experts, reporting to a Management Group. This working structure was introduced in the first 6 months of 2000 and took some time before it was fully effective. It has, however, proved to be a very efficient and useful way of administering the programme and achieving results. Benchmarking has also shown its value as a practical tool.

At the same time, the Customs Policy Group, consisting of the Director-Generals of Customs of all Member States, continued its work on developing customs policy and strategy, thereby making the essential link between policy objectives, Customs 2002 activities and their implementation by national administrations.

B. Achievements

The following examples are provided to illustrate the results that have emerged in individual working areas [6]:

[6] For full details on the results of the programme to date please refer to the Customs 2002 "Actions and Achievements" document on the DG TAXUD website

Risk Management

Indicated as a problem area by the European Court of Auditors and a priority area by the European Parliament, proper risk management is a major instrument for fighting fraud. First practical results include the creation of a mechanism and standard forms to enable Member States to exchange information on high-risk areas.

The completion of an inventory of Community customs controls will enable problem control areas to be identified and addressed via the programme; it will also alert applicant countries to areas needing special attention. A catalogue of indicators for economic operators has been produced and is being tested in practice. If successful this could bring significant benefits in reduced compliance costs via more standardised assessment across the community.

Information technology

This is the major area of programme investment which covers the maintenance and further development of existing IT systems well as the development of new IT systems to meet changing requirements. All systems increase standardisation and in many cases improve controls as well as reducing compliance costs. The major actions carried out to date appear in various reports, particularly on the implementation of the New Computerised Transit system (NCTS) [7], which remains a priority. The new computer platform, the Common Communications Network/Customs System Interface (CCN/CSI), on which, NCTS and other applications are based, will improve control standards and provide the basis for e-customs in an enlarged community. The system also permits the rapid transmission of control and crisis information to customs posts at the community's external frontiers.

[7] See Transit Brochure and relevant reports

The Data Dissemination System (DDS) enables business to gain on-line access to Community customs tools, such as the community's integrated tariff (TARIC). Interest is demonstrated by the 2.5 million consultations per month to two of the key information areas supplied by DDS (TARIC and Tariff Quotas). This figure has been reached after only six months of the system operating and is still increasing significantly.

Improvements to TARIC, comprised of more than 4000 Community measures, enable updated Tariff information to be sent out each day in eleven languages. Ongoing work is preparing the links to applicant countries' systems and assisting these countries in their preparation for accession.

Measurement of Results

The European Parliament has stressed the importance of this work. Work on the customs activities performed by Member States is underway and the results achieved enable Member States to compare their performance to the Community standard and act to improve customs operations where necessary.

The need for greater transparency in customs actions increases as the Community expands. Combined with the drafting of standards for controls, this work will provide increased guarantees of the maintenance of standards in an enlarged Community.

Changing customs work

Work under the programme needs to adapt to external changes. The "counterfeiting" action shows the importance of customs co-operating to counter increasing threats to community business and employment. The programme (via the use of exchanges, support to specialised teams etc.) has undoubtedly contributed towards helping Member States efforts to tackle the growing counterfeiting problem. Results show customs in the Community seizing 68 million counterfeit articles in 2000 (compared to 25 million 1999), estimated to equate to more than 1,5 billion Euro of legitimate products.

Standardisation

In addition to the many computerisation actions improving standardisation, work on guidelines and recommendations has led to improvements which will be continued as more actions are completed. Sectors involved include co-operation between customs laboratories, product safety, cultural goods, chemical precursors, establishing memoranda of understanding and encouraging the use of X-ray scanners.

External activities

Numerous external activities have taken place notably aimed at preparing for enlargement. Actions have focused on the improvement of the operational capacity of customs administrations in the applicant countries.

External activities also aimed at improving links with close trading partners to enable better control, to prevent fraud and to foster trade by facilitating exchanges.

The IT inter-connectivity study deserves particular mention as a crucial step in examining applicant countries' preparations and state of readiness to link up to community systems.

Exchange of officials and general co-operation between customs

Greater targeting and linking exchanges to high priority areas (e.g. improving controls) and specific projects (e.g. anti-counterfeiting) have led to better results in this area. One example concerns the RALFH project on co-operation between the five ports responsible for 70% of EU maritime traffic where exchanges involve officials using container scanners as well as officials applying specific controls.

Actions in the context of preparing, accompanying and implementing legislative reforms

Seminars have been held to prepare the reform of economic procedures and a permanent contact platform with operators (contact group) to work in the framework of the transit reform, for which national management plans are co-ordinated. A network of transit co-ordinators has been put in place and a train-the-trainers seminar has been organised.

4. Proposal for a new programme 'Customs 2007'

A. Introduction

- The promising results reached so far by the Customs 2002 programme indicate that there would be a strong Community interest to continue, and even to enlarge, this programme. Improvements, already appearing in key areas such as computerisation, transit reform, risk analysis and controls, will provide a better foundation for combating fraud and set clearer standards for the focus of the applicant countries' pre-accession activities.

- The programme should seek to accelerate the move towards e-customs and rationalise and improve customs operations through greater co-operation and the use of modern systems.

- In addition the newly implemented working structure provides a firm basis for building a new programme and to ensure positive and practical results that are fully consistent with the customs strategy approved by the Council on 31 May 2001 [8].

[8] OJ C 171 of 15.6.200, p. 1

- The new proposal is designed to build on the previous achievements and to contain the following improvements over the Customs 2002 programme:

- Greater emphasis on the preparation for enlargement and combating fraud

- Introduction of new computerisation initiatives to standardise the specifications and the correct treatment of data exchanges between economic operators and Member States

- Better structure of objectives and working tools

B. Objectives of a new programme

The central objective remains to ensure that Community law is applied by customs in such a way as to maintain the proper functioning of the single market in an enlarged Community. This requires equivalent treatment across the Community, due attention to protecting the Community and citizens' interests and efforts to support a competitive business environment.

Emphasis should be placed on the following elements:

1. Ensuring the continued use of previously developed system based on the CCN/CSI and the main computerisation applications such as TARIC, NCTS, TQS...

2. Enlargement will soon become a reality. It is essential to continue standardisation of the present working methods and to provide practical support to the applicant countries. Standards for controls and guidelines to assist in the application of Community law should feature heavily in the new programme.

- Computerisation improvements will continue to be necessary to maintain the quality of controls in an enlarged community. Work on the access of applicant countries to community systems would also be increased.

- Practical support and training on all aspects of the implementation of Community provisions by customs (in particular those of the Community customs code) will be a main feature of the programme.

3. Anti-fraud actions must be improved.

- Better use of risk management to focus controls on high-risk areas and the implementation of the ongoing pilot projects on risk information exchange is an important element of the programme.

- Increasing operational co-operation under projects of co-operation between the national customs administrations such as RALFH will also feature strongly.

4. The reduction of compliance costs would contribute towards the creation of a competitive business environment.

- As customs duties steadily decrease in importance, costs for customs procedures become more important and we must avoid that they become disproportionate.

- The costs of compliance in a community of 15 Customs administrations with differing computer systems can be significantly higher than in major trading partners of the Community. Although this issue also requires legislative changes, a lot can already be done and achieved on the operational side through standardising data input requirements, particularly for customs declarations.

- The ultimate goal must be to move to paperless customs ('e-customs') where the maximum amount of data is transferred electronically.

5. Training actions will respond to the needs arising from the various programme activities.

To ensure the objectives are duly monitored, all actions (with the exception of individual exchanges) shall be the subject of a specific proposal made on a standard form and outlining any measurable indicators. Major requests for funding shall also be accompanied by a detailed implementation plan showing the commitments of the respective parties.

C. Programme tools

The programme tools used shall include the full range of tools used under Customs 2002 (including information exchange and communication systems, management and project groups, benchmarking, seminars, workshops etc).

Information from all actions shall be fed back to the relevant management instruments to ensure full use is made of any experience gained to the broader benefit of the Community.

D. Financing of the programme

The Community

The operational costs to be borne by the Community can be broken down into three main categories, Joint actions, IT actions and Other actions.

Joint Actions covers seminars, exchanges, monitoring, benchmarking, training, and any other actions agreed under Article 13. The expenditure related to Joint Actions is expected to be approximately equal in each year of the programme, although there is likely to be a shift in emphasis away from seminars towards more monitoring and benchmarking actions. The cost of the Joint Actions is estimated to be EUR18.825 million over the lifetime of the programme.

The programme's IT actions related to the functioning and evolution of existing systems will amount EUR71.545 million over the five-year period. The IT actions related to the development of systems which are intended to facilitate the electronic exchange of information between customs administrations and trade, will amount to EUR7.4 million over the five-year period.

In addition, the activities related to interconnecting the systems of the applicant countries with community systems as part of the enlargement process and the costs of the development and extension of the existing systems (notably Transit and CCN/CSI) in order to be able to respond to the needs of new Member States will amount to EUR22.74 million over the lifetime of the programme.

Other actions include the Management and Project Groups, which are essential to the effective and efficient operation of the programme and the external activities, mainly directed at the applicant countries. The costs of these activities will amount to EUR4.175 million over the five years lifetime of the programme.

External actions which provide technical assistance and training to third countries will amount to EUR8.315 million.

The total amount to be borne by the Community's budget is therefore EUR133 million.

Candidate countries

The terms and conditions of the participation of the applicant countries in the Customs 2002 Programme are governed by the appropriate international legal instruments that provide for an automatic extension if the Customs 2002 Programme is extended without "any substantial change". If the Customs 2007 Programme is not seen as an extension of the Customs 2002 programme, but a successor programme, it would require new legal instruments. No provision has been made for the cost of the applicant countries' participation in the programme, since their contributions would be treated as additional funds for the programme to be used for the participation of those countries which have chosen to participate.

It should be stressed that several candidate countries are already using pre-accession assistance programmes to strengthen their customs administrations. Activities financed from these programmes are likely to continue after accession. Close co-ordination will therefore be required to avoid any duplication of activities.

5. Conclusions

The interim report on Customs 2002 and Member States' reaction show that the new working structure and the more operational approach undertaken are producing results which are of long term benefit to the Community.

A new programme that provides for both continuation and extension in this sector is justified:

- to foster employment by contributing towards a competitive business environment with reduced compliance costs;

- to prepare for enlargement and, after enlargement, for the full integration of the new Member States, so that all customs administrations in the enlarged Community may act as would one single administration;

- to improve the protection offered by customs to the consumer and to the financial interests of the Community.

These priorities for the future, together with the support already received from Member States, constitute a strong case for continuing the work of Customs 2002.

It is accordingly recommended that the attached "proposal for a Decision of the European Parliament and of the Council adopting an action plan for customs in the Community (Customs 2007)" be adopted.