EN Official Journal of the European Union C 487/57

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the European Parliament and of the Council on the Union legal framework for customs infringements and sanctions’

(COM(2013) 884 final — 2013/0432 (COD))

(2016/C 487/08)

Rapporteur-general: Mr Antonello PEZZINI

Consultation European Parliament, 22/06/2016 Legal basis Article 114 of the Treaty on the Functioning of the European Union Section responsible Single Market, Production and Consumption Adopted at plenary 21/09/2016 Plenary session No 519 Outcome of vote (for/against/abstentions) 173/0/3

1. Conclusions and recommendations

1.1. The European Economic and Social Committee has always considered an effective customs union to be an essential part of the European integration process, serving to guarantee the safe and transparent free movement of goods, in full compliance with competition rules and with maximum protection for consumers and the environment. It is also an effective means of tackling infringements, fraud, counterfeiting and facilitating the development of legitimate trade.

1.2. The Committee strongly supports the aims of the Commission’s proposal, insofar as the proposed measures are intended to: — constitute a first step towards an effective single European customs regime, complete with a unitary system of governance, common legal and administrative customs bodies such as a European Customs Court, a common set of rules for implementing the Customs Code, a single IT system with uniform compliance procedures, and an unambiguous interpretation of the rules that facilitates the development of internal and external trade; — provide certainty in a consistent manner across the whole Union with regard to regulation and enforcement, using a uniform system for detecting and penalising infringements, as well as civil and non-criminal sanctions (including the possibility of non-financial penalties) proportionate to the duties evaded and the seriousness of the infringement as determined by common maximum and minimum thresholds. — form an integral part of the enhanced common legal system for preventing and deterring infringements, with the help of ITC compliance modelling and automatic early warning systems; — provide common mechanisms for dispute resolution and comparison of sanctions imposed, with the aim of simplifying and accelerating the development of European trade and to avoiding long and costly legal procedures; — comply fully with the obligations arising from the World Trade Organization (WTO) and World Customs Organization (WCO) international frameworks.

1.3. The EESC calls for the directive’s objectives to include the requirement that this tool — which allows for the gradual but necessary convergence towards a single, unitary regulatory system in terms of both enforcement and interpretation — be accompanied by monitoring and market surveillance, based on automatic detection systems which do not impede the development of legitimate European trade.

1.4. The Committee recommends that in addition to assessing degrees of convergence in relation to implementing the new legislation at territorial level, the biannual report to be presented to the European Parliament, the Council and the EESC also propose indicators to be used in the next steps in the process towards creating: — a genuine European Customs Agency, — and a European Customs Court, — and establishing an effective and efficient common customs corpus to align customs infringement and penalty systems, with a single basis for regulation and implementation and affording unambiguous interpretation.

2. Introduction

2.1. The Customs Union (CU) is the cornerstone of the European Union. The Union’s customs legislation has been fully harmonised since 1992 in terms of substantive and procedural rules. The new Union Customs Code (UCC), Regulation (EU) No 952/2013, was adopted in 2013 and entered into force in 2016.

2.2. The regulatory aspects of customs matters are one of the areas which fall exclusively under the Union’s remit, pursuant to Article 3 of the TFEU, while activities relating to organising checks are the responsibility of Member States. Sanctions and regulatory enforcement are covered by the framework for judicial cooperation in criminal matters (Chapter V of TFEU).

2.3. Customs operations represent around 16 % of global trade, handling imports and exports worth over EUR 3 500 billion per year. Customs duties collected in 2013 totalled EUR 15,3 billion, almost 11 % of the EU budget.

2.4. Non-harmonised national infringement and sanction systems may lead to illegal trade moving to Member States where there are lower risks of discovery and where sanctions are less stringent. Legitimate businesses must also face higher costs when operating across several jurisdictions. Here, varying sanctions regimes risk altering trade flows and economic strategies in the single market, as well as granting advantages to companies that operate in countries with less stringent customs checks.

2.5. National regimes applicable to customs infringements and sanctions have been analysed since the Customs 2013 programme, revealing a considerable number of differences between regimes. This has also been highlighted by recent in-depth studies (1).

2.6. Customs enforcement laws follow 28 (2) different legal regimes, as well as different administrative and judicial traditions, with significant variation in the definition and severity of sanctions. The lack of consistency in implementing customs laws has an effect on conditions for competition, which should be homogeneous within the internal market.

2.7. Inconsistencies in the implementation of legislation concern, in particular: the nature of administrative and/or penal sanctions, the type of sanctions, thresholds and the extent of infringements, dispute resolution/settlements, levels and types of responsibility, any aggravating or mitigating factors, time limits and barred statutes and the responsibility of legal persons.

2.8. Inconsistencies relating to implementation need to be overcome and harmonised European customs regimes established — in accordance with the single customs principle — that enable Member States to agree on dispute resolution mechanisms for settlements in the event of customs infringements, in accordance with the nature and extent of the violation. The aim would be to avoid long and costly legal proceedings for both parties.

2.9. It is helpful to recall that the Customs Union is the operational arm of many of the EU’s trade policy measures, and it implements numerous international agreements on trade flow. It does this by developing — via Member States’ administrations — important horizontal processes involving data management and trader and implementation management. Inconsistencies in implementing legislation within the European system have already been the subject of complaints before the WTO.

2.10. In response to the serious challenges facing the customs union in terms of the way it functions, and given the inconsistent application of the rules, which could potentially dampen its overall effectiveness, the EESC has already emphasised the need ‘to pursue a single customs policy, based on uniform, up-to-date, transparent, effective and simplified procedures, which will contribute to the EU’s economic competitiveness at global level’ (3).

2.11. As the EESC has highlighted (4), in order to establish a genuine internal market, definite time frames need to be guaranteed for implementing the enacting provisions and uniform interpretations of EU’s — customs legislation, which should act as a single administration. The aim would be to ensure: the equal treatment of operators across the whole EU customs territory, easier access to the status of Authorised Economic Operator, a comprehensive update of all stakeholders concerned, computerised procedures and quality training of staff. In essence, we should be able to establish a single European customs system.

2.12. Only with effective progress towards a single European customs system and appropriate governance bodies will we be able to remedy the currently complex and varied functioning of the Customs Union.

3. The Commission proposal

3.1. The main objective of the Commission’s proposal for a directive is to use a harmonising directive to establish a common legal reference framework that aims to achieve: — equal treatment for economic operators; — protection for the EU’s financial interests; — effective implementation of the rules on customs infringements and sanctions; — legal certainty (lex certa) and conditionality and proportionality in relation to penalties (nulla poena sine culpa); while ensuring compliance with customs rules in a consistent manner across the EU, accompanied by the harmonised implementation of regulations on customs infractions and sanctions, thereby avoiding having national infringement and sanctions systems that differ too greatly and so alter competition rules and affect the free movement of goods.

3.2. More specifically, in view of the chosen legal basis, Article 33 of the TFEU, the Commission has proposed: — a long list of sanctionable offences divided into three sub-categories, namely: sanctionable offences in cases of strict liability, cases of misconduct or negligence and cases of fraud; — a scale of sanctions that are ‘effective, proportionate and dissuasive’ for each of the categories, in accordance with the criteria laid down in the case-law of the Court of Justice (5); — a range of sanctions that can be imposed from 1 to 30 % of the value of the goods, or established at a flat rate if the infringement relates to certain statuses or authorisations; — introducing a four-year time limit from the day of the infringement, or the day that it ends in cases where there is a continuation or a recurrence of the infringement, in order to address discrepancies in the time limits on penal powers; — introducing mechanisms to suspend the administrative procedure, in the event that the same circumstances lead to the initiation of criminal proceedings; — providing an incentive for cooperation and the exchange of information between Member States.

3.3. The proposal, which was presented by the European Commission three years ago, came under scrutiny from the European Parliament and met with objections from several Member States. The Lithuanian parliament objected that ‘the chosen legal basis (Article 33 TFEU) of the Proposal does not authorise the Union to take action in establishing a framework concerning the infringements of Union customs legislation and providing for sanctions for those infringements.’ (6). It argued that the legal basis did not comply with the principle of subsidiarity, in particular in failing to comply with the requirements of the principle of conferral, according to which the Union acts only if the Treaties provide for a legal basis for action.

3.4. The European Parliament has now resumed its examination of the proposal — entrusting the drafting of its opinion to Kaja Kallas MEP, the rapporteur for the IMCO Committee — and has requested that the legal basis be extended to include Article 114 of the TFEU (7). This provides for a mandatory consultation with the EESC, as indicated in the referral letter to the EESC by the chair of the European Parliament’s IMCO Committee.

3.5. The EESC agrees fully with this choice and highlights the importance of a uniform customs system, able to provide value and unity not only to the internal market, but to the whole of European society, which is now more than ever in search of unitary systems.

4. General comments

4.1. The European Economic and Social Committee has always considered an effective customs union to be an essential part of the European integration process, in order to guarantee the safe and transparent free movement of goods in full compliance with competition rules and with maximum protection for consumers and the environment.

4.2. The EESC considers it essential to secure a common approach to the prevention, deterrence and unambiguous identification of infringements, as well as a uniform approach to establishing sanctions, including a settlements system, to ensure a uniform, non-discriminatory implementation of European legislation throughout the whole of the Union, as provided for in Article 3 of the TFEU.

4.3. The EESC strongly supports accelerating the ongoing process of moving towards an effective single European customs regime. This should be achieved via a system of unitary governance, a European Customs Agency and the establishment of common administrative and judicial bodies (8). There should also be a European Court of Customs (9) based on the North American example of using a single system for infringements and, as a last resort, a single sanctions regime backed by ex ante triggering of prevention and resolution/settlement systems that aim to contain/eliminate costly litigation that hinders community trade, particularly for small and medium-sized enterprises.

4.4. The Committee believes that the uniform implementation of European customs law must also include the litigation phase for economic operators, both within the internal market and internationally, as well as the ex ante approach to prevention, using single, enhanced telematic ICT solutions to avoid mountains of paperwork relating to detection.

4.4.1. The Committee reiterates the importance of ‘a customs policy that is implemented on the basis of uniform, transparent, effective, efficient and simplified procedures, enabling the European Union to take on its global competitors and ensuring that the rights and security of industry and European consumers, as well as intellectual property, can be protected’ (10).

4.5. The EESC is convinced that any European system for infringements and settlements should be accompanied by measures that include all the other elements which form part of the general legal enforcement system, such as supervision, checks, investigation and monitoring.

4.6. The Committee insists that it is essential to provide certainty with regard to the legislation and its implementation in a uniform manner throughout the whole European Union. This should entail a single system for detecting and penalising infringements using clear and well-defined categories, and civil and non-criminal sanctions (including the possibility of non-financial penalties) in proportion to the seriousness of the infringement as determined by common minimum and maximum thresholds, which require the convergence of interests.

4.7. In the EESC’s view, this first step towards a convergence of infringement and sanctions regimes in the common customs rules should: — align time limits with the three-year time limit for the notification of a customs obligation, as is provided for in the Customs Code; — guarantee that infringements are sanctioned in accordance with the degree of culpability; — align financial penalties in a proportionate manner and in accordance with the duties evaded, not with the value of the goods.

4.8. The EESC insists that interoperability be guaranteed between the various databases used within the European market surveillance system, in order to increase the deterrent effect with regard to infringements. This should be done on the basis of a common strategy and with substantial support from Community programmes, in order to ensure that information is shared between the different authorities at different levels, in real time, particularly in cases of infringements and sanctions of a serious nature, including tackling illegal trade and simplifying procedures for legitimate trade.

4.9. In accordance with Court of Justice case-law, the Committee agrees with the inclusion of Article 114 TFEU, in addition to Article 33, as a legal basis, since the measures set out under Article 114 are intended to improve the operating conditions of the internal market and contribute to removing distortions in competition, which is the spirit of this legislative proposal.

4.10. Pending an effective customs union, the EESC calls for a boost to EU action on staff training and development, as well as to the EU legislative framework’s management capacity, including via action on administrative capacity and establishing a common customs support team to ensure the uniform application of sanctions, resolutions and settlements.

4.11. The Committee recommends that the report to be submitted by the Commission to the European Parliament, the Council and the EESC every two years should not only contain an assessment of the degree of convergence in Member States, but also an overview of the key performance indicators on sanctions, the spread of best practices, the effectiveness of the relevant services, and the effectiveness of the European legislation framework adopted. This could be used to assess the next steps in the process towards the creation of a genuine European Customs Agency, a European Customs Court and in training an effective and efficient common customs body.

Brussels, 21 September 2016. The President of the European Economic and Social Committee Georges DASSIS

(1) See: Analysis and effects of the different Member States’ customs sanctioning systems. PE 569.990 — January 2016.

(2) Currently.

(3) See: OJ C 229, 31.7.2012, p. 68.

(4) See the EESC opinions in OJ C 229, 31.7.2012, p. 68 and OJ C 251, 31.7.2015, p. 25.

(5) See: Court of Justice rulings in cases C-382/92 and C-91/02.

(6) See: Seimas of the Republic of Lithuania — Conclusions of the Committee on European Affairs, document No ES-14-51, 9.7.2014 No 100-P-71.

(7) Article 33 of the TFEU is therefore the correct legal basis for a cooperation framework between customs authorities. Article 114 of the TFEU is the legal basis used for the adoption of harmonisation measures for the single market. The harmonisation measures referred to in this article require, as a prerequisite, the existence of differences between laws in the Member States that risk disrupting trade within the internal market.

(8) This is legally feasible, based on the provisions of Article 257 of the TFEU, which has already been applied to the EU Civil Service Tribunal (the employment tribunal for EU staff) and is also set to be used to establish a Unified Patent Court.

(9) The US Court of International Trade could be used as the model. ‘The Customs Courts Act of 1980 creates a comprehensive system for judicial review of civil actions arising out of import transactions and federal transactions affecting international trade.’

(10) See: EESC opinion (OJ C 271, 19.9.2013, p. 66).