EUROPEAN COMMISSION Brussels, 10.11.2022 COM(2022) 580 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL pursuant to Article 14(3) of Regulation (EU) 2019/880 of the European Parliament and of the Council of 17 April 2019 on the introduction and the import of cultural goods





Table of Contents 1. INTRODUCTION 2. OBJECTIVES TO BE MET 3. PROJECT ARCHITECTURE AND PLANNING APPROACH Phase 1 – Conceptualisation Phase 2 – System development: Phase 3 – Deployment and Operation: 4. PROGRESS OVERVIEW Adoption of implementing provisions Conceptualisation – Business Case Project definition - Vision Document Project development Methodology: approach used for the implementation of the ICG System High-level planning Request for Changes (RfCs) External synergies Cooperation between DG TAXUD and DG SANTE Work with the Project Group on ‘Digitalisation of Cultural Goods’ 5. RISKS FOR DELAYS

Risk 1 – Staff allocation Risk 2 – Covid-19 pandemic and Ukraine crisis Risk 3 – Proposal for an EU Single Window Environment for Customs Mitigation actions 6. CONCLUSIONS Annex I: Multiannual strategic planning Annex II: Main project phases and critical milestones timeline

GLOSSARY Business Case The document that provides the IT project justification and defines its budgetary requirements. Vision Document The Vision Document elaborates on the assumptions made in the Business Case Document. It records the system owner/system supplier partnership and understanding of the system at the time of writing. ICG system Import of Cultural Goods system - the centralised electronic system for the import of cultural goods. TRACES Trade Control and Expert System - the European Commission's multilingual online platform for sanitary and phytosanitary certification. EU CSW - CERTEX EU Customs Single Window - Certificates Exchange. MFF Multiannual Financial Framework; the EU long-term budget, running from 2021 to 2027. BPM Business Process Model - the application-level Business Process Model describes the entirety of the business process and flow of information for an application, completing the System Business Process Model created during the “System Specification” phase, to take into account the application’s own needs.



1.INTRODUCTION Regulation (EU) 2019/880 of the European Parliament and of the Council of 17 April 2019 on the introduction and the import of cultural goods (hereafter “the Regulation”) aims to prevent the illicit trade in cultural goods, in particular when it contributes to the financing of terrorist activities, and to prohibit the import into the customs territory of the Union of cultural goods exported illegally from third countries. The Regulation subjects the import of certain cultural goods that are considered to be particularly endangered (namely, archaeological objects and parts of monuments that have been dismembered) to import licences and others, which are considered less endangered, to importer statements and ensures that they undergo uniform controls when imported into the Union. Certain imports of cultural goods that are intended for specific uses (educational, scientific or research-related) are exempted from these documentary requirements. The obligation for importers to obtain an import licence or draw up and submit an importer statement to customs will only start to apply from the moment that a centralised electronic system (the ICG system) will become operational. The ICG system will not only serve as a means for the accomplishment of formalities by operators, but also for the storage and the exchange of information between Member States administrations in charge of implementing the Regulation (customs and cultural authorities). The good functioning of the ICG system is closely linked to the success of the EU Single Window Environment for Customs, which aims to provide a legal basis for the functioning of the EU Customs Single Window Certificates Exchange (EU CSW-CERTEX). The “EU Single Window Environment for Customs” is designed to provide quicker and more efficient sharing of electronic data between national customs administrations and EU regulatory authorities across policy domains, creating a digital framework for enhanced cooperation between all border authorities and facilitate the administrative checks at the moment of customs clearance. The EU CSW-CERTEX represents the central component of the EU Single Window and is developed by the Commission to link the national Single Window Environments for customs to Union systems or databases managing non-customs requirements so that all relevant authorities can access the relevant data and collaborate more easily on border checks. EU CSW-CERTEX covers exchanges for a multitude of other non-customs formalities hosted in EU databases and regulated by different legal acts under the responsibility of various Commission Directorates, including the formalities related to cultural goods.

Every 12 months from the entry into force of the Regulation and, until the ICG system becomes operational, the Commission is to present a report to the European Parliament and to the Council on the progress made with establishing this electronic system. The Commission presented its first annual progress report in June 2020 . The report outlined the action taken by the Commission services during the first year after the Regulation entered into force, namely: (a) the preparatory work for adopting the necessary implementing provisions, and (b) the consultations with the Member States via the Expert Group for customs issues related to cultural goods and the Project Group for the import of cultural goods. The second annual progress report was submitted in July 2021 . It presented the progress achieved with the adoption of the Commission Implementing Regulation (EU) 2021/1079 , as well as the roll-out of Phase 1 – ‘Conceptualisation’ of the ICG project, the work carried out by the Project Group created for this purpose and the advancement of the Business Case and the Vision Document for the ICG project. The third annual progress report covers the period from July 2021 to June 2022. For the sake of completeness, the objectives to be met, the project architecture and the planning approach, which are detailed in the first annual progress report, are briefly mentioned also here. The overall assessment of the progress made and the identified risks for delay are summarised in the conclusions section of this report. 2.OBJECTIVES TO BE MET The ICG system is to become operational by 28 June 2025 at the latest, as on that date, it will become mandatory for all operators to obtain import licences or submit importer statements to customs through that electronic system, in order for them to be able to import legally specific categories of cultural goods into the Union. After the adoption, in June 2021, of Commission Implementing Regulation (EU) 2021/1079 and the approval of the Vision Document, the development phase of the ICG system begun. It will cover about two years, at the end of which, the third phase will start. In the third phase, the ICG system will be interconnected to the EU-CSW CERTEX, to allow the exchange of documents with Member States customs systems. In parallel, training sessions will be organised to familiarise their administrations with the ICG system’s operational functionalities. Alongside other activities of the Commission services in the field of customs, the project on the import of cultural goods is also planned in detail through the Multi-Annual Strategic Plan for electronic Customs 2019 revision (MASP-C rev. 2019). An excerpt of the planning of the project on the import of cultural goods from MASP-C rev. 2019 is provided in Annex I to this report (table 1). As already explained, part of the project on the import of cultural goods is developed also within the EU Single Window Environment for Customs (MASP-C rev 2019 Fiche 1.13) of which EU CSW-CERTEX is the key IT system. An excerpt of the planning of EU CSW-CERTEX from MASP-C Fiche 1.13 is provided in Annex I to this report (table 2). 3.PROJECT ARCHITECTURE AND PLANNING APPROACH As explained analytically in the first annual progress report, the Project Architecture is based on the methodology provided for in MASP-C rev. 2019 and its Annexes, including the Governance Scheme , the EU Customs Business Process Modelling Policy and the IT strategy . A comprehensive roadmap, with the main project phases and the critical milestones is detailed in Annex II. Despite of the project progressing on several levels at the same time, it can be figuratively divided into three phases: Phase 1 – Conceptualisation: Initially, a Business Case is prepared, providing the project justification and defining budgetary requirements. Further, the Level 3 (user requirements BPMs) and Level 4 (functional requirements BPMs) are produced, with the aim of providing a visual representation of business processes and detailed functional requirements to guarantee that the envisaged operational IT system will function as set out in the legislation. Next a Vision Document is produced, which provides more detailed information on the project definition in terms of architecture, cost, time, and risk, as well as information such as milestones, deliverables and project organisation. These documents reflect the discussions, and the content of the implementing act to be produced by the Commission. Phase 2 – System development: Following the provisions of the implementing act, and the production of user requirements and the functional specifications for the system, technical specifications on how the system will be constructed are developed. These technical specifications include: the architecture to be used, the messages to be submitted by economic operators, the interfaces to other systems, testing plans, etc. Once the design of the system is ready from a conceptual perspective and the deliverables listed in Table 1, Milestones 1 and 3 (see Annex I) are produced, a more in-depth work begins and more technical aspects are taken into account in the Application & Service specifications and Technical System Specification documents, which are the concretisation of the Business Case (prepared during Phase 1) and the Vision Document (prepared during Phase 2). The ICG will be integrated in the existing TRACES platform and therefore reuse most of the existing specifications, architecture, messages and interface. Phase 3 – Deployment and Operation: The actual IT development phase begins (Construction Phase), which is followed by a Transition phase where the early versions of the ICG system will be gradually rolled out to the different groups of users and tests are performed to ensure that, by 28 June 2025, operators and competent authorities are capable and well trained in the use of the system. To this phase will follow a 6 months after-care period, in which the system will be fine-tuned to match any operational needs that may become evident only after an IT system becomes mandatory, and to ensure that operations are running smoothly. It is to be noted that the ICG system will be interconnected with Member States’ customs administrations via the EU CSW-CERTEX by 3 March 2025, following the Commission proposal on an EU Single Window Environment for Customs to allow customs automated controls on the documents issued for the import of cultural goods. This activity will require Conformance Testing. 4.PROGRESS OVERVIEW Adoption of implementing provisions During the previous phase the Commission adopted the necessary implementing provisions for the establishment of the electronic system. In order to get a better perspective from a practical implementation point of view, it consulted extensively with Members States representatives in the Expert Group on customs issues related to cultural goods and in the Cultural Goods Committee.

Art market associations have been informed by the Commission services about the progress of work at every opportunity, so as to ensure that the practical implementation of the Regulation is well adapted to the realities of the market. During the adoption procedure, the draft implementing act was also made available online for consultation to stakeholders for a 4-week period. Conceptualisation – Business Case The Business Case was approved by the Information Technology and Cybersecurity Board (ITCB) of the European Commission on 23 September 2020 and by the Electronic Customs Coordination Group (ECCG) on 16 October 2020 without comments. The Business Case explores the different alternatives and confirms that the TRACES system hosted by the Commission Directorate-General for Health and Food Safety (DG SANTE) is the most suitable platform to develop the ICG system, as most of the functionalities required for certification and licencing schemes are well developed in that platform. Project definition - Vision Document The Vision Document further refines the initial assessment made in the business case, and it details the methodological approach, the project governance and the synergies with other projects. As a result, the ICG system will be developed in partnership between the Commission’s Directorate-General for Taxation and Customs Union (DG TAXUD) and DG SANTE, leveraging on the long-term cooperation and synergy between these two Directorates-General for the collaboration between customs and partner competent authorities, which to-date has proven to be very successful in the field of import controls of animals, food and feed. The Vision Document was approved by the Electronic Customs Coordination Group (ECCG) on 25 June 2021. Project development Given that the legislation determining the functioning and legal deadlines of the ICG system were already adopted, technical activities have been well-progressing during the reporting period. Both level 3 (user requirements BPMs) and level 4 (functional requirement detailed BPMs) were reviewed by the Member States and published on ARIS Publisher. While this package includes the first version of the BPMs, additional updates will be required during the development phase. Further, the Business Acceptance Criteria (BAC) document was created and delivered in Q1 2022. This document guides the execution of all business tests, including acceptance tests, as a means of validating the implementation against the system and application specifications. The document contains all the test scenarios required to test comprehensively the business requirements and functional requirements for the ICG system, so as to ensure that all identified business needs can be implemented by it. In order to make this verification, there are four groups of test scenarios that describe the business processes, pertaining to the business areas falling under the scope of the BAC document, i.e. 1) the import license for cultural goods, 2) the importer statement for cultural goods, 3) the general description document and 4) administrative cooperation. The test scenarios are presented as sequences of steps describing end-to-end processes as defined by the Level 4 BPMs. Based on them, the test cases were produced and specific test cases have been defined for particular scenarios. Test cases represent different business workflows of a specific scenario, depending on input parameters, prerequisites and all information contained in a dataset. Performing all test cases for a specific scenario allow to verify the end-to-end process for positive and negative flows. Taking into account that the ICG system will be a TRACES module for which the interface is already designed, the import licence, importer statement, and general description document need to be aligned with the current interface. Therefore, the TRACES environment must be configured and provisioned with test data to allow and ensure the execution of all test scenarios and test cases. Thus, with the help of the BAC document, user stories were created and linked to the test cases defined in the BAC document, verifying the information needed for the developers to estimate and implement the functionalities necessary to meet the requirements. The tool that was used for the creation and tracking of these stories is Jira, a software application used for project management, in order to ensure the tracking of progress and the specific details related to the effort organised in structures that provide meaning for the business users, developers and other relevant roles within the project. Methodology: approach used for the implementation of the ICG System The methodological approach used for the implementation of the ICG represents a mix between the DG TAXUD Electronic Management of Projects Online (TEMPO) methodology for the conceptualisation phase and quality assurance and Agile practices used in DG SANTE for development and deployment. In this context, the regular internal meetings and demo sessions allow for discussing and implementing real functionalities, avoiding too elaborate mock-up screens. The adaptive planning allows for responding faster to expectations and changes in a flexible way. To get proper feedback from the field and properly implement the system, the Member States will be associated on a voluntary basis as soon as there is a test version. The test environment will be accessible from the outside using generic training profiles as of Q4, 2022. High-level planning The ICG features are classified under different categories as presented below: A) “ICG core features with existing base in TRACES”: essential features where existing functionality will be reused; B) “ICG core features without existing base in TRACES”: essential features to be built from scratch; C) “ICG not core features”: important but not essential features; D) “External connections”: features that rely on external inputs; E) “Out of scope”: for ICG features out of the scope of the first ICG system version (e.g. Artificial Intelligence);

An estimation of availability by quarter is given in the table below. Table 1: High-level overview of availability targets The effort is currently organised in 8 releases from Q1, 2022 to Q2, 2024, with the caveat that this organisation is subject to continuous agile refinement and optimisation. The first release (R1) mainly addresses the general functional infrastructure (e.g. support entities, search indexes, reference data, users, roles) but also on basic business relevant functionality such as the first limited set of fields and the associated logic for the ICG documents and the first draft ICG documents. As reflected in the table (“external connections” section), the work on CERTEX integration is yet to start (planned as of Q2, 2023) and will be a significant part of the ICG overall functionalities, allowing data exchanges with national customs systems. Request for Changes (RfCs) While the development activities are progressing and internal discussions are ongoing, several changes are identified to be implemented at the Level 2-Level 4 ICG BPMs. Therefore, the BPMs will be updated during the Q3 2022 to reflect the latest status and the BAC document will be updated accordingly as well, to be enhanced with new data sets (or test cases) for the testing phase of the system. External synergies During the reporting period, the Commission has been liaising closely with international organisations, such as the International Council of Museums (ICOM) for ensuring that the system incorporates elements of risk management, notably from the ICOM Red Lists . In addition, other tools used by ICOM to protect cultural heritage (i.e. Object ID , Observatory , etc.) were explored with the aim of combating illicit trafficking. At the same time, in light of the continuous efforts towards the digitalisation of the cultural goods domain and the use of innovative technologies, the Commission has been exploring possible synergies with international organisations on the possible use of Artificial Intelligence (i.e. to describe cultural goods and identify potentially false declarations in importer statements and applications for import licences). Cooperation between DG TAXUD and DG SANTE An extensive cooperation exists between TAXUD and SANTE, both Directorates-General being responsible for a number of policies that are deeply intertwined. The operational framework of cooperation has been agreed between the two parties and has been further enhanced during the reporting period through continuous monitoring. Work with the Project Group on ‘Digitalisation of Cultural Goods’ The Commission has created a Customs Project Group on the Digitalisation of Cultural Goods (former title ‘Customs Project Group on the import of cultural goods’ – ‘PGICG’) which serves as a discussion forum for experts from Member States national customs administrations and competent (cultural) authorities with experience in carrying out licencing formalities in heritage matters, in particular digitally. The Group provided support in the preparation of the implementing act, and is assisting the Commission services with defining the parameters and elaborating the criteria for the functional specifications of the ICG system. The Project Group consists of delegates from 14 Member States (AT, BE, BG, GR, ES, LV, PT, RO, DE, NL, IT, FR, HU and DK) and to-date it has met fourteen times (five during the reporting period 29.6.2021 – 28.6.2022). During this reporting period, the Project Group mainly examined and discussed the following matters: ·Registration of beneficiaries for exemption from documentary requirements (estimation of expected numbers, timeline); ·Identification of Member State competent authorities within the ICG system; ·Frequently Asked Questions (FAQ) document to provide technical assistance to ICG users;

·ICG library with basic information on the laws of third (exporting) countries; ·Safekeeping, the creation of refuges by Member States (voluntary scheme); ·Aspects that are useful in progressing on the technical activities such as: reducing the free text fields within the import licence and importer statement templates and generating lists of values, defining roles in TRACES according to the structure that the Member States are using, defining pre-registration guidelines, ensuring that the same evaluation criteria will be used for each Member State (for private/semi-public entities or bodies) to confirm whether an institution complies with the trustworthiness requirement and other key matters; ·Developments with Artificial Intelligence for use in a future version of the ICG, identifying innovative approaches to tackle the way in which cultural goods are described and controlled by EU customs at the border (the implementation of AI is not foreseen for the first version of the system and might come as a future development); ·Cooperation with international organisations (e.g. ICOM for the Red Lists, notably for the creation of a compendium or library feature of the ICG aiming to help Member State administrations and importers at better identifying export restrictions or requirements in the third countries). 5.RISKS FOR DELAYS Risk 1 – Staff allocation The initial proposal from the Commission did not provide for the creation of an IT system. Thus, resources were not allocated accordingly. However, in the course of the negotiations and at the request of the co-legislators, the creation of the ICG system was included in the Regulation, which called for unforeseen at that point, additional resources. The needs for this six-year project in terms of IT development personnel in DG TAXUD were estimated, at the time of the final political trilogues in December 2018, to be two full time Administrator posts. However, only one full time Administrator could be allocated from mid-July 2020. Risk 2 – Covid-19 pandemic and Ukraine crisis The COVID-19 public health crisis affected to some extent the team’s capacity to deliver and especially the project activities and meetings with the Expert Group and the Project Group with the Member States. Meetings were held in a virtual format, with shorter agendas and limited interaction. Moreover, the public health crisis forced a rescheduling of priorities within Member States, thus limiting their capacity to provide input and feedback to the file. At the same time, customs are today being challenged by the geopolitical tensions due to the war in Ukraine, dealing with fundamental transformations in this context. Risk 3 – Proposal for an EU Single Window Environment for Customs The good functioning of the ICG system is linked to the success of the EU Single Window Environment for Customs, which aims to provide a legal basis for the functioning of the EU CSW-CERTEX. The government-to-government (G2G) pillar of that proposal reflects how customs and partner competent authorities will exchange data digitally. At the first political trilogue on the proposal for a Regulation on the EU Single Window Environment for Customs that took place on 19 May 2022, the co-legislators reached an agreement that improves and extends the scope of the Commission’s proposal, without impacts for the ICG system. Soon after the formal adoption and publication of the Regulation, DG TAXUD will start working on preparing the implementing and delegated acts governed by this Regulation. The proposed draft text of these acts will be discussed with the Member States at a new section of the Customs Code Committee, named “Single Window Environment” (CCC-SWE). Although the positive developments mark an important step forward, the adoption by the European Parliament and Council, as well as the preparations for the draft implementing and delegated acts, are the next key steps that must be taken into account. Risk 4 - The overall customs IT development priorities The assessment of the main risks for the timely implementation of the Union Customs Code (UCC) IT systems reveals that the risks are situated mostly on the side of the Member States and linked to resource constraints, the complexity of the projects and their integration, contractual and procurement issues in addition to some external factors such as the COVID-19 pandemic. Some Member States have experienced additional problems related to the impact of Brexit, the eCommerce project and more recently the war in Ukraine. This situation is currently being assessed and the options of derogations under the UCC or updates to the UCC Work Programme are being considered. Mitigation actions The risks have been reported within DG TAXUD. 6.CONCLUSIONS The main actions undertaken during the period covered by this third progress report to develop the ICG system can be summarised as follows: * The first version of the package of BPMs for the ICG system is finalised and reviewed by the Member States. Additional updates on the BPMs will be required during the development phase. * The BAC document was finalised, describing the test scenarios that define the testing activities for the validation of all business and functional requirements and ensuring their implementation by the system. Consequently, user stories were created and aligned with the BAC.

* The features were classified under different categories and marked accordingly in the specified planning (see Table 1: High-level overview of availability targets). * The ICG System development has started and the first basic results are already on the screen, with the aim to associate the stakeholders around Q4, 2022 and gather feedback. Therefore, DG TAXUD receives regular demonstrations during the development cycle, while Member States will be engaged as soon as there is a test version. * Close collaboration with the members of the Project Group on ‘Digitalisation of Cultural Goods’ has allowed to advance the technical activities. The Commission has so far been on schedule. Potential risks for delay in delivering the ICG system within the set deadline have been identified only in connection with the overall customs IT development priorities and, in particular, the UCC IT systems. The COVID-19 public health crisis has only slightly affected progress with the ICG project.



Annex I: Multiannual strategic planning The MASP-C ensures an effective and coherent management of IT projects by setting out both a strategic framework and milestones within the legal deadlines established in legislation. It is ultimately endorsed by the Member States in the Customs Policy Group (CPG) based on advice provided by the Electronic Customs Coordination Group (ECCG) and consultations with trade at the Trade Contact Group (TCG). The planning for the electronic system has been discussed and approved by the Member States and is described in detail in Fiche 1.18 of the MASP-C rev. 2019. Table 1 below provides an excerpt of the planning of the project on the import of cultural goods from MASP-C rev. 2019 Fiche 1.18. Table 1 - Excerpt of MASP-C rev. 2019 Fiche 1.18 Milestones Estimated completion date 1 Business Analysis and Business Modelling - Business Case Document Q4 2020 - Level 3 (User Requirements BPM) Q1 2022 - Level 4 (Functional Requirement detailed BPM) Q1 2022 2 Legal Provisions - Current provisions adopted* Q2 2019 - Future provisions adopted** Q2 2021 3 Project Initiation Phase - Vision Document Q2 2021 - GO decision Q2 2021 4 IT Project - Application & Service Specifications Q2 2023 - Technical System Specifications Q2 2023 Construction Phase - Central services implementation Q3 2024 - Service integration in National Systems N/A - National implementation N/A Transition Phase - Deploy and rollout Q4 2024 - Conformance tests Q2 2025 5 Operation - Commission, Member States administrations and Traders Q2 2025 - Non-EU Countries and non-EU traders (in case required) N/A 6 Implementation support (training and communication) - Centrally developed training and communication Q4 2024 - National training and communication Q4 2024 *Current provisions refer to Regulation (EU) 2019/880 **Future provisions refer to the implementing provisions to be adopted according to Regulation (EU) 2019/880



Table 2 provides an excerpt of the EU CSW-CERTEX project, with a focus on Component 2 of the EU-CSW CERTEX project, interconnecting the ICG system.