Opinion of the Economic and Social Committee on "Customs cooperation in the single market (SMO)"

(2000/C 268/13)

On 27 May 1999 the Economic and Social Committee, acting under the third paragraph of Rule 23 of its Rules of Procedure, decided to draw up an opinion on "Customs cooperation in the single market".

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 3 May 2000. The rapporteur was Mr Giesecke.

At its 374th plenary session (meeting of 13 July 2000) the Economic and Social Committee adopted the following opinion unanimously.

1. Introduction

1.1. As part of its redoubled efforts over recent years to protect the Community area against the advance of organised crime, the EU has substantially stepped up its fight against fraud affecting Community financial interests and the protection of its external borders. Throughout this process the ESC has closely monitored, reviewed and generally welcomed individual proposals in the various fields, recommending their implementation. This is equally true for customs, a sector at the forefront of concrete action:

- Opinion on the "Proposal for a European Parliament and Council Decision adopting an action programme for Community customs (Customs 2000)"(1)

- Opinion on the "Proposal for a European Parliament and Council Decision amending the Decision of 19 December 1996 adopting an action programme for customs in the Community (Customs 2000)"(2)

- Opinion on the "Proposal for a European Parliament and Council Regulation (EC) amending Regulation (EEC) No. 2913/92 establishing the Community customs code (transit)"(3)

- Opinion on the "Proposal for a European Parliament and Council Regulation (EC) amending Council Regulation (EEC) No. 2913/92 establishing the Community Customs Code"(4)

- Opinion on the "Proposal for a Council Regulation (EC) amending Regulation (EC) No. 3295/94 laying down measures to prohibit the release for free circulation, export, re-export or entry for a suspensive procedure of counterfeit and pirated goods"(5)

1.2. The 1998 annual report recently submitted by the Commission entitled "Protecting the Communities' Financial Interests and the Fight against Fraud"(6) provides another opportunity to carry out a kind of interim review of the effectiveness of measures to date, to identify areas where improvements can be made and, above all, to draw attention to measures not yet embarked upon or approved.

1.3. Hardly any other EU administration has experienced such changes over the past decade in the political environment in which it operates and the technical means at its disposal as customs. In addition to its traditional administrative role, it is responsible for the ever more demanding task of monitoring external economic relations. The transition to the European single market, the incorporation of the Schengen agreement into the Treaty of Amsterdam, and the opening of frontiers to the east have necessitated a complete overhaul of customs strategies. For this reason all customs administrations are currently undergoing radical change.

1.4. The opening up of intra-EU frontiers and the explosion in travel and trade with eastern Europe have brought considerable challenges, as well as increased pressure from immigration. In particular, the relatively high duties on certain imports, such as tobacco and alcohol, and the sometimes considerable customs preferences for poorer developing countries, as well as high subsidies for agricultural exports, have led to an upsurge in cross-border crime and encouraged organised forms of such crime.

1.5. There is considerable evidence to suggest that international smuggling rings employ the same or similar strategies for drugs smuggling, illegal immigration, arms trafficking and money-laundering, or in circumventing European consumer protection and copyright laws. There are ever more frequent reports of violence against customs officers.

1.6. This new type of threat to internal security in the EU Member States necessitates increased international cooperation with the countries where such crime may originate or which serve as conduits for it. The agreements which have been reached between the EU and 33 third countries would seem to provide a good basis for this and are by all accounts already showing themselves to be effective. Nevertheless, such links need to be cultivated and extended.

1.7. In the context of planned EU enlargement, especially given the large number of applicant countries and their very disparate legal and administrative traditions, pre-accession strategies must pay particular attention to these issues.(7)

1.8. In all its opinions the Committee was aware of the problem that while flexible and effective counterstrategies were needed to deal with the constantly changing methods of fraud, these counterstrategies must not significantly hamper international trade and movement of people, given that, in an age of increasing globalisation, customs regimes are a factor in business location decisions. For this reason the Committee has always considered it important that operational improvements should go hand in hand with economic development as far as possible. The Committee is aware that there will be reservations about this in some Member States. Furthermore, the policy of reform should take account of the time and funding required by customs administrations to make the necessary changes in staffing and equipment.

1.8.1. The Committee is well aware of the risks of cross-border crime arising from the removal of border controls between Member States, but this must not be used as an argument against developing trade further with the result that restrictions already removed are reinstated in practice in the form of a system of controls to counter fraud. A balance must be found between the interests of trade on the one hand and anti-fraud measures on the other.

1.9. On this point, the Committee has strongly advocated the development and introduction of "intelligent" checks making extensive use of IT and professional risk analyses. Of course, physical checks will and must continue to have their place in such a system.

2. General comments

2.1. The Committee feels that the analyses by the Commission and the Court of Auditors, as well as the comprehensive study by the European Parliament, are clear enough on the weaknesses in European customs operations. The Committee also has the impression that the EU-level steps which are possible at the moment are being taken with some determination and are a move in the right direction. Nevertheless, some decisions could have been made more promptly.

2.1.1. However, individual Member States are to a greater or lesser extent lagging behind the pace of change, which admittedly has been rapid. The Commission should push for measures to be implemented without delay. Customs cooperation requires that all countries have roughly similar infrastructure.

2.2. The Committee would stress that the new counterstrategies and the work of OLAF will only bear fruit if work on developing European criminal law, which to date has not progressed very far, is speeded up considerably in line with calls made at the Tampere Summit. The current state of affairs makes effective prosecution extremely difficult. The procedures for seeking assistance from authorities and law enforcement agencies are still far too cumbersome despite many improvements. The Commission report(8) cites extremely slow responses to requests for information and cumbersome internal procedures.

2.3. It has often been pointed out to the Committee that cooperation between EU customs administrations runs more smoothly than between other administrations thanks to decades of experience with the customs union and the existence of relatively clear legal bases. Nevertheless, there seems still to be plenty of room for improvement. There still seem to be unacceptably large differences between the mentalities and practices of administrations.

2.3.1. The Committee notes that there are still substantial differences among national customs administrations in the application of Community rules. This is due to differing administrative structures and traditions, differing levels of training and very widely differing levels of equipment. While some countries use scanners, others do not even have e.g. sniffer dogs to search for drugs and weapons.

2.3.2. The Committee feels that the personnel measures taken, such as seminars, exchange of officials and joint initial and further training initiatives, are appropriate and extremely important. A European customs academy should be set up as soon as possible, primarily to create a specific sense of team spirit, an esprit de corps, among European customs officers.

2.3.3. On the important questions of staffing and training, the Committee expects to see closer cooperation between the Commission and customs officers' unions.

2.3.4. In the Committee's view, differences in equipment are more problematic as this is the exclusive responsibility of the Member States. These differences in equipment can quite easily lead to major shifts in the flow of goods. It is up to the Commission to be unrelenting in drawing attention to these weak points.

2.3.4.1. In this context the Committee welcomes the Commission's proposal to increase the proportion of customs revenue withheld by Member States for administrative expenses from 10 to 25 % as of 2001. It is imperative that these resources are indeed made available for improving the equipment of customs services. The Commission should monitor their use.

2.3.5. The Committee proposes that the Commission draw up equipment recommendations for the various customs installations (airport, port, road and rail crossings, internal customs) in collaboration with the Member States. The result should be a proposal for minimum equipment requirements.

2.4. Differences between national VAT systems also affect the functioning of the internal market. The task here is to coordinate tax considerations with uniform customs legislation. The structure of national administrations and responsibility for VAT (on imports) differ from one Member State to another. The appropriate authorities must work closer together on taxation and controls. There are further differences between the authorities responsible for criminal tax proceedings, resulting in more complicated procedures and administration compared to the more uniform customs administration.

2.5. Supranational and national prohibitions and restrictions - the latter differing in their substance - all have a partial effect on the movement of goods across external and internal borders. The Committee assumes that it will take time for these key areas to be harmonised. It therefore calls for transparency first and foremost and for a high degree of coordination between the systems in force.

2.6. Another obstacle which continues to stand in the way of modern, IT-based cooperation between customs and financial administrations and with the EU institutions in the internal market are the restrictive rules on data protection and tax secrecy in individual Member States. The Committee feels that the regulations in question should not hamper such an exchange of information.

3. Specific comments

3.1. Specifically, the Committee takes the following views on the measures passed by the EU:

3.2. Opinion on the "Proposal for a European Parliament and Council Decision adopting an action programme for Community customs (Customs 2000)" and on the "Proposal for a European Parliament and Council Decision amending the Decision of 19 December 1996 adopting an action programme for customs in the Community (Customs 2000)"

3.2.1. A key issue is the flow of information between the Commission and the individual Member States, between Member State administrations and within national administrations. According to Interpol estimates, the exchange of existing information accounts for around 80 % of the total clear-up rate, which means that communication in the customs sector still has a long way to go. The Committee feels that there are particular shortcomings at the working level in horizontal communication between customs offices internationally. There is actually no communication between internal customs offices. Communication via the various central linking offices (CLO) is cumbersome and will hopefully soon be supplemented by direct communication at the working level. Indeed, one example of this is the planned New Computerised Transit System (NCTS). In the interim the Committee proposes that customs officers should be encouraged to inform colleagues in the other Member State directly when they notice something suspicious. Such communication is particularly hampered by the fact that individual customs posts are not all connected to the Internet, but only to their national intranets.

3.2.2. The Committee feels that there is insufficient vertical communication between the Member States and Commission services and OLAF. The advantages of an information flow based on reciprocity are not yet exploited to the full in all cases, apart from legal requirements.

The fight against crime must not start at the border. Cooperation between checkpoints, customs investigation departments, both within states and Community-wide, and cooperation with authorities in third countries is a fundamental component of the fight against fraud.

3.2.3. The intensification of EU cooperation with many third countries also necessitates increased cooperation with the appropriate customs and trade authorities in partner countries. The Committee welcomes the initial and further training measures already implemented which promote communication.

3.2.4. The Committee regrets that all IT-based customs clearance systems in the individual Member States are only national in character. In this area in particular there is a pressing need to coordinate national systems on a Community-wide basis. Nationally oriented systems are not compatible with the effective operation of a customs union. It is up to the Commission as the guardian of European law to ensure that the customs union functions smoothly in this respect too.

3.2.5. Physical checks are an essential part of customs operations. They restrict the flow of goods considerably and differences in checking procedures also affect traffic patterns a great deal. This is particularly true in the case of ports which now use container scanning systems. The Committee is in favour of installing state-of-the-art inspection systems at all crossings where the volume of goods warrants this. Experience has shown that the relatively high cost of such inspection systems is soon offset by the increased revenue they bring in.

3.2.5.1. The provision of information and communication between administration and business needs to be improved at all levels. The economic operators concerned must be provided with prompt and detailed information on proposed reforms or changes in European customs law and other relevant branches of law if business is to be able to prepare for the new circumstances and make the necessary adjustments in good time. In this context the Committee would point out that existing databases are only partially accessible to business. The last 45 days' Official Journals can be consulted on the EUR.LEX database for example, but the CELEX database is only available against payment even to national customs authorities.

3.2.5.2. The Committee feels that in the case of goods moved on a regular basis in the same way closer cooperation could be fostered between the companies in question and their customs offices based on the trust built up between them, similar to that based on a memorandum of understanding.

3.2.6. The Committee welcomes the initiative to draw up risk profiles using appropriate analytical techniques in all Member States. This can be expected to eliminate checks for businesses that meet customs requirements, but the Committee regrets that in some Member States this development is taking place without the cooperation, or even the knowledge, of the businesses concerned. It would seem to the Committee that this system of risk analysis will serve its purpose of freeing up time for customs administrations to keep a check on flows of goods with a high risk factor.

3.2.7. The Committee feels that deploying mobile inspection units along transport routes between destinations is an effective complement to spot checks at border crossings in view of the surprise factor.

3.2.8. The Committee welcomes the setting up of the Customs Information System (CIS). Provided that this central information system run by OLAF receives sufficient input from the Member States, it could provide very useful guidance for customs posts in individual Member States.

3.3. Opinion on the "Proposal for a European Parliament and Council Regulation (EC) amending Regulation (EEC) No. 2913/92 establishing the Community customs code (transit)"

3.3.1. The Committee has noted that the total volume of fraud has decreased significantly thanks in particular to an increase in the guarantee amounts payable on the transport of sensitive products. It also welcomes the progress made in other aspects of the transit procedures under reform, which means that now the legal adjustments are complete the focus should be on practical implementation of the procedures. The NCTS (New Computerised Transit System) seems to be a very good way of taking account of the requirements of all those involved in the procedure. The Committee expects to see the procedures implemented uniformly, irrespective of the different computer systems in use, in all countries covered by the Community and common transit procedure.

3.3.2. The Committee feels that the decrease in the volume of fraud would suggest that it is preferable to continue to differentiate the requirements for the transport of sensitive goods from those applicable to non-sensitive goods. But some easing of regulations should be granted to transporters of sensitive goods who have specifically proven their trustworthiness.

3.3.3. The forwarding of receipts by the customs office of destination to the customs office of departure continues to be a major problem in the transit system. Until receipts can be issued electronically through the NCTS the Committee would urge all customs posts concerned to make sure receipts are forwarded promptly.

3.3.4. Assuming that a large portion of external trade uses these procedures, the Committee would point out that the practicability of these procedures must continue to be a priority.

3.4. Opinion on the "Proposal for a European Parliament and Council Regulation (EC) amending Council Regulation (EEC) No. 2913/92 establishing the Community Customs Code"

3.4.1. The Committee feels that the electronic customs clearance system can only work if the requirement to submit supporting documents in paper form can be done away with in the individual stages of the procedure. Paper documents such as bills or proof of entitlement to preference must be kept for verification purposes. But there is already a clear trend towards sending commercial documents in purely electronic form with a digital signature. These electronic documents must be stored separately with respect to each clearance application. On this point the Committee welcomes the decision of the Internal Market Council on 16 March 2000 which will hopefully soon be approved by the Parliament.

3.4.2. The Committee has noted that a considerable amount of fraud has been uncovered in the submission of proof of entitlement to preference. It regrets that jurisprudence to date has attached little importance to the confidentiality of the importer. The relevant Article 220 of the Customs Code should be interpreted with more emphasis on the proving of bad faith by the administration, as opposed to the above-mentioned decision of the Internal Market Council whereby the onus is placed on the importer to prove good faith, which might be difficult for small and medium-sized importers in particular.

For those past cases still to be decided, the Committee suggests that the Commission take an amicable and economically sustainable line.

3.4.3. In the Committee's view, customs declarations should be made in euros in all euro-zone countries even during the transition period.

3.5. Opinion on the "Proposal for a Council Regulation (EC) amending Regulation (EC) No. 3295/94 laying down measures to prohibit the release for free circulation, export, re-export or entry for a suspensive procedure of counterfeit and pirated goods"

3.5.1. The Committee notes that violations are clearly on the increase. It emphasises the importance for European business of customs activity in this area, which calls for a particularly high degree of training and up-to-date and comprehensible information on sensitive products and their countries of origin.

3.5.2. A prerequisite for successfully preventing the release for free circulation of counterfeit and pirated goods is close cooperation based on trust between the businesses concerned and customs administrations. The Committee feels that the flow of information to businesses on the options available needs to be intensified. In this context the Committee welcomes the Commission's initiative to draw up uniform implementing regulations which will enable businesses to communicate their need for protection throughout the EU using a single application.

Brussels, 13 July 2000.

The President

of the Economic and Social Committee

Beatrice Rangoni Machiavelli

(1) OJ C 301, 13.11.1995, p. 5.

(2) OJ C 138, 18.5.1999, p. 1.

(3) OJ C 73, 9.3.1998, p. 17.

(4) OJ C 101, 12.4.1999, p. 6.

(5) OJ C 284, 14.9.1998, p. 3.

(6) COM(1999) 590 final.

(7) A list of tasks can be found in the document "Protection of the Communities' Financial Interests", COM(1998) 278.

(8) COM(2000) 28 final of 28.1.2000.