COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Action plan for transit in Europe - a new customs policy
Date: 1997-04-30
Institutions: European Commission
Subjects: action programme, customs cooperation, customs debt, customs transit, tariff policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  30.04.1997 
COM(97)  188 final 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT  AND THE COUNCIL 

ACTION PLAN FOR TRANSIT IN EUROPE 
A NEW CUSTOMS POLICY 

CONTENTS 

1.  TRANSIT,  A  KEY  INSTRUMENT  OF  TRADE  AND  ECONOMIC 

INTEGRATION  EUROPE-WIDE 

2. DECISIVE ACTION TO SAFEGUARD A SYSTEM UNDER THREAT 

3. THE WEAKNESSES  OF THE SYSTEM 

4. THE SYSTEM'S LIABILITIES: OUTSTANDING  DEBTS 

5. THE MAIN THRUST OF THE ACTION PLAN 

6. 

IMPROVING  CUSTOMS' 
COOPERATION 

SERVICES  ORGANIZATION  AND 

7. MOVING TOWARDS A EUROPE-WIDE  SYSTEM 

8.  SPECIFIC  MANAGEMENT  AND  CONTROL  PROJECTS  FOR  THE 

TRANSIT SYSTEM 

9.  THE  KEY  TO  SUCCESS:  COMMITTING  ALL  PLAYERS  TO  THE 

REFORM OF TRANSIT 

10.  FUTURE-PROOFING  THE  SYSTEM:  ADAPTING  TO  PERMANENT 

CHANGE 

3 

4 

6 

6 

7 

8 

9 

10 

10 

11 

ANNEX: ACTION PLAN FOR THE TRANSIT  SYSTEM 

1.  TRANSIT,  A  KEY  INSTRUMENT  OF  TRADE  AND  ECONOMIC  INTEGRATION 
EUROPE-WIDE 

1.1.  Customs  transit  is one  of the  cornerstones  of European  integration  and  an  issue  of 
vital interest to European businesses. It enables goods to move much more freely  and makes 
customs  clearance  formalities  much  more  accessible  by  providing  for  the  temporary 
suspension  of  duties  and  taxes  normally  applied  to  imported  goods  moving  inside  the 
Community  (Community  transit).- or  between  the  Community  and  its  EFTA  and  Visegrad 
partner  countries  (Via the  Common  Transit  Convention),  or  among  the  59  states  that  are 
now contracting parties to the TIR Convention. 

1.2.  Access  to  the  common  transit  system  is  a  key  component  in  the  pre-accession 
strategies  for  Central  and  Eastern  European  countries  defined  following  the  Europe 
(Association) Agreements and the Commission's White Paper on the subject.  Four  Visegrad 
countries  have  already  joined  the  system,  which  gives  them  a  practical  framework  for 
preparing their future  accession to the EU. For other countries that have applied to join,  it is 
in their own interest to  ensure that the  system is capable of accommodating  them under  the 
best  possible circumstances.  Only a reformed  and  computerized  customs  transit  system  can 
provide that assurance. 

1.3. 
Some  18  million  Community  and  common  transit  documents  and  one  million TER 
carnets  (of the 2 to  3 millions used  between  all the  Contracting  parties  to  the  Convention) 
are  issued  in  Europe  every  year,  covering  vast  quantities  of  goods  and  accounting  for 
billions of ecus in duty and taxes alone. The transit  systems therefore  need to  be adapted  to 
cope with the demands of modern business and reformed  to reduce the risk of fraud. 

1.4. 
In recent years transit fraud  has become a considerable drain on the Community  and 
national  budgets,  and  has led to  illegal trafficking  on  the  European  market  in untaxed  and 
totally  uncontrolled  goods,  jeopardizing  not  only  the  competitiveness  of  European 
businesses but the health and safety  of our citizens. 

This  alarming  state  of  affairs,  highlighted  by 

1.5. 
three 
communications  to  Parliament  and  the  Council  in  1995  and  1996  and  by  the  Court  of 
Auditors  in  its  report  on  transit  in  1994,  was  confirmed  by  Parliament's  Committee  of 
Inquiry  into  the  Community  Transit  System,  which  greatly  contributed  to  convincing  the 
system's  administrators  and  users  of  the  urgent  need  for  radical  action  to  save  customs 
transit  in  Europe,  to  restore  the  economic  advantages  of  the  system  and  make  it  more 
secure  again  by  providing  mechanisms  which  would  ensure  better  protection  against  the 
risks involved. 

the  Commission 

in 

1.6.  With this communication to the Council and Parliament, which is also aimed at users 
and  administrators  of the transit  system, the Commission  means to translate  its  commitment 
to  thoroughgoing,  balanced  and  realistic reform  of customs transit  systems into  action.  The 
Commission's  action  plan  for  the  transit  system,  annexed  to  the  communication,  will 
provide a basis-and a permanent  point  of reference  for  the range of proposals that  it will put 
forward  and initiatives that it will take. 

1.7. 
The  action  plan's  adoption  follows  the  presentation  to  Parliament,  at  the  plenary 
session  of  12  March  1997,  of  a  report  by  Parliament's  Committee  of  Inquiry  on  transit, 
adopted  on  19 February.1  In a recommendation  of  13 March  1997, Parliament  called  on the 
Commission,  the  Council  and  the  Member  States  to  see  to  it  that  the  Committee's 
conclusions  were  acted  upon.  The  work  of  the  Committee  of  Inquiry,  together  with  its 
conclusions  and  recommendations,  was  instrumental  in  the  Commission's  own  policy 
review;  it  has  greatly  contributed  to  bringing  out  the  full  political  implications  of  what  is 
rather  a  technical  subject,  and  placing  it  in  the  wider  context  of  EU  customs  policy  and 
customs cooperation between states. 

1.8. 
The  reform  of  customs  transit  procedures  in  Europe  is  a  task  tailor-made  for  the 
Customs  2000  programme  for  customs  in  the  Community,2  which  has  highlighted  the 
increasing  need  for  European  customs  administrations  to  work  closely  together  so  as  to 
form  something  like  a  single  Community  administration,  and  has  put  forward  a  number  of 
mechanisms  for  achieving  this  objective.  Adopting  the  Customs  2000  Decision  last 
December,  Parliament  and the Council underlined  the importance to the internal  market  and 
to European  citizens of having an active and effective  customs  policy to boost  international 
trade while offering  high standards of protection  at all points of the external border. 

1.9. 
Transit reform  is only one outward  sign, albeit in a critical area, of the  Commission's 
wider drive to define  and pursue common policies for  implementing the law on customs and 
indirect  taxation  and  combating  customs  and  tax  fraud.  At  a  purely  Community  level,  in 
addition  to  the  Customs  2000  programme,  this  proactive  stance  is  evident  from  the 
Customs 2000  "Mark  Two"  programme  on  customs  computerization, 
the  Fiscalis 
programme to  develop  cooperation  on indirect taxation,  and  the formation  of  a High-Level 
Working  Group  bringing  together  the  Member  States'  customs  and  tax  administrations, 
chaired  by  the  Commission,  to  discuss  fraud  prevention  with  regard  to  tobacco  products 
and alcohol. 

2. 

DECISIVE ACTION TO SAFEGUARD A SYSTEM UNDER THREAT 

2.1. 
The  swift  and  irresistible  growth  of  trade  in  recent  years,  particularly  with  Central 
and Eastern Europe,  has drawn criminals'  attention to  the profits  to be made from  a system 
which offers  ease of access not matched by prevention and control measures. 

2.2. 
International  criminal  organizations  have exploited  weaknesses  in transit  procedures 
to  evade  government  surveillance  of  considerable  quantities  of  high-tax  products  such  as 
cigarettes and alcohol. 

"Report  on the Community Transit  System" by the European  Parliament's  Committee of Inquiry  into 
the Community Transit System (Doc. PE 220.895 of 20 February 1997). 

Decision No 210/97/EC of the European Parliament and of the Council of  19 December  1996 adopting 
an action programme for customs in the Community (Customs 2000): OJ L 33, 4.2.1997. 

2.3. 
The revenue lost to the  Community  and  national budgets has been  estimated  by the 
Commission,  on  the basis  of Member  States'  reports  of  fraud  cases  to  do  with  transit,3  at 
some  ECU  1.27  billion  over  the  seven  years  1990-1996,  including  ECU  485  million  in 
conventional  own  resources  and  784  million  in  national  taxes.  In  1996,  reported  fraud 
accounted  for  ECU  78  million  in  own  resources  and  ECU 216  million  in  national  taxes 
(mostly  on  cigarettes),  or  a total  of ECU  294  million  altogether,  compared  with  ECU 225 
million  in  1995. The  situation  is  still worrying,  in  other  words.  In terms  of  own  resources, 
transit fraud accounted for only  17% of the ECU 448 million in fraud  reported under mutual 
assistance  arrangements  in  1996.  Because  excise  duties  are  so  much  higher,  however, 
transit's  share of fraud on duties and taxes on cigarettes  alone for  the  same year  accounted 
for  38%  of  the  total  of  ECU  773  million.  The  full  extent  of  fraud,  including  undetected 
fraud,  is almost certainly far  greater. 

2.4. 
Fraud  on  this  scale  is  not  simply  a fiscal problem;  it.causes  economic  damage  and 
may  even  pose  health  threats:  directly  or  indirectly,  it  interferes  with  honest  traders' 
operations  and the facilities they are offered,  and by illicitly supplying the market it not  only 
competes  unfairly  with  legal  products  but  may  jeopardize  consumer  health  and  safety. 
Ultimately,  Europe's  citizens lose out,  as producers,  traders,  consumers  and  taxpayers,  for 
the  revenue  lost  to  the  Member  States  and  the  Community  has  to  be  compensated  for  in 
some other way. It would therefore be short-sighted -  both in purely budgetary terms and in 
terms  of  combating  organized  crime  -  not  to  devote  resources  to  effective  action  or  to 
invest in combating  fraud. 

In the light  of its own findings  and those  of the Court  of Auditors,  the  Commission 
2.5. 
took  it  upon  itself  to  tackle  the  problem  in  its  first  communication  of  29  March  1995, 
"Fraud in the transit procedure,  solutions foreseen  and perspectives for the  future."4 

2.6.  With the Member  States'  approval, it then adopted  a number of immediate measures 
designed  to  counter  the  threat  to  the  Community-s  and  the  Member  States'  financial  and 
economic  interests,  and  developed  an ambitious  plan to  computerize  the  transit  system.  Its 
communication  of  3 April  1996,  "Commission  action  to  counter  transit  fraud",5  set  out  a 
programme  for  the  adoption  of the  measures,  most  of which  are  not  in  place,  and  spelled 
out the need for  a thorough overhaul of the legislation and the way it is implemented. 

The  Commission  has  since  undertaken  a thorough  analysis  of  the  situation  and  the 
2.7. 
weaknesses of the transit  system, in close consultation with all the public and private players 
in  the  field,  with  a  view  to  establishing  clear  guidelines  for  comprehensive  reform.  This 
analysis  resulted  in  an  Interim  Report,  which  was  annexed  to  its  communication  of  9 
October  1996.6 

Under  Regulation  (EEC)  No  1468/81  (mutual  assistance),  to  be  superseded  by  Regulation  (EC)  No 
515/97  with  effect  from  13  March  1998  (see  note  9),  or  under  Regulation  (EEC)  No  1552/89  (the 
Community's own resources -  fraud  cases involving amounts over ECU  10 000). 

4  COM(95)  108 final. 

5 

SEC(96)  290  final. 

6  COM(06) 477  final. 

2.8. 
This latest communication  and the attached  action plan are the result  of that  process 
of  analysis  and  wide  consultation  of  all  the  players  in  the  transit  system  to  thrash  out 
guidelines  for  the  reform; The  process  culminated  in  the  Euro  Transit  conference  held  in 
February  1997,  which  provided  a  forum  for  users  and  administrators  of  the  system  to  air 
their expectations with regard to the intrinsic weaknesses of the transit  system, but  also with 
regard  to the serious shortcomings of the general context  and the customs  structures  within 
which the system works and upon which it depends. 

3. 

THE WEAKNESSES OF THE SYSTEM 

3.1.  All parties agree that the present transit  systems are plagued "by problems: 

failures  by both  administrators  and  users  to  comply  with  existing  rules  and 
obligations,  not  only  because  of  certain  problems  legally  interpreting  and  applying 
them in practice but also because the will to  act  (and to  allocate  sufficient  resources 
so that people can do their jobs properly) is lacking; 

the lack of concerted  action bv and coordination  of the many  administrations 
and offices  involved  and poor  exploitation  of existing  arrangements  for  cooperation 
-  structural weaknesses that are by no means unique to transit; 

the  existence  of  different,  ill-fitting  systems,  arising  from  the  different  legal 
frameworks  and  decision-making  systems, which make the whole both  complex and 
inflexible; 

failure  to  adapt  the  rules  and  procedures  to  allow  them  to  deal  swiftly, 

reliably and flexibly with large numbers of highly varied transit  operations; 

failure  to  use  available  data,  which,  combined  with  a  lack  of  complete  and 
reliable information  on the real economic  and administrative impact  of transit  and on 
the  operations  themselves,  makes  it  almost  impossible  to  manage  the  system  really 
effectively  and  appropriately  or  to  prevent  fraud  with  the  help  of  risk  analysis  and 
targeted controls. 

4. 

THE SYSTEM'S LIABILITIES:  OUTSTANDING DEBTS 

4.1. 
The  fraud  resulting  from  these  weaknesses  in  the  transit  system  and  the  various 
malfunctions  to  which  they  gave  rise  has  left  principals,  in  particular,  facing  mounting 
customs and fiscal debts. On the basis of information  supplied by the Member  States for  the 
period  1990 to  1996, the Commission  has estimated  the total debt to be recovered  -  which 
is  not  necessarily  equal  to  the  total  fraud  -  at  some  ECU  2  billion,  one  fifth  of  which  is 
accounted  for  by  conventional  Community  own  resources  (customs  duty,  etc.),  the  rest 
comprising national taxes (VAT, excise, etc.). 

The  business  circles  concerned,  in  view  of  the  scale  of  the  debts  caused  by  fraud, 

4.2. 
have requested  remission of the sums owing, or at least a moratorium for the time being. 

4.3. 
In  its  recommendation  No  27, Parliament's  Committee  of  Inquiry  on  transit  asked 
the Commission to consider writing off the debts "where these can be shown to be the  result 
of maladministration"  and,  pending  such arrangements,  "a  suspension  of outstanding  claims 

of  repayment  dating  from  before  the  introduction  of  the  100%  guarantee  for  sensitive 
goods". 

4.4.  Where tax  debts  are  concerned,  it  is  for  the Member  States  to  which  the  relevant 
national  revenue is owed to decide,  under national legislation,  how they  should  respond  to 
such requests, as long as this is compatible with equivalent tax treatment, remains neutral as 
far as operators are concerned, and does not affect the VAT "own resources" base. 

4.5.  As to  customs  debt  (the  conventional  "own  resources" element  of  the  outstanding 
debt),  Community  legislation,  as  it  stands,  does  not  allow  blanket  remission  or  even 
suspension.  Any  special  dispensation  to  that  effect  would  require  fundamental  changes  to 
the  system  providing  for  the  Community's  own  resources,  and  would  have  highly 
deleterious economic and financial  repercussions. -While it gives the appearance  of fairness, 
it would in fact have the opposite effect,  since it would take no account of the wide variety 
of individual circumstances and cases concerned. 

The Commission therefore  rejects the idea of blanket remission of customs debts. It 
4.6. 
is,  however,  possible  to  deal  with  debtors'  individual  circumstances  under  existing 
provisions of the Community Customs Code covering circumstances in which no  deception 
or obvious  negligence  can be attributed to  traders, in accordance with procedures  handled 
at national level  and, if necessary,  pursued at Community level.  It should be borne in mind, 
however, that the primary purpose of the rules of procedure for transit is not to  reduce the 
principal's  commercial  risks.  "Maladministration",  therefore,  is  not  necessarily  a  special 
circumstance  within the  meaning  of the relevant  provisions.  In any event,  the  Community 
Customs  Code  also  allows  customs  administrations  to  delay  payment  or  settle  in 
instalments. 

4.7. 
It  is  therefore  up  to  the  administrations,  particularly  as  regards  deadlines  for 
payment, to use the discretion given to them in Community and national legislation,  having 
regard to the particular circumstances of the person liable in each case. 

5. 

THE MAIN THRUST OF THE ACTION PLAN 

The  action  plan  hinges  on  a  number  of  key  concepts  in  response  to  the  current 

5.1. 
system's weaknesses: 

a simple and coherent system, which can be easily understood and applied by 

operators and customs officials; 

a system run using up-to-date  procedures and tools for  cooperation,  relying 

on computerization and electronic data interchange; 

a system that can cope with a wide range of operations and situations; 

a system that incorporates coordinated  fraud prevention and coverage of the 

sums actually at risk in its procedures, 

a system  managed  and evaluated  with the  aid of a proper reporting  system, 

for both general and operational purposes. 

5.2. 
This set of objectives must of course be translated  into various initiatives applied  not 
only  to  transit  but  to  general  customs  policy  and  practice.  The  projects  and  reforms  will 
cover both internal Community customs procedures and arrangements extending beyond  the 
Community's  customs territory.  The main areas covered  are outlined  below. They form  the 
core of the action plan annexed to the communication. 

6. 

IMPROVING CUSTOMS' SERVICES ORGANIZATION AND COOPERATION 

6.1.  Bearing in mind that  a single customs  code would  appear to  imply  a single  customs 
service,  it is important  that  the  15 customs  administrations  function  as if they were  one,  as 
proposed  in  the  Customs  2000  programme  and  called  for  by  Parliament's  Committee  of 
Inquiry.  The  Commission will implement  Customs  2000  as fully  as  possible,  particularly  as 
it  refers  to  transit,  by  means  of  a plan covering  all the  potential  projects  to  be  launched  in 
the five-year term  of the  programme,  subject  to  revision  each  year  by the  Customs  Policy 
Committee, bringing together the heads of the Member  States'  customs  administrations  and 
the Commission. The transit action plan will therefore  represent  one sectoral plan in a wider 
drive to improve the way customs  function. 

6.2.  While the  Commission  should  not,  as  a rule,  interfere  with the  way  Member  States 
organize their  own administrations  and decide upon the responsibilities  and  powers  of their 
officials,  it  is  vitally  important  for  both  the  EU  and  its  Member  States  that  fraud  and 
organized  crime are properly tackled in a consistent  manner. 

6.3. 
In  addition  to  a  substantial  fraud  prevention  drive,  there  must  be  progress  on 
developing  a  consistent  policy  with  regard  to  tackling  fraud  cases  if transit  fraud  is  to  be 
deterred,  particularly  when  it  is  subject  to  transnational  organized  crime.  Customs 
administrations  should  have primary responsibility  for  this policy with  a view to  combating 
major  economic  and  financial  crime,  with  specific  assistance  from  the  Commission,  and 
support from police and justice officials  where necessary. 

6.4. 
The  EU  needs  a  criminal  policy  to  help  it  establish  proof,  have  cases  pursued  in  a 
coordinated  fashion,  bring  serious fraud  cases before  the criminal courts, particularly  where 
they  involve  criminal  organizations,  and  impose  effective,  proportionate  and  deterrent 
penalties on the organizers.  The Commission's  role  should  be to  inform  , assist,  coordinate 
and push for  action, so as to fulfil  the duty given to it by Article 209 A of the EC Treaty. 

6.5. 
This would  require the Member  States to  ratify  the Convention  on the protection  of 
the  European  Communities'  financial  interests,7  and  the  relevant  protocols  on  combating 
corruption  of  national  civil  servants  and judicial  cooperation  in  criminal  cases.8  The  policy 
to  tackle  fraud  should  enable  an  appropriate  Europe-wide  legal  framework  for  the 
protection  of European financial  interests to be established  in the longer term. 

7  Council Act of 26 July  1995, OJ C 316, 27.11.1995. 

8  For the first Protocol, see Council Act of 27 September 1996, OJ C 313, 23.10.1996. 

8 

6.6. 
In  the  short  term  it  is  vital  to  boost  detection  and  exchange/act  upon  information 
more,  by  putting  into  practice  new  legal  instruments  such  as  Council  Regulation  (EC) 
No  515/97  of  13 March  1997,  on  mutual  assistance  between  the  administrative  authorities 
of the Member  States and cooperation  between the latter and the Commission to  ensure the 
correct  application  of  the  law  on  customs  and  agricultural  matters;9  Council  Regulation 
(Euratom,  EC)  No  2185/96  of  11  November  1996,  concerning  on-the-spot  checks  and 
inspections  carried  out  by  the  Commission;10  Council  Regulation  (EC.  Euratom) 
No 2988/95  of  18  December  1995,  on  the  protection  of  the  European  Communities' 
financial interests,  which  sets  out  administrative  measures  and  penalties  for  irregularities 
with  regard  to  Community  law,11  and  the  CIS  Convention  on  the  use  of  information 
technology  for  customs  purposes,12  which  should  be ratified  with  a view to  cracking  down 
on serious transit  fraud. 

6.7. 
This  would  give  the  EU  basic  tools  to  exchange  information,  foster  judicial 
cooperation,  establish  criminal  proof,  pursue  offences  and  have  them  punished  by  the 
national  courts.  It  would  require  Commission  assistance  to  ensure  that  it  served  the 
purposes  and  met  the  requirements  of customs transit  procedures  applying  in both  EU  and 
non-member  countries.  Such action should allow criminal cases of transit fraud,  that  deserve 
to be handled by the criminal courts, to be vigorously prosecuted  and dealt with. 

6.8. 
In  this  context,  the  fact  that  the  EU  Treaty  contains  different  legal  bases  and 
instruments for  action  on customs and judicial  cooperation  should  not undermine  the ability 
of the Union to take effective  action to fight against the  fraud. 

7. 

MOVING TOWARDS A EUROPE-WIDE SYSTEM 

7.1.  Growing  trade  and  further  economic  and  political  integration  between  the  EU  and 
its European  partners  will  make  it  increasingly  difficult  to  manage  three  co-existing  transit 
systems  in  Europe  -  Community  transit,  common  transit  and  the  TER  -  effectively  and 
securely.  The  success  of  measures  to  simplify  transit  management,  such  as  the  New 
Computerized  Transit  System, will largely be determined by efforts  to integrate and  possibly 
merge  the  Community  and  common  transit  systems.  The  Commission  will  put  forward 
concrete proposals on the  subject. 

7.2.  Relations  with  current  partners  in  the  common  transit  system  will  have  to  rely 
systematically  on  close  cooperation  and  maximum  use  of  the  mutual  assistance  facilities 
now available. Any new applicants will have to prove that they are quite capable of handling 
the reformed,  computerized  system. 

9  OJL  82, 22.3.1997. 

10  OJL  292,  15.11.1996. 

11  OJL  312, 23.12.1995. 

12  Council  Act  of  26  July  1995  drawing  up  the  Convention  on  the  use  of  information  technology  for 

customs purposes, OJ C 316, 27.11.1995. 

SPECIFIC  MANAGEMENT  AND  CONTROL  PROJECTS  FOR  THE  TRANSIT 

8. 
SYSTEM 

8.1. 
The action plan at Annex, giving a breakdown of the various measures proposed  and 
the  Committee  of  Inquiry  recommendations  to  which  they  correspond,  is  organized  in  a 
logical sequence reflecting  the components of the transit operation and related activities: 

management  of the  transit  procedure  to  restore  confidence  and  ensure  that 
the  facilities  granted  to  operators  and  the  constraints  imposed  on  them  correspond 
to the degree of risk attached to their operations in practice; 

supervision  of transit  operations, with all players in the procedures  accepting 
their  respective  responsibilities;  for  customs  administrations,  that  means  using  and 
developing administrative cooperation  arrangements to the full; 

fraud  detection  and  law  enforcement,  coordinated  checks,  relying  on  more 
effective  security  measures  and  a  common  risk  management  policy,  targeting  of 
checks,  the  setting  up  of  Community-wide  mechanisms  to  detect  fraud  and 
irregularities,  and  the  development  of  a legal  framework  conducive  to  stepping  up 
law enforcement  (see point 7 above); 

sound  financial  management  of 

transit,  which  demands  appropriate 
guarantees for the sums at stake, tailored  to the operator's  reliability and the risks of 
the  operation,  as  well  as  effective  mechanisms  for  recovering  any  sums  ultimately 
owing, in the first instance from the persons who  cause the customs  or tax  debts  to 
be incurred; 

uniform  application  of the  rules,  which  entails  developing  practical  tools  for 
training, and for putting the legislation and checks into practice, conducting  effective 
checks to ensure that the rules are applied,  and setting up a system of  administrative 
customs penalties; 

effective  monitoring  and  continuous  evaluation  of  the  customs  systems  and 

their  reform. 

THE  KEY TO  SUCCESS:  COMMITTING  ALL  PLAYERS  TO  THE  REFORM 

9. 
OF TRANSIT 

The  Commission  hopes  to  pave  the  way  for  a thoroughgoing  reform  of  the  transit 
9.1. 
systems  by  setting  out,  in  the  action  plan,  the  terms  of  reference  for  using  its  right  of 
initiative, in accordance with its specific role as a Community  institution. 

The  plan will not  satisfy  everyone  involved  in transit,  and will  naturally  give  rise  to 

9.2. 
discussion and negotiations before  decisions can be taken. 

9.3. 
To  this  end,  the  relevant  decision-making  bodies  for  Community  and  common 
transit will be asked, within the timetable set  out under the action plan,  to  state  clearly their 

10 

positions  on  the  Commission's  proposals,  on  how  responsibilities  for  the  various  tasks 
should be allocated  and on the resources to be devoted to them. 

9.4.  However,  once  the  decisions  have  been  taken  all  parties  will  of  course  be  called 
upon  to  play their  part  faithfully  and  in the  common  interest,  by  putting  the  measures  into 
practice in their own particular field. 

9.5. 
Each EU Member  State and partner  country  in the common transit  system will have 
to  give a political commitment to find the resources needed to  implement the measures they 
have jointly adopted in the most effective  and efficient  manner. 

9.6.  As transit "consumers",  the system's users have a right to  high-quality  products  and 
services.  However,  they  must  also- accept  their  personal  responsibility  for  way  the  system 
works.  Consequently,  transit  reform  must  'include  a  commitment  from  them  to  use  the 
system  honestly,  accepting  the  responsibilities  clearly  laid  down  prior  to  each  operation,  as 
well as introducing  structures which allow them to make their voice heard  and to  participate 
in  ongoing  evaluations  of  the  system's  performance.  The  definition  of  proposals  wil 
moreover  take into  consideration  the impact  of the  envisaged  measures  on business,  and  in 
particular  SME's. 

9.7.  As  stated  elsewhere,  the  Commission  also  intends  to  play  its  part  as  a  Community 
institution  by  monitoring  and  evaluating  implementation,  in  partnership  with  the  Member 
States.  It  will, if necessary,  use  its powers under  the  Treaty  to  ensure  compliance  with  the 
law.  With  the  partner  countries,  it  will  also  thrash  out  arrangements  for jointly  monitoring 
compliance with the provisions of international conventions on transit. 

Customs  administrations  and  the  Commission  will  therefore  have  an  internal 
9.8. 
instrument  to  measure  the  relevance  and  effectiveness  of  the  measures  applied,  which  will 
also  assist  with  efforts  to  monitor  the  reforms  and  their  implementation  by  the  Court  of 
Auditors  and  by  Parliament's  Committee  on  Budgetary  Control,  in  line  with 
the 
recommendations  of the Committee  of Inquiry on transit.  The Commission will also provide 
regular progress reports to the Committee on Budgetary Control. 

10. 

FUTURE-PROOFING THE SYSTEM: ADAPTING TO PERMANENT CHANGE 

10.1.  The  backdrop  to  reform  of the transit  system  is a constantly-changing  world.  If  the 
system  is  to  keep  pace  in  future,  that  reform  will  have  to  reflect  changes  in  the  internal 
market  and  its  tax  implications,  Treaty  revisions  resulting  from  the  Intergovernmental 
Conference,  the  EU's  future  enlargement,  the  Community's  rising  internal  and  external 
trade and the persistent trend towards lower tariff and non-tariff barriers. 

10.2.  To  be  fully  effective,  reform  must  be  based  on  the  customs  policy  guidelines 
established  by the Customs 2000 programme  referred  to  above,  so that  it contributes  to  the 
completion  of  the  internal  market  and  becomes  and  intrinsic  part  of  the  EU's  external 
relations, particularly with the rest of Europe.13 

13  The Commission's Work Programme for  1997: COM(96) 507 final and SEC(96)  1819 final. 

11 

10.3.  The  changing  nature  of  indirect  taxation  in  the  internal  market  must  also  be  taken 
into  account,  not  only  to  ensure  that  Community  and  non-Community  customs  and  tax 
regulations  applicable to  the movement  of goods are consistent  but to  anticipate  the  effects 
of such change on traders'  declarations and potential new fraud  opportunities. 

10.4.  Where  excise is concerned,  the  system whereby  products  subject  to  excise  circulate 
within  the  Community  is  very  similar  to  the  customs  transit  in  its  objectives  (fiscal 
surveillance  and  control  of  heavily-taxed  goods),  its  procedures  (accompanying  document, 
guarantee, etc.) and, unfortunately,  its susceptibility to certain types of fraud.  It makes  sense 
to  pool  experience  of the two  systems  and their  reform,  particularly  as  to  the  effectiveness 
of different  procedures  and fraud prevention  measures,  so as to  prevent  fraud  shifting  from 
one system to  the other.  The Commission  has already  established,  with  the Member  States, 
a  High-Level  Working  Group  to  define  a  comprehensive  approach  to  tackling  fraud  in 
sensitive goods such as tobacco and alcohol. 

10.5. 
In  the  case  of  VAT,  taxation  at  the  point  of  origin,  as  outlined  in  the  Commission 
paper  "A  common  system  of  VAT",14  would  sever  all  links  with  the  movement  of  goods 
subject  to  intra-Community  transactions.  On the  other  hand,  for  imported  goods,  i.e.  those 
currently  subject  to  customs  transit,  it  has  not  yet  been  decided  at  what  point  any 
transactions  should  be  covered  by the  VAT  legislation;  the  solution  needs  to  balance  two 
opposing  principles,  (1)  that  goods  should  be  allowed  to  cross  external  borders  without 
delay, whether  they  are released  for  free  circulation  at the border  or  continue to  be  subject 
to  customs  transit,  and  (2)  that  domestic  EU  transactions  be  assured  equal  tax  treatment, 
without  conferring  unintended  advantages on imported goods. 

10.6.  This balance must  be struck  not  only for  transit  but for  all customs  procedures  with 
tax implications.  The twin  issues to  be  addressed  are (1) the  economic  and  fiscal  impact  of 
customs  transit  on  the  routing  of  imported  goods  inside  EU  territory,  and  (2)  operators' 
freedom  to use the system or not, as they choose. 

14 COM(96) 328  final 

12 

ANNEX 

ACTION PLAN FOR THE TRANSIT SYSTEM 

CONTENTS 

1. INTRODUCTION.... 

2. TRANSIT, THE KEY TO EUROPEAN  CUSTOMS POLICY 

2.1  EXPLOITING THE  FULL  POTENTIAL OF "CUSTOMS  2000" 
2.2  MANAGING TRANSIT BY  MEANS  OF  AN  ACTIVE  INFORMATION  POLICY 

2.3  BOOSTING  COOPERATION BETWEEN  CUSTOMS  ADMINISTRATIONS 

2.4  CHECKING THAT THE RULES ARE APPLIED CORRECTLY AND UNIFORMLY 

2.5  ESTABLISHING  A PARTNERSHIP  BETWEEN  CUSTOMS  AND  OPERATORS  TO RESPOND  TO TRANSIT  USERS' 

NEEDS 

? 

2.6  INTEGRATING  EUROPEAN  CUSTOMS  SYSTEMS:  ANEW  CONVENTION  TO FACILITATE  EUROPEAN  CUSTOMS 

PROCEDURES 

2.7  ENSURING THAT INTERNATIONAL TRANSIT SYSTEMS ARE COMPATIBLE 

2.8 PROVIDING  THE  RESOURCES  FOR A EUROPEAN  CUSTOMS  POLICY 

3 

4 

4 
4 

5 

5 

6 

7 

7 

8 

3.  COMPUTERIZATION,  THE KEY  TO TRANSIT REFORM:  THE NEW  COMPUTERIZED 
TRANSIT SYSTEM  (NCTS) 

8 

4.  SPECIFIC MANAGEMENT AND CONTROL PROJECTS FOR THE TRANSIT SYSTEM  10 

4.1  MANAGEMENT  OF THE TRANSIT  PROCEDURE 

11 

4.2  SUPERVISION  OF TRANSIT  OPERATIONS 

11 

4.1.1  CONTROLLING  OPERATORS'  USE OF  THE  PROCEDURE  ACCORDING  TO  THEIR 
RELIABILITY  AND  THE DEGREE OF RISK 
4.1.2 REFINING  THE SYSTEM  BY  MEANS  OF DIALOGUE  AND  MUTUAL  COMMITMENTS: 
MEMORANDA  OF UNDERSTANDING 
4.1.3 REVIEWING  TRANSIT  PROCEDURES  FOR  CERTAIN  MODES  OF  TRANSPORT. 

12 
13 
14 
4.2.1  CUSTOMS'  RESPONSIBILITY  TO SEE THA T PROCEDURES  RUN  SMOOTHL  Y AND  ON 
14 
TIME: NATIONAL  MANAGEMENT  PLANS 
4.2.2 ADMINISTRATIVE  COOPERATION  WITH  REGARD  TO  THE PROCEDURE 
75 
4.2.3  OPERATORS'  RESPONSIBILITY  FOR  FRONT-LINE  SUPERVISION  OF  TRANSIT 
OPERATIONS 

16 
17 
17 
4.3.1 SECURE MOVEMENT  OF GOODS IN  TRANSIT 
18 
4.3.2  COORDINATED RISK MANAGEMENT 
19 
4.3.3  TARGETED CHECKS ON OPERATIONS 
20 
4.3.4 FRAUD DETECTION AND LAW ENFORCEMENT: 
4.3.5  COORDINATION  OF MEANS  AND  RESOURCES  AND  HARMONIZATION  OF  CUSTOMS 
21 
OFFICIALS'  POWERS 
22 

4.4  SOUND FINANCIAL MANAGEMENT OF TRANSIT 

4.3  FRAUD PREVENTION AND LAW ENFORCEMENT 

4.4.1  TAILORING  THE  GUARANTEE  SYSTEM  TO  THE DEGREE  OF RISK  AND 
RELIABILITY 
4.4.2 ASSIGNING  LIABILITY  FOR  CUSTOMS  DEBT  FAIRLY,  IN A  WAY  THAT  PROTECTS 
THE VARIOUS FINANCIAL INTERESTS INVOLVED 
4.4.3 STREAMLINING  DEBT RECOVERY PROCEDURES 

22 

23 
24 

4.5  CORRECT AND UNIFORM APPLICATION OF THE RULES 

25 

4.5.1  THE TRANSIT HANDBOOK 
4.5.2  TRAINING  CUSTOMS  OFFICIALS  AND  INFORMING  OPERA TORS. 

25 
26 
4.6  EFFECTIVE  MONITORING  AND  CONTINUOUS  EVALUATION  OF THE TRANSIT  SYSTEMS  AND THEIR  REFORM.27 

APPENDIX: 

HUMAN  RESOURCES  NEEDED  TO REFORM  TRANSIT 

ACTION PLAN FOR THE TRANSIT SYSTEM 

1.  INTRODUCTION 

1.1. 
The  crisis  in  the  transit  system,  as  diagnosed  by  Commission  officials  in  an 
interim  report  annexed  to  the  Commission's  communication  of  9 October  1996,1  has 
exposed  serious  malfunctions  in the  customs  union  that  call  not  only  for  remedial  action 
on  transit  but  for  action  on  a  broader  front,  as  part  of  a  genuinely  common  customs 
policy.  The transit  aspects of the policy will be directed  inwards - at the  internal  market  -
and  outwards,  by  means  of  a  new  customs  convention  to  facilitate  trade  in  Europe  (see 
below, point 2). 

In  addition  to  rapid  introduction  of  the  New  Computerized  Transit  System 
1.2. 
(NCTS2)  (see point  3), reform  of the transit  system  involves phasing  in specific  measures 
to  improve  the  technical  and  administrative  handling  of  procedures- in  both  the  common 
transit  and  Community  transit  regimes,  pending  a merger  of the two  systems  (see  points 
4.1  to 4.5).  The action taken must  also be evaluated  in terms  of its relevance  and  impact. 
The various components of the plan are presented  below in the form  of worksheets  listing 
what  is  to  be  done  and  how  it  ties  in  with  the  objectives  set  out  in  the  Commission's 
communication. 

1.3. 
changes in the transit  environment and act in good time (see point 5). 

The plan also reflects  the need to create conditions in which we can  anticipate 

1  COM (96) 477  final. 

2  NCTS  : New Computerized Transit  System 

3 

2.  TRANSIT, THE KEY TO EUROPEAN CUSTOMS POLICY 

2.1 

Exploiting the full potential of "Customs 2000"3 

This  action  plan  for  the  transit  system  is  fully  consistent  with  the 
2.1.1. 
Customs 2000 programme and with Recommendation No  1 of Parliament's Committee  of 
Inquiry  into  the  Community  Transit  System,  which  called  for  a  framework  "leading 
national customs services to function as if they were one". Transit, as a key component  of 
customs and trade activity, must therefore be included in the five-year  strategy and annual 
plans for the Customs 2000 programme. 

2.2 

Managing transit by means of an active information policy 

« 

2.2.1. 
If management  of the transit  system is to be  sound  and efficient,  the risks of 
such operations  properly  assessed,  appropriate  resources  allocated  and procedures  made 
watertight,  then the system's  administrators must be able to  collect  and process key data 
and compile statistics providing accurate, full and useable information on the use of transit 
procedures. At present, certain key information is unavailable, and insufficient  use is made 
of what is available. Parliament's Committee of Inquiry, in its final report, pointed out that 
the  lack  of  adequate  information  on  transit  procedures  and  the  resulting  management 
problems made it difficult  to assess the true scale of transit fraud. The Commission intends 
to  act  more  forcefully  as  coordinator  to  ensure  that  the  Community  acquires  the 
information policy that a modern transit system demands. 

2.2.2. 
information needed: 

Transit  administrators,  and,  to  a  lesser  degree,  users,  must  be  given  the 

to evaluate the system in economic terms; 

to  administer  all  the  transit  procedures,  especially  in  terms  of  identifying  the 
resources  needed  to  ensure  the  procedures  work  smoothly  and  safely  (statistics 
and declaration data); 

to assess the financial effects of any irregularities (statistics and declaration data); 

to monitor transit operations and manage risk. 

This  requires  access  to  accurate  particulars  of  the  goods  and the  operators, 
2.2.3. 
the  amounts  at  stake,  the  modes  and  means  of  transport,  level  of  traffic,  offices  and 
deadlines,  and  any  problems  the  operations  encounter  up  to  the  point  when  the  transit 
documents are discharged. 

2.2.4. 
The  Commission  will  take  appropriate  steps,  in  close  collaboration  with  the 
customs administrations and economic operators, to define statistical requirements and the 
data  needed  on  the  declaration,  as  well  as  other  data  needed  to  process  operations, 
compile  statistics  and  draw up  risk  profiles,  and  to  organize  national  collection  of  such 

3  Decision No 210/97/EC of the European Parliament and of the Council of  19 December  1996 adopting 

an action programme for customs in the Community (Customs 2000): OJ L 33, 4.2.1997. 

data and use it to compile statistics; introduction  of the NCTS will, of course,  make  all of 
the above tasks considerably easier to carry out. 

2.3 

Boosting cooperation between customs  administrations 

Close  cooperation  between  European  customs  administrations  is  essential  to 
2.3.1. 
fraud-proofing  customs  procedures  such  as  transit  and  allowing  the  internal  market  to 
operate smoothly, by ensuring that economic  operators are given equivalent  treatment  and 
allowed  to  conduct  their  business  under  the  best  possible  conditions.  Cooperation  is  the 
key to enforcing  Community customs regulations, the glue that binds the system together. 

2.3.2. 
Transit  fraud  can  only  be  tackled  effectively  by  means  of joint  action  on  the 
part  of  all  the  relevant  national  authorities,  coordinated  by  the  European  Commission. 
There must  be a common approach  to risk management  and the use of data,  for  example, 
as well as joint anti-fraud  operations (see point 4.3). 

This  will  require  us  to  make  full  use  of  existing  cooperation  schemes  and 
2.3.3. 
communications/information  exchange  networks  at  all  levels  -  transit-specific  schemes 
such  as  the  prior  information  system  and  more  general  mutual  administrative  assistance 
programmes  for  customs,  such  as  the  SCENT  network  and  the  customs  information 
system  (CIS). In addition to the improvements  offered  by the NCTS,  innovations  such  as 
a  network  of  transit  contacts  will  be  proposed  to  supplement  these  schemes,  extending 
them  as  far  as  possible  to  European  partner  countries  using  the  common  transit  system 
(see worksheets 4.2.2, 4.3.2, 4.3.3 and  4.3.4). 

2.4 

Checking that the rules are applied correctly and  uniformly 

Checks  on  enforcement  are  primarily  aimed  at  the  users  of  customs 
2.4.1. 
procedures,  and transit  procedures  in particular.  Customs regulations  lay down  a  number 
of  obligations  for  users  Community-wide,  which  necessa  ily  imply  that  any  breaches 
should  be  interpreted  and  punished  as  infringements  at  Community  level,  to  ensure  that 
such  action  is  uniformly  deterrent  and  fair.  (Action  to  prevent  and  deal  with  fraud  is 
covered  elsewhere  -  see  point  4.3).  That  is  why  the  Commission  will  propose  this  year 
that  the  Council  adopt  a  regulation  defining  customs  irregularities  and  laying  down 
Community  penalties  for  them;  the  proposal  is  in  line  with  the  framework  Council 
Regulation  (EC,  Euratom)  No 2988/95  of  18 December  1995  on  the  protection  of  the 
European  Communities'  financial  interests/  but  will  also  reflect  the  fact  that  the 
repercussions of customs regulations are not purely  financial. 

2.4.2. 
Checks  on  enforcement  are  also  directed  at  the  customs  authorities.  It  has 
become  apparent  that  the  Member  States'  customs  administrations  have  not  applied 
customs  regulations  on  transit  consistently,  have  generally  carried  out  too  few  (and 
inadequate)  checks  and  in  some  cases  have  failed  to  comply  with  the  administrative 
requirements,  for  example  with  regard  to  returning  copy  5  of  the  transit  document  and 
processing  enquiry  and  recovery  procedures.  This  has  substantially  contributed  to  the 
system's  ineffectiveness  and  lack  of security,  and to  a lack  of  confidence  in the  customs' 
authorities  ability  to  provide  a normal  service.  Concrete  action  must  be  taken  to  remedy 
some of these shortcomings (see point 4.2). 

OJL  312, 23.12.1995. 

2.4.3. 
Nevertheless,  transit  can  only  work  properly  if  the  customs  union  functions 
properly,  and  that  means  conducting  effective  checks  to  ensure  that  the  Member  States' 
customs  administrations  enforce  the prevailing rules.  The monitoring  operations  currently 
prepared  and  carried  out  in partnership  with the  Member  States  (and,  soon,  with  partner 
countries) do not fulfil  this role; they are not  designed  as inspections or investigations  into 
the  way  the  rules  are  enforced,  although  they  certainly  pinpoint  local  practices  and 
difficulties  in applying the rules, help improve implementation  or even review the need  for 
certain  rules,  and  may  prompt  administrations  to  take  remedial  action.  Likewise,  checks 
carried  out  under  Council  Regulation  No  1552/89,  on  the  Communities'  own  resources, 
only  cover  the financial aspects  of the  rules.  Infringement  procedures  and  action  against 
Member  States in the Court  of Justice for  failing  to  fulfil  their obligations  are the  ultimate 
weapon for  enforcing the primacy of Community  law, but they depend  on information  and 
proof  of  the  infringement  in  question.  Therefore,  there  is  a  pressing  need  for  the 
Commission,  as  guardian  of  the  Treaties,  to  be  given  the  means  to  investigate,  and  if 
necessary,  enforce  compliance,  subject  to  the  Court's  supervision,  the  principle  that  both 
parties be heard, and the rights of the defence.  Consideration  should  also be given to ways 
in  which  the  Member  States  might  be  directly  involved  in  this  exercise,  for  example  by 
setting up joint inspection teams from  the customs administrations. 

In  addition  to  means  of  enforcing  the  legislation,  there  is  a  need  for 
2.4.4. 
interpretation,  training  and  information  tools  to  ensure  consistent  application  of  the  law; 
these are covered in point 4.5. 

2.5 

Establishing a partnership  between  customs  and  operators  to 
respond to transit users' needs 

There is growing recognition  that  building a climate of trust  between  customs 
2.5.1. 
and  operators  is  crucial  to  maintaining  the  vital  balance  between  the  customs  facilities 
offered  to  operators  and the  need  to  police  customs  procedures  in general,  and  transit  in 
particular. 

In 

line  with 

the  suggestion  by  Parliament's  Committee  of 

2.5.2. 
Inquiry 
(Recommendation  No 32)  that  customs  authorities  be  given  a  "duty  of  care"  towards 
users  of  the  transit  system,  the  Commission  will  propose  the  introduction  of  a  general 
policy  of  dialogue  and  partnership,  at  Community  and  national  levels,  based  on  a 
European  quality  charter  for  public  customs  services.  The  Commission  will  also  support 
campaigns  to  promote  the  image  of  European  customs  services  and  the  quality  and 
openness policy, as part of the Customs 2000 programme. 

2.5.3. 
The  Commission  will  call  upon  customs  administrations  to  create  the 
conditions  for  pursuing  dialogue  at  national  level,  in  the  first  instance,  for  example,  by 
means  of  a  special  hot-line  which  would  allow  feedback  to  be  collected  centrally  and 
channelled  to  the relevant  authorities,  or by appointing  customs  ombudsmen  in charge  of 
receiving  and  dealing  with  complaints  from  operators  about  unfair  or  unsatisfactory 
treatment  without  recourse  to  the  courts,  with  a  view  to  improving  service  and  raising 
standards of performance.  The schemes would not be limited to transit. 

2.5.4. 
operators: 

With  specific  reference  to  transit,  the  partnership  should  enable  customs  and 

to  clarify  their  respective  responsibilities  for  administering  the  transit  system  and 
helping to improve it (see worksheets 4.2.1.  and 4.2.3.), 

to  ease  the  administrative  burden  on  customs  as  well  as  on  the  users  of  the 
procedures, 

to delegate certain tasks to private-sector operators acknowledged  to be reliable, 

to  develop  practical  ways  of  working  together  with  a  view  to  improving  fraud 
prevention  and detection,  and, in so doing, to enable transit  procedures to be made 
considerably more secure. 

The  principle  of  partnership  founded  on  dialogue  and  exchange  between 
2.5.5. 
customs  and  operators  should  go further  tha.n general  commitments  and new  committees: 
it  should  become  part  of  the  way  the  system  actually  works,  for  example  via  the 
conclusion of Memoranda of Understanding  fMolD  (see worksheet  4.1.2). 

2.5.6. 
In  addition,  a  Customs/transit  operators  contact  group  would  be  a  useful 
adjunct  to the Advisory Committee on Customs  and Indirect  Taxation, for  specific  transit-
related matters affecting  the whole of the common transit  area (see worksheet  4.5.2). 

2.6 

Integrating  European  customs  systems:  a  new  convention  to 
facilitate European customs procedures 

2.6.1. 
The basic idea is to introduce  a new transit  system to  replace  the  Community 
and  common  transit  systems  Europe-wide,  tailored  to  meeting  the  legitimate  need  to 
facilitate  trade  in Europe  and  accommodating  other  partners  in future  as  part  of the  pre-
accession  strategy  for  EU  enlargement.  The  new  convention  would  initially  cover  transit 
and  customs  declarations  using  the  Single  Administrative  Document,  and  could  later  be 
extended  to  all provisions in other bilateral  or  multilateral  conventions  on  simplifying  and 
facilitating  trade. 

2.6.2. 
backed the Commission on the idea in its Recommendation No 34. 

This  approach  was  supported  by  Parliament's  Committee  of  Inquiry,  which 

2.6.3. 
The  new  convention  to  facilitate  European  customs  procedures  only  makes 
sense  if  it  provides  for  a  speedy,  balanced  decision-making  process  ensuring  that  the 
various parties'  interests are fairly protected,  and if it is to be workable, this means using a 
qualified  majority  voting  procedure which would  prevent  a single country  imposing a veto 
or a group of countries dominating the others. 

A safeguard  clause  should be included  to  protect  the contracting  parties'  vital 
2.6.4. 
interests  while  ensuring  that  the  system  works  overall,  by  allowing  any  party,  in  certain 
exceptional  situations,  to  suspend  national  application  of  the  convention  or  particular 
provisions for  a limited period,  or to introduce special emergency measures. 

2.7 

Ensuring that international transit systems are compatible 

One. structural  weakness  of the transit  system  is that  there  are  in  fact  several 
2.7.1. 
different  "systems",  all  run  differently;  their  conflicting  principles  and  decision-making 
procedures  make  it  almost  impossible  to  achieve  coherent  European  customs  transit 
procedures.  The standard  of security varies,  providing  scope for  criminal organizations  to 

make  considerable  and  relatively  risk-free  profits  by  focusing  their  activities  on  the 
weakest links in the system. 

The Commission is therefore  in favour  of a single customs transit  system for  trade within 
the  territory  of  the  Community  and  partner  countries  in  the  future  European  transit 
convention.  The  TIR  convention  would  only  govern  trade  between  countries  inside  the 
European transit  area and  other  contracting  parties to  the  TIR  outside  the  area.  The  two 
conventions therefore  need to be compatible. 

However,  since the present  TIR convention  does not  allow a group  of contracting  parties 
to  set up a different  international transit  system for their exclusive use, unless they form  a 
customs union,  the Commission  intends  to  play  an  active role  in current  efforts  to  revise 
the convention with a view to improving the security of TIR transit operations. 

2.7.2. 
The  Commission's  top  priority  in the  first  phase  of revision,  to  be  completed 
by the  end  of  1997, will be to  have  the  convention  incorporate  controls  on  access  to  the 
system  by  guaranteeing  associations  and  transport  operators,  together  with  a  system  for 
checking  the  use  of  TIR  carnets,  based  as  far  as  possible  on  electronic  data  interchange 
(EDI) and the creation of an international control body (the TIR Executive Board). 

2.7.3. 

The second phase, starting in early  1998, should target: 

- reform  of the current  system of centralized guarantees,5 

-  incorporation  in  the  text  of  the  convention  of  certain  key  procedural  features,  for 
example in connection with the discharge of TIR operations, 

- provision for computerization of the TIR procedure, 

- a clearer definition  of the status of the holder of a TIR carnet, 

- a rethink of the lay-out and information  on the TIR carnet, 

-  possible  introduction  of  a  TIR  carnet  and  a  specific  procedure  for  "sensitive  goods", 
requiring appropriate guarantees. 

2.8 

Providing the resources for a European customs policy 

Political  recognition  of customs  transit's  importance  to  Europe  and  the  need 
2.8.1. 
to  overhaul the transit  system must be matched by the requisite resources,  if the  proposed 
action plan is to amount to more than pious wishes. 

2.8.2. 
of transit reform  are shown in the table attached as an appendix to the action plan. 

The Commission's present resources and future  requirements for the  purposes 

3.  COMPUTERIZATION, 
THE  NEW COMPUTERIZED TRANSIT SYSTEM (NCTS) 

KEY 

THE 

TO 

TRANSIT 

REFORM: 

The  purpose  of  the  NCTS  project,  and  the  extra  administrative  capacity  it 
3.1. 
offers,  is to  provide  a powerful  and  effective  tool  that  will help  solve many  of the  transit 

5 

In the context of the new guarantee system for TIR, the Commission has launched a study to establish 
a single Community guarantee association. 

8 

system's  management  and  security  problems  while  improving  anti-fraud  operations. 
Parliament's  Committee  of Inquiry,  in its  Recommendation  No 21,  called  for  the  project 
to be implemented without  delay, and exploited to the full. 

3.2. 
The NCTS introduces  a new concept  in transit  management,  based  on the use 
of  advanced  computerized  systems,  electronic  data  processing  technology  and  electronic 
data interchange (EDI), covering the Community, EFTA and the Visegrad countries. 

3.3. 

The objectives  of the project  are as follows: 

- 

to  see  that  Community  and  common  transit  procedures  function  more  effectively  and 
efficiently, 

- 

to enhance performance  in transit fraud prevention  and detection, 

- 

to  speed  up  transit  operations  and  make  them  more  secure,  while  at  the  same  time 
offering  economic operators new facilities where appropriate and achievable. 

3.4. 
The  NCTS  will  enable  the  movement  of  goods  in  transit  to  be  monitored  in 
real time, whereas current  checks via the paper  system are retrospective.  The new  system 
offers  a number of advantages: 

- 

instead of returning copy 5 of the transit document,  an electronic message is sent; 

- 

instead  of consisting  of a comparison  of the documents,  checks  are  computer-assisted, 
which makes it easier to select operations and target inspections; 

- 

improved administration  of guarantees; 

-  collection and use of transit statistics; 

- 

- 

faster  clearance of transit operations; 

increased  operational  security. 

3.5. 

The system will be introduced  and gradually expanded  as follows: 

- 

- 

- 

the  trial  phase,  consisting  of  the  introduction  of  limited  functions  in  a  few  countries, 
will take  place  in mid-1998,  with  customs  offices  continuing  to  exchange  the  relevant 
documents on paper, 

the operational  phase will begin in late  1998, with the introduction  of limited  functions 
in a few countries, replacing paper declarations, 

the  system  will  become  fully  operational  in  late  2000,  totally  replacing  exchanges  of 
paper documents between customs  offices. 

National  administrations  have  committed 

3.6. 
the 
resources needed  to implement  the project.  The Commission's  contribution will be  funded 
from the Community  budget. 

to  allocating 

themselves 

3.7. 
In  order  to  make  the  NCTS  as  good  as  it  can  be,  and  involve  operators 
directly in setting it up, future  users were treated  to a presentation  of the complete  project 
at  a  conference* held  on  28  April  1997  in  Brussels,  which  was  also  attended  by  the 
customs administrations that run the system. 

4  SPECIFIC  MANAGEMENT  AND  CONTROL  PROJECTS  FOR  THE  TRANSIT 
SYSTEM 

The  projects  listed  below  cover  not  only  devising  and  administering  regulations  (to 
include  provisions  for  enforcement  and  fraud  prevention)  but  detecting  and  tackling 
infringements  at  operational  level.  Calculations  of  the  human  resources  needed  to 
implement the schemes are given in the appendix. 

Some  of  the  projects  will  entail  some  expense  on  the  part  of  operators;  however,  this 
should  be  greatly  offset  by  the  increased  efficiency  and  security  they  bring  to  transit 
operations.  The projects  should not place an unfair  financial  burden on operators,  large or 
small,  and they will be  subject  to  regular  evaluations to  assess whether  they  are  effective 
and appropriate, taking into account their potential cost. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

MANAGEMENT OF THE TRANSIT PROCEDURE 
4.1.1. 

Controlling  operators '  use  of  the procedure  according  to  their 
reliability and the degree of risk 
Refining 
commitments: Memoranda  of  Understanding 
Reviewing transit procedures for  certain modes of transport 

the  system  by  means  of  dialogue  and  mutual 

4.1.3. 
SUPERVISION  OF TRANSIT OPERATIONS 
4.2.1. 

Customs'  responsibility  to see  that procedures  run  smoothly  and 
on time: national management  plans 
Administrative  cooperation with regard to the procedure 
Operators'  responsibility  for  front-line  supervision  of  transit 
operations 

4.1.2. 

4.2.2. 
4.2.3. 

enforcement: 

administrative 

FRAUD PREVENTION AND LAW  ENFORCEMENT 
4.3.1. 
4.3.2. 
4.3.3. 
4.3.4. 

Secure movement of goods  in transit 
Coordinated risk management 
Targeted checks on operations 
Fraud 
investigations and judicial  procedures 
Coordination of means and resources 

4.3.5. 
SOUND FINANCIAL MANAGEMENT  OF TRANSIT 
4.4.1. 
4.4.2. 

detection 

and 

law 

Tailoring the guarantee system to the degree of risk 
Assigning  liability for  customs debt fairly,  in a way  that  protects 
the various financial  interests involved 
Streamlining debt recovery procedures 

4.4.3. 
CORRECT AND  UNIFORM APPLICATION  OF THE RULES 
4.5.1. 
4.5.2. 
EFFECTIVE  MONITORING  AND  CONTINUOUS  EVALUATION  OF 

The transit handbook 
Training customs officials and informing  operators 

4.6. 
THE TRANSIT SYSTEMS AND  THEIR REFORM 

10 

4.1 

Management of the transit procedure 

4.1.1  CONTROLLING  OPERATORS'  USE OF  THE PROCEDURE  ACCORDING TO 
THEIR RELIABILITY AND THE DEGREE OF RISK 

It  is important  to get to know transit  users and manage risks if the transit  procedure  is to 
be  properly  managed.  Security  measures  must  be  balanced  against  the  right  of  honest 
traders  to  obtain  the  facilities  they  want.  To  assess  the  risks  involved  in  granting  transit 
facilities,  a feasibility  study will be conducted to explore the possibility of providing  access 
to  Community-  and  Europe-wide  information  on  traders  whose  reliability  is  not  deemed 
sufficient  to allow them to use simplified  transit procedures. 

Objectives. 
•  To  boost  security,  maintaining  customs  facilities  but  allowing  only  duly  authorized, 

honest and reliable operators to use simplified  transit  procedures 

•  To  uphold  Article  5  of  the  GATT,  by  keeping  the  non-simplified  transit  procedure, 

subject  to a full  guarantee,  open to all 

Action 

Elaborate a basic transit procedure that does not require prior  authorization 
Introduce  a  standard  prior  authorization  for  all  simplifications  of  the  procedure  for 
general use, and lay down the conditions for revising, revoking or cancelling it 
Define  the  requirements  to  be  met  before  operators  can  obtain  authorization  for 
simplified  transit (personal, technical, and  financial) 
Give guarantee offices  the legal framework  and practical tools needed to vet  applicants 
and stipulate the size of the guarantee in the  authorization 
Consider the operator's  security measures when deciding whether to grant  facilities 
Conduct  a feasibility  study  into  a Community  system to  provide access  to  information 
on unreliable  operators 

•  Proposals for regulations (Common and Community transit): July 1997 
•  Implementation: first half of  1998 
•  Monitoring and evaluation:  summer  1998, then annually 

Timetable 

Corresponding recommendations  by Parliament's  Committee of Inquiry: Nos  10 and 11 

H 

4.1.2  REFINING  THE  SYSTEM  BY  MEANS  OF  DIALOGUE  AND  MUTUAL 
COMMITMENTS: MEMORANDA OF UNDERSTANDING 

It  should be possible to build a new climate of trust between  customs  administrations and 
operators  allowing  certain joint  initiatives  in  respect  of the  management  of the  regimes 
and  of  the  transit  systems  by  making  procedures  more  manageable,  rather  than  by 
establishing  binding  legal  rights  and  duties  on  all  parties.  This  is  the  object  of  the 
Memoranda  of  Understanding,  or  MoU.  To  be  efficient,  the  MoIJ  must  be  concluded 
locally  between  businesses  and  the  customs  administration  with  which  they  deal  for 
customs  formalities.  However,  there  is  no  objection  to  "framework"  MoUs  being 
concluded  nationally  or  even  Community-wide  between  transit  users  and  administrators, 
on the basis of model MoUs. 

Objectives 
•  To  make  procedures  more  effective  and  allow  customs  and  operators  to  curb 

bureaucracy and unnecessary  controls 

•  To make procedures more secure 
•  To improve knowledge of transit users and their reliability 

Action 

Draft  model Memoranda of Understanding 
Promote the adoption of memoranda of understanding between customs and operators 
Evaluate  the  use  of  MoUs  and  their  impact  on  the  security  of  operations  and  the 
procedures'  efficiency,  also their advantages to customs and operators 

Timetable 
•  Model MoU:  1998 (first  half: ad hoc group; second half: discussions with operators). 
•  Launch: early 1999 

12 

4.1.3 
TRANSPORT 

REVIEWING  TRANSIT  PROCEDURES  FOR  CERTAIN  MODES  OF 

Transit  procedures  applicable to  certain  modes  of transport  must be carefully  reviewed  to 
assess  their  effectiveness  and  vulnerability  to  fraud;  for  example,  current  proposals  for 
maritime transport will be followed up. 

Objectives 

To  redefine  the  scope  of  transit  with  regard  to  maritime  transport  with  a  view  to 
reflecting  the difficulties  of applying the procedure  to  such cases  and  reducing  the  risk 
of  fraud 
To  improve  recovery  of  customs  and  fiscal  debts  by  introducing  a  compulsory 
guarantee for  certain transit  operations by sea 
To  obtain  sufficient  information  to  assess whether  the  facilities  granted  for  rail  and  air 
transport  are used properly and are sufficiently  secure 

• 

Action 

Amend  the  regulations  on  procedures  for  transit  by  sea  so  to  allow  only  regular 
shipping lines to use them, and improve means of checking on such  operations 
Enhance  protection  of  the  financial  interests  at  stake  by  introducing  a  compulsory 
guarantee for the transit  of non-Community goods by regular shipping line 
Commission  a study to  evaluate the effectiveness  and  security  of transit  procedures  for 
air and rail transport  and whether guarantee waivers should be maintained 

Timetable 
•  Amendment  to  maritime  transit  regulations:  adoption  of  a  proposal  for  Community 

legislation set for June  1997 

•  Study: launch of invitation to tender October  1997 

Financing of study: Article  10(2) of the Customs 2000 Decision 

Resources 

Corresponding recommendations  by Parliament's  Committee of Inquiry: No 25 

13 

4.2 

Supervision  of transit operations 

4.2.1  CUSTOMS' RESPONSIBILITY TO  SEE  THAT PROCEDURES RUN SMOOTHLY 
AND ON TIME: NATIONAL MANAGEMENT PLANS 

Reform  should start with improving the way current  procedures are applied and taking  full 
advantage of existing administrative cooperation  facilities. 

To  enable  operators  to  obtain  economic  advantages  from  using  the  transit  procedures 
by running them more efficiently 

, 

Objectives 

Action 

Reorganize  offices  responsible  for  returning  copy  5  of  the  transit  document  in  the 
offices  of destination  and the central offices,  once resource needs have been assessed 
Make  one national  office  (e.g. the  guarantee  office  -  see worksheet  4.4.3)  responsible 
for collating copies  1 and 5 of the transit document,  and handling enquiry  procedures 
Set  realistic  targets  for  meeting  Community-wide  time  limits,  as  part  of  the  national 
management  plan 

Timetable 

Amendment  of administrative  arrangements  (Community  and  common  transit):  end  of 
1997, for  implementation early  1998 
Implementation  of other measures: from  the second quarter of  1997 

Corresponding recommendations by Parliament's Committee of Inquiry: Nos 5 and 26 

14 

4.2.2  ADMINISTRATIVE  COOPERATION  WITH REGARD  TO THE 
PROCEDURE 

Administrative  cooperation  must  also  be  stepped  up  so  as  to  facilitate  contacts  between 
administrations  and  ensure  swift  and  organized  information  exchange,  notably  via  liaison 
officers  specially appointed  to deal with all transit-related  matters. 

To  make  transit  procedures  more  secure  and  effective  by  facilitating  communication 
between different  customs departments and thereby improve transit  monitoring 

Objective 

Action 

Improve the prior information  system: 
(1) expand the prior information  system  to cover all common transit countries (in 
progress) 
(2) make it compulsory for  all transit operations involving "sensitive goods" (defined  in 
a new, authoritative list) 
(3) have the office  of arrival send immediate notification  on acceptance of the goods, 
by the fastest  means of communication 

Set up a network  of national transit coordinators and local transit contacts: 
- appoint  a national transit  coordinator to monitor the implementation of transit rules, 
draft  national transit management  and control plans, act as go-between and support the 
activities of local contacts 
- appoint a transit contact in every large customs office  (handling over  10.000 transit 
authorizations  a year), to be responsible for implementing transit management and 
control plans, communicating directly with other customs administrations and holding 
regular dialogue with operators 
Set up the Transit  Stamps Transmission  System 

Timetable 
Setting-up  and introduction  of the Transit  Stamps Transmission  System: June  1997 
Adoption of a single list of "sensitive goods": July  1997 
Appointment  of coordinators and contacts for  each country:  September  1997 
Dissemination  of the complete transit network list: December  1998 
First  seminar for  national transit coordinators:  1998 

Corresponding recommendations  by Parliament's  Committee of Inquiry: Nos  1 and 9 

15 

4.2.3 OPERATORS' 
SUPER VISION OF TRANSIT OPERA TIONS 

RESPONSIBILITY 

FOR 

FRONT-LINE 

Users  of  transit  procedures,  responsible  for  physically  controlling  and  supervising  their 
operations,  should  also  contribute  to  increasing  security  and  making  the  procedures 
effective. 

Objectives 
•  To  make  transit  operations  more  secure  by  clearly  setting  out  the  principal's 

responsibilities for  actual control of goods transported  in transit 

•  To  reduce  delays in  discharging  the  procedure  and  give  operators  more  responsibility 

by entrusting them with the task of returning transit document  copy 5 

Action 

Clearly  set  out,  in  the  legislation,  the  principal's  responsibilities  for  controlling  and 
monitoring transit operations and clarify the concept  of discharge of the procedure 
Spell  out  the  extent  of  the  principal's  responsibility  for  the  good  conduct  of  transit 
operations via the conclusion of an MoU with the customs authorities 
Authorize  reliable  operators  to  take  charge  of  returning  transit  document  copy  5  for 
simplified  procedures, until such time as the NCTS is fully  operational 

•  Proposal relating to Community and common transit regulations: July  1997 
•  Implementation:  early  1998 

Timetable 

Corresponding recommendations  by Parliament's  Committee of Inquiry: Nos  10, 23, and 
24 

16 

4.3 

Fraud prevention and law enforcement 

4.3.1  SECURE MOVEMENT OF GOODS IN TRANSIT 

The  coherence  and  success  of  the  policy  depend  on  close  cooperation  between  customs 
administrations  and between  them and the Commission,  all actively working together  with 
operators,  who  must  assess  the  risks  they  run  and  check  the  goods  entrusted  to  them. 
Some  of  the  suggested  security  measures  are  not  new,  but  their  cost-effectiveness  could 
be  boosted  for  the  customs  services  and  the  trade  if  they  were  coordinated  and 
implemented  simultaneously  by the various  customs  services  involved  from  start  to  finish 
of the procedure. 

Objectives 

To  have  customs  and  operators  introduce  measures  to  reduce  the  risk  of  goods  being 
unlawfully  removed  from  customs  supervision  or  switched  en route,  based  on  a better 
cost-effectiveness  ratio. 
To  ensure  monitoring  or  surveillance  of  operations  and  make  it  easier  to  conduct 
checks 

Action 

Affix  seals  to  the  space  containing  the  goods:  this  should  be  compulsory  for  sensitive 
goods,  and  recommended  in  certain  other  cases;  have  the  competent  national 
authorities approve the means of transport  used, to ensure that it is suitable for  sealing 
Affix  compulsory  "T"  (transit)  plates to  the  approved  lorry  to  show  that  it  is  carrying 
goods in transit,  so as to make customs' work  easier and inform the haulier and driver 
Require  the  person  lodging  the  transport  document  to  state  the  vehicle's  compulsory 
route 
Have the office  of departure estimate the vehicle's arrival time as accurately  as possible 
Coordinate  surveillance  measures  with  the  operator's  own  security  measures  (see 
worksheet  4.2.3) 

Timetable 
Proposal for  implementing measures: July  1997 

Resources 

Customs  administrations:  assignment  of  sufficient  staff  to  carry  out  security  measures 
for  initial controls, in cases and circumstances laid down at European level 
Issue of approval certificates  and annual inspections of vehicles: to be contracted  out  to 
approved  private sector  agencies 

Corresponding  recommendations  by Parliament's  Committee  of  Inquiry:  Nos  7, S,  and 
22 

17 

4.3.2  COORDINATED RISK MANAGEMENT 

The  development  of  a  common  risk  management  policy,  and  especially  setting  up  a 
Community  risk  analysis unit,  would  enable  all  customs  administrations  to  define  precise 
criteria for targeting inspections, record  checks and enquiries. 

Objectives 
•  To rationalize, harmonize and coordinate fraud  prevention Europe-wide,  particularly as 

regards the customs transit  system 

Action 
•  Set up a Community risk analysis unit to compile  risk  profiles  and the  selection  criteria 

to be used 

•  Have  the  Commission  coordinate  risk  management  policies  implemented  at  national, 
regional  and  local  level,  too  (including  audits  of  operators,  especially  those  already 
granted  facilities) 

Timetable 

Between  now  and late  1988 (when the NCTS  is launched),  a Community  pilot  scheme 
on risk analysis is set to  consider transit  as a test  case (test  profiles  to be ready bv Julv 
1997) 
Commission to prepare a plan: first half of  1998 

Sufficient  staff  (Commission  and  national  experts  on  secondment)  to  form  the 
Community risk analysis unit (financed  under Article 9 of the Customs 2000 Decision) 

Resources 

Corresponding  recommendations  by Parliament's  Committee  of  Inquiry:  Nos  1,  3,  4, 7, 
9, 25 and 28 

18 

4.3.3  TARGETED CHECKS ON OPERATIONS 

Europe-wide  coordination  of  each  customs  administration's  control  plans  and  the 
development  of joint control operations would considerably enhance all areas of  anti-fraud 
work. 

• 

To  make  controls  more  effective  without  hampering  or  unnecessarily  delaying  goods 
movements 

Objectives 

Action 

Have  all  the  relevant  customs  services  (nationally  and  locally)  draft  a  six-monthly 
control  plan  setting  out  targets  and  priorities  for  each  sector,  allocating  the  necessary 
resources,  deciding  on  administrative  and  physical  controls  in  accordance  with 
European  guidelines on risk management,  evaluating the results of controls  carried  out 
and accounting for them in terms of European policy 
Coordinate national control plans at European level 
Organize one-off joint  control  operations for  the different  modes of transport  (air,  sea, 
rail, road) at European level, with Commission  assistance 

National  authorities  will  be  asked  to  submit  their  first  draft  six-monthly  control  plans 
for  transit  in  1997,  to  enable  consultation  and  coordination  by  the  Committee  in 
September  1997, so they can be introduced together,  across Europe, in January  1998. 

Timetable 

• 

Resources 
Community level: financing under Articles 8 and  12 of the Customs 2000 Decision 
For  customs  services:  allocate  human  and  material  resources  needed  to  carry  out 
controls to good  effect 

Corresponding  recommendations  by Parliament's  Committee of Inquiry: Nos  1, 4, 5 and 
7 

19 

4.3.4  FRAUD DETECTION AND LAW  ENFORCEMENT: 

ADMINISTRATIVE  INVESTIGATIONS AND JUDICIAL  PROCEDURES 

In  addition  to  fraud  prevention,  we  need  to  develop  a  policy  for  detecting  and  dealing 
with  fraud,  particularly  as  regards  large-scale,  organized  financial  and  economic  crime. 
This should be done by implementing the present  legislation in practice (some of it recent) 
and developing other tools and schemes needed to crack down on crime. 

To detect  and deal with transit fraud  effectively,  fairly,  and as a deterrent,  in equivalent 
ways across the Community 

Objectives 

Action 

Implement the new Regulation 515/97 on mutual assistance on customs 
Implement  Community  regulations  on  protecting  the  Community's  financial  interests, 
detecting  fraud  and  irregularities  (Regulation  2185/96  concerning  on-the-spot  checks 
and  inspections)  and  on  administrative  penalties  (see  point  2.4  with  reference  to 
Regulation  2988/95) 
Set up appropriate investigation bodies at Community level 
Promote  and  support  the  development  and  use  of  schemes  and  tools  to  combat  fraud 
across  the  EU:  the  "protection  of  financial  interests"  convention  and  two  additional 
protocols (on corruption and cooperation in criminal cases) 
Follow up the study on a European judicial area requested by Parliament 
Incorporate  provisions  on  customs  cooperation  into  the  Community  provisions  of  the 
EU Treaty and strengthen Article 209A 

Timetable 

Implementation  of Regulation  515/97: March  1998 
Implementation  of Regulation 2185/96:  1997 
Follow-up  of  the  ratification  and  implementation  of  the  CIS  and  financial  protection 
conventions, with the first protocol on corruption:  1997 
Follow-up  of  the  ratification  and  implementation  of  the  second  financial  protection 
protocol:  1998 
Follow-up of the study on a European judicial area:  1998 

Resources 

Setting up  of a crime unit  staffed  by Member  States experts on crime,  seconded to  the 
Commission 
Reinforcement  of  the  Commission's  investigation  services,  with  a  view  to  the 
implementation  of  Regulation  2185/96  and  the  setting  up  of  a  joint  investigation 
agency 

Corresponding  recommendations  by Parliament's  Committee  of  Inquiry:  Nos  2,  8,  and 
14 to 20 

20 

4.3.5  COORDINATION  OF MEANS AND  RESOURCES  AND  HARMONIZATION 
OF CUSTOMS  OFFICIALS' POWERS 

The management  of national administrations'  resources  (staff  and  equipment)  needs to  be 
coordinated.  Customs  officers'  powers  should  be  harmonized  as appropriate,  as  outlined 
in  the  Commission's  paper  COM(95)  556,6  to  ensure  that  they  meet  the  same  security 
standards and guarantee operators equivalent treatment throughout  the customs territory. 

Objectives 
•  To raise standards in the customs service generally, and make checks more  effective. 

Action 

•  Evaluate and actively coordinate customs administrations'  resource management 
•  Draft  a Community  plan to  ensure that the Community's external  borders  are  properly 

resourced 

•  Carry out a general study on the role and powers of customs  officials 

•  First  phase  of  coordination: 

Timetable 
inventory  of 

administrations (second half of  1998) 

the  means  deployed  by  customs 

•  Second  phase:  identification  of  additional  needs  at  European  level  and  drafting  of  a 

Community resource plan (1999) 

•  Study on the role and powers of customs  officials  already programmed  in the  Customs 

2000 action plan for  1997 

Resources 
•  Community/Commission:  financing  under  Articles  8  and  12  of  the  Customs  2000 
Decision,  plus  partial  Community  financing  of  certain  control  equipment  to  be 
considered 

•  Customs  administrations:  allocate  sufficient  human and material  resources  to  carry  out 

controls to good  effect 

Corresponding recommendations  by Parliament's  Committee of Inquiry: Nos  1, 4, 5, 6, 8 
and 9 

6  Comparative analysis of reports supplied by the Member States on national measures taken to combat 

wastefulness  and the misuse of Community resources. 

21 

4.4 

Sound financial management of transit 

4.4.1  TAILORING  THE GUARANTEE SYSTEM  TO THE DEGREE  OF RISK  AND 
RELIABILITY 

Sound  financial  management  of  the  transit  system  must  mean  securing  appropriate 
financial  guarantees prior to any transit  operation. 

To  tailor  the  type  of  guarantee  and  conditions  imposed  in  each  case  to  the  particular 
circumstances of the operator 

Objectives 

Action 

For  standard  operations  open to all, require  a guarantee that  offers  maximum  financial 
protection  (full,  individual guarantee, including flat-rate  guarantee vouchers for  the  full 
amount) 
Offer  simplified  guarantee  facilities  (comprehensive,  flat-rate)  to  operators  who  fulfil 
particular  criteria,  calculating  the  amount  according  to  the  potential  risks  of  the 
operation and the security measures taken 
Conduct  a  study  to  establish  the  extent  to  which  an  insurance  scheme  for  duties  and 
taxes might be substituted for guarantees in some cases 

Proposals for regulations: July 97 
Tools and operational measures: in the course of  1998 
Insurance study: launch invitation to tender in May  1998 

Timetable 

Customs 2000 budget for operational measures and the study 

Resources 

Corresponding recommendations by Parliament's Committee of Inquiry: Nos 10 and 24 

22 

4.4.2  ASSIGNING  LIABILITY  FOR  CUSTOMS  DEBT  FAIRLY, IN  A  WAY  THAT 
PROTECTS  THE  VARIOUS FINANCIAL INTERESTS  INVOLVED 

At the other end of the chain of formalities  and controls linking any transit  operation,  sound 
financial  management  also  demands  that  the  competent  authorities  are  able to  recover  any 
amounts  owing  swiftly  and  efficiently,  from  the  person  or  persons  liable.  Customs  debts 
should  be  recovered  in  the  first  place  from  those  directly  responsible  for  incurring  them, 
without precluding the possibility of recovering debts from the principal and his guarantor in 
the event of difficulties  recovering them from  any other persons liable. 

To pinpoint the transit  situations that give rise to  customs and tax debts and the status of 
those incurring such debts 

Objectives 

Action 

Make  it  very  clear  in  the  regulations  that  unless  the  goods  are  subjected  to  unlawful 
removal from  customs supervision or unlawful  introduction by a third  party,  sole liability 
for  payment  of debts incurred  in the course  of a transit  operation  lies with  the  principal, 
who,  as  the  person  authorized  to  use  the  transit  procedure,  must  see  to  it  that  the 
operations  he undertakes  are  properly  conducted  and  assume  full  liability  for  any  debts 
arising from failure  to carry out the duties entailed  in the use of the procedure  (see point 
4.2.3) 
State  in  the  regulations  that  if  the  goods  are  unlawfully  removed  from  customs 
supervision  in  the  course  of  a  transit  operation,  the  primary  persons  liable  are  the 
perpetrator,  any accomplices,  and the receiver(s)  of the goods thus removed  (which may 
include  the  haulier),  and  that  action  is  first  to  be  taken  against  them,  before  any 
proceedings are instigated against the principal 
If the debt cannot be fully  recovered from the other persons liable, notify  the principal,  as 
the  person  bearing  ultimate  financial  responsibility  for  the  operation,  and  proceed  to 
enter  the  debt  in the  accounts  in  his  name  on  the  basis  of  his joint  liability,  within  12 
months, taking precautionary measures (see point 4.4.3),  so as to ensure that the security 
is not released prematurely; provide for  payment to be suspended until any action against 
the other persons liable has run its course,  and for  the principal to be reimbursed  for  any 
sums recovered from other persons jointly liable 
Introduce  provisions in the regulations  establishing the liability of anyone responsible  for 
unlawful  introduction  of the  goods  following  a transit  operation  (after  the  principal  has 
been released from  his liabilities), together with any accomplices or the receiver(s)  of the 
goods (which may include the person for whom the goods were intended) 

Proposal: July  1997 

Timetable 

Corresponding recommendations by Parliament's Committee of Inquiry: No 23 

23 

4.4.3  STREAMLINING  DEBT RECOVERY  PROCEDURES 

Recovery procedures must be reorganized to eliminate any malfunctions  and delays arising 
from the multiplicity of customs administrations and the diversity of fiscal jurisdictions. 

Objectives 
Establish  beyond  doubt  the  place  where  the  debt  was  incurred  and  hence  the  national 
authority responsible for its recovery. 

Action 

Make  one  body  (the  guarantee  office) 
responsible  for  coordinating  recovery 
procedures  for  a  given  transit  operation  for  which  a  debt  has  been  incurred  — 
regardless  of  the  dutiable  event,  the  precise  location  where  the  debt  was  incurred,  or 
the country which is the ultimate beneficiary  of the debt (see point 4.2.1) 
Give  the  guarantee  office  responsibility  for  examining  the  case  on  the  basis  of 
information  sent  by  the  various  authorities  concerned  and  putting  forward  a  plan  for 
dealing with it (which party should be proceeded  against  as being liable, by whom,  and 
by  what  date),  and  for  taking  precautionary  measures  against  the  principal  and  the 
guarantor,  such as sending a recovery notice to the principal within  12 months,  without 
prejudice to the outcome of the recovery  procedure 
Stipulate that, in the event of failure to reach agreement  on the recovery plan within the 
same time limit,  the customs and tax  debt  will be deemed  to  have been  incurred  in the 
country of departure, which must immediately proceed to recover it 
Set up a link between guarantee offices  to make it easier to deal with recovery cases 
Improve  the  Community  Directive  and  the  Annex  to  the  Customs  Transit  Convention 
on mutual assistance with debt  recovery 

Amendments to regulations: proposals July  1997 

Timetable 

24 

4.5 

Correct and uniform application of the rules 

4.5.1  THE TRANSIT HANDBOOK 

Checks  to  see  that  the  rules  are  properly  applied  are  covered  in  point  2.4;  however, 
another  way  of  achieving  this  goal  is  to  give  customs  officials  a  practical  and 
comprehensive  standard  handbook  to  assist  them  in  applying  the  transit  rules  and 
combating transit fraud. 

Objectives 
•  To  ensure  transit  regulations  are  properly  and  uniformly  applied  by  operators  and 

customs  administrations 

•  To ensure that operators receive the same standard of treatment 
•  To make operators'  and customs officials'  tasks easier 

Action 
•  Draft  a  handbook  of  instructions  and  information  on  transit  for  the  use  of  customs 

officials  and, to  some extent, transit  operators 

Timetable 

Proposal  for  submission  to  the  Customs  Questions  Committee  and  Joint  Committee: 
June-July 1997 
First editorial team meeting: October  1997 
Start of drafting:  May  1998 
Distribution  to  administrations  (for  action)  and  operators  (for  information):  some  time 
in 2000 

Financing of publication:  Articles  14 and  15 of the Customs 2000 Decision 
Secondment  of  national  experts:  one  to  be  assigned  free  by  each  customs 
administration 

Resources 

Corresponding recommendations by Parliament's Committee of Inquiry: No 1 

25 

4.5.2  TRAINING CUSTOMS OFFICIALS AND INFORMING  OPERATORS 

Customs  officials  should  receive  appropriate  training,  with  a  common  core  component, 
and  operators  should  receive  information  enabling  them  to  supervise  their  operations 
better and enter into dialogue with customs administrations. 

Objectives 
•  To  ensure  consistent  and  continuing  training  of  customs  officials,  to  include  a 

component  on combating fraud, and educate operators with regard to transit 

Action 

Under the Matthaeus programme  and the Customs 2000 Decision: 
•  Hold  seminars  on  specific  topics  for  customs  officials  (facilitating  personal  contacts 

relations conducive to international  cooperation) 

•  Organize exchanges of officials,  especially local transit  contacts 
•  Devise a transit training module for use in national customs training centres and locally; 
•  Hold  seminars for operators on topics of particular interest to them 
•  Examine  the  possibility  of  setting  up  a  common  core  course  for  in-service  training  at 

Community/European level, to include customs transit 

Other activities: 
•  Set  up  a  customs/operators  contact  group  on  transit  bringing  together  the  relevant 
authorities and operators across Europe and nationally in the 23 countries  concerned 

•  Possibly provide technical assistance, for example to associated  countries 
•  Organize national and regional conferences  for customs and  operators 

Timetable 

Matthaeus/Customs  2000 seminars to be planned for  1998 
Devise training module:  1998 
Study on setting up a core course of in-service training 
First annual meeting of the customs/operators  contact group on transit:  1998 
Seminars on topics of interest to operators: second half of  1998 
Customs/operators  conference:  2000 

Resources 
•  Financing  under  the  Matthaeus  programme  and  Articles  14  and  15  of  the  Customs 

2000 Decision 

Corresponding recommendations  by Parliament's  Committee of Inquiry: No 4 

26 

4.6 

Effective  monitoring  and  continuous  evaluation  of  the  transit 
systems and their reform 

Customs  administrations  and  operators  will  be  invited  to  join  the  Commission,  in  the 
appropriate fora,  in monitoring progress and carrying out routine evaluations of transit  reform. 
The  Council  and Parliament  will play  a key political  role  in ensuring  that  transit  reform,  and 
particularly  the  computerization  of  transit  procedures,  is  carried  out  properly  and  with  the 
requisite  speed. 
The  Court  of  Auditors,  for  its  part,  gave  notice  at  the  "Euro  transit  '97"  conference  that  it 
would  conduct  an inquiry into customs transit in  1998. 

Objectives 

To  enable  administrators  and  the  political  institutions  to  which  they  are  accountable  to 
monitor the progress of reform 
To allow any problems encountered  along the way to be solved 
To ensure that the reforms  are introduced  smoothly in all the countries concerned 
To allow action and resources to be redirected  as necessary 

Action 

Establish  national  timetables  for  implementing  the  reforms,  stating  the  means  to  be 
allocated to them, in a coordinated  Community and European  framework 
-  Ensure regular monitoring of the national action plans 
-  Establish criteria for  evaluating implementation of the  reforms 
-  Report  on  national  implementation,  any  problems  encountered  and  any  changes  to  be 
made to ensure that the goals of the reform  are met 
Draw up an overall report on the progress of reform  Communitv/Europe-wide 
-  Evaluate the effects  of the reforms  and their impact  on the  effectiveness  and  security  of 
customs  procedures 
-  Inform Parliament and the Council of the progress of reform 

National action programmes: from the first quarter  of  1998 
Overall report to be presented by the Commission  : mid-1998 (UK Presidency) 
Evaluation:  annual 

Timetable 

Corresponding recommendations  by Parliament's  Committee of Inquiry: Nos  37 and 38 

27 

INDICATIVE FIGURES CONCERNING THE HUMAN RESOURCES NEEDED FOR TRANSIT REFORM 

APPENDIX 

The following  estimates are for  the  overall requirements  involving permanent  staff  and seconded  national  experts,  corresponding  to the  various 
projects planned  as part  of the reform.  These requirements  will have to be met by use of additional  resources,  as well as by internal  redeployment 
and by a contribution from  the third-coutry  partners, for  the reform  of the transit-arrangements  and the NCTS. 

(DG XXI + UCLAF) 

TYPE OF PROJECT 

REFERENCE ON ACTION PLAN : 

AVAILABLE 
RESOURCES 
(APRIL  1997) 

RESOURCES 
REQUIRED 
1997/1998 

RESOURCES 
REQUIRED 
1999 

RESOURCES 
REQUIRED 
2000 

1 

2. 

3 

4. 

5. 

6. 

7. 

8. 

9. 

Management/Organization/Secretariat/Documentation 

Amendment of Community / common transit legislation 

4.1.1./4.1.3./4.2.1./4.2.3./ 
4.3.1./4.3.5./4.4.1./4.4.2./4.4.3. 

Implementation and management  tools (statistics, manuals, audit for  access 
and guarantees, etc.) 

2.274.1.1./4.2.2./4.4.1./ 
4.4.3/4.5.1. 

Training,  information,  dialogue  (MoU,  seminars,  customs/traders  contact-
group, exchanges of officials, conferences, training modules) 

4.1.2./4.5.2. 

Studies and their follow-up  (TIR, air/rail transit and insurance) 

4.1.1/4.1.3/4.3.574.4.1. 

Planning,  coordination,  controls,  co-operation  and  mutual  assistance 
(control plans, EC risk analysis unit  and co-ordination,  EC co-ordination of 
means and resources) 

4.2.274.3.2./4.3.3./4.3.47 
4.3.57 

TIR review (+ sec) 

Negotiations for new convention on customs  facilitation 

Technical assistance for third countries 

2.7. 

2.6. 

4.5.2. 

10. 

Monitoring, evaluation (monitoring, national action programmes, reports) 

4.6 

immrf 

3 

Persons available ex  TFT 

Total excluding  computerization 

11. 

Computerization 
(technical and legislative + secretariat) 

Grand total 

1 plus 4 persons providing services 
2 plus 7 persons providing services 

5 

1 

0 

1 

0 

1/2 

3 

0 

1/2 

1/2 

5 

161/2 

121 

28  1/2 

4 

3 

3 

3  1/2 

2 

11 

3 

2 

1 

2 

33  1/2 

142 

47  1/2 

4 

3 

2  1/2 

2  1/2 

2 

11 

3 

2 

1 

2 

33 

14 

47 

4 

4 

2 

2  1/2 

0 

11 

3 

2 

1 

2 

311/2 

14 

451/2 

FINANCIAL STATEMENT 

1.  TITLE OF OPERATION 

Commission  communication  on  an  "Action  Plan  for  customs  transit  in  Europe  -  a 
new customs policy". 

2. 

BUDGET HEADING INVOLVED 

B5-303 

"Customs 2000" (action programme for  customs in the Community). 

3. 

LEGAL  BASIS 

-  Article  100a of the Treaty 

-  Decision  No  210/97/EC  of  the  European  Parliament  and  of  the  Council  of 
19 December  1996 adopting  an action programme for  customs in the  Community 
(Customs 2000) (OJ No L 33, 4.2.1997, p.24) 

-  Proposal presented by the Commission  on ...  1997 for  a Decision of the European 
Parliament  and  of  the  Council  amending  the  Decision  of  19 December  1996 
adopting  an  action  programme  for  customs  in  the  Community  (Customs  2000) 
(OJNoC...,  ...  1997, p. ...) 

4. 

DESCRIPTION OF OPERATION 

4.1 

General  objective 

Establish an action plan for the reform  of customs transit  procedures. 

4.2 

Period covered and arrangements for renewal or extension 

-  Multiannual operation  (1997-2000) 

-  Under  Customs  2000  the  Commission  must  present  a  communication  to 
the  Parliament  and  the  Council  by  30 June  1999  at  the  latest  on  whether 
the  programme  should  be  continued,  accompanied  if  necessary  by  a 
proposal to that  effect 

5. 

.  CLASSIFICATION  OF EXPENDITURE  OR REVENUE 

5.1 

Non-compulsory  expenditure 

5.2 

Differentiated  appropriations 

5.3 

Type  of  revenue  involved:  traditional  own  resources,  the  VAT  and  GNP 
resources, national taxes. 

J£( 

6. 

TYPE OF EXPENDITURE OR REVENUE 

The action plan will be financed entirely under the Customs 2000 programme. 

The  scheme  should  enhance  collection  of  Community  and  national  revenue  by 
limiting  the  risk  of  fraud  and  ensuring  recovery  of  the  sums  involved  in  cases  of 
fraud. 

7. 

FINANCIAL IMPACT 

7.1  Method  of calculating total cost of operation  (definition  of unit costs) 

The action plan will be financed entirely under the Customs 2000 programme. 

7.2 

Itemised breakdown of cost 

The  breakdown  of  the  expenditure  for  the  action  plan  is  entirely  integrated 
into the Customs 2000 programme expenditure set out below. 

EC in ECU million (at 1996 prices) 

- Internal  policies 

1996 

1997 

1998 

1999 

2000 

Total 

1-  Redeployment  of  internal  market 
funds 

2- Customs  2000  computerization 

2.1- Customs  2000l 

2.2-Sectoral 
smooth  functioning  of  customs2 

projects 

for 

the 

3- Improved  action  against  fraud 

"Internal  policies'*  subtotal 

-  External  operations 

T O T AL 

2 

1 

1 

4 

1 

5 

2.3 

2.6 

2.9 

3.2 

13 

3 

(3) 

1.5 

6.8 

1.5 

8.3 

6.5 

9.9 

6.5 

12 

6 

13.1 

1.5 

1.5 

1.5 

20.5 

22.9 

23.8 

1.5 

1.5 

1.5 

22 

24.4 

25.3 

23 

35 

7 

78 

7 

85 

Adopted, see Customs 2000 Decision 210/97/EC of 19 December 1996. 
Sums  covered  by  this  amendment  affecting  the  TARIC,  QUOTA,  EBTI,  TRANSIT, 
SCENT/CIS, CCN/CSI and SIGL projects financed in 1996 and  1997 under heading B5-7210 
(IDA). 
P.m: ECU 10.9 million was allocated for these projects under item B5-7210 (IDA) of the 1997 
budget. 

SO 

7.3 

Indicative schedule of appropriations and MEN 

-  Decision  No  210/97/EC  of  the  European  Parliament  and  of  the  Council  of 
19 December  1996 adopting an action programme for customs in the Community 
(Customs 2000) 

EC in ECU million 

Indicative plan 

Accumulated 
position end 
1996 

1997 
Budget 

1998 
PDB 

1999 

2000 

2001 

2002 and 
subs, years 

TOTAL 

4.000 

6.800 

10.600 

10.900 

10.700 

p.m. 

p.m. 

43.000 

-  Proposal  presented  by the Commission  on  ...  1997 for  a Decision  of the European 
Parliament  and of the Council amending the Decision of  19 December  1996 adopting 
an action programme for customs in the Community (Customs 2000) 

EC in ECU million 

Indicative plan 

Accumulated 
position end 
1996 

1997 
Budget 

1998 
PDB 

1999 

2000 

2001 

2002 and 
subs, years 

TOTAL 

9.900 

12.000 

13.100 

35.000 

8. 

FRAUD PREVENTION MEASURES;  RESULTS OF MEASURES TAKEN 

The fraud prevention measures are those of the Customs 2000 action programme. 

9. 

ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 

See proposed  action plan and the report  of Parliament's  Committee of Inquiry into 
the Community Transit System. 

,i v 

9.1 

Specific  and quantified  objectives; target  population 

-  Specific  objectives: 

Now  that  the  Community  is administering  the  body  of rules  adopted  for  the 
purposes  of the  internal  market,  it  has  a duty  of  care to  economic  operators 
and to all citizens of the European Union. 

In  so  far  as  the  administration  of  the  customs  union  is  concerned,  customs 
legislation  has been  almost  completely  harmonized,  since the  entry  into  force 
of the Community Customs Code on  1  January  1994. 

There  is now  a need  to  step up  activities  aimed  at  further  homogenizing  the 
working  practices  and  methods  of 
the  Member  States'  customs 
administrations:  if  distortions  of  competition  are  not  to  deflect  traffic  and 
undermine  the  confidence  of  operators  and  citizens  in  the  working  of  the 
customs  union,  controls  and  simplified  procedures  must  be  equivalent  in 
outcome and operators treated  equally along the entire external  frontier. 

Though the Community  now has complete  and  coherent  customs  rules, these 
rules have not always been applied by national customs administrations with a 
uniformity  and  efficiency  inspiring  confidence  that  the  financial  interests  of 
the Community  and  the Member  States  and the  integrity  of the  common  and 
Community  policies  governing  trade  with  non-member  countries  are  being 
suitably  protected.  A  Community  scheme  to  boost  cooperation  between 
national administrations is therefore vital if this objective is to be attained. 

The  sound  management  of  the  common  policies  also  depends  on  the 
effectiveness  and efficiency  of the customs machinery underpinning them. 

At  the  same  time,  the  rules  governing  customs  action  must  be  made  more 
accessible to users, traders,  SME, consumers and  citizens of the Union.  This 
calls  for  the  consistent  management  of  public  relations  and  information 
through  a  partnership  with 
the  Member  States,  drawing  on  such 
intermediaries  as  chambers  of  commerce,  trade  federations  and  associations 
where relevant. 

the  Community,  close 
While  pressing  on  with  developments 
cooperation  with the  customs  administrations  of third  countries  is needed  to 
reinforce  current  Community  schemes  aimed  inter  alia  at  harmonizing  the 
legislation  of  future  applicants  for  Union  membership  and  providing 
assistance in specific cases. 

inside 

-  Target population 

Member  States'  customs  administrations,  business  circles,  citizens  and 
consumers. 

9.2 

Grounds for the operation 

-  Need for  Community financial  aid 

The  completion  of  the  internal  market  and  the  unification  of  Community 
customs  legislation  (cemented  by  the  entry  into  force  of  the  Community 
customs  code  on  1  January  1994)  oblige  customs  administrations  along  the 
customs  union's  external  frontier  to  operate  uniformly.  Only  controls  of 
comparable quality  employing the best possible working  methods to  maintain 
both  traffic  flow  and  a  high  level  of  fraud  prevention  and  guaranteeing  all 
operators  equivalent  treatment  wherever  they  cross  the  external  frontier  can 
prevent  distortions  of  competition  from  deflecting  traffic  and  undermining 
operators'  and  citizens'  vital  trust  in  the  sound  working  of  the  internal 
market. 

This  objective  can  only  be  achieved  by  an  action  at  Community  level 
providing  a  legal,  organizational  and  logistical  framework  for  coordinated 
measures by the customs administrations. 

The  first  step  in this  direction  was  the  adoption  by the  European  Parliament 
and the Council  on  19 December  1996 of the  action  programme  for  customs 
in  the  Community  (Customs  2000).  Now  it  is  for  the  Commission  to 
complete  and  build  on  this  action,  which  is  necessary  to  ensure  the  best 
possible administration of customs transit in Europe. 

The sound management  of the internal market from a customs standpoint  also 
depends on cooperation with third countries.  Cooperation with  neighbouring 
countries,  and  in  particular  the  adoption  of  common  procedures,  simplifies 
trade,  improves  fraud  prevention  and  so  facilitates  the  administration  of  the 
internal market. 

-  Choice of ways and means 

The proposed  action programme involves the implementation of schemes  and 
measures  complementing  those  the  Member  States  are  normally  required  to 
take to enforce Community law.  Such schemes and complementary  measures 
are  aimed  at  making  sure the  transnational  dimension  is taken  into  account, 
something vital for the attainment of the objectives laid down. 

Its implementation  and management  are based  on the principle  of partnership 
between the Community and the Member  States: rather than being normative, 
it  is  based  on  permanent  cooperation  between  Community  and  national 
administrations in pursuit of a common  objective. 

Financing  estimates  for  the  computerized  information  and  data-interchange 
systems,  which  used  to  be  funded  under  the  IDA  programme,  have  been 
based  on  the  costs  recorded  in  previous  years.  The  proposed  increase  in 
1998 is mainly attributable to the need to  extend the TRANSIT  system  to  all 
Member States. 

33 

TRANSIT system 

This  commercial  policy  instrument  is  vital  to  the  working  of  international 
trade. 

The  present  paper-based  administration  of  this  system  is  facing  major 
problems: 

-  The  customs  administrations  are having  difficulty  coping  with  the  volume 
of work.  Handling  about  18 million  declarations  a  year  in  Europe  -  and 
about  a  million  queries  under 
the  enquiry  procedure  -  demands 
considerable resources. 

-  Despite 

the  considerable  simplifications  accorded 
operators find manual transit procedures relatively slow and costly. 

them,  economic 

-  Worsening  transit  fraud  in  recent  years  has  not  only  seriously  affected 
national  and  Community  revenue  but  caused  grave  economic  injury  to 
honest  traders  as  a  result  of  unfair  competition  from  goods  that  have 
escaped  duties and taxes and the application of Community policies. 

The transit computerization  project  is aimed at: 

-  boosting the effectiveness  and efficiency  of the transit  system; 

-  enhancing customs administrations'  capacity to prevent and detect fraud; 

- 

further  simplifying  and  speeding  up  transit  operations  for  economic 
operators. 

Computerizing transit has many advantages: 

- 

In terms  of  fraud  prevention,  it  will  make the  system  much  more  secure, 
considerably  reducing  the  opportunities  for  fraud:  cost-benefit  analyses 
suggest  savings of about  1.2 billion ECU in revenue over five years. 

-  National  administrations  will  be  able  to  focus  checks  on  high-risk 
improve  future  selection 
transactions  could 

transactions  (analysing 
criteria). 

-  Economic operators should their  competitiveness  increased  by a reduction 

in their financial risk and their workload. 

CCN/CSIsystem 

The  "Common  Communication  . Network/Common  System 
Interface" 
project  is  aimed  at  providing  a  common  interface  for  transferring  large 
volumes  of  data  between  customs  and  tax  administrations  in  the  Member 
States  and  between  the  Member  States  and  the  Commission  rapidly, 

3"i 

economically and as securely  as possible.  The project  is jointly funded  under 
the  Customs  2000  programme  and  FISCALIS,  with  costs  being  divided  in 
proportion to the customs and tax systems supported. 

Harmonizing the means of exchanging information was considered  necessary: 

• 

• 

to  reduce  the  multiplicity  of  the  types  of  competence  necessary  for  the 
development,  maintenance and use of the applications; 

to  reduce  the  diversity  of the  exchange  services used  by the  applications 
to facilitate their use and their administration; 

• 

to standardize the access to the exchange services; 

• 

to  optimize the use of the communication  links and reduce the  associated 
costs; 

• 

to reduce the number of direct access points in the national domain; 

• 

• 

• 

to  improve  the  quality  of  service  provided  to  the  applications  and  to  the 
users by a common management  structure; 

to  allow the integration of new technologies  made potentially  available  to 
all applications which need them; 

to  increase  the  reactivity  of  the  systems  for  taking  new  needs  into 
account. 

The project  also cuts the costs  and time involved  in launching  a new  system. 
The  CCN/CSI  interface  should  come  into  partial  use  during  a  pilot  project 
scheduled  for  the end  of  1997; its use by TRANSIT  should  begin  at  the  end 
of the second quarter of 1998. 

9.3  Monitoring and evaluation of the operation 

-  Performance  indicators selected 

a)  Number of monitoring missions organized with the Member  States 

b)  Number  of  seminars  organized  on  working  methods  and  external  border 

controls 

c)  Number of exchanges and seminars organized with non-member  countries 

d) Number  of  studies  carried  out  with  national  administrations  or 

commissioned from  outside bodies 

e)  Number  of  pilot  operations  or  experiments  carried  out  with  national 

administrations 

5) 

f)  Number and dissemination of publications edited by the Commission either 

alone or in conjunction with the Member States 

g) Number  of  seminars,  meetings  and  colloquies  organized  by  the 
Commission,  the Member  States  or outside bodies  and funded  wholly  or 
partly by the action programme 

h) Number of manuals and other works published by the Commission with a 
view to  improving the enforcement  of  Community  legislation  by national 
administrations 

i)  Statistics  on  the  use  of  communication  and  date-interchange  systems, as 

means of cooperation 

-  Impact indicators (measuring performance against objectives) 

a)  Number  of  procedures  opened  in  the  course  of  enforcing  Community 
legislation  at  the  external frontier, including  complaints  from  the  public 
and infringements 

b) Number of customs problems dealt with 

c)  Amount  of  Community  own  resources  or  national  resources  that  would 

otherwise have been lost to  fraud 

d)  Stronger  controls  at  the  external  frontier:  this  can  be  expressed,  for 
example, in seizures of drugs or other offences prevented or prosecuted 

e)  Acceptance  by  the  Member  States  of  guidelines  for  the  introduction  of 

new working methods 

f)  Initiatives proposed by the Member  States to  improve public  relations or 

information to the customs services' clients 

g)  Actual participation of economic operators and outside groups in schemes 

proposed under the action programme 

h) Evaluation of the impact of computerized data-interchange  systems on the 

efficiency  of customs procedures 

-  Details and frequency of planned evaluations 

The  action  programme  is  subject  to  permanent  monitoring  by the  Customs 
Policy Committee, which is made up of the Directors-General  of the Member 
States'  customs 
their  personal 
services  and  • the  Commission  or 
representatives. 

3C-

The Member  States are to report to the Commission on the implementation 
and impact of the programme by 31 December 1997 and 30 June 1999 at the 
latest. 

The  Commission  will  be  presenting  to  the  European  Parliament  and  the 
Council: 

-  an interim report on the programme's implementation by 30 June 1998; 

-  a  communication  on  whether  the  programme  should  be  continued, 
accompanied,  if so, by a proposal  to  that  effect,  by 30 June  1999 at  the 
latest; 

-  a final report on the implementation of this programme by 30 June 2001 at 

the latest. 

10.  ADMINISTRATIVE  EXPENDITURE (PART A  OF THE BUDGET) 

The  availability  of  the  requisite  administrative  resources  is  subject  to  the 
Commission's  annual  decision  on  resource  allocation  in the  light  of  the  additional 
staff and sums accorded by the budgetary authority. 

10.1  Staffing  implications 

DGXXI 

Type of post 

Staff to be assigned to the 
management  of the action 

Source 

Duration 

Permanent 
posts 

Temporary 
posts 

Existing 
resources 

Additional 
resources 

4 years 
1997-2000 

Officials  or 
temporary  staff 

A 

B 

C 

9.5 

5.5 

5 

Other  resources 

1.5 

19 

10 

4.5 

5 

13 

Total 

20 

20.5 

32.5 

1 

1 

6* 

8 

1998-2000 

1998-2000 

May '97-
2000 

40.5 

* 3n  ationa 

experts on s 

econdment  and. 

5 consultants 

3? 

SG (UCLAF) 

Type of post 

Staff to be assigned to the 
management of the action 

Source 

Duration 

Permanent 
posts 

Temporary 
posts 

Existing 
resources 

Additional 
resources 

4 years 
1997-2000 

Officials or 
temporary  staff 

A 

B 

C 

Other resources 

Total 

4 

4 

8 

1998-2000 

1998-2000 

4 

4 

8 

10.2  Overall financial implications of additional human resources 

DGXXI 

Officials or 
temporary staff 

National experts on 
secondment 

Consultants 

Total 

Amount in ECU 

Method of calculation 

212 000 

106 000x2 

135 000 

450 000 

797 000 

45 000 x 3 

150 000x3 

Duration 

3 years 

0 

3.5 years 

3.5 years 

2 683 000 

Cost of 19.5  existing posts in the DG = ECU 2 067 000 a year (ECU 106 000 a head) 

SG (UCLAF) 

Amount in ECU 

Method of calculation 

848 000 

106 000x8 

Officials or 
temporary staff 

Total 

848 000 

Duration 

3 years 

2 544 000 

10 

. #* 

10.3 

Increase in other operating expenditure involved in operation 

Budget heading 

Cost in ECU 

Method of calculation 

A-130 

A-2510 

Total 

66 000 

156 375 

222 375 

see (1) below 

see (2) below 

(1) A-130 mission costs 

These will be funded by redeploying existing resources. 

60 missions to the Member States at ECU 800 each 

12 missions to the associated countries at ECU 1500 each 

= 

= 

ECU  48 000 

ECU  18 000 

(2) A-2510 meetings 

The expert working parties already exist and therefore represent no additional cost. 

15 meetings a year x 15 experts (1 per Member State) x ECU 695  = 

ECU 156 375 

Total for Part A of the budget 

ECU 222 375 

11 

fi 

ISSN 0254-1475 

COM(97) 188 final 

DOCUMENTS 

EN 

02  06  09 

Catalogue number  :  CB-C0-97-192-EN-C 

ISBN  92-78-19465-4 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

Ht