Opinion of the Economic and Social Committee on 'Customs cooperation in the single market (SMO)'
Date: 2000-07-13
Institutions: European Economic and Social Committee
Subjects: customs regulations, customs territory (EU), simplification of formalities, single market

19.9.2000

EN

Official Journal of the European Communities

C 268/57

The Committee also recommends concrete action concerning
fraud in areas such as excise duties on tobacco and alcohol,
agricultural products, preferential tariff agreements, the CAP,

VAT, as well as the role of computerised checking and
enforcement systems.

Brussels, 13 July 2000.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

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

(2000/C 268/13)

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

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

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

1.

Introduction

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

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

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

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

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

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

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

(1) OJ C 301, 13.11.1995, p. 5.
(2) OJ C 138, 18.5.1999, p. 1.

(3) OJ C 73, 9.3.1998, p. 17.
(4) OJ C 101, 12.4.1999, p. 6.
(5) OJ C 284, 14.9.1998, p. 3.
(6) COM(1999) 590 final.

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

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

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

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

1.7.
In the context of planned EU enlargement, especially
given the large number of applicant countries and their very
disparate legal and administrative traditions, pre-accession
strategies must pay particular attention to these issues. (1)

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

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

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

2. General comments

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

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

2.2.
The Committee would stress that the new counterstra-
tegies and the work of OLAF will only bear fruit if work on
developing European criminal
law, which to date has not
progressed very far, is speeded up considerably in line with
calls made at the Tampere Summit. The current state of affairs
makes effective prosecution extremely difficult. The procedures
for seeking assistance from authorities and law enforcement
agencies are still far too cumbersome despite many improve-
ments. The Commission report (2) cites extremely slow
responses to requests for
information and cumbersome
internal procedures.

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

(1) A list of tasks can be found in the document ‘Protection of the

Communities’ Financial Interests’, COM(1998) 278.

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

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

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

internal borders. The Committee assumes that it will take time
for these key areas to be harmonised. It therefore calls for
transparency first and foremost and for a high degree of
coordination between the systems in force.

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

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

3.

Specific comments

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

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

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

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

Supranational and national prohibitions and restric-
2.5.
tions — the latter differing in their substance — all have a
partial effect on the movement of goods across external and

Specifically, the Committee takes the following views

3.1.
on the measures passed by the EU:

3.2. Opinion on the ‘Proposal for a European Parliament and
Council Decision adopting an action programme for Com-
munity customs (Customs 2000)’ and on the ‘Proposal for a
European Parliament and Council Decision amending the
Decision of 19 December 1996 adopting an action pro-
gramme for customs in the Community (Customs 2000)’

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

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

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

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

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

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

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

businesses that meet customs requirements, but the Committee
regrets that in some Member States this development is taking
place without the cooperation, or even the knowledge, of the
businesses concerned. It would seem to the Committee that
this system of risk analysis will serve its purpose of freeing up
time for customs administrations to keep a check on flows of
goods with a high risk factor.

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

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

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

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

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

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

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

The Committee welcomes the initiative to draw up
3.2.6.
risk profiles using appropriate analytical techniques in all
Member States. This can be expected to eliminate checks for

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

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

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

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

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

Brussels, 13 July 2000.

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

3.5. Opinion on the ‘Proposal

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

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

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

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI