Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council laying down the Community Customs Code (Modernised Customs Code) COM(2005) 608 final — 2005/0246 (COD)
Date: 2006-07-05
Institutions: European Economic and Social Committee
Subjects: computer system, customs formalities, customs inspection, customs regulations, electronic document, exchange of information, systems interconnection

C 309/22

EN

Official Journal of the European Union

16.12.2006

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the
European Parliament and of the Council laying down the Community Customs Code (Modernised
Customs Code)

COM(2005) 608 final — 2005/0246 (COD)

(2006/C 309/05)

On 17 January 2006 the Council decided to consult the European Economic and Social Committee, under
Article 95 of the Treaty establishing the European Community, on the abovementioned proposal.

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 31 May 2006. The rapporteur was Mr Burani.

At its 428th plenary session, held on 5 and 6 July 2006 (meeting of 5 July), the European Economic and
Social Committee adopted the following opinion by 152 votes to one with three abstentions.

1. Introduction: principles underlying the new Code

One of the priorities of the Community customs action
1.1
programme (Customs 2007), adopted by the Council in 2002,
was a complete overhaul of the current customs Code [Council
Regulation (EEC) No 2913/92], which has become outdated
following developments in the markets and technology, the
successive
adoption of various Treaties
EU enlargements.

above

and,

all,

a

The

idea of

completely modernised code was
1.2
prompted by the fact that the old Code — which is still in
force — ‘has not kept pace with either the radical changes to
the environment in which international trade is conducted …
or with the changing focus of customs work’. The proposal in
question is in line with Community policy — particularly with
the principles of the internal market and consumer protection,
and with the Lisbon Strategy — and forms the basis for further
measures to streamline customs systems and procedures and to
into line with common standards governing
bring rules
Member States' IT systems as they are drawn up.

The Commission believes that this raft of measures
1.2.1
will make it possible to incorporate the Council's eGovernment
and ‘better regulation’ initiatives, and to achieve a number of
including increased security and safety at
specific objectives,
external borders, reduced risk of
lastly, greater
fraud and,
consistency with other Community policies, particularly fiscal
policy.

The new Code must be seen in the context of the Lisbon
1.3
Strategy, which seeks to make Europe ‘a more attractive place
to invest and work’; it is also in line with the Commission's
proposals, approved by the Council
in December 2003, to
create a simple, paperless environment. Moreover, another
vehicle for the Council's policy is the parallel Proposal for a
decision on a paperless environment for customs and trade
[COM(2005) 609 of 30 November 2005], on which the EESC
will draw up a separate opinion.

1.4
The new elements introduced by the new Code are not
just a matter of form or updating rules; the changing focus of

customs policy is much more important. Over the past 20
years, the role of customs has gradually been shifting away
from the collection of duties towards much greater focus on
application of non-tariff measures, in particular those related to
security and safety, controlling illegal immigration, combating
fraud, money-laundering, narcotic drug trafficking, sanitary
measures, health, the environment and consumer protection, as
well as the collection of VAT and excise duties. The Commis-
sion document does not explicitly mention under security and
safety a secondary element which is certainly part of customs'
role — the valuable assistance they provide in combating arms
trafficking and terrorism. In this context, there is a gap in the
plans for
IT systems, on which the EESC comments in
point 3.1.3.1 below.

1.5
Another new element is the introduction of compu-
terised procedures. The current Code provides for these proce-
dures — and they are widely adopted in almost all Member
States — but they are optional both for national customs and
for users. The new Code, however, makes them compulsory;
this is necessary to eliminate the need for paper — the aim of
the parallel initiative described in point 1.3 above.

1.6
The Code has been drawn up in line with Commission
policy and with due regard for the procedures laid down in the
areas of feasibility, transparency and impact assessment. The
EESC is pleased to note that the civil society sectors concerned
have been consulted and are largely in favour; it agrees with
the Commission regarding respect for the legal bases and for
the subsidiarity and proportionality principles, but reserves the
right to comment on the impact assessment at a later date.

1.7
The Commission has looked at four different approaches
to the issue, opting in the end for a solution which provides
for closer cooperation between national customs' IT systems,
on the grounds of the need to comply with the subsidiarity
principle and Member States' clear reluctance to accept a solu-
tion based on a centralised European system. The EESC notes
that this decision was unavoidable but points out that the latter

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option would have provided a more reliable, simpler and less
burdensome solution for users. The subsidiarity principle
would then have been devolved at European level rather than
national level.

exemptions and derogations are often genuine distortions of
competition, and they are not always temporary.

2. General comments

2.1
In February 2005, the EESC commented on a Proposal
for a Regulation of the European Parliament and of the Council
amending the Customs Code (1), which, even then, proposed
innovations concerning a paperless environment and integrated
management of external borders. The EESC is pleased to note
that the principles enshrined in that proposal, on which its
comments had been broadly positive, have also been included
in the present proposal and converted into specific provisions
which, once again, in general, it can accept.

2.2
The raft of new provisions is evidence of greater focus
on operators' rights and needs, taking into account, where
necessary, any damages that may result from the procedures.
Both the streamlining of legislation and the concentration of
customs procedures — which are being reduced from the
current 13 to three: import, export and special procedures —
are evidence of
in the drafting
this approach. Moreover,
process,
two-thirds of the articles of the present Code are
amended, merged or transferred to the implementing provi-
sions, with the result that the number of articles falls from 258
to 200.

2.2.1
The EESC congratulates the Commission on its sensi-
tive, laborious work, in which it has respected the general prin-
ciples of the internal market and shown great respect for opera-
tors' rights and needs. Incidentally, however, it notes that the
lack of an implementing regulation — which the Commission
does, moreover, have the power to draw up — leaves room for
some uncertainty for the moment as regards a number of
provisions: it therefore calls for a new implementing regulation
to be drawn up and adopted without delay.

3. Specific comments

3.1 Title I: General provisions

Generally speaking, the exchange and protection of
3.1.2
data (Articles 5, 6 and 7) do not call
for any particular
comment, as the proposed legislation is in line with the normal
protection provided by public administrations for people's
privacy and business confidentiality. The EESC particularly
welcomes the provisions in Article 8, which require customs
authorities
to provide information on the application of
customs legislation, and to further transparency by making
legislation, administrative rulings and application forms avail-
able on line to operators free of charge.

3.1.2.1
The first paragraph of Article 5 warrants particular
attention. It requires electronic data processing techniques to
be adopted for all exchanges of data, documents, decisions and
notifications between economic operators and customs authori-
ties. This provision, which is wholly appropriate where busi-
nesses and professional operators are concerned, could cause
difficulties where the importer (or, more rarely, the exporter) is
a private individual and not necessarily an ‘economic operator’.
The problem is anything but minor, at a time when the
amount of on-line and catalogue purchases of goods in coun-
tries outside the EU is growing exponentially. The EESC notes
that the matter is currently being discussed under the comi-
tology procedure and suggests that private individuals be expli-
citly included among those permitted under Article 93 to
submit summary declarations. The provisions of Article 94,
granting customs authorities the possibility of accepting paper-
based import summary declarations although only in excep-
tional circumstances, should also be amended. Alternatively, or
in addition, the possibility could be explored of extending to
private individuals the right to submit the occasional simplified
declarations — again paper-based — provided for
in
Article 127.

3.1.1
Article 3 lists the national territories making up the
Community customs territory. It does not call for any particular
comment, apart from the uncertainty raised by paragraph 3,
which states: ‘Certain provisions of the customs legislation may
apply outside the customs territory of the Community within
the framework of legislation governing specific fields or of
international conventions’. Legal certainty does not allow a law
to mention ‘certain provisions’ without specifying in the same
text or an appendix which provisions are referred to. From a
legal point of view — and also for reasons of transparency —
it needs to be clearly specified in detail which territories and
legislation are being referred to. All too often, the public —
and experts, too — fail to notice exemptions and derogations
granted on various occasions in various different ways: these

(1) OJ C 110 of 30.4.2004.

On a more general note, although still on the
3.1.2.2
subject of electronic data processing techniques,
the EESC
points out the high costs of the new integrated data processing
system; these costs have to be borne within a short period of
time, while a substantial part of the benefits (particularly where
quality is concerned) will only become apparent in the medium
to long term. Some Member States already seem to be
concerned at both the costs that will have to be borne and the
obligation to respect the timeframes for implementing the new
systems; others — particularly those which are most advanced
in terms of computerisation — feel that it would be costly to
change recently introduced systems to come into line with the
joint system. The EESC acknowledges these concerns, which
the Commission must not ignore. However, it believes that the
to Europe of having an efficient, modern customs
benefit
system is worth some individual
sacrifices, which could
perhaps be alleviated by assistance in specific cases of docu-
mented need.

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3.1.3
Article 10 requires Member States to cooperate with
the Commission ‘with a view to developing, maintaining and
employing an electronic system for the common registration
and maintenance of records’ of all operators and authorisations
granted. Any uncertainty regarding the nature and operation of
the system is cleared up in Article 194: each Member State is
to maintain its own electronic data processing system, ensuring
interoperability with the systems of the other Member States in
accordance with rules and standards established by the
Commission, assisted by the Customs Code Committee. The
system is scheduled to enter into force on 30 June 2009. The
EESC believes that a system based on national databases
exchanging — once interoperability is ensured — information
and updates may well prove difficult to manage, as well as
costly. Above all, it is somewhat unlikely that a system of this
kind could actually become operational within the specified
timeframe. The Commission's impact assessment estimated the
implementing the system at EUR 40-
additional cost of
50 million per year, a figure which various experts feel to be
over-optimistic.

3.1.3.1 Moreover, there is a clear, crucial shortcoming in
the system planned, or at least in the mission statement: there
is no specific provision for access to the electronic data proces-
sing systems of authorities combating terrorism and organised
crime, with, of course, due regard for the rules protecting
privacy and production activities. The EESC has repeatedly
highlighted this aspect, on a number of occasions. The Council
has for years been stressing the need for cooperation between
the different authorities — criminal and financial police,
customs, secret services, Olaf and Europol, but, regrettably,
without significant results thus far.

Article 11 raises a particular concern. It stipulates that
3.1.4
customs representatives can ‘perform the acts and formalities
laid down in the customs legislation’, appointed by an operator
and acting in the operator's name and on their behalf (direct
representation) or on their own behalf (indirect representation).
Paragraph 2 requires customs representatives to be established
within the Community customs territory, but nothing further.
Moreover, the EESC notes that the Commission states in its
Explanatory Memorandum that ‘The rules on representatives
have been changed, with former restrictions being withdrawn’;
these were incompatible with a computerised environment and
with the principles of the single market. The inference is that
customs representatives have a single authorisation (Com-
munity passport) enabling them to operate throughout Com-
munity territory in the name of any operator, wherever the
operator may be established. This article needs to be made
more explicit; a separate regulation could lay down procedures
for creating a register or list etc. along the lines of the arrange-
ments for authorised economic operators, discussed in point
3.1.5 below.

3.1.5
Another figure of interest is the authorised economic
operator (Articles 4 and 13 to 16). In practice, this is a business
(more often than an individual) which can guarantee that it is

responsible, solvent and professional
to a sufficiently high
degree to be accredited by Member States' customs authorities
as having the right to a certain number of facilitations in the
area of controls and procedures. The Commission reserves the
right to specify, on the basis of Article 196, the procedures for
granting the status of authorised economic operator. The EESC
takes note of these provisions, which are clearly intended to
facilitate international trade and the creation of an environment
conducive to trade, but it also notes that a great deal will
depend on the conditions for granting this status and the rules
for preventing any abuse thereof. Moreover,
it is not clear
whether authorised economic operators will be granted a ‘Euro-
pean passport’.

Article 22 marks a decisive step towards harmonising
3.1.6
customs regimes, by requiring Member States — albeit in fairly
loose terms — to adopt administrative and criminal penalties
for failure to comply with Community customs legislation. The
EESC agrees, of course, on the need to achieve harmonised
rules on this sensitive issue, but it remains to be seen how
receptive Member States will be to endeavours to lay down
rules or guidelines on criminal matters, which are an area
where resistance or, at least, reservations, are to be expected.

3.1.7
Articles 24, 25 and 26 deal with appeals against
administrative decisions (Article 23 excludes decisions taken by
a judicial authority), laying down a two-stage procedure. The
first step is appeal before the customs authorities and the
second appeal before a higher, judicial or other authority. In
the case of penalties a general principle similar to the estoppel
principle applies, except where the customs authorities consider
that ‘irreparable damage’ may be caused to the person who
lodged the appeal; the EESC is pleased to note this indication of
concern for the needs of the citizen.

3.1.8
Article 27 lays down the — clearly necessary — possi-
bility for customs authorities to carry out controls of all kinds
It also
(physical, administrative, accounting and statistical).
provides for an electronic risk management system to be imple-
mented,
‘with the purpose of identifying and evaluating the
risks and developing the necessary measures to counter the
risks’. This system, which Member States are to implement in
cooperation with the Commission by 30 June 2009 at the
latest, will also be regulated by rules laid down by the Commis-
sion on the basis of Article 196.
the EESC
welcomes the measure and hopes that the Commission has
made quite sure that all the Member States are willing to imple-
ment a system which will presumably prove to be costly and
sensitive to manage.

In any case,

3.1.9
Article 30 exempts from customs controls and formal-
ities the cabin and hold baggage of passengers on intra-Com-
munity flights and sea-crossings, but without prejudice to
security and safety checks and checks linked to prohibitions or
restrictions laid down by the Member States: this is tantamount
to saying that the exemption only applies in countries which
have not laid down prohibitions or restrictions. Since there are

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always restrictions in place everywhere, if only with regard to
goods subject to excise duty, the general rule is,
in practice
nullified and customs' power to carry out controls on both
cabin and hold baggage remains intact.

4. Titles II — VIII: Customs formalities and procedures

4.1
Titles II — VIII deal with customs formalities and proce-
dures, and broadly retain the content of the Code currently in
force. The EESC does not intend to analyse these provisions in
detail, as they have already been discussed extensively during
the consultations held with stakeholders before the text was
drawn up. It will therefore merely comment on a few articles
of particular interest.

Article 55 states that a customs debt is incurred even in
4.2
the case of smuggled or illegally-trafficked goods (defined as
‘goods which are subject to measures of prohibition or restric-
tion on importation or exportation of any kind’): customs
duties are due in any event, without prejudice to the applica-
tion of other criminal or administrative measures. However,
counterfeit currency and narcotic drugs which do not enter the
authorised circuits are exempt from the customs debt; these
kinds of
trafficking are clearly viewed purely as criminal
offences, except in cases where a Member State's legislation
requires customs duties to serve as the basis for determining
financial penalties. Despite an opinion to the contrary from the
the EESC does not believe that
European Court of
customs authorities
the legitimate
income they would have gained from establishing a customs
debt — administrative and criminal penalties apart — at least
in the case of narcotic drugs, whose value could be set at the
respective market price. The fact that a drug is imported illeg-
ally does not change the fact that it is still an import. In other
words, while the reason for exempting counterfeit currency is
clear, the reason for exempting narcotic drugs is not.

Justice,
should be deprived of

4.3
Under Article 61, customs authorities may authorise an
operator to provide a comprehensive guarantee to cover its
customs debts. Article 64 states that one of the forms that this
guarantee can take is an undertaking given by a guarantor, and
Article 66 specifies that it can be provided by a ‘bank or other
officially recognised financial institution accredited in the Com-
munity’. This provision is important in that it acknowledges
that any bank or financial
institution from any European
country can provide a valid guarantee for customs in another
country: this is an important principle which is already in force
but which in practice is often obstructed by customs in various
countries. However, it is not yet clear what is meant by the
phrases ‘officially recognised’ and ‘accredited in the Com-
superfluous and
that
munity’:
misleading, as banks and financial institutions established in the
Community already have a ‘European passport’ and no further
indications are necessary.

the EESC feels

they are

for

Again on the subject of guarantees, Article 83 gives the
4.4
the ‘Article 196’
Commission the possibility, again under
procedure, of adopting a ‘special procedure’
securing
payment from guarantors. However, no information is given as
to what the special procedure consists of or its scope. If this is
a reference to the petition for prosecution of the guarantor ‘at
the first request’
it is certainly nothing new, as this kind of
guarantee already exists and is provided for by other regula-
tions (such as the EU Financial Regulation). If, however, other
formulas are implied,
it would be as well to specify them
because the cost of a guarantee varies according to the risk and
the procedures for prosecuting the guarantor.

that

Furthermore, Article 83 stipulates

4.5
interest on
customs debts is to be charged for the period between the date
of expiry and the date of actual payment; Article 84 caters for
the opposite case, where it is a customs authority which is in
debt towards the importer or exporter: here,
it is explicitly
stipulated that no interest is due for the first three months. The
EESC stresses this clear, unacceptable discrepancy between the
ways in which the public authority and the general public are
treated.

5. Title IX: Customs Code Committee and final provisions

The provisions of

this title are essential

5.1
for under-
standing the Code's structure and scope. The keystone is Article
196, which states that in implementing the legislation ‘the
Commission shall be assisted by the Customs Code Committee,
hereinafter referred to as “the Committee”’, acting under ‘Arti-
cles 4 and 7 of Decision 1999/468/EC’ and ‘having regard to
the provisions of Article 8 thereof’. In practice, this means that
the Commission has the power — albeit with the assistance of
the committee — to regulate all aspects of the Customs Code,
in line with normal Community procedure. The EESC has no
objection to this but trusts that the rules adopted will respect
users' needs and will be sufficiently flexible as to be able to be
updated at the appropriate time in line with progress in techni-
ques, technology and commercial practice.

Under the powers conferred on it by Article 196, the

5.2
Commission (Article 194) can adopt measures laying down:

— rules and standards for the interoperability of customs

systems;

— ‘the cases in which, and the conditions under which, the
Commission may issue decisions requesting Member States
to revoke or amend a decision’;

— ‘any other

implementing measures, where necessary,
including where the Community accepts commitments and
obligations in relation to international agreements which
require the adaptation of provisions of the Code’.

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5.2.1
The Commission's powers are therefore fairly broad
and include the right to determine, itself (second indent), the
cases in which, and conditions under which, Member States
may be required to revoke or amend a decision. The EESC
notes that while,
in the cases covered by the first and third
indents, the Commission is performing its institutional role of
coordinating and implementing decisions adopted or endorsed
by the Council, in the case of the second indent it is exercising
power in an anomalous way, even though, all things consid-
ered, this may be justified by circumstances and the EESC is
certainly not opposed to it.

5.2.2
On a general note, the EESC points out that the deci-
sion to carry out controls on operations of all kinds effected by
the public — including commercial transactions and customs
work — will affect free trade, and that it derives from political
decisions, endorsed by the EU and the Member States within
their different remits. The Commission, of course, implements
these decisions.

The EESC hopes that the customs reform will not
5.2.3
upset the necessary balance between free trade and users' and
end-consumers' safety and security, and that it will be carried
out with due respect for the professionalism of customs staff
and importers/exporters' employees.

Brussels, 5 July 2006.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on the White Paper on Financial
Services Policy 2005-2010

COM(2005) 629 final

(2006/C 309/06)

On 1 December 2005 the Commission decided to consult the European Economic and Social Committee,
under Article 262 of the Treaty establishing the European Community, on the White Paper on Financial
Services Policy 2005-2010

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 31 May 2006. The rapporteur was Mr Iozia.

At its 428th plenary session, held on 5 and 6 July 2006 (meeting of 5 July), the European Economic and
Social Committee adopted the following opinion by 152 votes to one with nine abstentions.

1. Conclusions and proposals

1.1
The EESC supports the Commission's proposal to devote
the next five years to the dynamic consolidation of the financial
services industry by implementing and strengthening current
legislation and by simultaneously avoiding excessive regulatory
additions (so-called gold-plating), while respecting the spirit of
the Lisbon Strategy and the features of the European social
model.

would be useful to recommend that European authorities iden-
tify a main supervisory authority, the one situated in the
(home) country of the parent company, which would also be
entrusted with the task of supervising the activities of subsidi-
aries and controlled companies situated in other EU Member
States. The advantages that would be gained by European-scale
companies and consumers are obvious.

1.2
It is essential, not least in the opinion of the EESC, that
the role and activities of supervisory authorities be enhanced,
thereby optimising coordination as provided for
level-3
committees under the Lamfalussy process.

1.2.1
The EESC believes that it would be premature at this
point to establish a single EU supervisory authority that
could, in future, promote market integration, but considers it

The growing importance of financial activities in the
1.3
economy (often referred to as the financialisation of
the
economy) is underpinned by the improved efficiency of finan-
cial transactions. Although the financialisation of the economy
is reflected in a significant capacity for economic and job
growth in the financial sector, it can also adversely affect the
whole economy. The power of stock markets focused on share-
holder value can also thwart industrial strategies. Commercial