COMMISSION STAFF WORKING DOCUMENT Executive Summary Impact Assessment on the Amendment of Council Regulation (EC) No 515/97 and Council Decision 2009/917/JHA on mutual assistance
Date: 2013-11-25
Institutions: European Commission
Subjects: European Anti-fraud Office, carriage of goods, customs cooperation, customs formalities, customs fraud, customs territory (EU), disclosure of information, exchange of information













EUR-Lex - 52013SC0482 - EN











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52013SC0482

COMMISSION STAFF WORKING DOCUMENT Executive Summary Impact Assessment on the Amendment of Council Regulation (EC) No 515/97 and Council Decision 2009/917/JHA on mutual assistance /* SWD/2013/0482 final - 2013/ () */










1          
Problem definition
1.1       
Problem
introduction

Action against breaches of customs
legislation is integral to the protection of the Union’s financial interests
and to the development of customs cooperation. EU legislation in this domain
includes Regulation 515/97, governing mutual administrative assistance and
exchange of information, and Council Decision 917/2009, addressing issues of
breach of national laws in the customs area. Customs legislation may be
breached in a number of ways, including by misuse of the transit system,
so that goods effectively imported are declared as being in transit in order to
evade the applicable customs duties; by mis-description of imported
goods so as to take advantage of lower duties; or by misdeclaration of the origin
of goods in order to  circumvent anti-dumping levies and avoid quantitative
import limits or quotas.

1.2       
Problem
description

In order to verify the authenticity of the declared origin of goods,
customs authorities perform a document-based check that does not contain detailed
information about the transport-logistic steps followed by the container
transporting the goods; hence the customs officers do not have the means to
verify whether the declared origin of goods is consistent with the route
actually followed by the container in question. This makes the identification
of potential cases of misdeclaration of origin very difficult.
In verifying the authenticity of the declared description of goods,
customs authorities must base their work on a risk assessment in order to identify
suspicious cases. The Commission creates relevant profiles but, in so doing, its
services make repetitive requests for similar data, which creates an
unnecessary burden for the Member States (MS).
In order to verify the goods in transit, customs authorities perform
document-based and visual checks. These methods are not only limited by the
available man-power but they also miss the opportunity to profit from technical
developments allowing automatic analysis, such as ConTraffic for identification
of suspicious shipments and ATIS for detection of abnormal transit patterns,
tools introduced by the Commission.
A particular issue in the fight against customs fraud is that OLAF
investigators have to wait 3 to 7 months before obtaining supporting documents
from the MS. In addition, there are cases where MS are often unable and
sometimes even reluctant (as they may not be directly involved in the
investigation in question) to assist OLAF in obtaining supporting documentation
from economic operators for the purposes of OLAF investigations. This is
particularly problematic in view of the three-year limitation period for
recovery of the customs debt.

1.3       
Scale of
the problem

Fraud resulting from false declaration of origin alone may amount to
as much as EUR 100 million yearly loss for the EU27. In 2011, MS reported 1.905 cases of detected fraud and other irregularities
amounting to damage of EUR 107.7 million, related to misdescription of goods.
This is, however, only damage detected by the MS and the Commission. The actual scale of the problem is thus substantially higher. The cases
of breaches related to transit amount to an approximate loss of EUR 12 million
per year, while information is not available on an estimated 30000 detected
cases of potential fraud.
Regarding the delays in OLAF’s investigations, experience shows that the 3-7 month period elapsing
before documents supporting imports and exports are obtained is a significant
source of loss. The European Court of Auditors, in a 2010 audit, found that ‘In the 274 declarations checked, 49 errors were found,
giving rise to EUR 558 000 of loss of duty. These amounts are
time-barred and therefore can no longer be recovered and are definitively lost
for the Community budget’.

1.4       
The
drivers behind the identified problems
Gaps in the existing
detection system
1.4.1    Mis-declaration
of origin  

There are currently limited means of checking the true origin of
imported goods. In particular, it is not possible for the customs officers to
verify whether the declared origin of goods is consistent with the route
followed by the container transporting the imported goods. Such information is
considered as crucial for detecting cases of misdeclaration of origin.

1.4.2    Mis-description
of goods  

The identification of suspicious cases by customs authorities is
based on notifications that may be received from various sources (for example,
other customs authorities or economic operators) and analysis based on limited
data available. The main drawback of the current procedure is that the controls
are still not sufficiently targeted as they are based on non- systematic data
analyses.

1.4.3    Misuse of the
transit system

Current procedures used for verification of goods in transit consist
of document-based and visual checks, methods limited in effectiveness and
efficiency as they are not premised on sufficient analysis. More extensive controls
may, in turn, lead to serious distortions of trade flows. In addition to
document-based and visual checks, MS and OLAF may also use  the ATIS; this,
however, is not premised on a solid legal basis and also misses important
information, in that it does not contain data on national movements but only
provides for the initial transit information.
No legal provision for avoiding delays in OLAF investigations

1.4.4    Delays in OLAF
investigations 

As a result of the recent introduction of e-Customs, import-supporting
documents (invoice, certificate of origin, etc.) are kept by the economic
operators and not by the customs administrations. This causes a loss of time since
a variety of actors need to contribute/respond to requested documents before these
become available to OLAF. There is currently no provision in the legal
framework which could be used to accelerate procedures relating to OLAF
investigations.

1.5       
Baseline scenario:
How the problem would evolve

In the absence of policy change, customs-related
breaches of legislation would continue to remain partially undetected, causing
continuing financial losses to the EU and allowing a lower degree of
implementation of related legislation.
Fraud related to misdeclaration of origin will rise.
ConTraffic has proved the usefulness of container-related information (Container
Status Messages — CSMs) and as
a research project it will come to an end soon. Until a new method helping to
detect misdeclaration of origin is adopted, fraud will continue to occur and
even grow with fraudsters gaining experience. Hence the loss of EUR 17.6
million linked to misdeclaration of origin will remain and will most likely
grow even further. Similarly, no improvement in the fight against misdescription
of goods is to be expected.  For the time being
there is no indication of any planned changes that could be introduced into the
customs procedures in order to facilitate the fight against misdescription of
goods. Fraud related to misuse of the transit system
is expected to increase. The current solution — ATIS, despite being very useful, reveals shortcomings. Data on merchandise in transit, currently collected on
the basis of this administrative arrangement, may no longer be available as the
legality of the legal basis for their collection is doubted by several MS. In
that event, the volume of undetected fraud would most likely rise.
As regards the delays in OLAF investigations, unless a change to the
existing procedure is made, no improvement is to be expected in the near
future. It is unlikely that the situation will change without any action being
taken.

2          
Analysis
of subsidiarity and proportionality

The necessity of action
at EU level is based on the fact that MS alone cannot efficiently identify and
mitigate risks of breach of customs legislation; neither are they capable of
pursuing investigations properly if cross-border transfer of goods is involved.
Therefore, the fight against customs-related fraud requires a broader European
approach. Importantly, the EU has exclusive competence in fraud prevention and
protection of its financial resources in customs matters. The EU is arguably best
placed to serve as a driving force behind this initiative because it already
possesses the necessary experience and systems.
Value added: Action at EU level
would significantly improve the fight against customs-related fraud, by
increasing the available evidence, improving the possibilities for detection
and repression of fraud and rendering the action more efficient and effective.

3          
Objectives

General objectives of this initiative are to: i) reinforce the protection of the
financial interests of the European Union (fraud detection and investigation)
and ii) strengthen customs cooperation between MS and between the latter and
the Commission by ensuring the correct application of customs law.
Specific objectives are to increase the detectability, prevention and prosecution of
customs fraud by enhanced collaboration both between the MS and
between the MS and the Commission in fighting customs-related fraud, and to improve
the process relating to OLAF investigations.
The operational objectives of the action
to be taken correspond to the problems identified and to the specific
objectives. Indeed, in order to increase the detectability, prevention and
prosecution of customs-fraud, it is necessary to create conditions for improved
fighting of customs fraud. To deal with the problem of delays in OLAF
investigations, steps have to be taken to speed up the process.
The table below interlinks the identified
problems with the objectives.
 Problem || Specific Objective || Operational Objective || 
 Misdeclaration of origin and related financial losses   || Increase the detectability, prevention and prosecution of customs fraud by enhanced collaboration both between the MS and between the MS and the Commission (when fighting fraud  related to misdeclaration of goods’ origin, misdescription of goods and misuse of transit system) || 1.       Create conditions for improved fighting of customs fraud related to mis-declaration of goods’ origin 
 Misdescription of goods and related financial losses || 2.       Create conditions for improved fighting of customs fraud related mis-description of goods 
 Misuse of the transit system and related financial losses || 3.       Create conditions for improved fighting of customs fraud related to misuse of the transit system 
 Delays in OLAF investigations and (time-barring) || Improve the process relating to OLAF investigations || 4.       Speed-up OLAF investigations 

4          
Policy
options
4.1       
Options
addressing the core problem (operational objective 1, 2 and 3)

·       
Option 0: keep status quo
This option follows a description of the baseline scenario. 
·       
Option 1: Soft law — With appropriate recommendations, increase the detectability of
customs fraud related to misdeclaration of goods’ origin, misdescription of goods and misuse of the transit system
As regards objective 1, the recommendation would invite MS to
support the Commission in its attempts to obtain CSMs from economic operators.
In relation to objectives 2 and 3, the recommendation would
invite MS to authorise the Commission to access/copy the data which are currently
available in a Commission platform and also to provide additional transit data.[1]
·       
Option 2: Responsibility for increasing the
detectability of customs fraud related to misdeclaration of goods’ origin, misdescription of goods and
misuse of the transit system is vested in the Commission
This option involves the creation of an EU central database for CSMs
and data related to import, export and transit. This database would build on
experience gained from ConTraffic and from ATIS. The national transit and other
subsequent transit information, such as modifications to the routing schedule
or results of controls will also be included in the EU central database. 
·       
Option 3: Responsibility for increasing the
detectability of customs fraud related to misdeclaration of goods’ origin, misdescription of goods and
misuse of the transit system is vested in the MS
This option involves, contrary to the above, entrusting the MS with
the responsibility for collection and analysis of relevant data. Therefore,
each MS will create its national databases for CSM, import, export and transit-related
data. Regular exchange and open access should allow MS to communicate and
exchange data and to prepare regular analyses.
·       
Option 4: Shared responsibility between the
Commission and the MS for increasing the detectability of customs fraud related
to mis-declaration of goods’ origin, mis-description of goods and misuse of the transit system
Under this option, CSM and transit data would be collected at EU
level, while MS would be given responsibility for import and export-related
data. This may be the most plausible mixture because it takes into account the current
settings (Commission handling ConTraffic and ATIS); hence, it divides the
responsibility accordingly.
·       
Option 5: Baseline scenario plus
This option would mean increasing the manpower assigned to the
detection and prevention of the relevant customs fraud. By relying upon
more control officers and more investigators, it is expected that more fraud
would be detected and possibly also prevented. The proposed doubling of
resources could concern both MS and the Commission (OLAF). After thorough
analysis this option is to be discarded at this stage. 

4.2      
Options
addressing delays in OLAF investigations and related financial losses (Objective
4)

·       
Option 0: keep status quo
This option entails keeping the status quo. No additional measures
would be taken under this option to facilitate faster investigations in OLAF.
·       
Option 1: Soft law — Issue a recommendation to speed up the procedure 
This option would mean issuing a recommendation inviting MS to
contribute to a faster procedure. A recommendation is a non-binding instrument,
which can be understood as an appeal to MS to improve the current practice and
contribute to the process of speeding up the investigations and fraud
detection.
·       
Option 2: Speed up the investigation
procedure by empowering the Commission to directly ask economic operators for
supporting documents
The Commission would be empowered to request supporting documents
directly from the economic operators. This option implies that MS would be
informed but would not play an active role.
·       
Option 3: Increase number of investigators in
Commission/OLAF
This option would mean improving the workflow at OLAF by increasing
the number of investigators employed by OLAF. The time spent on investigation
should thus be shortened, which should diminish the problem of lengthy
investigations.
·       
Option 4: Request economic operators to
additionally provide information at national level by necessary provision in
the relevant EU legislation
This option would mean a return to the pre-2010 situation (i.e.
before e-Customs was introduced). Economic operators would be obliged to
provide information on all supporting documents to their respective national
authorities, which should then be in a position to provide immediately the
requested information.
·       
Option 5: Impose a deadline for providing the
supporting documents
This option would mean imposing a specific deadline for MS to
provide the Commission with the relevant documents. However, this option is considered
to be too intrusive and impractical, as a unified deadline for all cases fails
to take into account differences in the complexity of investigations. 

5          
Analysis
of impacts
5.1      
Summary of
the impacts

Impacts of options related to objectives 1,2 and 3
 Criteria     Option || Effectiveness || Efficiency (all objectives) || Economic impacts (all objectives) || Simplification || Coherence (all objectives) || Overall assessment 
 Obj. 1 || Obj. 2 || Obj. 3 || Obj. 1 || Obj. 2 || Obj. 3 
 Option 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || -- || 0 
 Option 1 || + || + || + || + (Total cost: negligible) || + || + || + || + || + || + 
 Option 2 || +++ || +++ || +++ || ++ (Total cost for the Commission:  EUR 850.000– set up; EUR 200.000– yearly maintenance If global dump – no cost for economic operators, if selective reporting – EUR 3.000 to 200.000) || +++ || +++ || +++ || +++ || +++ || +++ 
 Option 3 || ++ || ++ || ++ || --- (Total cost for the MS: EUR 850.000– set up EUR 200.000– yearly maintenance Total cost for economic operators: as per Option 2 || +++ || ++ || ++ || ++ || _ || + 
 Option 4 || +++ || ++ || +++ || - (Total cost for MS: EUR 320.000– set up EUR 80.000– yearly maintenance Total cost for the Commission: EUR 530.000 - set up ; EUR 120.000– yearly maintenance Total cost for economic operators: as per Option 2 || ++ || +++ || ++ || +++ || + || + 
Impacts of options related to
objective 4
 Criteria || Effectiveness in achieving objective || Efficiency || Economic impacts   || Coherence || Simplification 
 Option 0 || 0 || 0 || 0 || 0 || 0 
 Option 1 || + || + || +- || + || ++ 
 Option 2 || +++ || ++ || +++ || + || ++ 
 Option 3 || ++ || -- || + || - || 0 
 Option 4 || +++ || --- || - || - || -- 

6          
Comparing
the options
6.1      
Options
addressing objectives 1, 2 and 3

As illustrated in the baseline
scenario, Option 0 will not only fail to achieve the objectives but it might also
worsen the current situation. 
The voluntary nature of Option
1 would inevitably entail a risk of incomplete data and even though the
situation could improve as compared to the status quo, it is clearly still not
sufficient and therefore this option is considered as negative. Option 2, on
the other hand, is considered as strongly positive because the Commission is
already in possession of the necessary systems and experience to successfully
run the databases in question. Moreover, Option 2 is a preferred option not only
by MS but also by economic operators as it creates a cost-efficient and
effective solution to the problem of customs-related fraud. Option
3 is considered as positive but, unlike Option 2, creating separate national
databases will lead to overlaps and add complexity, as the same data would be
gathered, processed and interpreted by several MS. Importantly, it would also
impose a substantial financial burden on the MS. In this sense, Option 4
appears to offer a better solution than Option 3 because it avoids the
imposition of excessive financial burdens on MS since the related costs as well
as responsibilities are to be shared with the Commission. However, when
compared to Option 2, it risks losing sight of the importance of a cross-border
element in the context of collection and use of data on imports and exports.
Also, similarly to Option 3, Option 4 leads to potential duplication of data on
imports and exports in multiple national databases. On the basis of the above
comparison, Option 2 is the preferred option.

6.2      
Options
addressing objective 4

Option 1 is considered to
be quite negative as it is highly unlikely that it would achieve the objective
pursued. Option 2 is considered to be more effective than Option 1 because it
presupposes that the only time spent on obtaining relevant documents would be
time needed by economic operators to supply that information to OLAF. This offers
a realistic possibility of substantially shortening the time needed for
obtaining relevant documents. Also the problem that OLAF is currently facing
(namely cases where MS are not in a position to assist OLAF in obtaining those
documents) would be removed by addressing requests directly to those who are in
possession of the documents in question. For these reasons, Option 2 is regarded
as strongly positive. Option 3 is rated as quite positive because it has the
potential to address the problem. However, because of the significant financial
burdens it is less beneficial than Option 2. On the basis of the above
comparison, Option 2 is the preferred option.

7          
Monitoring
and evaluation
7.1      
Monitoring

The table below
provides an overview of indicators.
 Objective || Indicator 
 1, 2 and 3 || –      Export/import/transit data/CSMs: –     number of detected breaches of legislation, –     number of investigations opened based on these data, –     number of requests for use of data by investigators, –     amounts recovered on the basis of such information 
 4 || Duration of related OLAF investigations (whether the change resulted in faster procedures; whether it increased the number of investigations and the amounts recovered) 

7.2      
Evaluation

With respect to the operational objectives, the Commission services
responsible will ensure that evaluation is carried out every five years. The
scope will cover results and impacts related to the increased detectability of
fraud thanks to the database and the analysis carried out on the basis of the
available data and information as well as the efficiency and relevance of the
measures introduced. The evaluation will take the form of a presentation of the
results in the Mutual Assistance Committee by the Commission/OLAF.
[1]     Data on
national transit and other subsequent transit information, such as
modifications in the routing schedule or results of controls.