REPORT FROM THE COMMISSION TO THE COUNCIL Progress report further to the Council Conclusions on Customs Cooperation with the Eastern Neighbouring Countries
Date: 2016-06-14
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Armenia, Azerbaijan, Belarus, Georgia, Moldova, Russia, Ukraine, customs cooperation, customs fraud, simplification of formalities

EUROPEAN 
COMMISSION 

Brussels, 14.6.2016  
COM(2016) 375 final 

REPORT FROM THE COMMISSION TO THE COUNCIL 

Progress report further to the Council Conclusions on Customs Cooperation with the 
Eastern Neighbouring Countries 

EN 

   EN 

 
 
 
 
  
 
TABLE OF CONTENTS 

1. 

INTRODUCTION ................................................................................... 3 

2.  COUNCIL  CONCLUSIONS  ON  THE  PROGRESS 

IN 
CUSTOMS  COOPERATION  WITH  THE  EASTERN 
NEIGHBOURING COUNTRIES ........................................................... 3 

3.  PROGRESS OVERVIEW ....................................................................... 5 

3.1. CUSTOMS  COOPERATION  WITH  GEORGIA,  REPUBLIC 

OF MOLDOVA AND UKRAINE .......................................................... 5 

3.2. CUSTOMS COOPERATION WITH BELARUS................................... 7 

3.3. CUSTOMS COOPERATION WITH RUSSIA....................................... 7 

3.4. TRILATERAL EU-RUSSIA-UKRAINE TALKS.................................. 8 

3.5. EURASIAN ECONOMIC UNION ......................................................... 8 

3.6. CUSTOMS  COOPERATION  WITH  ARMENIA  AND 

AZERBAIJAN ......................................................................................... 8 

3.7. EASTERN PARTNERSHIP ACTIVITIES ............................................ 9 

4.  CONCLUSION........................................................................................ 9 

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1. 

INTRODUCTION 

The  purpose  of  this  document  is  to  assess  the  progress  achieved  in  the  priority  areas 
identified  by  the  Council  of  the  European  Union  in  the  "Council  conclusions  on  the 
progress  in  customs  cooperation  with  the  Eastern  Neighbouring  Countries"  (hereinafter 
'Council Conclusions') adopted in the Economic and Financial Affairs Council meeting 
in Brussels on 28 January 2014. 

The  document  provides  an  update  on  customs  relations  with  the  Eastern  partners  and 
Russia  since  the  previous  Commission  Progress  Report  Further  to  the  Council 
Conclusions  on  Customs  Cooperation  with  the  Eastern  Neighbouring  Countries 
(Brussels, 21.11.2013, SWD (2013) 487 final). 

2. 

COUNCIL  CONCLUSIONS  ON  THE  PROGRESS  IN  CUSTOMS  COOPERATION  WITH 

THE EASTERN NEIGHBOURING COUNTRIES 

The three priority areas, namely ‘developing safe and fluid trade lanes’, ‘promoting risk 
management and the fight against fraud’ and ‘investing in customs modernisation in the 
region’  were  agreed  in  High-Level  Seminars  on  Customs  Cooperation  at  the  Eastern 
Border of the EU, held in Budapest on 14 and 15 April 2011 and in Krakow on 20 and 21 
October  2011,  and  identified  in  the  Council  conclusions  on  the  Customs  Cooperation 
with  Eastern  Neighbouring  Countries  (adopted  at  the  Council  meeting  in  Brussels,  5 
December 2011). 

In this context, the Council in its conclusions of 28 January 2014 invited the Commission 
and the Member States to cooperate with the Eastern neighbouring countries with a view 
to: 

1.  Develop safe and fluid trade lanes, in particular by: 

•  defining  the  conditions,  including  the  requirements  of  data  protection,  and 
launching  pilot  project(s)  on  exchanges  of  advance  customs  information 
between  the  Member  States  and  Eastern  Neighbouring  Countries  leading  to 
better targeted controls and trade facilitation; 

•  supporting Eastern Neighbouring Countries in the development of authorised 
economic  operator  (AEO)  systems  and  in  preparing  necessary  legal 
preconditions for the possible mutual recognition with the EU; 

•  encouraging and assisting Eastern Neighbouring Countries to follow the main 
steps for accession to the Conventions on a  Common Transit Procedure  and 
the Simplification of Formalities in Trade in Goods, including in setting up a 
project  group,  conducting  a  gap  analysis,  preparing  a  road  map,  providing 
training  for  customs  officers  and  information  to  business  and  exploring 
financial support instruments; 

•  seeking  to  ensure  the  proper  and  transparent  functioning  of  the  TIR 
Convention 1975 and to create favourable conditions for transit operations at 
the Eastern Border of the EU. 

2.  Promote risk management and the fight against fraud, in particular by: 

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•  enhancing  operational  cooperation,  organising  further  Joint  Customs 
Operations  (JCOs)  involving  Eastern  Neighbouring  Countries  based  on  the 
best practice and recommendations of, inter alia, JCO ROMOLUK (2013); 

•  defining  the  rules  for  monitoring  that  the  volume  of  tobacco  products 

manufactured is commensurate with legitimate demand. 

3.  Foster customs modernisation, in particular by: 

• 

identifying differences in customs legislation and procedures, in particular, in 
most  important  areas,  such  as  customs  declarations,  transit,  customs 
valuation,  origin  of  goods,  classification  of  goods,  risk  management  and 
authorisations  issued  by  the  customs  authorities  in  order  to  develop  and 
implement  approximation  agendas  using  as  a  tool  the  revised  set  of  the  EU 
customs blueprints and examples of good practices; 

• 

fully  utilising  the  opportunities  offered  by  current  and  future  EU  financing 
instruments in order to fund equipment, twinning projects, training of customs 
officers, exchange of experience and best practices. 

4.  Continue  discussions  with  the  Russian  customs  authorities  on  the  evaluation  of 
the pilot project on information exchange and on the Early Warning Mechanism 
(EWM),  which  would  serve  as  a  means  to  provide  advance  notification  of 
situations  that  may  disrupt  EU-Russia  trade  flows  and  to  propose  practical 
solutions. 

5.  Engage in an informal technical dialogue on customs matters with supranational 
institutions  established  as  a  result  of  the  creation  of  a  Customs  Union  between 
Belarus, Kazakhstan and Russia, with a view to exchanging information, solving 
practical problems or enabling convergence of customs legislation. 

6.  Consider  preparation  and  adoption  of  Strategic  Frameworks  and  setting  up 
Working Groups on Customs Cooperation with Armenia, Azerbaijan, Belarus and 
Georgia, continue the cooperation with Russia, Republic of Moldova and Ukraine 
under the respective Strategic Frameworks. 

7.  Continue the close monitoring of the progress achieved in the above areas and the 
dialogue between the EU and the Eastern Neighbouring Countries at High-Level 
Seminars on Customs Cooperation at the Eastern Border of the EU and/or other 
dedicated customs fora in order to ensure the relevance of actions carried out and 
to coordinate and adjust the assistance provided. 

Finally,  the  Council  invited  the  Commission  to  evaluate,  together  with  the  Member 
States,  the  progress  achieved  in  the  priority  areas  of  customs  cooperation  with  Eastern 
Neighbouring Countries taking into account, inter alia, the initiatives and best practices 
of the Member States. The Commission was also invited to report to the Council on this 
progress, in order for it to propose a follow-up to these actions by the end of 2015. 

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3. 

PROGRESS OVERVIEW  

The relations with Georgia1, the Republic of Moldova2 and Ukraine3 were brought to a 
new level in 2014 with the signing of Association Agreements/Deep and Comprehensive 
Free  Trade  Areas  (AA/DCFTAs).  These  agreements  aim  for  the  countries'  progressive 
political association and economic integration with the EU, through the implementation 
of reforms and commitments. The political developments in the region, i.e. the conflict in 
Ukraine and the tensions between the EU and Russia, and the emergence and expansion 
of the Eurasian Economic Union (EAEU) have influenced the degree of EU engagement 
with the countries in the region. 

3.1. 

CUSTOMS  COOPERATION  WITH  GEORGIA,  REPUBLIC  OF  MOLDOVA  AND 

UKRAINE 

Cooperation with Georgia and the Republic of Moldova has progressed positively since 
the provisional application of the Association Agreement/Deep and Comprehensive Free 
Trade Area (DCFTA) from 1 September 2014, while for Ukraine provisional application 
of this part of the agreement was postponed until the end of 2015. 

Customs cooperation with the Republic of Moldova, Ukraine and Georgia is based on the 
Strategic Frameworks, endorsed with the Republic of Moldova in October 2011, Ukraine 
in  May  2012  and  signed  with  Georgia  in  March  2015.  Practical  implementation  of 
mutually  agreed  activities  and  the  support  has  been  organised  under  the  Customs  2020 
Programme. Regular customs dialogue has taken place to provide the strategic outlook. 

The  new  Agreements  have  established  Customs  Sub-Committees,  entrusted  with 
decision-making  powers,  to  monitor  the  convergence  of  legislation  and  procedures 
according  to  the  DCFTA  commitments.  These  aim  to  achieve  a  high  degree  of 
cooperation  and  regulatory  approximation  between  the  contracting  parties.  Judging  by 
the  results  of  the  first  committee  meetings  with  Georgia  and  the  Republic  of  Moldova 
(March/May  2015),  both  countries  are  on 
in  respecting  customs-related 
commitments within the agreed timelines under the new Agreement.  

track 

With  Ukraine,  the  cooperation  on  customs  has  been  influenced  by  the  political 
developments  in  the  country  and  the  organisational  developments  in  the  Ukrainian 
customs  administration.  During  that  period  there  have  been  projects  supported  by  the 
Commission and the Member States where some progress can be reported.  

1 Association Agreement between the European Union and the European Atomic Energy Community and 

their Member States, of the one part, and Georgia, of the other part (OJ L 261, 30/08/2014) 

2 Association Agreement between the European Union and the European Atomic Energy Community and 
their  Member  States,  of  the  one  part,  and  the  Republic  of  Moldova,  of  the  other  part  (OJ  L  260, 
30/08/2014) 

3 Association Agreement between the European Union and its Member States, of the one part, and Ukraine, 

of the other part (OJ  L 161, 29/05/2014) 

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Along  with  the  alignment  of  customs  legislation  to  the  EU  customs  acquis,  the  EU 
focuses on:  

- 

the  development  of  risk  management  systems,  including  a  programme  for 
authorised  economic  operators,  and  promoting  exchanges  of  customs 
information; 

-  assisting in the accession to the Common Transit Convention, thereby offering 

uninterrupted transit to the heart of the EU; 

-  assisting  in  working  towards  accession  to  the  Regional  Convention  on  pan-
Euro-Mediterranean  preferential  rules  of  origin,  thereby  fostering  regional 
economic integration for trade in goods.  

Developing  an  authorised  economic  operator  (AEO)  concept  in  line  with  the  EU 
legislation  is  one  of  the  commitments  taken  by  Georgia,  the  Republic  of  Moldova  and 
Ukraine  in  the  new  Association  Agreements.  The  current  focus  is  on  a  comparative 
analysis  of  the  respective  AEO  legislations  conducted  by  Commission  and  Member 
States  experts.  Exchange  of  experience  and  best  practices  will  be  shared  by  enabling 
participation in the AEO Network meetings and conducting study visits to EU Member 
States. 

In  addition,  a  pilot  project  on  recognition  of  EU  AEOs  at  one  of  the  border-crossing 
points  (BCP)  on  the  Moldovan-Romanian  border  was  launched  on  1  July  2015  for  an 
initial period of 6 months; the pilot project aims at providing additional benefits for the 
EU AEOs at the Leuseni BCP (reducing processing time, improving risk targeting, fewer 
physical and documentary based controls). 

In order to improve risk management and facilitate trade between the EU and its Eastern 
neighbours it was decided to launch a pilot project with Moldova and Ukraine on sending 
transit data to these countries with a view to implementing the project in 2016. 

Future accession of Eastern neighbours to the common transit procedure would imply 
an  important  step  forward  in  regional  integration  of  transit  systems;  it  would  provide 
simplifications,  accelerate  border  checks  and  enhance  risk  management.  A  short-term 
transit  project  was  launched  in  January  2015  in  Ukraine  with  the  main  objective  of 
providing  support  and  consultancy  to  the  State  Fiscal  Service  in  their  preparations  to 
accede to the Convention. As a follow-up, a twinning project has been recommended. A 
twinning project fiche for the alignment with NCTS is being drafted for the Republic of 
Moldova. 

Seminars on the Common Transit Convention were organised in Warsaw in September 
2013,  in  Kyiv  in  April  2015  and  in  Tbilisi  in  June  2015;  these  seminars  were 
complemented by study visits to Member States. Georgia, the Republic of Moldova and 
Ukraine  have  the  status  of  informal  observer  in  the  EU-EFTA  Working  Group  on 
"Common Transit and the Simplification of Formalities in Trade in Goods", where they 
provide regular updates on progress. 

The Pan-Euro-Mediterranean Convention on preferential rules of origin (PEM), as 
a zone of cumulation of manufacturing processes with the EU and other PEM members, 
fosters  regional  economic  integration  for  trade  in  goods.  The  Republic  of  Moldova 
ratified the PEM Convention on 28 May 2015; it became a Party to the Convention on 
1 September 2015. Georgia requested to accede to the PEM Convention in October 2015; 

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Ukraine  has  informed  the  Commission  about  the  internal  discussions  regarding  its 
accession to the Convention. Several seminars were organised on rules of origin in 2014 
and 2015 for these three countries (Kyiv on 5 June 2014, Chisinau on 3 November 2014, 
Tbilisi on 17 March 2015). 

The fight against cigarette-smuggling and other forms of illicit trade in tobacco products 
remains a high priority for the EU in relation to the Eastern neighbours. The Commission 
is actively implementing the Action Plan of the Communication on stepping up the fight 
against cigarette-smuggling and other forms of illicit trade in tobacco products, in close 
cooperation with the Member States. 

Based on good experience from the previous joint customs operation (ROMOLUK I), in 
which both the Republic of Moldova and Ukraine participated, OLAF organised another 
joint customs operation (ROMOLUK II) on cigarette-smuggling in 2015.  

The assistance provided by the EU to Georgia, the Republic of Moldova and Ukraine to 
support the implementation of the AA/DCFTA and to improve the customs capacities of 
the Eastern Partners is essential. The EU Border Assistance Mission to Moldova and 
Ukraine (EUBAM) has provided valuable assistance on customs legislation and practice, 
including on anti-fraud activities. 

3.2. 

CUSTOMS COOPERATION WITH BELARUS 

In recognition of a number of positive steps taken by Belarus since 2014, which have led 
to an improvement in EU-Belarus relations, the Council agreed on 15 February 2016 to 
lift most restrictive measures against Belarus and to step up the implementation of the list 
of concrete measures to deepen the EU's policy of critical engagement with Belarus. This 
list of measures was endorsed by COREPER in January 2015 and includes activities in 
the area of customs.  

In this context the Commission has suggested to resume expert contacts. 

The  EU  has  also  financed  projects  in  the  framework  of  the  Eastern  Partnership 
Programme. 

3.3. 

CUSTOMS COOPERATION WITH RUSSIA 

The  ongoing  political  crisis  and  customs  and  trade  irritants  have  influenced  the 
cooperation. Russia has implemented irritants with negative effect on EU operators:  

-  since  July  2013  Russia  has  restricted  the  geographical  application  of  the  TIR 
Convention  to  a  few  border-crossing  points  at  the  EU-Russia  border  and  has  required 
additional (national) guarantees for goods in transit through Russia. These disruptions are 
continuing to date; 

-  for  several  months  in  2014  the  Russian  border  authorities  also  put  in  place  enhanced 
control measures targeting Lithuanian road carriers that also led to disruptions; 

-  since  September  2014,  there  have  also  been  disruptions  of  transit  through  Russia 
between  the  EU  and  the  Central  Asian  and  the  South  Caucasus  countries  due  to  the 
import ban imposed by Russia on EU agri-food products in response to EU sanctions for 
Russia's intervention in Ukraine.  

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The  Strategic  Framework  for  Customs  Cooperation  endorsed  in  November  2010 
provided  the  overall  direction  for  the  cooperation.  However,  implementation  remained 
very  limited.  The  Early  Warning  Mechanism  was  not  followed  up  and  the  joint 
evaluation  of 
information  exchange  was  not  completed.  
Nevertheless,  a  new  roadmap  for  the  implementation  of  the  Strategic  Framework  was 
prepared at the end of 2015 and agreed early in 2016. 

the  pilot  project  on 

3.4. 

TRILATERAL EU-RUSSIA-UKRAINE TALKS 

Talks  to  address  Russian  concerns  regarding  the  implementation  of  the  EU-Ukraine 
DCFTA  started  informally  in  November  2013  between  the  EU  and  Russia,  before  the 
signature  of  the  AA/DCFTA  (27  June  2014);  these  talks  were  extended  to  Ukraine  in 
June 2014.  

The Minsk Declaration by the Normandy-four leaders of 12 February 2015, concerning 
the  broader  issue  of  the  Ukraine  crisis,  refers  to  the  trilateral  talks  on  the  AA/DCFTA 
mentioning that their aim is to 'achieve practical solutions to concerns raised by Russia 
with regard to the implementation of the DCFTA'.  

On  customs  matters,  Russia  could  not  demonstrate  how  the  DCFTA  provisions  might 
cause  increases  in  the  risk  of  fraud  in  bilateral  Ukraine-Russia  trade  and  why 
any concerns  about  potential  fraud  cannot  be  addressed  in  the  existing  bilateral 
agreements  and  customs  cooperation  frameworks  (i.e.  Ukraine-Russia,  EU-Russia  and 
EU-Ukraine).  

As of 1 January 2016 Russia suspended the Commonwealth of Independent States (CIS) 
trade  preferences  in  relation  to  Ukraine;  Russia  also  banned  agricultural  imports  from 
Ukraine and introduced additional sanctions with restrictions to transit from Ukraine to 
Kazakhstan  through  Russia.  In  return,  Ukraine  also  introduced  import  and  transit 
restrictions on Russian goods. 

3.5. 

EURASIAN ECONOMIC UNION  

The treaty establishing the EEU was signed on 29 May 2014 by Belarus, Kazakhstan and 
Russia, and came into force on 1 January 2015. Armenia joined on 2 January 2015 and 
Kirghizstan on 12 August 2015. The EEU was created on the basis of the Customs Union 
formed in 2010 by Russia, Belarus and Kazakhstan.  

Some  technical  level  contacts  have  taken  place  between  services  of  the  European 
Commission and the Eurasian Economic Commission. 

3.6. 

CUSTOMS COOPERATION WITH ARMENIA AND AZERBAIJAN 

In October 2014 Armenia signed its accession treaty to the Eurasian Economic Union, 
which entered into force on 2 January 2015. Following Armenia's decision in 2013 not to 
initial the negotiated AA/DCFTA, Armenia and the EU continue their political and trade 
dialogue in areas where this is compatible with Armenia’s new obligations. Negotiations 
started  in  December  2015  on  a  new  EU-Armenia  legally  binding  and  overarching 
agreement upgrading bilateral relations currently based on a Partnership and Cooperation 
Agreement. 

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Customs  cooperation  between  the  EU  and  Azerbaijan  has  been  rather  limited  since 
Azerbaijan  decided  to  suspend  the  negotiations  of  the  Association  Agreement.  At  the 
Eastern  Partnership  Summit  in  Riga  (May  2015)  Azerbaijan  confirmed  its  interest  in  a 
new EU-Azerbaijan agreement. This initiative was welcomed by the EU in line with the 
Reviewed European Neighbourhood Policy envisaging a new EU differentiated approach 
towards  Eastern  Partnership  countries  addressing  their  particular  needs  and  priorities. 
Discussions on the scope of the future agreement started in December 2015 with the aim 
to  obtain  a  mandate  to  start  negotiations  still  in  2016.  This  would  include  customs 
cooperation. 

3.7. 

EASTERN PARTNERSHIP ACTIVITIES 

The  Eastern  Partnership  (EaP)  is  a  common  endeavour  by  the  EU  and  Armenia, 
Azerbaijan, Belarus, Georgia, the Republic of Moldova, and Ukraine to further support 
sustainable reform processes in these countries. 

Within  the  Eastern  Partnership  Platform  2  on  Economic  integration  and  convergence 
with EU policies a series of trainings for customs managers on trade facilitation aspects 
was  initiated.  Two  events  were  conducted  in  September  2014  in  Warsaw  and  in 
September  2015  in  Cracow.  48  participants  from  six  EaP  countries  were  trained  on 
verification of origin, classification, valuation, protection of intellectual property rights, 
post-clearance  audit,  ethics  and  anti-corruption  measures.  160  hours  of  lectures, 
presentations,  exercises  and  case  studies  were  provided.  Continued  support  of  Member 
States is needed in this area.  

The  EaP  Expert  Panel  on  Integrated  Border  Management  (IBM)  seeks  to  facilitate  the 
exchange  of  best  practices  on  IBM  and  strengthen  the  cooperation  between  customs 
services  and  border  guards  in  Partner  Countries.  The  EaP  Flagship  Initiative  on 
Integrated  Border  Management  has  provided  opportunities  for  EaP  countries  to  submit 
project  proposals  aimed  at  customs  modernisation  and  trade  facilitation.  The  projects 
developed  under  this  Initiative  will  assist  the  EaP  countries  in  the  implementation  of 
IBM  strategies,  integrity,  trade  facilitation,  risk  management,  detection  of  drugs  and 
smuggled cigarettes/tobacco products, protection of intellectual property rights and fight 
against corruption4.  

The recently published new addition of the Customs Blueprints prepared by the European 
Commission with the support from the customs experts of Member States and Candidate 
countries  should  be  used  to  help  improve  and  build  up  operational  and  administrative 
capacity in the customs services of the EaP Countries (in particular in Georgia, Republic 
of Moldova and Ukraine). The blueprints are intended to be used as benchmarks against 
which  the  EaP  Countries  can  measure  shortfalls  in  the  different  business  areas  and 
subsequently  make  improvements.  The  content  of  the  Blueprints  was  presented  at  the 
EaP IBM Panel in Riga, June 2015. Follow-up activities, e.g. in the form of workshops, 
may be organised in the future.  

4 In this regard it is worth mentioning the Eastern Partnership IBM capacity building project led by Frontex 
to facilitate the movement of persons and goods across borders in the six EaP countries.   

9 

 
                                           
4. 

CONCLUSION 

Substantial progress has been achieved since the previous Commission Progress Report 
Further  to  the  Council  Conclusions  on  Customs  Cooperation  with  the  Eastern 
Neighbouring Countries (Brussels, 21.11.2013, SWD (2013) 487 final).  

Customs cooperation with the Eastern Partnership countries, in particular with Ukraine, 
the Republic of Moldova  and  Georgia has intensified. The  Commission  focused on the 
implementation  of  the  AA/DCFTAs  and  the  Strategic  Frameworks  for  customs 
cooperation by supporting customs reforms. Progress was made in implementation of the 
AEO  programmes,  accession  to  the  Common  Transit  Procedure  and  accession  to  the 
Regional  Convention  on  pan-Euro-Mediterranean  preferential  rules  of  origin.  The 
countries concerned participated in the Customs 2020 Programme, Technical Assistance 
and  Information  Exchange  instrument  (TAIEX)  activities  and  twinning  projects  which 
assisted  them  in  obtaining  better  understanding  of  EU  customs  activities  and  thus 
implementing  good  practices.  The  Member  States  supported  the  capacity  building 
activities. 

Customs cooperation with Russia was limited during this period and was influenced by 
political and trade developments. The Commission has insisted on Russia implementing 
fully the TIR Convention and abstaining from unjustified customs controls. Dialogue is 
important to avoid disruptions in trade flows. 

Cooperation  in  the  customs  area  with  Belarus  and  the  Eurasian  Economic  Union  was 
limited.  

10