Proposal on the EU Single Window environment for customs
Date: 2018-05-04
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: customs union



IMMC.Ares%282018%292382035.ENG.xhtml.PART-2018-266442V1.docx












INCEPTION  IMPACT  ASSESSMENT 






Title of the initiative




EU Single Window environment for customs






Lead DG – responsible unit




DG TAXUD Unit B1 Processes & Data, Customer relationship and planning






Likely Type of initiative




Regulatory and non-regulatory measures






Indicative Planning




Quarter 1, 2020 (to be confirmed)






Additional Information




Webpage on “The EU Single Window environment for customs”






The Inception Impact Assessment is provided for information purposes only. It does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content. All elements of the initiative described by the Inception Impact Assessment, including its timing, are subject to change. 








A. Context, problem definition and subsidiarity check






Context






The new era of digitalisation is transforming the way international trade operates. Customs administrations across the European Union (EU) have seen a dramatic increase in their workload as the networks of global trade have exponentially expanded the movement of goods and services. Likewise, the cross-border movement of goods must comply with several pieces of EU legislation in the field of customs, transport, environmental protection, safety and security of citizens and economic policies. Many of these provisions related to international trade generate numerous and burdensome reporting obligations for the trade community. 


In this context of increased trade flows and regulatory requirements, the European Union and its Member States recognise that there is a pressing need for action on the modernisation and improved efficiency of the EU customs clearance procedures. Already the 2008 e-Customs Decision
                           1
 set the basic framework for creating a paperless environment for customs and trade, defining the objectives and mechanisms for the harmonisation and future coordination of electronic customs. This Decision called on the Member States and the Commission to endeavour to establish and make operational a framework of single window services
2
 providing for the seamless flow of data between customs authorities, the Commission, economic operators, and other regulatory agencies. The adoption of the Union Customs Code (UCC)
                           3
 and its application on 1st of May 2016 further supported the shift to a paperless and interoperable environment for EU customs by establishing or redefining the legal framework of new and existing customs systems. 


Although the ongoing process of digitalisation offers a large potential to generate faster and more efficient customs clearance and control procedures, this opportunity is not fully seized in the entire supply chain. As the customs domain is progressively transformed into a paperless electronic environment, the clearance process imposes a wide range of multiple non-customs formalities that must be fulfilled separately and not always electronically. These requirements are predominantly related to other policies areas (veterinary, sanitary, phytosanitary, agricultural, fisheries, environmental, etc.) and impact economic operators when applying to get certificates, licenses and permits from the relevant competent authorities and then when submitting those supporting documents together with the customs declaration for clearance by customs authorities. 


To address this situation, significant attention has been paid to single window initiatives within and across EU. For instance, in the maritime sector, the establishment of National Single Windows for maritime formalities required by Directive 2010/65/EU laid the cornerstone for the reception and sharing of ship-related regulatory information among different authorities. Nevertheless, the 2014 evaluation
                           4
 of the e-Customs Decision concluded that the single window for customs was one of the outstanding objectives that remain to be achieved. In this context, the Heads of Customs Administrations of EU Member States and of the European Commission adopted, in October 2014, the Venice Declaration which invited the Commission and the Member States to prepare an action plan for the progressive implementation of the Single Window environment for customs and to provide a legal framework for the development of this environment, including the definition of the scope, the objectives as well as the roles and responsibilities of the relevant stakeholders and the target deadlines. This Declaration was endorsed by the Council Conclusions adopted in December 2014
5
. Subsequently, in the 2016 Communication on "Developing the EU Customs Union and its Governance,”
                           6
 the Commission announced its plan to explore a workable solution for the development and creation of an EU Single Window environment for customs. This plan was supported by the ECOFIN Council in its conclusions of March 2017
7
. 


Moreover, the WTO Trade Facilitation Agreement (which entered into force on 22 February 2017) requires the signatory parties to make their best efforts to establish single windows enabling traders to submit data requirements for import, export, or transit of goods through a single-entry point. This initiative will therefore contribute to the implementation of this Agreement.  


If building a customs single window would be a significantly complex task to fulfil for any country, in particular due to the involvement of a high number of authorities and the multiplicity of their respective procedures and systems, this complexity increases exponentially on the EU level. The applicability of both national and EU legislation to the cross-border movements of goods and the implementation of customs and non-customs legislation by 28 national administrations further demonstrate that the EU structure bears an additional intricacy that needs to be considered when defining the most suitable Single Window environment. Given this context, the Commission and the Member States agreed to implement the Customs Single Window environment through a phased approach.


The first stage of this approach consisted in establishing, in 2015, a pilot project to allow the automated acceptance by Member States’ customs administrations of electronic certificates issued by other authorities for which a database is set up at EU level. Since then, the pilot project has evolved significantly in expanding the scope of certificates and the available functionalities of the solution which is turning into a fully-fledged operational system used successfully by eight Member States’ customs administrations. Further functionalities are being rolled out in 2018, such as the handling of quantities for certificates at EU level to reinforce controls and protect the citizens. To maximise the benefits of this second stage, a legal basis would be needed. This proposal constitutes the culminating step which would consist of providing a comprehensive framework to support the establishment of an integrated and coherent environment for customs Single Window services in the EU.







Problem the initiative aims to tackle






The international movement of goods must comply with several pieces of EU legislation in the field of customs, transport, sanitary, phytosanitary, environmental protection and other legislation related to safety and security. 


Customs is the only authority that has a complete overview of the goods entering and leaving the EU territory. Customs authorities enforce more than 60 pieces of EU legislation at the EU external borders for protecting the health and safety of the citizens and the integrity of the environment. These legislative measures impose different regulatory requirements on the import, export and transit of goods. To fulfil these requirements, the economic operators are often required to submit the same information to various competent authorities (governmental, regional or local) which have their own rules of procedure and working methods. Likewise, different government authorities carry out multiple controls and inspections on the same goods and supporting information. The frequent filing of the same information and the procedural redundancies associated with the multiplication of information generate compliance costs, which impose an unnecessary burden to both Member States’ administrations and the business community. Hence, the rationalisation of control processes and the efficient cooperation between competent authorities involved in the cross-border movement of goods is crucial for facilitating legitimate trade, as well as strengthening the security and safety of citizens, animals and the environment.


In 2016, approximately 271 million customs declarations were processed in the EU, which on average consists of 8 declarations per second. Along with these declarations, customs authorities are required to check the certificates and licences issued by other competent authorities to certify goods compliance with EU standards. The economic operators applying for a customs procedure must first obtain a certificate/licence from a competent authority, which is then submitted to customs control. These supporting documents are checked to determine the placement of goods under a customs procedure. Under the current reporting model, the process of manual verification and controls performed by customs (of the documentation required by other competent authorities) represents a cost-intensive and burdensome process, consumes significant human resources and poses the risk of human error or misconduct. 


The increased digitalisation of logistics processes (including IT developments in the customs domain, sanitary border control, maritime transport, etc.) creates opportunities to perform automated checks; however, these possibilities are presently not fully seized due to limited information sharing and unharmonised data management across policy domains. 


In addition, the limited exchanges of information between the different authorities acting at the border do not only hamper the free flow of goods, but also weaken the security and safety of citizens, animals and the environment. The authorities in charge of safety and security policies do not receive sufficient information on the goods that have been cleared by customs under a specific certificate. In some cases, the certificates or licenses issued by competent authorities can be used to import/export goods through different customs declarations in any Member State, thus yielding the risk of fraudulent re-use and forgery of certificates.  


To enhance cooperation between competent authorities involved in the cross-border movement of goods, some Member States have started developing national initiatives to provide single window services for customs. Nonetheless, these emerging national initiatives are characterised by different modalities and maturity levels. As a result, these isolated initiatives only offer limited benefits to trade in the context of the EU Single Market.  


The impact assessment will shed more light into the relevance and magnitude of these problems. 






Basis for EU intervention (legal basis and subsidiarity check)






The legal basis is provided by Articles 33 and 114 of the Treaty on the Functioning of the European Union (TFEU)
                           8
. 


The objectives of the proposal cannot be achieved by the Member States alone in an effective and efficient manner for the following reasons:  


Although some of the national single window services are currently structured around a decentralised model (or anticipated to adopt such system), an important role must be played at EU level in terms of harmonisation and interoperability. On the one hand, data harmonisation across different sectors requires EU action to facilitate submission, processing, exchange and checking of information. On the other hand, the interoperability of national single window services, and ultimately the coherent development of a Single Window environment for customs could only be achieved through the establishment of a common framework. This proposal will cater for a coordinated and coherent development and implementation of single window services, providing a definition of the scope of the Single Window environment for customs and the roles and responsibilities of the different stakeholders involved. 


On a more specific level, the cooperation between various competent authorities acting at the border, and especially the automated data exchange between them, requires the interconnection of their respective IT systems. In this regard, a single infrastructure linking the 28 Member States’ customs administrations with the various EU certificates databases and providing common functionalities, such as data transformation to translate data sets from the certificate into customs “language”, would be more efficient than developing 28 connections to each of the EU certificates databases. The functionality of this framework would also enable national customs administrations to perform a harmonised implementation of non-customs legislation by standardising the exchange of information between EU certificates databases and national customs authorities. It should be noted that the number of certificates hosted in EU databases is growing thanks to the digitalisation efforts promoted by different Commission Directorates-General. A centralised IT infrastructure run by DG TAXUD is currently working on project mode as highlighted under the context section. The existing pilot project is connecting customs administrations of participating Member States with TRACES
9
 and is already covering three certificates (CVEDA
10
 CVEDP
11
 and CED
12
). The scope of the project is being expanded to other certificates (FLEGT
13
, COI
14
 and CHED-PP
15
) and it is foreseen to be expanded to other EU databases (i.e. ODS
16
 and F-GAS licenses of DG CLIMA and dual-use goods licenses of DG TRADE).  


The proposal will therefore comply with the subsidiarity principle. 






B. Objectives and policy options 






Policy objectives


This initiative aims to support through regulatory and non-regulatory measures the development of an integrated and coherent electronic environment of single window services for customs with national and EU components through enhanced intergovernmental/agency cooperation, improved enforcement of cross-border regulatory requirements and trade facilitation. 


The general objective gives rise to a series of specific objectives that would together achieve the overall goal of the initiative:


Improve working practices between customs and other competent authorities involved in the cross-border movement of goods by automating customs controls of supporting documents, promoting electronic feedback of the customs clearance and enabling the integration of customs and non-customs procedures applicable to the cross-border movement of goods. 


Determining a framework for data harmonisation and enabling the re-use of data provided by economic operators when fulfilling the different formalities required by customs and non-customs authorities for the cross-border movement of goods.


Defining a clear governance framework for the EU Single Window environment for customs and ensuring coherence and interoperability of all national and EU Single Window solutions where beneficial and appropriate.



The initiative will take into consideration other relevant EU actions and policy developments in the context of trade and transport facilitation.



Policy options


The impact assessment will consider several policy options for targeted EU level intervention with a view to addressing the problems identified under section A. These options will be structured around two e-governance domains that facilitate information sharing and interaction between the stakeholders involved in the cross-border movement of goods. In the context of this initiative, the government-to-government (G2G) cooperation is expected to promote collaboration and coherence between customs and competent authorities to ensure a better alignment of the various sectoral regulatory requirements and efficient information sharing. The business-to-government (B2G) segment would streamline reporting processes imposed to trade by the different competent authorities involved in the cross-border movement of goods. 


The baseline scenario is to maintain the present status quo and continue operating under the current scope of the EU Single Window certificates management project with no supporting legal proposal. The automated acceptance and verification of certificates will proceed as planned in the field of cooperation between customs and competent authorities. The participation of each Member State in this project would continue to be voluntary with no common action possible on the B2G domain. 


A number of regulatory options to support the technical development will be assessed. These include measures to ensure a proper legal base for data exchange between customs and other competent authorities involved in the cross-border movement of goods and a uniform interconnection between national customs declaration systems or national single window systems with the EU certificates databases to facilitate the standardisation of information exchanges and a reliable management of the quantities authorised by these certificates.  



A preliminary list of measures is outlined below. These measures are not mutually exclusive as they can be combined in different option packages.


G2G cooperation: 


The G2G measures are anticipated to streamline the exchange of information between the national customs systems and other competent authorities’ systems and databases to enable the automated verification of certificates. Through this exchange, Member States’ customs administrations could access:


EU certificates stored in EU databases.


EU certificates stored in national databases.


National certificates stored in national databases.


Certificates issued by third countries relevant to the customs clearance process and certificates issued by competent authorities in compliance with EU legislation for which no database exists at EU or national level.



B2G interaction:


The B2G interaction could be addressed through different measures as indicated below:


A harmonised trader interface to interact with various EU certificate management systems.


Harmonised measures to set up national customs single window solutions providing trade with harmonised access points to fulfil regulatory formalities required for import, export and transit of goods.


Development of an EU Customs Single Window Trader Portal to fulfil customs and non-customs regulatory formalities required for import, export and transit of goods.



Various technical solutions are available within each option depending on factors like system connectivity and implementation of functionalities. The impact assessment will place special focus on the combination of policy options, which represent various complementary approaches to the EU customs Single Window initiative.






C.  Preliminary assessment of expected impacts






Likely economic impacts






The establishment of a Single Window environment for customs is expected to lead to significant financial gains and the creation of value added services for both public administrations and economic operators.


The single window is primarily a trade facilitation measure which can potentially reduce trade barriers and transaction costs, thus contributing to the competitiveness of the EU economy. According to the World Bank’s research
                           17
 on trade facilitation measures, the presence of a Single Window programme is anticipated to improve a country’s trade performance. In this context, the trade facilitation measures of simplification, harmonisation, standardisation and modernisation of procedures related to the Single Window initiative would improve the efficiency and performance of trade flows by reducing the cost of duplication and accelerating logistics processes.


A consistent EU-wide approach to single window services would enable an integrated government restructuring package encompassing an improved deployment of financial resources and reduced costs for developing and maintaining IT systems with standardised interoperability, including data definitions and procedures.


Likewise, the high-value national software industries around developing single window solutions will further harness the vast potential of innovative technologies, such as blockchain and Connecting Europe Facility (CEF) Digital Building Blocks 
18
 to achieve seamless interoperability between the stakeholders involved. In addition, the Single Window initiative will encourage the development of innovative infrastructure solutions to enable efficient, secure and reliable digital exchange. The impact assessment will identify and evaluate opportunities for such innovative solutions in the context of the above-referenced policy options. 


The initiative would also affect more positively the SMEs by measures that would significantly reduce their regulatory burden and foster a higher service quality.






Likely social impacts 






The initiative will contribute to a better enforcement of many EU-wide policies to protect citizens. EU legislation lays down a detailed set of sanitary and phytosanitary requirements to eliminate the possible risks of animal, plant and public health threats by enforcing controls on the import of foods of animal/non-animal origin and plant products. The corresponding licensing schemes have a positive social impact while protecting the EU community at large. The initiative will promote further cooperation between the relevant competent authorities and customs services as well as provisions on targeting controls based on the risks involved. This will in turn increase consumer confidence in market products.


Policies supporting the development of the Single Window initiative would further facilitate international trade, enhance competitiveness and increase flexibility in the cross-border movement of goods, capital and labour, thus having a considerable social significance and an impact on employment.


An efficient exchange of information and integration of procedures would allow for the early detection of fraudulent activities, thus maintaining public confidence in the integrity of the customs system.






Likely environmental impacts






The use of digital information for optimising customs-related processes could have significant environmental impacts. Digitalisation is not only a fundamental precondition for reducing the cost of duplication, increasing efficiency and coordination of border activities, but it also yields long-term environmental advantages in natural resources saving, reduced emissions and sustainable procurement, which would considerably benefit business, government and society. This initiative would facilitate an EU-wide dematerialisation process by converting physical certificates into electronic format.


In addition, the initiative will better enforce many policies aiming at protecting the environment, plants and animal welfare, such as the FLEGT licensing
                           19
 scheme for the imports of timber into the EU to fight illegal logging and its negative environmental impacts; ODS & FGAS licensing system
                           20
 to ensure that the existing restrictions on ozone-depleting substances (ODS) and fluorinated gases (FGAS) are properly implemented; the Catch Certification Scheme
21
 for the imports of fishery products into the EU to fight illegal, unreported and unregulated fishing; and the CITES licensing system
                           22
 to protect endangered species by imposing strict requirements on the import and re-export of these species. 






Likely impacts on fundamental rights






The harmonised implementation of EU legislation will help guarantee the equal treatment of economic operators throughout the EU by also fostering increased integrity and transparency of the relevant customs activities.


Customs formalities contain both personal and commercially sensitive data. Any technical requirements that would be promoted under this initiative will have to take into account sufficient coverage for all data protection aspects. Since the adoption of the General Data Protection Regulation in May 2016, the Commission has been actively engaged with all concerned actors (governments, national authorities, businesses and civil society) to prepare the application of the new rules. Along with the processing of personal data based on the principle of fundamental rights, the impact assessment will discuss a comprehensive policy framework for non-personal data to align existing differences between the Member States legislations. 






Likely impacts on simplification and/or administrative burden






This initiative is expected to make the processes and procedures of cross-border international trade simple, straightforward and efficient for traders and government services. 


Traders would interact in a seamless way with competent authorities involved in the cross-border movement of goods, while Member States can rationalise the use of human resources and the allocation of financial costs throughout the EU. Significant impact is anticipated in various aspects of service delivery, such as simplified data sharing between authorities, integration of processes for performing coordinated and faster controls, better traceability and real-time statistics on movements of goods under restriction, faster clearance and release of goods, efficient channels of data submission to the competent authorities and reduced fraud errors.  


The impact assessment will identify and quantify in detail the extent of this impact (regulatory costs - administrative costs, compliance costs and enforcement costs – benefits, savings and burden reduction/simplification potential).






D. Evidence base, data collection and better regulation instruments






Impact assessment






An impact assessment analysis will inform the Commission's decision on the preferred policy option for the initiative and support its implementation. An inter-service steering group where all relevant Commission DGs will be represented will support the preparatory work. The responsible Directorate General for Taxation and Customs Union intends to submit the impact assessment for quality assessment to the Regulatory Scrutiny Board in early 2020. It is important to note that any initiative would be subject to approval of the new Commission.






Evidence base and data collection






The main methods include targeted and open public consultation, thematic cases studies, and active collaboration with the stakeholders involved. 


A consultative project group
23
 was set up in December 2016 with the participation of experts from 19 Member States and 6 trader federations as a discussion platform to provide insight on defining the scope of the EU Customs Single Window and assessing the legal and policy instruments suitable for this initiative. Within this framework, consultations are also taking place with leading experts from WCO
24
, UNECE
25
 and academia. 


The ongoing involvement of various Member States in the certificates exchange pilot project will also allow for data collection resulting from national experiences on system implementation. 


To further develop and refine the scope of the initiative, it will be relevant to use the findings from ongoing initiatives, such as the Reporting Formalities Directive, proposals on European Maritime Single Window environment and on Electronic Freight Transport Information (both foreseen May 2018), use cases of CEF
                           26
 building blocks, the proposed Single Digital Gateway Regulation and other efforts and projects that are made at the EU level to apply the “once - only” principle cross-border
27
.






Consultation of citizens and stakeholders






The consultation will aim to provide international trade stakeholders and the wider public with the opportunity to express their views on all elements covered by the initiative, as well as gather specialised input on barriers in developing an EU Single Window environment for customs. 


Among the stakeholders, the following groups can be distinguished: national customs administrations in the Member States; other national competent authorities (ministries and their agencies) that rely on customs to control or implement their policies (e.g. veterinary, sanitary, phytosanitary, agricultural, fisheries, environmental, pharmaceutical, etc.); economic operators dealing with cross-border movement of goods, and as represented by national, European and/or international associations; subject matter experts in IT; academia, research institutes and think tanks; international organisations related to international trade and customs, such as UNECE, WCO and WTO, NGOs and citizens.   


Both public and targeted consultation methods will be used to achieve a balanced and comprehensive coverage of stakeholders; the targeted consultations will start from the second quarter of 2018 while the public consultation will start in the third quarter 2018. Different sets of consultation tools will be used to target different types of stakeholders. 


The public consultation will be open for at least 12 weeks, and it will be accessible in 23 official EU languages both via DG TAXUD's consultation webpage and the Commission's central Contribute to law-making page. The consultative project group (as described above) will continue to meet regularly during the preparation of the initiative.


The results of all consultation activities will be summarised in a synopsis report, which will be also made publicly available in TAXUD-customs consultations.






Will an implementation plan be established?






The development of an implementation plan will be subject to the preferred option identified.










(1)
 
                        
Decision No 70/2008/EC
 of the European Parliament and of the Council of 15 January 2008 on a paperless environment for customs and trade, OJ L 23, 26/01/2008, P. 21-26



(2)
 
                        Within the context of the UNECE Recommendation, “a Single Window is defined as a facility that allows parties involved in trade and transport to lodge standardised information and documents with a single-entry point to fulfil all import, export, and transit-related regulatory requirements. If information is electronic, then individual data elements should only be submitted once.” (
https://www.unece.org/fileadmin/DAM/cefact/recommendations/rec33/rec33_trd352e.pdf
) 



(3)

   
Regulation No 952/2013
 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (recast), OJ L 296, 10/10/2013, P. 1-101 



(4)
 
   Evaluation of the electronic customs implementation in the EU Final report (21 January 2015), available for download 
here
.
                        




(5)


 
                           
http://data.consilium.europa.eu/doc/document/ST-16507-2014-INIT/en/pdf




(6)

   COM (2016) 813 final



(7)
 
http://data.consilium.europa.eu/doc/document/ST-7585-2017-REV-1/en/pdf



(8)
 
                        Treaty on European Union and the Treaty on the Functioning of the European Union, Official Journal C 326, 26/10/2012 P. 0001 – 0390.



(9)
 
                        TRAde Control and Expert System is a trans-European network for veterinary health, which notifies, certifies and monitors imports, exports and trade in animals and animal products. 



(10)
 
                        Common Veterinary Entry Document for Live Animals 



(11)
 
                        Common Veterinary Entry Document for Products of Animal Origin 



(12)
 
                        Common Entry Document for Feed and Food of Non-Animal Origin 



(13)
 
                        Forest Law Enforcement, Governance and Trade License



(14)
 
                        Certificate of Organic Inspection



(15)
 
                        Common Health Entry Document for Plant Protection



(16)
 
                        Licencing and reporting of Ozone-Depleting Substances



(17)
 
                        The Impacts of Trade Facilitation Measures on International Trade Flows;
                        

http://documents.worldbank.org/curated/en/515651467997566625/pdf/WPS7367.pdf



(18)
 
                        
https://ec.europa.eu/cefdigital/wiki/display/CEFDIGITAL/About+CEF+building+blocks
 



(19)
 
                        Council Regulation (EC) No 2173/2005 of 20 December 2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community.



(20)
 
                        Regulation (EC) No 1005/2009 on substances that deplete the ozone layer & Regulation (EU) No 517/2014 on fluorinated greenhouse gases



(21)
 
                        Council Regulation (EC) No 1005/2008 of 29 September 2008 establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing, amending Regulations (EEC) No 2847/93, (EC) No 1936/2001 and (EC) No 601/2004 and repealing Regulations (EC) No 1093/94 and (EC) No 1447/1999



(22)
 
                        Convention on International Trade in Endangered Species of Wild Fauna and Flora



(23)
 
                        Project Group to study a possible framework to develop the EU Single Window environment for customs (EU-SW) including the legal context.



(24)
 
                        World Customs Organisation



(25)
 
                        United Nations Economic Commission for Europe



(26)
 
   Connecting Europe Facility programme.



(27)
 
                        
The Once Only Principle large-scale pilot (TOOP)
 and also, the coordination and support action on the once-only principle for citizens (
SCOOP4C
).