REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Second Progress Report on the implementation of the EU Strategy and Action Plan for customs risk management
Date: 2018-11-09
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: EU control, action programme, customs cooperation, customs regulations, customs territory (EU), customs union, exchange of information, import policy, institutional cooperation

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 9.11.2018  COM(2018) 549 final/3  CORRIGENDUM This document corrects document COM(2018) 549 final of 20.07.2018 Concerns all language versions Correction of the numbering of sections-paragraphs. The text shall read as follows: REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Second Progress Report on the implementation of the EU Strategy and Action Plan for customs risk management {SWD(2018) 380 final}  
 
 
REPORT FROM THE COMMISSION TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT 

Second Progress Report on the implementation of the EU Strategy and Action Plan 
for customs risk management 

1. 

INTRODUCTION 

1.1.  New threats, new answers 

The world has changed dramatically during the first 50 years of the Customs Union and 
so  has  the  role  of  EU  customs  authorities.  As  the  lead  authority  that  supervises  the 
movement of goods across the external borders, customs are now the first line of defence 
against dangerous and criminal activities related to commercial trade. Examples include 
trade  in  non-compliant  or  dangerous  goods,  trafficking  in  cultural  goods,  firearms  and 
drugs,  wildlife  and  other  illegal  trafficking,  fraud,  terrorism  and  organised  crime.  All 
goods entering, leaving or passing through the EU (including goods carried by travellers) 
are subject to customs supervision and may be subject to customs controls. 

Customs have a vital role in guaranteeing the safety and security of our society, as well 
as  in  protecting  the  financial  interests  of  the  EU  and  its  Member  States.  They 
consequently  face  a  major  challenge  in  developing  controls  within  a  common  risk 
management  framework.  To  reach  their  objective,  customs  must  balance  their  role  in 
facilitating legitimate trade and preserving the fluidity of the supply chains necessary for 
our economy, while contributing to our safety and security. 

1.2.  A response to the Council’s invitation 

In 2014 the Commission adopted a Communication on the "EU Strategy and Action Plan 
for  customs  risk  management"1.  The  strategy  identified  a  number  of  key  objectives 
underpinned by the overall aim of reaching a high-quality, multi-layered approach to risk 
management  which  is  effective  and  efficient.  The  Action  Plan  detailed  a  series  of 
measures to be taken for each objective. In December 2014, the Council endorsed the EU 
Strategy  and  Action  Plan  for  customs  risk  management  and  invited  the  Commission  to 
report to the Council, within eighteen months, on its implementation and on the results 
achieved2. 

Following  the  Council's  request,  the  Commission  presented  in  July  2016,  the  first 
progress  report on the implementation  of the EU Strategy  and Action Plan for customs 
risk  management3.  The  report  showed  that,  eighteen  months  into  the  implementation 

1 COM(2014) 527 final. 

2 15403/14 

3 COM(2016) 476 final. 

1 

 
 
 
 
 
 
                                                 
process,  the  great  majority  of  the  actions  set  out  in  the  Action  Plan  had  already  been 
launched.  However  the  report  found  that  the  reform  of  customs  risk  management  is  a 
resource-intensive  exercise  in  which  achieving  results  takes  time.  It  identified  issues 
related to  IT as the primary challenge at that stage of implementation, in terms of both 
insufficient financing to develop the required IT systems and to issues of data availability 
and information exchange mechanisms. 

In December 2016, the Council adopted conclusions on the Commission progress report4. 
The  Council  conclusions  underlined  that  risk  management  processes  are  essential  for 
safeguarding the security and financial interests of the EU and its Member States whilst 
ensuring  the  facilitation  of  legitimate  trade.  The  Council  also  underlined  the  need  to 
continue  to  implement  the  EU  Strategy  and  Action  Plan  for  customs  risk  management 
and  wished  to  highlight  their  significant  contribution  to  the  Renewed  Internal  Security 
Strategy and its implementation, especially in the fight against terrorism and cross-border 
organised crime. 

The  Council  invited  the  Commission  to  present  a  second  progress  report  on  the 
implementation of the EU Strategy and Action Plan for customs risk management within 
eighteen months and to develop an efficient reporting mechanism to measure the impact 
of the outcome and results of specific actions.  

This second progress report constitutes the Commission’s response to that request. Like 
the  previous  report,  this  report  provides  an  overall  qualitative  assessment  of  the 
implementation of the Strategy, by explaining the progress made under each of the seven 
key objectives since the publication of the first report. It should be noted that this report 
is not an evaluation, neither is it a reflection on the future of the Strategy after the current 
exercise.  Moreover,  the  report  does  not  include  any  proposals  to  change  the  current 
Strategy. 

The  Commission  Staff  Working  Document,  annexed  to  this  report,  provides  further 
information  on  the  progress  made  in  the  implementation  of  the  individual  actions  and 
sub-actions.  

2.  PROGRESS REPORT 

2.1.  Objective 1 — Improving data quality and filing arrangements 

The objective of setting up a complete legal framework with requirements for ‘multiple 
filing’ and for improving data quality has been reached. Only its implementation remains 
to be achieved5. 

Aside  from  the  need  to  align  certain  technical  elements  with  data  requirements,  the 
Commission has not yet identified any major problems in its application. 

4 14894/16 

5 The Code’s substantive provisions entered into force on 1 May 2016. While the legal basis for this has 
been adopted, construction of the  main IT solution  in question (the Import Control System 2 (‘ICS2’)) 
has not yet been launched, meaning that the desired results and outcomes cannot be observed yet 

2 

 
 
                                                 
However, both the benefits and the impact of the Union Customs Code (the Code)6 will 
only be fully evident when all the related IT systems are operational. 

2.2.  Objective  2  —  Ensuring  availability  of  supply  chain  data,  sharing  of 

risk-relevant information and control results 

To  meet  the  challenges  facing  the  Customs  Union,  one  of  the  main  objectives  of  the 
Code  is  to  complete  the  transition  of  the  customs  environment  to  a  paperless  and 
electronic one, and provide for greater EU-wide digital integration. 

Therefore,  the  Commission  is  continuing,  together  with  the  Member  States  and 
businesses, to develop the different IT systems which underpin the implementation of the 
Code. The full set of IT systems will further modernise and harmonise import, export and 
transit processes, and introduce new concepts such as centralised clearance. 

However, it will not be possible for the Commission and the Member States to deliver all 
systems by 2020. This is because of the limited time available and the financial resources 
available  under  Customs  2020  programme  as  well  as  the  degree  of  complexity  and 
ambition of the many different interconnecting elements. The Commission has therefore 
adopted  a  proposal7  to  amend  Article 278  of  the  Code  to  extend  the  legal  deadline 
(transition period) to deliver some IT applications from 2020 to 2025.  

2.2.1.  Import Control System (ICS2) 

For  goods  entering  the  EU,  the  reform  of  EU  advance  cargo  information  (ICS)  is 
progressing. 

The transition Strategy and Plan for the Import Control System (ICS2) was endorsed by 
the Member States in December 2017. According to the plan, the ICS2 programme will 
be  implemented  in  three  operational  phases.  These  are:  (i)  goods  in  postal  and  express 
consignments in air traffic (pre-loading entry summary declarations (ENS) and minimum 
data  requirements);  (ii)  new  ENS  requirements  for  the  whole  of  air  traffic;  and  (iii) 
completing the reform with maritime, road and rail ENS requirements. 

In 2018 all elements needed to begin implementation will be available and agreed with 
the Member States.  

Implementing  ICS2  beyond  2020  also  depends  on  whether  the  necessary  funds  can  be 
secured  under  the  next  Multiannual  Financial  Framework.  In  this  respect,  the 
Commission has recently presented a proposal for a new Customs programme8. 

2.2.2.  Other projects and systems 

Electronic  customs,  supported  in  particular  by  the  multiannual  strategic  plan  for 
electronic  customs  (MASP),  is  a  major  development  for  the  EU  Customs  Union.  This 

6 Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013. 

7 COM(2018) 085 final. 

8 COM(2018) 442 final. 

3 

 
 
 
 
 
                                                 
initiative  aims  to  replace  paper-format  customs  procedures  with  EU-wide  electronic 
procedures  to  create  a  more  efficient  and  modern  customs  environment.  The  update  of 
the  MASP  was  finalised  at  the  end  of  2017,  after  the  Council  gave  its  agreement  to 
postpone the finalisation of some IT systems. 

The ‘Surveillance 3’9 system is to be implemented by October 2018. However, Member 
States  need  to  make  the  necessary  changes  to  their  national  systems  to  feed  the 
surveillance  system  with  the  relevant  data  elements.  Under  the  Code,  Member  States 
have a transition period until 2020 to fulfil this obligation. 

The Digital Transport and Logistic Forum (DTLF)10 is still ongoing and its mandate will 
be probably extended for 2-3 years. 

In  early  2016,  the  Commission  launched  the  eManifest11  pilot  project,  which  aims  to 
establish  a  harmonised  electronic  cargo  data  set  that  encompasses  information  required 
for maritime and customs formalities when ships enter or leave European ports. 

In  the  area  of  product  compliance  and  safety,  the  Commission  has  proposed  to  link  up 
customs  and  market  surveillance  in  view  of  facilitating  the  exchange  of  risk-related 
information between competent authorities.12 

2.3.  Objective  3  —  Implementing  control  and  risk  mitigation  measures 

where required (‘assess in advance — control where required’) 

As stated in the 2016 report, improvement in this area is mainly due to the progress made 
on  activities  already  under  way  when  the  Strategy  was  adopted,  including  advances  on 
prohibitions and restrictions. 

Under  Objective  3  further  progress  has  been  made,  particularly  on  the  following 
activities: 

2.3.1.  System-Based Approach (SBA) 

The System-Based-Approach (SBA) is a control methodology for trustworthy economic 
operators,  focusing  on  the  internal  systems  to  control  their  business  and  mitigate  risks 

9 The surveillance 3 IT system aims at fulfil the Union Customs Code  requirements such as the standard 
exchange  of  information  by  electronic  data-processing  techniques  and  the  establishment  of  adequate 
functionalities needed for processing and analysing the full surveillance dataset obtained from Member 
States. 

10 This Forum aims at the further digitalisation of freight transport and logistics. It brings together Member 
States  and  stakeholders  from  transport  and  logistics  communities  in  order  to  identify  areas  where 
common action in the EU is needed. The DTLF was set up by the European Commission in April 2015 
(Decision  setting-up  an  expert  group  on  Digital  Transport  and  Logistics  -  The  digital  Transport  and 
Logistics Forum C(2015) 2259. 

11 The overall objective of this pilot project is to test procedures that would simplify the submission of data 
elements  required  by  different  authorities  for  cargo  formalities  with  the  aim  to  facilitate  and  reduce  the 
administrative burden for ship data providers. 

12 COM(2017) 795 final. 

4 

 
 
 
 
                                                 
related to customs compliance. The work of the SBA Network and the respective Project 
Group was completed and the SBA final report submitted to the Customs Policy Group 
(CPG)  in  December  2017.  This  report  assessed  the  SBA  as  an  effective,  efficient  and 
solid  control  methodology  and  recommended  that  it  be  used  to  a  larger  extent  in  the 
future. 

2.3.2.  Credibility checks 

Credibility  checks  are  automated  checks  introduced  at  the  clearance  stage  of  imports. 
They  are  measures  that  check  the  compatibility  of  entries  in  the  customs  declaration 
against  three  parameters:  (i)  legal  checks  (checking  the  compatibility  of  entries  against 
the  legal  parameters  of  goods  description);  (ii)  mass-related  checks  (checking  the 
credibility of declared particulars (e.g. net mass/unit, or net mass/suppl. unit)); and (iii) 
price-related checks (checking the credibility of the declared prices (value/unit)). To date, 
428 such measures have been introduced via the integrated Tariff of the European Union 
(TARIC)13. 

2.3.3.  Product compliance and safety 

The  first  progress  report  of  2016  referred  to  the  guidelines  and  checklists  for  product 
compliance  and  safety.  Since  then,  a  few  more  checklists  have  been  established  for 
products that are subject to EU harmonisation legislation (‘harmonised products’). These 
will be used and updated regularly. 

In December 2017, the Commission adopted a proposal for a regulation  on compliance 
with  and  enforcement  of  EU  harmonised  legislation  on  products14  which  intends  to 
structurally  strengthen  the  legal  framework  for  controls  on  goods  entering  the  EU.  It 
would also streamline cooperation between customs and market surveillance authorities 
for more effective checks on imported products. The proposal provides a legal basis for 
stronger cooperation between customs and market surveillance authorities facilitated by 
an  EU  Product  Compliance  Network  as  well  as  comprehensive  national  market 
surveillance strategies covering import and digital supply chains, structural exchanges of 
information  and  data  between  customs  and  market  surveillance, 
international 
cooperation, and alignment with concepts of the Code, such as the Authorised Economic 
Operators (AEO) scheme.  

2.4.  Objective 4 — Increasing capacity to ensure effective implementation of 
increase 

the  Common  Risk  Management  Framework  and 
responsiveness to newly identified risks 

to 

As indicated in the 2016 progress report, progress on Objective 4 was initially modest, as 
many actions had to be undertaken to improve the capacity of Member States and the EU 
to  implement  the  Common  Risk  Management  Framework  (CRMF).  Since  then,  there 
have been new developments in several areas: 

13 Council Regulation (EEC) No 2658/87 of 23 July 1987. 

14 COM(2017)795. 

5 

 
 
   
 
                                                 
2.4.1.  Developing further capacities 

Member  States  have  identified  additional  capacities  that  might  be  necessary  to  support 
more  effective  and  efficient  risk  management,  including  increased  responsiveness  to 
newly identified risks. The typical needs analyses of human and other resources generally 
concluded either that more resources are indispensable, or that current resources should 
be  boosted  or  modernised  to  strengthen  risk  management  capacity.  According  to  the 
European Court of Auditors' (ECA) special report of December 201715, Member States 
shall  be  encouraged  to  perform  more  and  better  customs  controls  with  a  uniform 
application of customs legislation. 

Other important needs include coordinating activities internally or externally with other 
national agencies and with customs authorities of other Member States, and applying new 
tools, data or methods for risk analysis practices. 

Many Member States have already acted upon the results of their analyses and addressed 
the  identified  weaknesses.  In  addition,  some  customs  organisations  have  been 
reorganised and internal coordination has been improved. 

2.4.2.  Implementing the Common Risk Management Framework (CRMF) 

the  most  commonly 

Member  States  have  reported  significant  developments  in  their  national  IT  systems. 
However, 
the  effective 
implementation of the CRMF at national level appears to be the poor quality, availability 
or  usability  of  data.  An  additional  challenge  is  the  lack  of  access  to  the  data  of  other 
Member States. 

remaining  barrier 

identified 

to 

A  CRMF  evaluation  cycle  model  has  been  developed  with  all  Member  States.  The 
Commission created a CRMF subgroup which delivered a pilot evaluation cycle report in 
December  2017,  cross-checking  the  CRMF  evaluation  cycle  with  the  Customs  Union 
Performance  (CUP)  to  ensure  that  they  are  mutually  supportive  and  apply  consistent 
approaches.  The  subgroup  also  coordinated  closely  to  improve  and  further  develop 
performance indicators in the field of controls with re-use of data where appropriate and 
avoiding duplication in data collection. 

The pilot CRMF evaluation cycle report outlined the issues to be considered, subject to 
further  discussion  and  prioritisation  with  the  Member  States,  and  depending  on  the 
availability of resources. The report suggested that additional attention should be given to 
organisational  capacities  for  collaboration.  The  report  also  took  stock  of  CRMF 
deployment  to  date,  recognising  the  considerable  common  achievements  since  the 
inception of the CRMF. These include: (i) the establishment of trans-EU networks of risk 
experts;  (ii)  the  implementation  of  common  risk  criteria;  and  (iii)  the  ongoing 
deployment  of  the  EU  common  risk  management  system  for  sharing  risk  information, 
supporting priority control areas and facilitating customs crisis response actions. 

15 Special Report 19/2017 of 5 December 2017. 

6 

 
 
 
 
 
                                                 
2.4.3.  Thematic working groups  

At EU and multilateral level, many working groups made up of representatives from the 
European Commission and the Member States work on key issues for improving customs 
control and risk management capacities. 

2.4.4.  Financial Risk Criteria 

The  decision  on  Financial  Risk  Criteria  (FRC)16  aims  to  develop  a  common  EU-wide 
approach  on  the  way  to  address  financial  risks  in  the  EU.  It  responds  to  some  of  the 
weaknesses  identified  in  the  European  Court  of  Auditors’  special  report  of  December 
201717.  

The  decision  sets  out  the  common  risk  criteria  that  have  to  be  used  to  address  specific 
types of financial risks: economic operators at risk, goods at risk, undervaluation, evasion 
of antidumping duties, misclassification, undue quotas, undue preferential origin, undue 
suspensions,  customs  procedures  at  risk  (e.g.  CP  42)  and  customs  simplifications. 
Financial Risk Criteria will be used in the everyday electronic risk management process 
to harmonise the selection process for customs controls. 

This  initiative  will  enable  Member  States  to  address  financial  risks  in  an  equivalent 
manner  at  the  external  border,  without  placing  an  undue  burden  on  legitimate  trade.  It 
will  also  identify  the  most  opportune  time  and  place  of  the  control  depending  on  the 
scope  and  nature  of  the  risk  and  on  the  availability  of  data  and  documentation.  

2.5.  Objective  5  —  Promoting  interagency  cooperation  and  information 
sharing between customs and other authorities at Member State and EU 
level 

All  Member  States  reported  broad,  well-functioning  and  often  daily  cooperation  with 
other  national  authorities  (especially  other  law  enforcement  authorities  and  tax 
authorities) and agencies. 

In  this  area,  the  contribution  of  risk-based  customs  controls  was  crucial  to  detect  and 
prevent organised crime and terrorism related to the movement of goods across external 
borders. 

There  is  also  potential  for  increasing  further  customs’  capacity  for  advance  cargo  risk 
analysis in cooperation with other law enforcement/security authorities. 

2.5.1.  Cooperation with Europol 

Within  the  Priority  Control  Area  on  firearms,  the  Commission  and  the  Member  States 
explored  new  forms  of  cooperation  with  police.  This  included  a  specific  exercise  with 
Europol  on  gas  pistols  and  a  fast  parcels  operation  on  illicit  trafficking  of  firearms  in 

16 C(2018) 3293 final. 

7 

 
 
 
 
 
                                                 
 
2017.  These  activities  clearly  demonstrated  the  added  value  of  cooperation  between 
customs and police using new forms of collaboration. 

Europol is further developing its cooperation with customs authorities. Its report on the 
implementation  of  the  ‘Strategic  Review:  Europol  and  customs’  confirmed  the  need  to 
further  strengthen  the  presence  of  customs  officials  in  Europol,  including  the  need  for 
customs  to  be  able  to  access  Europol’s  Secure  Information  Exchange  Network 
Application (SIENA). 

In  addition,  cooperation  between  the  European  Anti-fraud  Office  (OLAF)  and  Europol 
has  been  further  strengthened.  OLAF  is  an  associated  service  to  Europol’s  ‘COPY’ 
Analysis Project  dealing with  organised  crime on  Intellectual Property Rights  (IPR).  In 
accordance  with  the  Europol  Regulation  (EU)  2016/794,  OLAF  has  indirect  access  to 
information  in  Europol’s  databases.  OLAF  also  recently  signed  a  memorandum  of 
understanding  with  Europol  on  secure  communication  and  has  been  connected  to  the 
SIENA system. This should facilitate communication between these two bodies. 

2.5.2.  Cooperation  with  the  European  Border  and  Coast  Guard  Agency 

(Frontex) 

The  adoption  of  the  European  Border  and  Coastguard  (EBCG)  Regulation  in  201618, 
paves the way for improved cooperation between customs and the work of the Agency, 
based on strategic complementarity between the different functions. 

This Regulation provided Frontex with a new mandate, embedding it more deeply within 
border and migration management. The Agency now has the mandate to address potential 
threats  at  external  borders,  thus  helping  address  serious  crime  with  a  cross-border 
dimension, which ensures a high level of internal security within the EU.   

2.5.3.  Intellectual Property Rights (IPR) 

The Commission is continuing its support to the Member States to combat infringements 
on IPR and has identified the following main priorities: (i) homogeneous implementation 
of customs enforcement of IPR across the EU; (ii) improved risk management in the IPR 
field; and (iii) better cooperation between authorities. 

Previous  cooperation  and  coordination  on  IPR  infringement  between  enforcement 
authorities  at  EU  level  has  led  to  the  seizure  of  millions  of  fake  and  possibly  harmful 
products and helped take down several transnational criminal networks. The policy area 
of  IPR  infringements  has  been  included  as  a  mandate  for  action  in  the  Customs 
Cooperation Working Party action plan (2018-2019).19 

The European Commission promotes the exchange of risk information (via the Customs 
Risk  Management  System  (CRMS))  and  the  statistical  analysis  of  new  trends.  The 
common customs IPR experts/risk analysis group to be set up in 2018, will assess if the 
existing tools are sufficient for risk analysis and IPR infringements or if more needs to be 
done. 

18 Regulation (EU) 2016/1624 of the European Parliament and of the Council of 14 September 2016, and 

Article 52(3) in particular. 

19 The draft mandate was adopted on 31 January 2018. 

8 

 
                                                 
2.5.4.  The European Agenda on Security 

As  gatekeeper  of  EU  borders  for  the  flow  of  goods,  EU  customs  play  a  crucial  role  in 
protecting the EU and its citizens, as well as protecting international supply chains from 
criminal activities and terrorist attacks. 

By  implementing  the  EU  Strategy  and  Action  Plan  for  customs  risk  management,  the 
Commission  contributes  to  the  implementation  of  the  European  Agenda  on  Security,  a 
central component of the general objective to  create an area of justice and fundamental 
rights. 

In the last 2 years, the Commission adopted several legislative proposals aimed at cutting 
off  the  sources  of  terrorist  financing.  The  most  relevant  are  the  proposals  on:  (i)  illicit 
cash movements20; (ii) illicit trade in cultural goods21; and (iii) EU certification of airport 
screening equipment22. The Commission also continues to implement EU Action Plans: 
(i) against illicit trafficking and the use of firearms and explosives23; (ii) to strengthen the 
fight against terrorist financing24; and (iii) against wildlife trafficking25. 

2.5.5.  The 

  Action  Plan  on 

‘Strengthening  Chemical,  Biological, 
Radiological and Nuclear Security in the European Union’  (the EU 
CBRN Action Plan) 

Reinforcing  resilience  against  CBRN  threats  in  terms  of  prevention,  preparedness  and 
response, requires significant investments by Member States. It therefore calls for closer 
cooperation  at  EU level  to  learn  from  each other, pool expertise and assets  and exploit 
synergies  across  borders.  One  key  priority  of  the  EU  CBRN  action  plan  is  to  ensure 
border  security  and  detection  capacity  to  prevent  the  illicit  entry  of  CBRN  materials. 
Adapting cargo information systems is essential to strengthen monitoring and risk-based 
controls of international supply chains so that CBRN material does not illicitly enter the 
EU. 

2.5.6.  The Customs Cooperation Working Party (CCWP) Action Plan 

In May 2017, the EU adopted a new 4-year plan for the fight against serious international 
and  organised  crime.  This  plan  known  as  the  "EU  policy  cycle"  defines  the  top  crime 
priorities  for 
the 
implementation  of  the  policy  cycle  subsequently  increased  compared  to  the  previous 
years. 

the  period  2018-2021.  Customs  authorities’ 

involvement 

in 

However, their participation is still selective and limited to some crime priorities (mainly 
excise/Missing  Trader  Intra  Community  (MTIC)  fraud  and  environmental  crime 

20 COM(2016) 825 final. 

21 COM(2017) 375 final. 

22 COM(2016) 491 final. 

23 COM(2015) 624 final. 

24 COM(2016) 050 final. 

25 COM(2016) 87 final. 

9 

 
                                                 
priorities). The synergies between the 2018-2021 EU policy cycle and the ninth CCWP 
Action  Plan  (2018-2020)  were  further  strengthened  through  complementary  actions  led 
by the same actors, joint police and customs operations, etc. 

Furthermore,  the  ninth  CCWP  Action  Plan  includes  action  on  ‘better  integration  of 
customs  in  the  EU  Serious  and  Organised  Crime  Threat  Assessment  (EU  SOCTA)’ 
covering  customs’  participation  in  the  EU  SOCTA,  as  well  as  the  broader  cooperation 
between customs and Europol. The focus is on identifying areas where improvement is 
needed, exchanging best practices, awareness raising and training. 

SOCTA  2017  is  the  most  comprehensive  study  of  serious  and  organised  crime  ever 
undertaken in the EU. 

2.5.7.  Cooperation of customs and border guards 

Customs and border guards are strategic partners in border control tasks at EU external 
borders. In October 2017, revised guidelines for cooperation between customs and border 
guards were prepared based on the evaluation carried out in 2015-2017. These underline 
the importance of strategic cooperation and highlight  key areas of  cooperation between 
the two authorities. 

2.6.  Objective 6 — Improving cooperation with trade 

Cooperation between customs and trade is mainly improved through the strengthening of 
the AEO concept. 

2.6.1.  The Authorised Economic Operator  (AEO) programme 

The AEO programme is based on the customs-to-business partnership concept introduced 
by  the  World  Customs  Organisation  (WCO).  It  is  an  essential  supply  chain  security 
measure allowing compliant and trustworthy traders who voluntarily meet a wide range 
of criteria to benefit from maximum simplification and facilitation. The year 2018 marks 
the tenth anniversary of the EU AEO programme. 

Member  States  have  developed  robust  procedures  for  applying  the  AEO  legal 
requirements  that  guarantee  high  quality,  consistent  and  efficient  management  of  the 
programme. 

The main changes  relating to  the AEO legislation in  the context of the Union Customs 
Code  and  its  delegated  and  implementing  acts  were  linked  to  the  overall  changes  in 
policies and structure under the Code. These changes were the result of lessons learned in 
the  10  years  of  practical  implementation  of  the  EU  AEO  programme.  The  AEO 
guidelines were updated in 2016. 

2.6.2.  Measuring the impact of the AEO concept 

A  number  of  indicators  have  been  used  in  the  Customs  Union  Performance  (CUP) 
reporting to measure the impact of the AEO concept. The CUP provides a mechanism to 
measure and assess the performance of the Customs Union, including the AEO concept, 
on 
against 
facilitation/competitiveness, the AEO concept is analysed on the basis of general aspects. 

the  EU.  Under 

the  main 

objectives 

strategic 

area 

of 

10 

 
 
 
These include the number of authorisations and applications at EU level, the involvement 
of AEOs in the supply chain and control aspects related to facilitation of AEOs. 

2.6.3.  eAEO direct trader access 

The  European  Commission  is  developing  the  eAEO  direct  trader  access  that  from 
1 October  2019  will  enable  traders  to  submit  their  AEO  application  and  receive  AEO 
decisions  electronically.  Traders  and  customs  in  the  EU  will  have  the  possibility  to 
communicate with each other via the eAEO module in a uniform and coherent way. 

2.6.4.  Pre-Loading Advance Electronic Cargo Information (PLACI) and its 
link with ICS2 implementation especially as regards postal operators 
and courier services 

Following the successful amendment of the Universal Postal Union (UPU) Convention to 
introduce  advance  electronic  postal  data  submission  obligations,  the  Commission  has 
worked  closely  with  postal  sector  players  to  jointly  develop  effective  and  minimally 
disruptive  global  standards  to  implement  this  obligation.    The  Commission  has  also 
closely liaised with  global partners (such as the US, Australia and Canada).  Currently, 
postal services are still exempted from the data submission requirement.  Postal flows are 
specifically vulnerable, so receiving advance electronic postal data will be of particular 
importance to strengthen air cargo security flows into the EU and to tackle the financial 
risks inherent in this type of transactions. The first release of the new ICS2 system will 
cover postal consignments in air traffic and consequently close the existing gap for most 
of the postal business model transactions. 

2.7.  Objective  7  —  Tapping  the  potential  offered  by  international  customs 

cooperation 

Cooperation  and  exchange  of  customs-related  information  with  third  countries  play  an 
important  role  in  the  area  of  the  Customs  Union  and  common  commercial  policy. 
Cooperation  and  exchange  of  information  can  improve  customs  risk  management  and 
make legitimate trade faster and less costly by targeting customs controls and simplifying 
customs procedures. Along with mandatory pre-arrival declarations, it contributes to the 
security and safety of the EU by strengthening controls to block the entry of hazardous 
goods,  arms,  explosives  and  dual-use  goods  and  to  prevent  IPR  infringements  and  the 
entry and trafficking of drug precursors. 

The  Commission  represents  the  European  Union  in  the  World  Customs  Organisation 
(WCO), in particular when defending the interests of the EU and its Member States on 
issues  related  to  nomenclature  and  classification  of  goods,  but  also  on  cross-cutting 
topics like e-commerce, tax and customs cooperation, and security and safety. 

2.7.1.   Initiatives  on  the  exchange  of  customs  information  with  third 

countries 

Various  initiatives  have  been  taken  to  allow  customs  authorities  in  the  EU  and  third 
countries to exchange certain customs information in specific circumstances based on: 

11 

 
 
 
• 
International agreements and decisions adopted by bodies set up by international 
agreements  (e.g.  stand-alone  customs  cooperation  and  mutual  administrative  assistance 
agreements or customs and trade facilitation chapters included in free trade agreements; 
agreements  on  trade  facilitation  and  security;  agreements  on  transit;  Joint  Customs 
Cooperation  Committee  decisions  on  mutual  recognition  of  AEO/trusted  trader 
programmes); and 

• 
Non-legally  binding  arrangements  or  pilot  projects  (e.g.  transmission  of  TIR 
Carnet data to Russia; Smart and Secure Trade Lanes (SSTL) with China). The strategic 
objective  of  SSTL  is  to  test  security  measures  applied  to  the  logistic  supply  chains,  to 
facilitate  ‘customs-to-customs’  data  exchange,  to  determine  joint  risk  rules  and  to 
mutually recognise customs controls and trade partnership programmes. 

2.7.2.  Preferential trade agreements 

To further improve the EU’s international trade framework, the Commission contributes 
to  new  and  ongoing  negotiations  of  customs-related  provisions  in  preferential  trade 
agreements,  in  particular  with  Mercosur,  Mexico,  Indonesia,  Chile,  Australia  and  New 
Zealand. 

Moreover,  there  are  a  number  of  activities  under  way  aimed  at  improving  the  risk 
management of the supply chain through international cooperation. 

Notable successes include the  revision of the WCO Framework of Standards to  Secure 
and Facilitate Global Trade (SAFE), the new international standards, e.g. on pre-loading 
air cargo information and the mutual recognition of AEO programmes. 

2.7.3.  Other initiatives - High Level Seminar 

A  High  Level  Seminar  on  the  exchange  of  customs-related  information  with  third 
countries  was  hosted  by  the  Bulgarian  Presidency  on  7-8  June  2018.  At  the  seminar 
participants: (i) reviewed the current state of play in the area of the exchange of customs- 
related information with  third countries and  confirmed the  growing importance of such 
exchanges  as  well  as  the  timely  need  to  act;  (ii)  identified  the  needs  for  enhancing 
exchanges  of  customs  related  information  with  third  countries;  and  (iii)  discussed  and 
identified  the  potential  scope,  purposes,  benefits,  conditions,  means  and  constraints  for 
enhanced exchanges of customs-related information. In the conclusions of this seminar it 
was  agreed  that  a  strategic  and  consistent  approach  is  needed  in  choosing  with  whom 
information should be exchanged, what should be the concrete types of information and 
what should be the concrete purposes for exchanges, taking into account current financial 
and security risks, trade patterns and political interests.    

3.  MONITORING SYSTEM 

The  Commission  has  been  invited  to  develop,  in  close  cooperation  with  the  Member 
States,  a  performance  and  monitoring 
the  strategy’s 
implementation more systematically and robustly in the future. 

to  monitor 

framework 

The  Commission  has  begun  work  on  this  system,  and  has  developed  indicators  and 
evidence sources to efficiently monitor the strategy. These first points of discussion are 

12 

 
 
 
detailed  in  the  Staff  Working  Document  which  accompanies  this  report.  They  are 
intended  to  serve  as  a  basis  for  further  reflection  with  Member  States  within  the 
appropriate working group. 

4.  CONCLUSION 

Risk management is a process not limited to specific actions with a definitive beginning 
and  end.  Faced  with  new  threats  and  challenges,  customs  must  continuously  act  and 
adapt  to  contribute  to  the  security  and  safety  of  EU  citizens,  while  avoiding  an  undue 
negative impact on the fluidity of international trade. Consequently, a number of actions 
set  out  in  the  Strategy  are  marked  as  ‘in  progress’  as  they  cannot  by  nature  have  set 
deadlines,  precisely  because  of  the  necessary  and  continuous  process  linked  to  all 
challenges. 

This report and the accompanying Staff Working Document give an instant picture of the 
state of implementation of the EU Strategy and Action Plan for customs risk management 
as of mid-2018. 

They show that significant progress has been made in the implementation of the Strategy 
and Action Plan since the publication of the previous report, both by the Member States 
and by the European Commission.  

Of the 54 sub-actions identified by the Strategy and Action Plan, only 2 have not started 
yet, whilst 41 are ongoing and 11 are completed. 

They  show significant  progress  by the Member  States and the Commission  in  terms  of 
strengthening collaboration between all the actors involved and launching new initiatives. 
Examples  include  the  Commission’s  decision  on  financial  risk  criteria  and  the 
participation of customs administrations in security-related activities. 

Despite  this  progress,  customs  face  continuing  challenges,  including  unprecedented 
levels of terrorism and other security threats. With EU imports of goods constantly on the 
rise,  they  need  to  join  forces  with  market  surveillance  authorities  to  prevent  unsafe  or 
non-compliant  products  from  entering  the  market.  Customs  also  face  many  other 
challenges such as the emergence of e-commerce and the phenomenon of undervaluation 
of goods that may prevent them from reaching their full performance potential. 

In addition, the implementation of the IT systems required for data collection and sharing 
is  ongoing  and  is  progressing  well,  although  the  final  date  for  full  completion  of  some 
systems needed to be postponed from 2020 to 2025. 

While the snapshot provided in this report is as accurate as possible, it cannot completely 
reflect  the  activity  of  customs  in  the  area  of  risk  management.  Indeed,  customs 
authorities must constantly reinvent themselves to face new threats that appear day after 
day, which may have a negative financial impact on both the EU's and Member States' 
budget.  These  threats  are  often  linked  to  the  activity  of  criminal  networks  that  master 
technology better and better.  

Within this context, the Member States and the Commission need to be able to measure 
progress in terms of greater protection balanced with trade facilitation, by collecting and 
analysing evidence-based data. This includes quantitative data on controls based on risk 

13 

 
 
management, and on control results at different points in the supply chain. This exercise 
is supported and complemented by the Customs Union Performance which measures the 
overall  performance  of  the  Customs  Union.  Regarding  monitoring,  we  should 
acknowledge  that  while  quantitative  data  is  essential,  it  can  never  be  a  full  measure  of 
contribution as there are underlying differences in processes and results. 

14