Source: EURLEX
Language: en
Format: md

|  |  |
| --- | --- |
| CALL FOR EVIDENCE  FOR AN IMPACT ASSESSMENT | |
| This document aims to inform the public and stakeholders on the Commission's future legislative work so they can provide feedback on the Commission's understanding of the problem and possible solutions, and give us any relevant information that they may have, including on possible impacts of the different options. | |
| Title of the initiative | Reform of the Union customs legislation |
| Lead DG (responsible unit) | DG TAXUD A1 A2 |
| Likely type of initiative | Legislative proposal |
| Indicative timetable | Planned adoption date: Q4-2022 |
| Additional information | Customs (europa.eu) |
| This document is 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, including its timing, are subject to change. | |

|  |
| --- |
| A. Political context, problem definition and subsidiarity check |
| Political context |
| Since its birth in 1968, the EU’s Customs Union is the cornerstone of the EU single market and external trade policy and a key component of EU strategic autonomy. The Union Customs Code (UCC) provides a comprehensive framework for customs rules and procedures in the EU customs territory, which are implemented in each Member States by customs authorities. Multiple requirements laid down in sectoral policies, known as ‘prohibitions and restrictions’, are also applied by customs, e.g. for ensuring product safety, security and for protecting health, cultural heritage and the environment.  Customs thus play a crucial role as the authorities in charge of the supervision of the supply chain at the EU borders, which covers all actions taken for ensuring that customs legislation and other relevant provisions on goods are applied. Their tasks include not only the collection of import duties and other taxes, thereby ensuring the flow and protection of financial resources, but also the detection of non-compliance and threats before goods reach the internal market (or even before they are loaded for transport to the EU), thereby protecting the Union, its citizens and businesses from a wide range of risks. Uniform implementation and enforcement of customs rules on the ground is key to simplifying operations of law-abiding businesses, while stepping up the fight against products which do not respect EU standards, rogue operators, organised crime, terrorism and fraud.  Recent and past events like Brexit, the Covid-19 pandemic and the Russian invasion of Ukraine have shown the crucial importance of ensuring the resilience and security of international supply chains. Alongside these challenges, the last decade has witnessed major changes in trade and technology (the volumes of trade have significantly increased and its nature has changed with the big expansion of e-commerce), together with an increasing demand for customs to ensure safety and security in the Union. The Union is therefore facing a strong tension between the needs of its citizens, who expect better protection from productions breaching EU standards and harming the environment, jobs and innovation, and the systematic abuse of global e-commerce to bypass EU market controls and target EU consumers directly.  In her political guidelines, President von der Leyen emphasised the need “to take the Customs Union to the next level, equipping it with a stronger framework that will allow us to better protect our citizens and our single market”. To this end, the 2020 Customs Action Plan sets out steps for ensuring a more coherent and stronger Customs Union, focusing efforts on four main areas (risk management, e-commerce, compliance, and the Customs Union acting as one). The Commission Work Programme 2022 foresees, in its Annex II, under the priority “An economy that works for the people”, a revision of the Union customs legislation. This initiative will also contribute to other major priorities, including the promotion of our European way of life and the twin green and digital transitions. This initiative is informed by: a year-long multi-stakeholder foresight project (the future of EU Customs 2040); the interim evaluation of the Union Customs Code; independent studies on the Authorised Economic Operators programme, on solutions for e-commerce and on customs free zones; several special reports of the European Court of Auditors on customs issues [1](#footnote3) . The recommendations of the Wise Persons Group on Challenges facing the Customs Union and the subsequent engagement between the Commission, the Parliament and the Member States under the French Presidency have generated further strategic insights and underlined the political momentum for immediate action. |
| Problem the initiative aims to tackle |
| Despite its evident success and significant reforms undertaken over the years, such as the UCC underpinning simplifications and digitalisation, the Customs Union meets increasingly difficult challenges.  ·Customs do not yet function “as one”. Although adopted at EU level, customs legislation is implemented by national customs authorities, each working primarily in its national environment. Despite the success of the UCC in harmonising certain areas (decisions, authorisations, valuation, data requirements), uneven implementation of the rules and procedures remain a problem. This is particularly true in the field of customs risk management, where differences in capacities, practices and priorities, combined with the absence of an EU-wide analysis of financial and non-financial risks, lead to divergences in protection and loss of revenues. Relative weak links are exploited by highly-adaptive illicit traders, reducing the effectiveness of individual action by any Member State. Uneven facilitation and simplifications for legitimate trade is also problematic for external competitiveness, administrative burden, and the internal level playing field.  ·Due to failures of implementation and delays, the UCC has not yet brought the promised simplifications for traders, although the most promising will be deployed in 2023 (EU-level centralised clearance). Other simplifications such as self-assessment are not used because of legal uncertainty about their application in practice. There is therefore scope for simplifying the customs environment for traders, by reducing administrative burden and unnecessary formalities.  ·Customs work has shifted from the traditional revenue collection to new tasks such as enforcing prohibitions and restrictions imposed by complex sectoral legislation, which respond to increasing protection demands from citizens. This stretches to the limit the available capacities of Member States, which have to enforce more than 350 pieces of EU legislation covering a wide range of diverse policy areas, such as product safety, environmental protection, climate change, intellectual property rights, dual use goods, protection of human and animal health, firearms and smuggling. [2](#footnote4)    ·Relatedly, co-operation between customs and other sectoral authorities and across related policies is uneven and often hindered by structural obstacles affecting the availability or exchange of data. In the absence of proper prioritisation and sufficient resources, customs operations face competing pressures, in particular between their traditional fiscal tasks and the ever increasing range of prohibitions and restrictions on imported goods to be enforced at the borders. Specialised authorities (agriculture, market surveillance, etc.) depend on the customs mechanisms for interventions at the border but collaboration on intelligence building, identification and analysis of relevant risks and data sharing is not systematic; likewise, strategic delivery planning and management is not co-ordinated.  ·The current coordination mechanisms among Member States do not provide an appropriate governance of the Customs Union, as they are either at a political level (Customs Policy Group) or based on voluntary initiatives (CELBET). The lack of structured governance at operational level does not enable an effective planning and organisation of interventions on risk priorities or “risk appetite” (to be defined at political or policy level), where needed, to ensure uniform results. The available operational information is not sufficient to fully measure performance.   ·In the area of information management, digitalisation of customs processes is on track, and ongoing investments in trans-EU systems (notably the new Import Control System and the EU Single Window Environment for Customs) will bring important added-value in the near future. However, the overall customs information environment has become complex and difficult to change. Data are fragmented across systems, owners and procedure-specific legal provisions, which prevent it from being used effectively. Gaps across the Member States in visibility and analytical capacity exacerbate the weak links mentioned above. Effective supervision is further impeded by weaknesses in the scope, sourcing and quality of data declared as customs data is typically provided by intermediaries who handle the goods but do not know much about them.    ·The rise of e-commerce presents major specific challenges. Where customs could previously work with wholesale trade flows, they now deal with flows of billions of small retail consignments. Non-compliant suppliers bypass market surveillance to send non-compliant goods as well as prohibited items directly to EU consumers. Exemptions from import duties are exploited with under-declared values and artificial splitting of consignments (undermining both duty and VAT collection).  Without further action at EU level, the gap between supervision capacity and public expectations may put the credibility of EU policies and standards for goods and supply chains, and our internal market as such, at risk. Harm to consumers, unfair competition for EU production and loss of revenues will continue to grow. Industry information highlights the scale of the challenge: a survey by the European Consumer Organisation found that 2/3 of e-commerce goods sampled did not comply with EU standards; similarly, an analysis of the EU’s rapid alert system (RAPEX) shows that more than 90% of chemicals non-compliant with the REACH regulation in consumer products come from outside the EU. Without reform, we can expect similar enforcement challenges in other policies (for example, the banning of forced labour products, the tracing of firearms in the EU, the sustainability requirements of EU legislation or the carbon content of imported products). |
| Basis for EU action (legal basis and subsidiarity check) |
| The legal bases for this initiative are:  -Article 33 of the Treaty on the Functioning of the European Union (TFEU) on customs cooperation;  -Article 114 TFEU on approximation of legislation aimed to the establishment and functioning of the internal market;  -Article 207 TFEU on common commercial policy.  According to Article 3(1)(a) TFEU, Customs Union is one of the exclusive competences of the Union. Therefore, the subsidiarity principle does not apply to this initiative. |
| B. Objectives and policy options |
| The reform of customs supervision for all goods entering and leaving the EU touches upon many areas of EU activities, from trade and industry measures to environment and EU standards, from health and security to sanctions. It should strengthen the EU resilience and strategic autonomy, providing it with a capacity to act in a complex economic and geopolitical situation. It should increase the ability of the EU to protect its citizens, industry and legitimate trade from the challenges of the present day and the future. It should ensures the protection of the financial interests of the EU and safeguards the Traditional Own Resources (i.e. customs duties) for the EU budget.  This initiative will aim to deliver a true Customs Union acting as one in preventing harmful traffic and protecting the single market from illegal products, while facilitating legitimate trade no matter where goods cross EU borders. It will build a simpler, more data-centric customs, fit for the twin digital and green transitions. It will also aim to give the Customs Union the strategic management capabilities that it needs, as a shared strategic asset, to play its full role in promoting the European way of life and to adapt quickly and efficiently to the challenges and crises of the future.  Measures to be considered (alone or in combination) will include:  ·Strengthening common risk management, for example by, leveraging partnerships with trusted traders and other competent authorities and reinforcing the advance cargo information.   ·Simplifying customs formalities for reliable and trusted traders established in the EU, for example by making more use of commercial information rather than of burdensome administrative requirements.  ·Enhancing the co-operation between customs and non-customs authorities (such as market surveillance authorities, law enforcement authorities, tax agencies). This could cover, for example, joint policy elaboration, operational coordination, enforcement and information exchange.   ·Reforming the EU customs governance to provide for an EU layer which could, for example:  oBetter implement the “risk appetite” or risk priorities identified at policy and political level.  oBetter deliver on activities where “acting as one” would add value (e.g. EU-wide risk management, information technology management, training of customs officers, financing of customs equipment, supporting simplifications and services for trade, handling EU crisis response, as well as “protecting as one” by driving joined-up co-operation between the customs and other authorities).  ·Providing for a fully-fledged EU customs information environment, putting emphasis on data management capabilities for better risk management, and including simplified provision of data (e.g. enabling re-use of data, avoiding duplications, etc.) in reduced customs processes, streamlined handling of non-customs formalities (building on the concept of “single window”), more tailored services for trade, other public authorities and consumers.  ·Adapting customs legislation to e-commerce transactions, for example by strengthening supervision of business-to-consumer flows and liability of involved actors for all fiscal and non-fiscal rules.  ·Integrating the green agenda in the customs agenda and traders behaviours.  A structural modernisation of the Customs Union requires a coherent, integrated package of measures, which leverage the foundations laid and investments made under the current UCC, and provide for a clear transitional path from the current environment, over a 10-year period (2025-2034). It should at the same time respect international commitments and contribute to the global reform of customs and the World Customs Organisation. |
| C. Likely impacts |
| To the extent that it modernises and simplifies the Customs Union and strengthens its capacity to “act as one” in its operations and co-operation, this initiative will bring:  ·improved protection of consumers against non-compliant/harmful goods though better risk management;  ·reduced administrative burden of customs processes for compliant traders;   ·better protection of national and EU public finances and enhanced fight against fraud;  ·improved protection of the EU economy, jobs and innovation against unfair competition, including social and environmental dumping;  ·reinforced fight against organised crime and terrorism and strengthened EU internal and external security via better risk management;  ·rapid and uniform response mechanism to future crisis (targeting threats while maintaining supplies);  ·improved customs capabilities, such as better human resource capacities, tools and skills, more efficient management of resources for joint interventions with a greater systemic impact;  ·digital transition allowing for a simplified and more efficient customs environment for traders and authorities.  In terms of impact distribution, the customs supervision system addresses the whole EU. Consumers, businesses and national authorities all depend on the external border to prevent entry and free circulation of non-compliant products/harmful traffic.  A number of impacts have a global dimension, including better enforcement of international agreements (notably on environmental matters, on endangered species, f-gases or hazardous waste), reduction of emissions, international trade facilitation, and reduction of illegal exploitation of workforce and the environment globally.  As regards Sustainable Developments Goals (SDG): the reform contributes to Goal 8 (Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all), Goal 9 (Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation), Goal 12 (Ensure sustainable consumption and production patterns) and Goal 15 (…sustainably manage forests, (…), halt and reverse land degradation and halt biodiversity loss). |
| D. Better regulation instruments |
| Impact assessment |
| An impact assessment is being conducted to support the preparation of this initiative and inform the Commission's decision.  This initiative is part of the regulatory fitness and performance programme (REFIT), as it will propose measures aimed at reducing administrative burdens and achieving simplification of customs processes. |
| Consultation strategy |
| The aim of the consultation activities is to gather views from a broad range of stakeholders on the problems the initiative aims to tackle, the potential policy options to be covered, as well as the scope and technicalities attached to each alternative.  The stakeholders that will be consulted are customs authorities, business associations/federations, competent authorities at EU and national level involved in customs-related matters, EU and non-EU citizens.  The planned consultation activities include:  -Targeted consultations with national customs authorities in the Reflection Group of the Customs Policy Group [3](#footnote5) .   -Targeted consultation with trade representatives of the Trade Contact Group [4](#footnote6) .  -A public consultation based on a questionnaire available in any of the 24 official EU languages on the Have Your Say page.  The consultation activities will be promoted via the official channels of the Commission, including social media. The factual summary report will be published on the consultation page 8 weeks after the public consultation is closed, while the synopsis report will be included in the impact assessment. |
| Why we are consulting? |
| The Commission intends to launch a public consultation in Q3 2022 and also invite feedback on this Call for Evidence. The aim of this consultation is to gather views and experiences of interested parties regarding the Customs Union and its reform. These views will be used to inform the impact assessment and will help to identify the existing problems and the most viable options for the reform. |
| Target audience |
| All EU and non-EU citizens and other stakeholders are welcome to contribute to this consultation. Contributions are sought in particular from economic operators in the area of customs (e.g. import/export SMEs, companies, customs brokers, professionals in the trade supply chain, etc.), customs authorities, national authorities in relevant areas (e.g. market surveillance, antifraud, data protection, health and safety compliance, etc.), consumers and academics. |

:   [(1)](#footnoteref3)
     
       ECA special reports 04/2021 “Customs controls: insufficient harmonisation hampers EU financial interests”; 12/2019 “Ecommerce: many of the challenges of collecting VAT and custom duties remain to be resolved”; 26/2018 “A series of delays in Customs IT systems: what went wrong?; 19/2017: “Import procedures: shortcomings in the legal framework and an ineffective implementation impact the financial interests of the EU”.
:   [(2)](#footnoteref4)
     
       Integrated EU prohibitions & restrictions list: indicative calendar and list as of 1.1.2022 legal notice, 2022, https://data.europa.eu/doi/10.2778/163387. European Commission, Directorate-General for Taxation and Customs Union,
:   [(3)](#footnoteref5)
     
    <Customs Reflection Group, subgroup of the Customs Policy Group>
     (code E00944/1).
:   [(4)](#footnoteref6)
     
    <https://ec.europa.eu/transparency/expert-groups-register/screen/expert-groups/consult?lang=en&groupID=2134>

[Top](#document1)