Modernised Community Customs Code - guide

19 February 2008
by eub2 -- last modified 19 February 2008

The aim of the modernised Community Customs Code regulation is to replace the existing Community Customs Code and the related Regulations with a modernized Customs Code that streamlines customs procedures and lays the foundations for accessible, inter-operable customs clearance systems at EU level.

What does the Modernised Customs Code contain?

The Modernised Customs Code will simplify legislation and administration procedures both from the point of view of customs authorities and traders.

It will:

• Streamline and reduce the number of customs procedures and make it easier to keep track of goods
• Ensure the progressive computerisation of all customs formalities, with a view to a completely ‘paperless environment for customs and trade’, (whose development will be supported and framed by the e-customs Decision No 70/2008/EC of the Parliament and of the Council, adopted on 15 January 2008, by:
• Introducing the electronic lodging of customs declarations and accompanying documents as the rule;
• Providing for the exchange of electronic information between the national customs, and with other competent authorities;
• Promote the concept of "centralised clearance", under which authorised traders will be able to declare goods electronically and pay their customs duties at the place where they are established, irrespective of the Member State through which the goods will be brought in or out of the EU customs territory or in which they will be consumed.
• Offer bases for the development of the 'Single Window' and 'One-Stop-Shop' concepts, under which economic operators give information on goods to only one contact point ('Single Window' concept), even if the data should reach different administrations/agencies, so that controls on them for various purposes (customs, sanitary,...) are performed at the same time and at the same place ('one-stop-shop' concept).
• Streamline and harmonise further the customs guarantee systems

The proposal incorporates the amendments provided for in the Regulation adopted in 2005 to improve the security and safety of goods crossing Community borders.

What would be the economic effects of the new Code for traders?

The proposed computerisation and simplification of procedures should allow companies established in the Community to face more effectively the customs-related challenges of economic globalisation and increasing trade volume. Delays at the border, caused by complex rules and paper-based procedures, hamper the competitiveness of companies importing raw materials or intermediate products or exporting on the world market.

What are the missions of Customs?

As defined in Article 2 of the MCC, Customs' role is multifold : their mission is 'fiscal' (collection of own resources and protection of financial interests of the Community and its Member States), 'economic' (application of tariff or commercial policy measures and fight against unfair and illegal trade), providing for the 'security and safety' of the Community and its residents, as well as 'trade facilitation' for companies. Proper balance shall be found between the last two missions.

What are the respective roles of the Modernised Customs Code and the e-Customs decision?

The MCC lays down the general rules and procedures applicable to goods brought into or out of the customs territory of the Community. The e-Customs Decision lays down the objectives to be met in creating a paperless environment for customs and trade, as well as the structure, means and time limits for doing so. With regard to computerisation of customs procedures and interoperability of electronic customs systems, the MCC therefore provides for the legal bases for procedures based on electronic data-processing techniques, while the e-Customs Decision identifies the systems to be developed and the time-limits to make them operational, the respective responsibilities and tasks of the Commission and the Member States and the coordination and monitoring process (through partnership with Member States in the Customs Policy Group and the drawing up and update of a Multi-Annual Strategic Plan)

Will the modernisation of the Customs Code interfere with the security amendment adopted in 2005 and to be applied in 2008/2009?
The MCC will of course 'absorb' the security 'acquis' resulting from Regulation No 648/2005.The security amendment (AEO status, pre-arrival and pre-departure information, risk management framework) was proposed and adopted in advance to the MCC because of the urgency to secure the supply chain. This 2005 'acquis' also incorporates the electronic treatment of exports. The MCC builds up on this 'acquis' to expand the electronic data-processing and exchange of information to all import and export procedures and re-balance the security and safety dimension of the Code by additional simplifications and facilitations. The Authorised Economic Operator (AEO) status and criteria are – with some clarifications – not only taken forward in the MCC but are consistently used with regard to the granting of various authorisations to economic operators to be proven reliable. On the security amendment and also the European Commission Customs website.

When will the modernised Code be applied?

The MCC will enter into force on the 20th day following that of its publication in the Official Journal. However, except for those provisions empowering the Commission to adopt implementing measures, the provisions of the MCC shall be applicable only once their implementing provisions (see question below) will be themselves applicable. That shall take place between 1 year and 5 year after the entry into force of the MCC. The fact that no precise date for the application of both the MCC and its implementing provisions was fixed is justified by the fact that this application will depend in most cases of the availability of IT systems at the level of the Community (common domain), of the customs administrations of the Member States (national domain) and of the economic operators (external domain).

The date(s) of application of the provisions concerned – to be fixed in the Regulation laying down the implementing provisions - will therefore be closely linked to the planning established under the e-Customs Decision.

What will be the procedure for the adoption by the Commission of the implementing provisions and will the Council and the Parliament be involved?

First of all, for most of its provisions, the MCC is not self-executive and needs implementing measures, which are adopted by the Commission under the form of a Regulation, on the basis of an empowerment given to this effect by the co-legislators in the Code.

The adoption of MCC implementing measures is subject to three standard 'comitology' procedures involving in different ways the Member States within the Customs Code Committee but also the Council as such and the Parliament. The procedure fixed by the Code depends on the nature and impact of the said-measures onto the provisions of the Code. A new procedure called 'regulatory procedure with scrutiny' has been introduced and will cover the adoption of about half of the implementing measures. It foresees, once the Commission's draft has been approved (by qualified majority) by the Committee, a right of scrutiny of the Council and the Parliament to allow them to verify that the Commission acted in full respect of the content and limits of its executive empowerment.

When do we expect the Implementing Provisions will be adopted?

In 2009.

Will the trade representatives be involved in the preparation of the Implementing Provisions of the Modernised Code and how?

Trade representatives were regularly informed and consulted by the Commission all along the co-decision procedure on the Modernised Customs Code and e-customs Decision. They are already, through trade-customs working groups, assisting the Commission in the preparation of specific parts of the Implementing Provisions. The Trade Contact Group, where the main professional organisations concerned by customs operations are represented, will follow closely the drafting and adoption process of these provisions. Moreover, the e-Customs Decision provides for consultation mechanisms with economic operators at all stages of the preparation, development and deployment of the electronic systems and services.

What is the meaning of centralised clearance?

The concept of 'centralised clearance' would mean that when an "authorised operator" lodges his customs declaration at the customs office where he is established, that office would then carry out any documentary risk analysis. This office (the 'office of import/export') would then forward the results of its analysis to the border customs office in that Member State or in another Member State where the goods are actually to enter or leave the Community (the 'office of entry/exit'). This border office would apply any physical controls to the goods being imported or exported that either office deems necessary on the basis of the result of risk analysis. Compliant and trusted traders would generally have a minimal incidence of selection for control at the place of entry or exit.

Provided that there is no irregularity, and that the customs debt was provided for at the office of import, the goods would be released directly into free circulation in the EU or for export.

Under the procedure, the goods would not have to be moved to the office of import or export but could be delivered direct to the point of sale, including in another Member State or third country. This would allow multi-national companies to conduct all of their EU business with one customs office.

What are the conditions for centralised clearance to be actually applied?

Centralised clearance will be included for its actual functioning in the legal framework (Implementing Provisions) and IT developments regarding customs clearance in an electronic environment, in general (the so-called Automated Import System and Automated Export System). However centralised clearance will imply a prior authorisation and, where it involves several Member States, also implies a shared responsibility between these Member States in charge of either receiving the customs declaration or controlling the goods. Moreover the disconnection between the place where the declaration is lodged (the Member State where the declarant is established) and the place(s) where the goods are presented for control may have consequences in terms of the sharing of the 25% collection costs of own resources which are left to Member States, of collection of VAT and statistics. The Council adopted, in connection with its political agreement on the MCC on 25 June 2007, a statement according to which the Member States shall find appropriate ways to tackle and solve these non Community aspects of centralised clearance.

What is the Single Window concept proposed under the modernised Customs Code?

The 'Single Window' refers to a single electronic entrance point at which authorised operators could submit the information required by customs and other agencies involved in frontier control, such as police, border guards, veterinary and environmental authorities.

What is the One-Stop-Shop concept proposed under the modernised Customs Code?

The 'One-Stop-Shop' refers to the combined performance of customs controls and other controls such as veterinary and environmental controls, so that the goods are controlled by all authorities at the same time and at the same place.

What would be the benefits of a Single Window and a One-Stop-Shop?

Co-operation between the different frontier authorities and electronic data exchange instead of the processing of paper documents would substantially simplify the work of governmental authorities and economic operators.

The latter would save time and money through the consequent reduction of red tape.

From the point of view of the Community and Member States, these innovations would contribute to more efficient risk management, reduced levels of inadvertent non-compliance on the part of traders and better quality of information shared between government agencies, leading to improved security and greater ability to target suspicious consignments, and improved efficiency.

What are the plans to put in place the Single Window and the One-Stop-Shop?

Single Window and One-Stop-Shop, because they involve measures, agencies and IT systems which are not fully under control of customs administrations and legislation, will be long-term projects which could probably not be implemented, step-by-step, before 2013.

What is the state of implementation of the AEO status?
AEO certificate have entered into force on 1 January 2008. See the press release issued in 2006 when the decision of the Commission was taken and also the Commission Customs website for practical information.

EU Member States expects around 500 - 1000 AEO applications in the coming period. So far 266 applications have been uploaded in the Community IT system developed for the purpose of informing all MS and for consultation, if required, between the Member States concerned. The applications received are from all actors in the supply chain. Member States will start to issue the AEO certificate as planned, starting in mid-March, the first possible date as the legislation lays down that the MS have to wait 70 days for eventual prejudicial information from any other MS. Moreover the Community is discussing or already negotiating with major trading partners (USA, Canada, Japan, China) and also neighbouring countries like Norway and Switzerland on mutual recognition of the business partners programmes (AEO and similar). The roadmap with US has as target date that mutual recognition should be implemented in 2009. The roadmap is to be adopted by the EC - US Joint Customs Cooperation Committee on 6 March 2008.

Source: European Commission