European external trade: managing customs

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In the European political guidelines, custom issues have been always a cornerstone of the single market: customs performed several vital functions, such as providing sufficient revenues for the EU budget, keeping the states’ businesses and citizens safe and protected from prohibited, dangerous goods and environmentally harmful products, as well as facilitating the EU trade with the rest of the world. Hence, the EU Customs Union is to ensure an integrated European approach to customs risk management based on the states’ effective control. The Commission’s 2020 Work Programme, adopted in January 2020 and adjusted in May 2020, suggested a new action plan to modernise the customs union.

  The role of customs in the Union has been always important: they not only assisted in collecting customs duties and VAT and excise duties on imported goods (where applicable), but they also ensured the imports’ compliances with the EU’s product quality requirements in food and environment aspects.

  The EU Customs Union, during its more than half a century’s history, has reflected significant member states’ efforts towards forming a single territory for customs purposes with the common set of rules. The member states’ customs authorities perform vital responsibilities in performing a wide and increasing range of control. Main customs rules and procedures in the Union’s Customs Code have been adopted in 2016; since then, several attempts have been made to upgrade and develop electronic systems for fully paperless customs arrangements by 2025. However, as the Commission acknowledged, “smarter ways” shall be adopted to face the emerging trade and customs’ challenges.

  A fast changing world, with new business models such as e-commerce and digitalisation, has challenged efficient management of the EU customs. At the same time, national authorities have to react quicker and better to changing circumstances, such as the coronavirus pandemic and Brexit, to name a few, if the Union wants to avoid threats to the safety and security of the businesses and citizens in the states.

  Fraud linked to customs duties and VAT (valued at about €120 billion a year) as well as the smuggling of illicit or unsafe goods are becoming increasingly serious problems. Uneven customs control capabilities among the states can lead to goods being diverted towards the EU customs territory’s weakest entry and exit points to avoid detection. Several EU institutions have noticed the risks to the EU’s financial interests from inadequate or ineffective customs controls of imported goods.

More in: https://ec.europa.eu/commission/presscorner/detail/en/QANDA_20_1710; 28.09.2020 

 

Facing challenges

  New approaches to customs’ challenges have been revealed in 2018 in the “foresight project” – “The Future of Customs in the EU 2040” with the three major directions in a modernized customs’ strategy: – protecting society, the environment and the states’ economy through effective facilitation of legitimate trade and intelligent, risk-based supervision of supply chains; – taking proactive measures based on innovation and sustainable approach to the changing global customs’ circumstances; and – revealing a common approach among the member states in this important direction in European integration combining vital links between the states’ and Union’s interests.

  According to the “foresight”, the Commission identified four main areas of actions: a) risk management, b) wide-spread e-commerce, d) promotion of compliance, and c) “unified actions of member states’ customs authorities.

  The Commission has estimated that the annual value of counterfeit goods imported into the EU reached €121 billion, representing 6, 8 percent of the EU’s foreign imports. The Union’s Intellectual Property Office calculated that counterfeit goods in EU market resulted in the loss of over 400,000 lost jobs, € 83 billion in lost sales and €15 billion in lost tax revenue.

Source: IPO’s estimates in: https://op.europa.eu/en/publication-detail/-/publication/d7e6f903-c577-11ea-b3a4-01aa75ed71a1

 

  The EU’s share of world trade presently, both in imports and exports is, correspondingly 15.3 percent and 15.8 percent showing 0,5 percent positive trade balance. That means, every month the EU states export and import foreign goods at the amount of € 330 billion. Therefore, the workload of EU-states’ customs authorities increased recently as a result of growing external trade, while the total numbers of customs staff have shown only modest increase from 89,628 in 2018 to 91,002 at present. Source: https://ec.europa.eu/commission/presscorner/detail/en/QANDA_20_1710

 

Perspective initiatives

The EU’s action plan includes a number of initiatives to modernise trade and customs facing contemporary global and regional challenges:

• Risk management: the plan focuses in particular on ensuring greater availability and use of data analysis for customs purposes. It calls for intelligent, risk-based supervision of supply chains and for establishing a new analytics hub in the Commission for collecting, analysing and sharing customs data that can be used for critical decision-making, helping customs authorities identify weak points at the EU’s external borders and manage critical situations.
• Managing e-commerce: in order to tackle the new challenges imposed by e-commerce, obligations on payment service providers and online sales platforms will be strengthened in combating customs’ duty and tax fraud in e-commerce.
• Promotion of compliance: expected “single window” initiative will make it easier for legitimate businesses to complete their border formalities in one single portal. It will allow for more collaborative processing, sharing and exchange of information and better risk assessment for customs authorities.
• Customs authorities acting as one: the plan provides for installment of modern and reliable customs equipment; a new reflection group formed of the states and business representatives will be set up to help prepare for future crises and challenges such as unanticipated global developments and future business models.

Reference to: https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1703 -28.09.2020.