Community transit: action plan (1997)

1) OBJECTIVE

To conduct a thoroughgoing, balanced and realistic reform of customs transit systems in the face of a rise in fraud.

2) ACT

Communication from the Commission to the European Parliament and the Council: Action plan for transit in Europe - a new customs policy [COM(97) 188 final - Official Journal C 176 of 10.06.1997]

3) SUMMARY

Customs transit is one of the cornerstones of European integration and an issue of vital interest to European businesses. It enables goods to move much more freely and makes customs clearance formalities much more accessible by providing for the temporary suspension of duties and taxes normally applied to imported goods moving inside the Community (Community transit), or between the Community and its EFTA and Visegrad partner countries (Poland, the Czech Republic, Slovakia and Hungary) under the Common Transit Convention, or among the 64 States that are (in 2003) contracting parties to the TIR Convention.

Access to the common transit system is a key component in the pre-accession strategies for Central and East European countries defined following the Europe (Association) Agreements and the Commission's White Paper on the subject. Four Visegrad countries have already joined the system, which gives them a practical framework for preparing their future accession to the European Union. Only a reformed and computerised customs transit system can provide that assurance.

In recent years transit fraud has become a considerable drain on the Community and national budgets and has led to illegal trafficking on the European market in untaxed and totally uncontrolled goods, jeopardising not only the competitiveness of European businesses but the health and safety of our citizens.

The swift and irresistible growth of trade in recent years, particularly with Central and Eastern Europe, has drawn criminals' attention to the profits to be made from a system which offers ease of access not matched by prevention and control measures.

The revenue lost to the Community and national budgets has been estimated by the Commission, on the basis of Member States' reports of fraud cases to do with transit, at some ECU 1.27 billion over the seven years 1990 to 1996, including ECU 485 million in conventional own resources and 784 million in national taxes.

Fraud on this scale is not simply a fiscal problem; it causes economic damage and may even pose health threats: directly or indirectly it interferes with honest traders' operations and the facilities they are offered, and by supplying the market illicitly it not only competes unfairly with legal products, but may jeopardise consumer health and safety.

All parties agree that the present transit systems are plagued by problems:

failures by both administrators and users to comply with existing rules and obligations;
the lack of concerted action by and coordination of the many administrations and offices involved and poor exploitation of existing arrangements for cooperation;
the existence of different, ill-fitting systems, arising from the different legal frameworks and decision-making systems, which make the whole both complex and inflexible;
failure to adapt the rules and procedures to allow them to deal swiftly, reliably and flexibly with large numbers of highly varied transit operations;
failure to use available data, combined with a lack of complete and reliable information on the real economic and administrative impact of transit and on the operations themselves.

These weaknesses in the transit system and the various malfunctions to which they gave rise have led to mounting customs and fiscal debts.

The action plan hinges on a number of key concepts:

a simple and coherent system, which can be easily understood and applied by operators and customs officials;
a system run using up-to-date procedures and tools for cooperation, relying on computerisation and electronic data interchange,
a system that can cope with a wide range of operations and situations,
a system that incorporates coordinated fraud prevention and coverage of the sums actually at risk in its procedures;
a system managed and evaluated with the aid of a proper reporting system, for both general and operational purposes.

This set of objectives must of course be translated into various initiatives applied not only to transit but to general customs policy and practice.

Bearing in mind that a single customs code would appear to imply a single customs service, it is important that the 15 customs administrations function as if they were one, as proposed in the Customs 2000 programme.

The Community needs a criminal policy to help it establish proof, have cases pursued in a coordinated fashion, bring serious fraud cases, particularly those involving criminal organisations, before the criminal courts, and impose effective, proportionate and deterrent penalties on the organisers. The Commission's role should be to inform, assist, coordinate and push for action, so as to fulfil the duty given to it by Article 280 of the EC Treaty.

This would require the Member States to ratify the Convention on the protection of the European Communities' financial interests, and the relevant protocols on combating corruption of national civil servants and judicial cooperation in criminal cases. The policy to tackle fraud should enable an appropriate Europe-wide legal framework for the protection of European financial interests to be established in the longer term.

In the short term it is vital to boost detection, improve the exchange of information and act on it more effectively, by putting into practice new legal instruments such as Council Regulation (EC) No 515/97 on mutual assistance between the administrative authorities, Council Regulation (Euratom, EC) No 2185/96 concerning on-the-spot checks and inspections carried out by the Commission, Council Regulation (EC, Euratom) No 2988/95 on the protection of the European Communities' financial interests, which sets out administrative measures and penalties for irregularities with regard to Community law, and the Convention on the customs information system (CIS) on using computer technology for customs purposes.

The main objectives of the action plan are as follows:

boosting cooperation between customs administrations;
checking that the rules are applied correctly and uniformly;
establishing a partnership between customs and operators to respond to transit users' needs;
integrating European customs systems;
ensuring that international transit systems are compatible;
introducing a new tool which will be the key to transit reform: the new computerised transit system (NCTS).

The action plan contains a series of measures for achieving these objectives:

management of the transit procedure to restore confidence and ensure that the facilities granted to operators and the constraints imposed on them correspond to the degree of risk attached to their operations in practice;
supervision of transit operations, with all players in the procedures accepting their respective responsibilities; for customs administrations, that means using and developing administrative cooperation arrangements to the full;
fraud detection, law enforcement and coordinated checks, relying on more effective security measures and a common risk management policy, targeting of checks, the setting-up of Community-wide mechanisms to detect fraud and irregularities, and the development of a legal framework conducive to stepping up law enforcement;
sound financial management of transit, which demands appropriate guarantees for the sums at stake, tailored to the operator's reliability and the risks of the operation, as well as effective mechanisms for recovering any sums ultimately owing, in the first instance from the persons who cause the customs or tax debts to be incurred;
uniform application of the rules, which entails developing practical tools for training and the implementation of legislation and controls, conducting effective checks to ensure that the rules are applied, and setting up a system of administrative customs penalties;
effective monitoring and continuous evaluation of the transit systems and their reform.

The Commission's action plan paves the way for a thoroughgoing reform of the transit systems and establishes the terms of reference for future initiatives.

4) implementing measures

5) follow-up work

Council Resolution of 23 November 1995 on the computerisation of customs transit systems [Official Journal C327 of 07.12.1995].

In this resolution the Council gives absolute priority to computerising the transit systems.

Council Resolution of 21.6.1999 on the reform of the customs transit systems [Official Journal C193 of 09.07.1999].

In this resolution the Council calls on the Commission to continue reform of the transit systems.

Communication from the Commission to the Council and the European Parliament: Implementation of the New Computerised Transit System (NCTS) [COM(2003) 125 - Not published in the Official Journal].

This Communication gives an overview of progress with implementing the new computerised transit system (NCTS) in the Member States of the EU, the contracting parties to the Common Transit Convention (Iceland, Norway, Switzerland, Hungary, Poland, the Czech Republic and Slovakia) and the accession candidate countries.

See also