ROADMAP
Roadmaps aim to inform citizens and stakeholders about the Commission's work to allow them to provide feedback and to participate effectively in future consultation activities. Citizens and stakeholders are in particular invited to provide views on the Commission's understanding of the problem and possible solutions and to share any relevant information that they may have.
Title of the initiative	Amendment to the Union Customs Code
Lead DG – responsible unit	DG TAXUD – A2 "Customs Legislation"
Likely Type of initiative	Proposal to amend legislation
Indicative Planning	Q1 2018
Additional Information	https://ec.europa.eu/taxation_customs/business/union-customs-code_en
This Roadmap is provided 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 by the Roadmap, including its timing, are subject to change.

A. Context, problem definition and subsidiarity check

Context

The Union Customs Code (UCC) provisions are being applied since 1 May 2016. A major goal of the Code is the shift to a complete use of electronic systems for interactions between economic operators and customs authorities, and among customs authorities, and the end of paper-based procedures.

However, its full benefits will only be obtained when the seventeen electronic systems that are set out in the UCC Work Programme are completed. In accordance with the Work Programme, the work on the electronic systems is being undertaken gradually in the period up to 2020. The systems can be divided into two categories: i) fourteen trans-European systems including some systems that have national components for development by the Member States and ii) three national systems that have to be developed or upgraded by the Member States alone. The work is divided between the Commission and the Member States on the following basis:

The Commission delivers network and capacity upgrades for all the trans-European systems and delivers fully certain electronic systems, such as databases, that serve all Member States; and

The Member States deliver national entry processing systems as well as national interfaces with the trans-European systems either built on the basis of Commission specifications or on national specifications established in line with EU customs law.

The Code provides in Article 278 that, until the shift to an electronic environment is completed, some transitional measures apply. Essentially, this provision permits the continued use of existing systems (mainly paper-based but some electronic) for the application of customs rules such as the submission of declarations and requests for authorisations, storage of information and so on, until the new electronic systems are operational. These transitional arrangements can apply until the end of 2020, at the latest.

Problem the initiative aims to tackle

The Commission and the Member States are on track to finish the major part of the work on the electronic systems on time. In 2017, three of the seventeen systems were implemented and a first phase of another system was completed, all by their scheduled dates. In effect, close to eighty percent of the Commission’s work on the trans-European systems provided for under the Work Programme will be completed by 2020. However, some systems will only be partly completed by that date; the last phases of the development of IT systems are often the longest and most complicated. Member States should have completed most if not all elements of the three national systems by 2020 also.

2020 has always been considered an ambitious deadline, given the complexity of the task involved in completing seventeen interlinked electronic systems across the whole of the EU. When setting that deadline, it was anticipated that the rules supplementing and implementing the UCC (the UCC Delegated Regulation (DA), the UCC Implementing Regulation (IA) and the UCC Transitional Delegated Regulation (TDA) would be adopted very soon after the adoption of the UCC in 2013, so that their provisions could be taken into account in developing the IT systems. However, as it happened, discussions on the supplementing and implementing provisions took longer than expected and the acts were only adopted in their final form in late 2015/early 2016. This led to a delay in producing the technical specifications for the IT systems dealing in one way or another with declarations and notifications, which are based on the data requirements laid down in Annex B of the UCC DA and IA.

Since the adoption of the DA and IA, work is proceeding at an intensive pace on the modelling for the systems but work on data harmonisation in particular has been more challenging than anticipated. Harmonisation of the data provided by economic operators is crucial for the interoperability of the different UCC electronic systems, for a harmonised application of the legal rules and for cooperation with other public services active at the border. Harmonising the data in line with international data models such as that of the World Customs Organisation also ensures better linkages with third countries' IT systems and thus greatly facilitates trade. However, this work involves a much heavier than expected investment in terms of time and in financial terms in fully reprogramming some of the existing electronic systems. In the current situation of budget cuts, finding the resources necessary for this work has proved difficult.

The Commission has always paid particularly close attention to the need for realistic timelines and to the costs and general impact of the proposed electronic changes on customs and trade. As the electronic systems are closely interlinked with each other, it is important to introduce them in the right order (sequencing) so as to ensure that interdependencies are respected and that the changes for administrations and trade are introduced in a structured and coherent manner.

For all of these reasons, it has become necessary to provide for a later date (2025 at the latest) for full completion of work on some of the systems. This will ensure the smooth implementation by 2020 of the other systems and this will in turn facilitate the later implementation of the remaining systems in proper sequence. Half of the systems for which implementation is to be delayed already exist and are being upgraded under the UCC while the other half are new systems. The systems to be postponed are as follows:

Upgrades for which the main technical challenge is data harmonisation i.e. the upgrade of the Import Control System (ICS), the New Computerised Transit System (NCTS) and the Automated Export System (AES) plus the upgrade of the National Export System (covering also the export component of the national Special Procedures System); and

Three new systems which are designed to apply innovative features of the code i.e. Centralised Clearance for import (CCI), Proof of Union Status (PoUS) and Guarantee Management (GUM).

The postponement of the delivery date for these electronic systems beyond 2020 conflicts with Article 278 of the Union Customs Code, which only allows the use of means for the exchange and storage of information other than the planned electronic systems until 2020. Therefore, the deadline in Article 278 must be extended in respect of the delayed systems. Furthermore, action must be taken quickly in order to ensure legal certainty; business and customs administrations would have serious problems if, by 2020, some of the electronic systems were not implemented and at the same time the law prohibited the continued transitional use of alternative arrangements.

As Member States and businesses need on average two years to plan for each electronic system, the Commission has to provide legal certainty by 2018 about the applicability of the transitional arrangements after 2020 up to 2025 (at the latest).

Basis for EU intervention (legal basis and subsidiarity check)

The initiative falls under the exclusive competence of the EU according to Article 3(1)(a) of the Treaty on the Functioning of the European Union (TFEU). Therefore, the subsidiarity principle does not apply.

B. What does the initiative aim to achieve and how

In order to tackle the aforementioned problem, the Commission proposes to amend Article 278 of the Union Customs Code so that the transitional arrangements for the exchange and storage of customs information (i.e. existing electronic and paper-based systems) can continue to be used after 2020 for the electronic systems that will not be implemented by 2020.

The Union Customs Code is a Regulation of the European Parliament and of the Council. The Commission will therefore propose the amendment to the European Parliament and the Council for adoption under the co-decision procedure.

The proposed amendment would keep the deadline of 2020 in Article 278 but, at the same time, would provide for an extended deadline of 2025 in relation to the aforementioned electronic systems that will not be operational by 2020.

In line with the legislative approach used for the current wording of Article 278, and for the UCC as a whole, the amended Article 278 would not name the electronic systems that are delayed. Instead the Article would refer to the groups of legislative provisions that the electronic systems in question are designed to apply.

If adopted, the amended text would allow a smooth transition from the existing, mainly paper-based, systems to the new electronic environment foreseen in the Union Customs Code. The transitional arrangements for each of the electronic systems under development, and that would consequently continue to apply in the case of the delayed systems, are spelled out in detail in the UCC Transitional Delegated Regulation.

The most important transitional arrangements can be summarised as follows: i) the electronic system to deal with the entry summary declaration, the transit procedure and the export control would continue to be the existing versions of ICS, NCTS and Export Control system; ii) the paper T2L document would continue to be endorsed by the customs authorities to be used as proof of Union status; iii) Annex 9 of the TDA, rather than Annex B, would set the applicable data requirements; iv) existing paper-based Union transit procedures for rail, air or sea would continue to apply; v) paper documents could continue to be used to inform about the exit of the goods from the customs territory; vi) the Member States involved in an authorisation for Centralised Clearance should cooperate but could also refuse the authorisation where granting it would create a disproportionate administrative burden; and vii) the information on guarantees used in several Member States for purposes other than transit would have to be exchanged between Member States by email and be stored in the Member States' national systems.

C. Better regulation

Consultation of citizens and stakeholders

The Commission has extensively consulted the Member States about the need for a more realistic timetable for the development of the electronic systems of the Union Customs Code and about the corresponding need for the continued applicability of transitional arrangements for the exchange and storage of customs information beyond the current deadline of 2020. In addition to some written and bilateral consultations, these issues were extensively discussed with all the Member States at the High Level Project Group/ Electronic Customs Coordination Group meeting held on 31 March 2017 and at a meeting of the Customs Policy Group held on 29-30 June 2017. The Commission also sent Member States a detailed questionnaire to obtain information on their preferences regarding systems that should be delayed if any had to be delayed and drew up a new planning on the basis of the responses of Member States to that questionnaire.

The Commission also consulted the trade representatives in the forum of the expert group that gathers representatives from diverse trade associations, the Trade Contact Group, at Plenary meetings on 27 April 2017 and 12 July 2017. Businesses need realistic timetables and agree that the deadline to use the transitional arrangements for the exchange and storage of customs information must be extended if the electronic systems are ready only after 2020.

No further public consultation is envisaged at this stage.

Impact assessment

The Commission will carry out a mid-term evaluation of the UCC, including a dedicated consultation process, after 2020, once the bulk of the electronic systems are in place. It will carry out a more complete evaluation of the Code once all the systems are in place.

Given the current transitional phase of the legislation and the above plans for future evaluations, no evaluation is necessary in respect of this specific proposal. The Commission has consulted Member States on the feasibility of the 2020 deadline for completion of the work on the electronic systems and Member States have in response indicated their support for a later date for full completion of work on some of the systems, with a view to ensuring the smooth implementation of most of the systems by 2020. Member States also, like business representatives, agree on the need for a legislative proposal to extend the 2020 deadline for the use of transitional arrangements in respect of customs processes covered by the electronic systems that will only be completed after 2020.

This initiative does not require an impact assessment because it does not concern a policy choice. It simply suggests extending the use of the transitional arrangements that are already provided for in the Union Customs Code, for an additional period of time. This extension will, in fact, ensure a smoother and less disruptive implementation of a policy choice contained in the Code, which concerns the gradual shift to a complete use of electronic systems for interactions between economic operators and customs authorities, and among customs authorities, and the end of paper based procedures.

In addition, the Commission is preparing a report on the implementation to date of the Union Customs Code including its electronic systems, which will also be presented in early 2018.