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Report Published on Progress of the EU’s Strategy and Action Plan for Customs Risk Management

On 19 July 2016, the European Commission published its ‘Progress Report on the implementation of the EU Strategy and Action Plan for customs risk management’ (the Progress Report). When the EU Council endorsed the European Commission’s Strategy and Action Plan (see: EU Triggers Strategy and Action Plan for Better Customs Risk Management of the Business Alert-EU for more on that), it had invited the European Commission to report, within 18 months, on its implementation and the results achieved. The Progress Report has been drafted to that end.

The Strategy’s overall aim is to achieve a high-quality, multi-layered approach to customs risk management that is effective and efficient. It identifies seven key objectives, and is supplemented by the Action Plan, which lists the concrete actions to be taken under each objective. The key objectives of the Strategy are:

  1. Improving data quality and filing arrangements;
  2. Ensuring availability of supply chain data and sharing of risk-relevant information between customs authorities;
  3. Implementing control and risk mitigation measures where required;
  4. Strengthening capacity;
  5. Promoting cross-sectoral cooperation and information sharing between customs and other authorities at Member State and EU level;
  6. Improving cooperation between customs and trade; and
  7. Tapping the potential offered by international customs cooperation.

In the Progress Report, the European Commission assesses the progress made under each objective. In what follows, some of the implementing measures, which are highlighted in the Progress Report and which may be of interest to Hong Kong traders, will be outlined.

With regard to the objective of improving data quality and filing arrangements, the key achievement relates to the introduction of ‘multiple filing’. Under the old system, only carriers (or their authorised representatives) have been required to file an Entry Summary Declaration (ENS). An ENS is a declaration, which is submitted prior to the arrival of goods into the customs territory of the EU, on the basis of which EU Member States perform a risk analysis. Under the new Union Customs Code (UCC), other operators, such as the freight forwarder or consignee, will also need to supply information. This should result in higher quality data and more effective risk analyses. Another novelty, in this regard, is the lifting of existing exemptions from the obligation to file an ENS for postal and low-value consignments.

Although the UCC entered into force on 1 May 2016, the new IT systems are not yet fully operational (see: Revisions to EU Customs Law to Become Applicable in Matter of Months and EU’s Modernised Customs Code Enters into Force of the Business Alert-EU). As a result, the applicability of certain provisions of the UCC, including the new rules on the ENS, is suspended. The Progress Report therefore concludes that the creation of the legal framework for attaining the objective of improving data quality and filing arrangements has been accomplished and only its implementation remains to be achieved.

Concerning the objective of ensuring availability of supply chain data and sharing of risk-relevant information between customs authorities, the European Commission refers to the new Import and Control System (ICS). The new ICS is an update of the old ICS, an IT system currently used by the custom authorities of the EU Member States. The ICS allows for national customs authorities to exchange the results of their risk analyses, conducted on the basis of the ENSs mentioned above.

The essence of the innovation relates to the creation of a common repository of advance cargo information. The introduction of the above-mentioned system of ‘multiple filing’ will lead to an increase in the volume of advance cargo information. The centralised repository should make it possible to store and process this information, while simultaneously allowing all other EU Member States to directly perform effective and efficient risk assessments based on that information. 

The Union Customs Code provides for the basic legal framework of the new ICS. However, the actual deployment of the IT system has been delayed due to a number of outstanding issues, related to budget, governance, etc. Moreover, the European Commission also intends to adopt a dedicated implementing act for the IT system. The new ICS is expected to be launched by October 2020.

With regard to the objective of strengthening capacity, the European Commission admits that progress has been slow, despite many ongoing actions. EU Member States are still in the process of analysing inconsistencies and weaknesses in the implementation of the Common Risk Management System (CRMS), and finding ways to address them. The CRMS, which had already been introduced prior to the adoption of the new UCC, is intended to identify common risk criteria and priority control areas. It is also aimed at ensuring the systematic and intensive exchange of information between custom authorities. Now, the intention is to update the IT system to share risk information, which should lead to a next generation CRMS.

Further, the European Commission refers to the fact that common risk criteria, to be applied in the EU Member States’ risk analysis systems, have been evaluated both at Member State and EU level. As part of this process, the European Commission and the EU Member States have been working on definitions for the various financial risks, and revising the existing risk criteria for safety and security, in particular in respect of air cargo security. In addition, steps have been taken to ensure the harmonised implementation of the risk criteria. The implementation of the new risk rules will be done on the basis of the above-mentioned ICS, and will therefore be postponed until 2020. For obvious reasons, these risk criteria are not publicly available.

Reference is also made to these new common risk criteria under the assessment of the objective of promoting cross-sectoral cooperation and information sharing. In addition, the European Commission refers to the amendment to Regulation 515/97 on mutual assistance between administrative authorities. This amendment, which was brought about by Regulation 2015/1525 and will apply as of 1 September 2016, broadens the scope of the exchange of information for the purpose of mutual assistance between Member State customs authorities and between those authorities and the European Commission.

For example, information obtained in this context, will be allowed as evidence in judicial proceedings, unless the Member State providing the information has explicitly opposed this possibility. The amendment will also speed up investigations by the European Anti-Fraud Office (OLAF), by imposing deadlines on EU Member States for providing requested documents.

Moreover, the amendment provides for the creation of centralised databases containing information on container movements and on goods entering, leaving and transiting the EU. The directory on container movements (the so-called Container Status Messages directory), will contain messages recording physical movements of containers by maritime vessels.

Finally, with regard to the objective of improving cooperation between customs and trade, the Progress Report emphasises the strengthening of the concept of Authorised Economic Operator (AEO), under the UCC. On the one hand, stricter criteria are introduced to obtain and maintain the status of AEO (e.g. demonstrating that they strictly monitor their trade in goods and that their employees are sufficiently competent or qualified). On the other hand, additional benefits are granted to AEOs, such as the ability to apply for “self-assessment” and “centralized clearance”. The Progress Report also refers to the fact that new AEO guidelines have been published, which take into account the new rules of the UCC.

Overall, the European Commission concludes in its Progress Report that the main challenge in implementing the Strategy and Action Plan is IT related. More specifically, the budget to develop the required IT systems is insufficient. However, with regard to the content of the Strategy and Action Plan, the European Commission does not suggest making any changes.    

Hong Kong traders wishing to obtain more information can click on the following links:

Progress Report
Strategy and Action Plan

Content provided by Picture: HKTDC Research
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