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EU customs reforms ‘could have unforeseen consequences’

[ February 2, 2024   //   ]

CLECAT (European Association for Forwarding, Transport, Logistics and Customs Services) and the European Shippers Council have warned Members of the European Parliament that the EU Customs Reform proposal could have unforeseen consequences.

While supporting the overall objectives of the plan, they say that the programme is “incredibly ambitious”, and that MEPs should not become subject of wishful thinking as the benefits of a central EU Data Hub may not materialise, especially for smaller firms do not have the means to become Trust and Check Traders (T&C).

The Customs Reform aims to simplify and harmonise processes and ease the administrative burden for European Traders with an EU Customs Data Hub created and a new status for companies that offers enhanced customs facilitation called ‘Trust and Check.’

The plan envisages that there would be direct, real-time access to the central database through traders’ IT systems, self-release of goods, self-assessment of duty, and a new centralised layer for analysing customs and product-related data of incoming goods to speed up clearance processes, decrease bureaucracy, and increase compliance.

However, say ESC and Clecat, there is a presumption that most companies will opt for the new T&C status, allowing them to self-release goods after calculating customs duties themselves, without physically presenting them to Customs. T&C is an enhanced version of the current Authorised Economic Operator (AEO) status, which is slowly gaining global recognition. However, as it is subject to a rigorous authorisation process and requires substantial business infrastructure, it is at present only moderately used by EU traders. According to the 2023 report of the European Court of Auditors, 18,210 AEO authorisations were in use in the EU´s Customs Territory in 2022, only a very small percentage of European companies involved in foreign trade, say the associations.

They question the ability or willingness of many companies, especially smaller forms to apply for the status as they will have neither the IT infrastructure nor the in-house expertise to use the benefits of the customs facilitations linked solely to the T&C status.

In the new system, each consignment of goods will be linked to one business or person in the EU who would be liable for compliance with duty payments and product rules. Importers and exporters will become solely responsible for paying applicable duties and taxes and ensuring that goods comply with EU standards and legislation. This may look very attractive for administrations and consumers, but CLECAT and ESC warn legislators that the reform proposal has not fully grasped the complexity of the supply chain and the ability of all its actors involved to fulfil all the new requirements.

Moreover, the  Commission proposal overlooks the fact that the information required for even the simplest customs procedure contains far more data elements than are readily available in business IT systems. Most traders currently rely on the expertise of customs representatives. The process is clear and heavily regulated: the importer holds and provides the product- and transaction-specific information, and the customs intermediary is responsible for its processing and submission according to customs law. ESC and Clecat say that the system does not need fixing: each data owner is responsible for their own part.

However, the customs reform proposal claims that data accuracy can be improved by either making the importer fully responsible or by mandating full importer responsibility to the customs intermediary, who will then be called an ´indirect representative´ – an importer in all but name. Under the reform proposal, direct representation would be limited.

Furthermore, non-customs related expertise on product safety, carbon emissions, deforestation, child labour would be expected of indirect customs representatives,. Understandably, customs intermediaries are highly reluctant to take on board these new obligations, not because of the responsibility, but because they cannot guarantee the accuracy of product data and especially not for hundreds of clients from hundreds of various industries.

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