ISSUE 2 2010
NEWS ANALySIS
The EU’s Modernised Customs Code (MCC) could swamp UK shippers in red tape, says a customers expert. Peter MacSwiney, who is chairman of Agency Sector Management – one of the companies that provides a technical interface between HMRC and the freight community - described many aspects of the MCC regime as burdensome and liable to lead to an increase, rather than a decrease in paperwork. Mr MacSwiney is also chairman
of the Ports and Borders Group at SITPRO, the trade simplification ‘quango’ now threatened with closure by the UK government. He said that while he agreed in principle with Brussels’ vision of automated import and export controls and links between member states’ national customs
systems, its execution left a lot to be desired. “The problem with Brussels is that they draft a law and then think about how they’re going to implement it – so there’s always a lot of fudging going on.” He told a Shipper’s Voice
seminar at the Multimodal exhibition in Birmingham on 27 April that experience with those parts of the MCC that were already in operation such as the Export Control System (ECS) had shown that it was difficult to get departure messages from a customs service in another country, with UK exporters often forced to ask customs authorities in other EU countries for evidence that exports have been completed. Moreover, despite the EU’s stated intention of electronic
cus toms c learance, ECS depended on a piece of paper accompanying the goods – a retrograde step for the UK, where customs has been largely electronic for years. The UK also might also
have to stop using the Single Transport Contract, which allows a UK exporter sending goods by air from another EU country (for example, from France to Japan) to opt to export clear in the UK. Under MCC, this could be replaced by an Approved Carrier System that uses the airline’s records to prove that the goods have been exported but its effectiveness has been questioned. Peter MacSwiney added
that there was a danger that illegitimate traders – for example, those that sold goods in the UK
that were supposed to have been exported and were hence VAT free - would still slip under the radar, while legitimate traders would suffer from increased bureaucracy. Implementation of the new
Import Control System (ICS) has been postponed to January 2011 because member states were not in a position to comply when it officially became law in July 2009. This could also be problematical, said Mr MacSwiney. “Every import destined for the UK will have to be notified at the first point of arrival into the EU, at item level.” That could mean 20-30 data elements having to be reported to customs in the country of arrival, forcing carriers to get a lot the information from shippers. Other ICS shortcomings include the need to obtain an Economic
Operator’s Registration Identifier (EORI). Every trader would have to be given an EORI number, even those with minimal shipments. The EORI only identifies
where the importer is legally established, not where the goods are actually going to in the UK. It would also be possible for a freight forwarder to be named as both shipper and consignee, causing further confusion. The UK’s existing import
system allocates VAT separately to each of an importer’s offices through an individual Trader Unique Reference Number (TURN) another facility that will disappear when EORI numbers are imposed - although UK Customs is apparently trying to graft an extra field onto the new system. Other aspects of the MCC such as centralised clearance,
11 MCC – it’s just bats, say customs experts
are even less clear, continued Peter MacSwiney. “We think it means that in theory traders will be able to make all their entries at one point in the EU, wherever they land - a good idea in principle, but someone’s still got to check that they’re eligible to be imported into the EU and account for VAT and duty. The system could be abused.” It is also very unlikely that customs systems in 27 different member states will properly connect with each other, he adds if the experience with existing ‘EU-wide’ systems like the New Computerised Transit System (NTCS) is anything to go by. Fiscal clearance measures will all
have to be in place before 24 June 2013, which does not leave great deal of time and consultation has already been truncated.
Lax import controls could be rogue trader’s charter
Simplified import customs procedures are not properly controlled in most EU countries, said a report by the European Court of Auditors published on 7 June. Two thirds of all imports into the EU now use simplified procedures, but member states’ pre- authorisation audits for traders using them was often poor, increasing the risk that rogue traders might be allowed to use them, said court member, Juan Ramallo Massanet. He added that failure to operate import checks correctly could not only lead to a loss of revenue, but could also harm EU-based manufacturers, who would have to compete with traders who had avoided paying duties or VAT on imported goods.
Checks used during the processing of simplified procedures for the release of goods were also often poor, the report continued. Error rates were at least 10% in four member states, and only the UK and Sweden had an IT system for controlling goods subject to import licences. However, the report was critical of the fact that in the UK traders could easily override their obligations in this respect. The Court urged all member states to computerise processing of simplified procedures including licences. The report suggested a minimum number of checks, based on automated risk analysis. The Court urged the European Commission
to put pressure on member states to rapidly implement the new regulatory framework and properly monitor it, and to develop effective EU- wide controls. In its reply, the Commission replied that it would do so and would also consider the Court’s suggested control model. It added that it has now started to audit simplified procedures. Massanet also pointed to the absence of a
risk analysis system, saying that the Commission has only recently developed comprehensive guidelines on the use of risk analysis to target controls and audits. The report also noted the excessive use of the notification waiver under local clearance
procedures, which prevent risk-based checks being carried out before goods enter the EU. It said that traders were using notification waivers regularly in the UK and four other member states, whereas the legislation states that such simplifications should only be used in certain special circumstances. The European Commission replied that it had
asked member states to amend their procedures and was monitoring this. Where its inspections have found extensive use of simplified procedures, it has asked member states to review and amend their procedures. The Court report noted that the Commission has
since introduced rules on controlling simplified procedures, in particular pre-authorisation audits and conditions that traders must fulfil, as part of
The European Commission has asked member states to tighten up their act
the Authorised Economic Operator concept. According to the Court, the UK’s performance
was ‘not satisfactory’ or only ‘partly satisfactory’ on most counts relating to pre-authorisation audits, checks before release of goods and supplementary declarations (declarations made to complete simplified declarations). It did better in carrying out ex-post audits on traders, however, and was one of only two countries to perform structured reviews of trader compliance, although the report had reservations on the frequency with which they were done.
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