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Minutes of the Joint Customs Consultative Committee, 16 May 2012

Minutes of the Joint Customs Consultative Committee, 16 May 2012

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JCCC SUB-GROUP UPDATE

Standing agenda item

Minutes of the Joint Customs Consultative Committee
Date of meeting: 16 May 2012 Location: William Chambers Room, Somerset House New Wing, Strand London WC2R 1LB Items discussed in this meeting Introductions and apologies 1. Minutes, matters arising and action points 2. Authorised Economic Operator 3. Civil Penalties 4. 5. 6. 7. 8. 9. 10. 11. 12. CHIEF fallback update Customs Information Paper review Low Value Bulking Imports EU-US Joint Customs Consultative Co-operation Committee Union Customs Code update Sub-group update Customs Newsletter Any Other Business Proposed change to TIR movements Civil Penalties Industrial action Warehouse applications Temporary Storage Movements and Border Force

Annexes
A – List of attendees B – Action point update C – Paper on AEO D – 3 papers on civil penalties E – CIP review paper F – LVBI paper G – Paper on mutual co-operation (EU-US JCCC) H – Sub-group update

1. Introductions
1.1 The meeting was chaired by Mike Norgrove. He introduced John McManus who was in his second week of being Deputy Director of ECSM. As there were a number of unfamiliar faces at the table he asked everyone to introduce themselves. A list of those attending and sending apologies is at Annex A. The meeting sent their best wishes to Graeme Nimmo (ICSB) who was recovering from an operation and wished him a speedy recovery.

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1.2 The Chair noted the absence of UKBA. Peter MacSwiney (trade Chair) said that he had spoken to them at a BIFA meeting and made the point that UKBA were remiss in their meeting attendance. This was becoming a problem as UKBA were no longer just enforcing Customs Policy but devising their own. Robert Windsor pointed out that as UKBA were also enforcing BIS policy there was a danger of a fragmented freight policy. This will be discussed further under any other business.

2. Minutes, action points and matters arising
2.1 Minutes January 2012
The following two amendments were proposed to the January minutes. 1. That section 11.3 be amended from Sisi Omu confirmed that the IFTCO had been put on ice and a virtual committee has been established. This met only when a problem was identified. The Chair hoped that the work by Alistair Baird would go some way to covering the work previously completed by the IFTCO. to Sisi Omu confirmed that the International Trade Facilitation Committee (ITFC) had been put on ice. A virtual group now exists and will meet whenever a specific issue needs to be discussed. The Chair hoped that the work by Alistair Baird would go some way to covering the work previously completed by the ITFC. 2. That the fist line of section 6.1 should read 'Anne's presentation' rather than 'Anne's presented'. Both amendments were agreed and the minutes were accepted.

2.2 Outstanding action points
The Chair ran through the action points as shown in Annex B. Sept - action point 3 - Peter MacSwiney will send Kerrie Spendiff data on the effect of ICS changes. Peter had meet Kerrie and things had moved on. Peter had been told by Dave Morgan that there were 15 European projects in the pipeline. However as Customs had previously only had to implement two projects at a time there was a concern over how the UK would cope. He mentioned Cassandra (supply chain data) and ECMAR (an electronic system on controlling road traffic) as two that would take considerable resource. He would like this raised at the next JCCC. The greater use of traders' systems for freight movement's also uncovered questions on when a declaration was considered as 'made'. Action point 1 - An item on forthcoming projects and the affect of using trader systems on determining when a declaration is received to be discussed at the next JCCC. Sept - action point 12 -AEO - Will be taken under the agenda item.

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Jan - action point 1 and action point 2 - discharged. Jan - action point 3 - CHIEF Fallback - Ian would take this under the agenda item tabled. Peter MacSwiney said that Kerrie had promised to be key to developments in CHIEF. She had also chaired the meetings in Mike's absence. He wanted to know who would take on this role now that she had left HMRC. Mike explained that he would remain as chair of the JCCC as he was keen to be on a forum that allowed him to access trade opinions. John McManus had taken over as Deputy Director from Kerrie. If Mike was unavailable then Bill Williamson or John would chair the JCCC. Martyn Fiddler (CATICG) asked if he could have an update on the Portuguese customs asking for T2L for yachts from the transit team. Action point 2 - Transit Team to contact Martyn Fiddler regarding T2L forms. Jan - action point 4 - Will be taken under the agenda item. Jan - action point 5 - Warehouse approvals - discharged.

3. Authorised Economic Operator
Colin Davis 3.1 The Chair prefaced Colin's presentation by noting that the Commission had asked in a meeting if there were any new ideas to promote AEO. Both the French and English delegates had said that ideas were already there - they just needed implementing. 3.2 Colin tabled the paper shown at Annex C. He said that the UK had fallen behind the rest of the EU in the number of AEO applications. Both Poland and Spain had now issued more AEO certificates. This is important because of the EU - USA Mutual Recognition Decision. A business not authorised for CT-PAT importing goods to the USA is five times more likely to be stopped at the Frontier than an authorised business. There is a real danger UK exporters could find themselves at a competitive disadvantage. 3.3 One of the benefits of AEO is reduced controls both at the Frontier and post clearance. This had the benefit of allowing Customs to concentrate on non-AEO traders using risk profiles and resulted in a quicker turnaround for all. In addition AEO envisaged that traders would not need to have the same records examined for each authorisation they needed. Again this saved time and resource for both the trader and the Customs authorities. Thirdly the Union Customs Code had guarantees as an integral part of many regimes/procedures. AEOs will be able to get guarantee waivers. 3.4 We are doing more to promote AEO this year. A conference was being organised for the 12 November which would have speakers from US CBP and the European Commission. Action point 3 Colin Davis will send Marie the details on the November 2012 AEO conference to send on the JCCC.

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3.5 The Chair then allowed questions from the committee. Howard Levene felt that some of his trade members had been forced into AEO because of the changes being made to guarantees. He felt that some might relocate outside the EU to avoid having to tie money up in guarantees. Robert Windsor (BIFA) felt that the question of guarantees should not have that much of an impact on the take-up of AEO. If the trader were not able to get a guarantee then they would need to pay the charges - having a guarantee would mean that the trader would at least know their liability. 3.6 Barbara Scott (CPG) asked the percentage of AEO's that had full AEO as opposed to AEOC (Customs simplifications only). So far it was around 50/50 for each in both the EU and the UK. Barbara felt that re-applicants were facing more stringent checks this time round and wondered if this impression was true as two applicants had spoken to her about this. Colin informed the committee that the criteria had not changed but the experience and training of our auditors had improved. In addition some companies may have changed their structure or procedures between inspections and these changes may mean the AEO criteria are no longer met. 3.7 The committee asked about the links between AEO and known consignors in Regulation 300/2008. Colin advised this is being considered at various levels including at the WCO, within the EU and nationally between HMRC and Department for Transport with the aim of reducing burdens on business. The committee also considered the reason for the greater number of applications in other MS could be the link with simplified declaration procedures. Peter MacSwiney thought that the criteria for financial security was not transparent enough - in addition people with AEO found that they still had to go through all the procedures for CFSP as if they were not making new applications. Ian Wilkins said that this had been raised internally and he would speak to Peter outside the meeting. 3.8 Brian Sinden (AICES) wanted to know if UK AEOs would be entitled to the light touch if they shipped goods to the US but the recipient was a non CT- PAT. John Carlin (FDF) could think of three reasons why the UK had fewer applications than other MS. Firstly German companies had been told that they could lose their simplifications if they did not apply for AEO. Secondly 'speed of clearance' was seen as a tangible benefit in other MS where there were more checks completed at the border. Thirdly in countries which had an onerous requirement for documents AEO provided some relief. This was not true in the UK. These reasons and the cost of applying for AEO had made it less popular than in other MS. Peter Cullum (RHA) believed that a Deloitte survey had shown the average cost of German AEO was 10,000 € per company. However Germany was a net exporter whilst the UK imported twice as much as it exported. In these circumstances it would be difficult to 'sell' AEO without a threat of some kind.

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3.9 Colin emphasised that, under the UCC, Guarantees would not be an issue for those businesses who had AEO status. The Chair asked whether the UK should press for general improvements in EU simplifications and defend the existing UK ones or 'throw in the towel' and hitch the simplifications to AEO. At the moment the UK declared policy was to reject the proposals on the new guarantee system. Angela Shephard noted that the UCC was not the only thing that was looking at maximising the use of AEO. The Blue Belt project (Safe Sea Net) had difficulty with community goods proving their community status when on a ship had a mixture of goods on it. There was also the possibility of mutual recognition with other countries like China and Canada. 3.10 Ian explained that the UK was still keen on linking the idea of self-assessment to AEO and were still trying to enhance the benefit package. It could have more simplifications in the future. Angela felt that in the immediate future we could at least look at making applications by AEO for CFSP easier. Brain Sinden noted that not all MS shared the UK view that AEO should be allied to centralised clearance. Even within MS there were different views of what should be allowed.

4. Civil penalties
Robert Windsor 4.1 Robert presented the three papers at Annex D1, D2, D3. For consideration. He wanted to discuss the harmonisation of civil penalties. Generally he felt there was no a problem with what was considered a transgression. He felt that civil penalties should be decided at a national level. The Chair agreed penalties should not be set at EU level and assured the committee that this government would not agree to the EU setting the amount for fines in the UK. 4.2 Peter asked who decided on the figure for transgressions - how for instance was it decided what the amount would be for CFSP as opposed to Transit transgressions. Angela would invite Anne Treadaway to the next JCCC to discuss how civil penalties are set. Peter added that he would also be interested to know who owned each policy. Action point 4 - Anne Treadaway will be invited to the next JCCC to discuss civil penalties.

5. CHIEF fallback update
Ian Wilkins

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5.1 Ian informed the committee that the new CHIEF fallback system would be ready in 18 months. Customs were now looking at 'fallback' during this 18 month period especially as the Olympics were fast approaching. The first priority was to get air freight moving as quickly as possible. Customs had investigated using the AOCC website for fallback. It could be possible that HMRC could use this information to release goods belonging to any AEO from the sheds. It was not possible that HMRC could provide fallback for all commercial systems (?) in the same way but the priority was to keep as much fright moving as possible. There were issues on CSPLO/UKBF access especially around the 'time-out' needed for the UKBF work however this had now been resolved. The department was now keen to look at the maritime environment but had so far found a lack of interest perhaps because the urgency of moving goods was not as vital for the non-air environment. 5.2 Peter MacSwiney said that the initial trail for exports had been held in January involving CCS-UK and BT. They idea was that an AEO could post entries onto the AOCC website with a two hour time-out. This would keep things moving and give the declarant some control. He felt that the maritime industry might be more interested when the new Fallback system was up and running. Brian Sinden (AICES) welcomed the move away from paper fallback. Even when the paper could keep up with demand the reconciliation afterwards had been dreadful. 5.3 John Powell (BPA) explained that Ro-Ro traffic had a well-established fallback mechanism and this would explain the lack of response in that area. For the first two hours of the CHIEF systems failing all goods are put on hold. After that they are then moved using a manual fallback process. The electronic inventories used by air were not there to build on. Ian pointed put that one of the knock-on effects of being able to move air freight using an electronic fallback system was that the National Clearance Hub (NCH) would be able to spend more time on transport needing paper fallback.

6. Customs Information Papers trial
Caroline Wilkins 6.1 For the past few months there had been a trial whereby JCCC members reviewed CIPs before they were officially issued. They were generally given three working days to do this. This had been a result of a number of papers being withdrawn. 6.2 Caroline gave some figure on the trial which lasted from 17 October 2011 to the 30 April 2012. Full details are given in her paper at Annex E.   49 CIPs had been issued of which 23 were sent for review by the JCCC. Since February CIPs were sent to an internal panel of HMRC/UKBA contacts before being sent to the JCCC.

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 

None of the CIPs issued after being quality reviewed had to be withdrawn. Of the 26 that were not revised, 23 per cent were later amended.

A number of the changes made were material so the benefit of the trial was obvious. This would indicate that the review process had a significant impact in ensuring that the CIPs issued were correct. 6.3 Caroline now wanted the JCCC to consider three questions. What would classify a CIP as 'urgent', should urgent CIPs have a minor review, and could some CIPs be excluded from being reviewed? This would be CIPs which were unlikely to be improved for example changes of address and notification of downtime. The committee immediately agreed that CIPs which were notifications of address changes and downtime did not need to go through the review. 6.4 Peter queried what currently defined a CIP as being 'urgent' and when was it considered that a CIP was 'published'? The publication day was taken as the day a CIP was emailed to the external distribution list rather than the day it went on the internet. Urgent was currently defined by the author of the CIP. Peter Cullum thought that an imperfect CIP in time was better than a perfect CIP too late to be of use. John Carlin felt the system currently in use had worked quite well and noted that sometimes the JCCC Secretariat sent urgent CIPs and asked for replies within one or two working days. Action point 5 - JCCC secretariat to implement new CIP process informing authors as necessary.

7. Low Value Bulking Imports
Mark Ellis 7.1 Mark introduced his paper at Annex F. Which detailed the emerging findings from the review of Low Value Bulking Imports (LVBI) that was being conducted. He made it clear that nothing in the paper was set in concrete - it was simply a view of our current position. For the review Mark had visited a number of trade and internal stakeholders including Local Compliance, Large Business Service, Border Force and AICES. He was happy to meet with any others that wanted to or take written comments.

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7.2 The LVBI review started with looking at how LVBI was being used and abused now. His team are undertaking an exercise where they compared declarations with the manifests and other paperwork until they drilled down to goods item level data. This was a large complex exercise and had quickly found evidence that LVBI was being misused. They had found mis-declarations, no-declarations (ie un-entered goods), undervaluation and evidence of smuggling of various items. It was also shown that in some instances safety and security data had not been submitted as per ICS requirements. This meant that there was a potentially significant revenue gap and also the threat of LVBI being used to smuggle items that could be used for terrorism. ME took the opportunity to remind all members of the rules around submission of ICS declarations, and that exceptions were limited to goods of less than 22 euros but, even then, only when an approved Anti-Smuggling Net was in place. 7.3 These risks were best addressed at the border before the goods entered the black economy. Although Border Force and Customs worked well together it was clear that more work could be completed post-clearance and that Border Force lacked access to the right data at the right time. The question was how to ensure that they did get the right information. The bulking provision meant that the information on CHIEF was not detailed enough, while paper manifests containing thousands of items made automated risk analysis impossible. ICS did not have enough information and most LVBI clearance locations are not fully inventory linked. 7.4 A range of solutions had been suggested or considered. One was a complete prohibition on items known to be used as a cover for smuggling or most likely to be under-valued. This would include foodstuffs and clothing. Another was to only allow LVBI goods to be cleared at locations that had either an Anti-Smuggling Net (ASN) with data at goods item level or at places that could be fully inventory linked. There was also the option of allowing only AEO approved operators to use LVBI or introducing special rules for low risk traffic from Channel Islands. 7.5 There were also existing sanctions that could be used or clarification given on various aspects. For example there seemed to be some unhelpful blurring over the definition of the inclusion or otherwise of commercial/non-commercial traffic and greater clarity could be given over the penalties and sanctions for breeching LVBI rules with increased approval reviews. There could also be a joint review of BF resources at high-risk locations. It was also suggested that a review of the 99 item rule would be useful in combating the problems besetting LVBI. 7.6 Angela Shephard gave some background on LVBI. It had first been offered as a facility for sending cut flowers from the Channel Islands to the UK and was an administrative concession not specifically set out in EU law. The intention was not to remove the facilitation unless HMRC were forced into this situation but something needed to be done quickly to tackle non-compliance. Robert Windsor suggested that removing use of LVBI from non-complaint traders would send shockwaves through the industry and would encourage others to stop abusing the system. Angela agreed that could help but the whole system was still in need of an overhaul.

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7.7 Peter MacSwiney was pleased that the system was not being completely withdrawn at this stage without careful consideration. He had visited Mount Pleasant and had noticed that staff were accomplished at recognising contraband from visual evidence - before Customs decided to collect further data it should consider how effective the information would be in stopping smuggling. A distinction was needed to be made between compliant and non-compliant operators, and HMRC should not seek to punish everyone to counter the abuse of the scheme by a minority. Perhaps customs could allow quick clearance for those who provided the information but not for others. Robert Windsor agreed that there was little use in providing information if UKBA were either unwilling or unable to use it. Brian Sinden has seen that data on these movements had been used successfully at Stansted. 7.8 Mark stressed that the intention was not to stop compliant traders but to move the non-compliant out of the scheme, while at the same time not simply displacing noncompliant behaviour into other regimes. Mark had also seen the operation at Mount Pleasant and was impressed by their knowledge; however they could be even more efficient with the right information. John Carlin expressed concerns over the removal of LVBI for those in the food and clothing industry but understood that something needed to be done. Peter Cullum was worried that food and drink were delivered on a 'just in time' basis and removal of LVBI would jeopardise this. However Mark explained that deliveries of food to supermarkets was likely to be outside the scope of the scheme as commercial goods and, in any event, may have to be notified to the FSA so it was likely that only very small personal deliveries could be made in this way. 7.9 Other possible solutions to the abuse of LVBI were discussed. Andy Miller noted that BA screened everything; taking on board Ian Wilkins’s comments that the carrier shared responsibility for goods imported and would ask for information on ICS if there were concerns over the freight being sent. In answer to Barbara Scott's query, Mark said that 145 traders have approval for LVBI. Customs would consider the suggestion of LVBI operators being authorised via AEO. As this (ie LVBI) was a UK facilitation there was not any need to involve other MS but Mark was investigating how the Dutch and others dealt with imports of this nature. He hoped to have some firm recommendations by the end of July and would report back to the JCCC in October. Action point 5 - Mark Ellis to report on LVBI at the next JCCC meeting. 7.10 On an unrelated matter Martyn Fiddler raised the subject of Merchandise in Baggage (MIB). In some cases the courier needed to have his paperwork stamped by a Customs officer otherwise the warranty on the goods would be breeched. Sometimes the Red and Green Channels were unmanned and at other times officers who were there did not understand. Action point 6 - Angela Shephard will speak to Martyn Fiddler on staffing at Customs Channels outside the meeting.

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8. EU-US joint Customs Co-Operation Committee
Colin Davis This subject had actually been discussed under Colin's presentation on AEO. As there were not further questions on this it was decided to move on. A copy of the discussion paper presented is at Annex G.

9. Union Customs Code update
Peter Starling/Bruce Stewart Peter Starling introduced the subject of the Union Customs Code with a quick review of events.     On 20 February CIP (12) 06 announced the re-cast of the Modernised Custom Code as the UCC. There had been 371 amendments to the UCC (previously this had been 115). The Commission were planning to publish the UCC in early 2013 so it simply replaced and repealed the MCC. MS had to send their views in by the 16 April. The Presidency shared those comments received with all MS - it totalled 500 pages. The UK had considered trade views in its response but would urge traders/associations to contact Malcolm Harbour (MEP) with concerns. Discussions had been planned to start in Customs Union Group in May but were now to start in June.

The Council would hold a formal vote on the UCC with a majority decision to accept the changes; the final text would also be agreed with the European Parliament. The Commission would then introduce the delegated acts which would cover what had to be done; and propose implementing acts to be discussed at Customs Code Committee which would cover how it would be done. The intention was to have the work on the Acts finished by 2013 with some transitional arrangements and for the code to be legally established by 2014. The UK and The Netherlands were leading an informal group of like-minded member states to discuss the UCC proposal, identify aspects of shared concern and explore how to handle Council negotiations.

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Peter MacSwiney praised the Customs Change sub-group for keeping the trade wellinformed on UCC progress. He was, however, disappointed that BIS was not present at this meeting as this would have been of interest to them and these changes needed as wide a forum as possible. Andy Miller asked if it was possible for the trade to send representatives to the EU meetings. This had been previously suggested but so far there had been no response from the Commission. The Chair noted that the Commission was under pressure from Member States to take on board the views of the business community. Changes at Director General level in the Commission meant that new bridges needed to be built. It was emphasised that trade members should actively liaise with their counterparts in Europe on areas of concern to ensure that the maximum possible lobbying pressure and influence was brought to bear. Bruce Stewart informed the Committee that the UCC proposals are subject to UK Parliamentary scrutiny and had not yet been cleared by either the House of Lords or House of Commons. Both Houses have shown a high level of interest in the Commission’s proposals and a number of detailed questions have been raised, particularly in respect of delegated and implementing empowerments. The proposals are likely to remain under scrutiny whilst Council negotiations progress and until there is an indication of the likely outcome in respect of those elements that the UK is not happy with. We expect both scrutiny committees to ask for updates on discussions. The UCC is next due to be discussed at the Club meeting on 24/25 May in Malta.

10. Sub-group update
JCCC Secretariat 10.1 The sub-group update paper was presented to the committee and a version is reproduced at Annex H. 10.2 Peter MacSwiney asked which sub-group was going to take on CHIEF STE. Angela explained that CHIEF STE was on hold and that Customs were looking at introducing changes at the same time as CHIEF replacement. Angela would speak to Peter outside the meeting. Action point 8 - Angela Shephard will speak to Peter MacSwiney regarding CHIEF STE and if needed table an agenda item for the next JCCC meeting.

11. Customs Newsletter
JCCC Secretariat 11.1 The Secretariat asked if the Customs Newsletter could be removed as a standing agenda item. The committee agreed to this request.

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12. Any Other Business
12.1 Transports Internationaux Routiers (TIR)
Peter Cullum explained that the International Road Transport Union (IRU) is proposing that TIR be authorised for use in internal journeys within the EU. Currently goods could only be moved by TIR if they went through a third country at some stage in their journey. There are at least three reasons for this proposal:    TIR security is now quite good and offers good supply chain monitoring through SAFETIR and other measures by competing with the CT system it offers more risk management options to the supply it supported the EU growth agenda

He would welcome support from other committee members and from HMRC.

12.2 Civil penalties
Barbara Scott asked if we could ask Gary Steele to attend the next JCCC when civil penalties were discussed. As the civil penalties team are located in Liverpool we would try to make arrangements for a dial-in if he could not come in person. Action point 9 - JCCC secretariat to request someone from the civil penalties team to come to the next JCCC.

12.3 Applications for warehouse approvals and temporary storage movements
Peter requested an update on warehouse approvals or the next JCCC. He also raised the subject of temporary storage movements. Recently UKBF have indicated that they would not allow goods that were under customs supervision to be moved to a different airport from the one they had permission to land at. The reason given was because different airports had different profiles. Peter hoped to solve this problem before the next meeting but wanted to let UKBA know that changes like this caused unnecessary trade disruption. Action point 10 - Customs warehousing to be considered as an agenda item for the JCCC in October 2012.

12.4 Changes in UKBA
In late February it had been announced that UKBA was being split to move the work on the frontiers into a new agency and separate it from the visa work. Angela had been promised information on the new structure and was hoping it would be available shortly. She had been told that the new agency would be called 'Border Force'.

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Peter Cullum believed that the BF attitude to collecting data would change now that it was headed by a police officer. The Chair agreed that there was an underlying worry the traditional risk based approach to customs checks might switch to the more time consuming transaction based approach. However he had met Brian Moore and members of Border Force and he hoped to pursue a good working relationship with them. The main partner for Customs matters would now be the Border Force however we would still need to liaise with UKBA on a number of matters.

12.5 Next meeting
The Chair thanked the committee members for their contributions to the meeting and reminded them that the JCCC was scheduled to meet again on the 10 October.

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JCCC 16 May 2012 Annex A: attendees

i) Trade representatives
Name Paul Brooks John Carlin Peter Cullum Martyn Fiddler Ken Gower Brian Green Brian Sinden Howard Levene Peter MacSwiney Andy Miller John Powell Barbara Scott Gary Tanner Robert Windsor Trade Body UK Major Ports Group Food and Drink Federation Road Haulage Association Customs Air transport Industry Consultative Group Association of Freight Software Suppliers Airline Operators Committee Cargo UK Association of International Courier and Express Services Society of Motor Manufacturers & Traders Community System Providers Airline Operators Committee Cargo UK (Guest) British Ports Association Customs Practioners Group UK Aerospace Industry Customs Group British International Freight Association

ii) HMRC/OGD attendees
Mike Norgrove Colin Davis Mark Ellis HMRC - Chair HMRC HMRC

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Chloe MacKenzie John McManus Angela Shephard Peter Starling Gary Steele Bruce Stewart Caroline Wilkins Ian Wilkins Bill Williamson Marie Campbell

HMRC HMRC HMRC HMRC HMRC Civil Penalties HMRC HMRC HMRC HMRC HMRC Secretariat

ii) Apologies
Don Armour Tom Dowdall Mike Hodge Graeme Nimmo Sisi Omu Brian Pugh Tim Reardon Andrew Walker Freight Transport Association UKBA UK Warehousing Association Institute of Chartered Shipbrokers BIS Automated Customs and International Trade Association Chamber of Shipping Pharmaceutical Trade Group

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JCCC meeting held on 16 May 2012 Action points
NO ACTION POINT UPDATE

Agenda item - Air Cargo Security No 3 Sept 2011 Peter MacSwiney will send Kerrie Spendiff data on the effect of ICS changes. Agenda item - Newsletter No 12 Sept 2011 AEO to be on the agenda for the next JCCC meeting. Will be carried forward to May JCCC as interested persons will not be at the meeting in January. Live issue to be carried forward.

Agenda item - minutes, action points etc No 1 Jan 2012 Sisi Omu to send information Information sent to JCCC on on the Red Tape Challenge to 27 February 2012. the JCCC. Agenda item - Update on MCCCIP and the EU Vote No 2 Jan 2012 JCCC Secretariat to send Peter Cullum the link to the papers for the European Parliament. Link sent to the JCCC on 1 March 2012. http://www.europarl.europa.e u/sides/getDoc.do?type=REP ORT&reference=A7-20110406&format=XML&language =EN

Agenda item - CHIEF fallback update No 3 Jan 2012 Ian Wilkins to report back at the next JCCC on any further developments on CHIEF fallback.

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Agenda item - Customs Information Paper review No 4 Jan 2012 CIPS trial to be continued until the next JCCC meeting where a report will be given on the results. Agenda item - Any Other Business No 5 Jan 2012 Mike Hodge will send Kerrie details of the cases where warehouse keepers have been told that their approvals will be removed. Discharged 19 March 2012

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Joint Customs Consultative Committee
Meeting: May 2012 Agenda item: 3 Author: Colin Davis

Authorised Economic Operator

3. 1. Update
Current levels of application/authorisation in UK as at April 2012:   460 applications, 313 authorisations 47 applications in 2011

Current levels of application/authorisation in EU:   13,292 applications, over 10000 authorisations 4,650 applications in 2011

There is a widespread perception in UK there are no benefits in becoming an AEO. This perception is not shared in rest of EU. Why? UK is said to have third fastest clearance times in the world. Therefore it is not possible to deliver any tangible benefit of fewer physical and document-based controls at import. This misses the point and purpose of AEO. The benefit of fewer physical and documentbased controls is only one of the benefits of AEO status; there are much wider benefits:

3.1.1 Mutual recognition
British Standards Institute website reports results of analysis of C-TPAT. C-TPAT importers are

examined on average 5 times less than non C-TPAT importers. Decision signed on 4 May between EU & USA states ‘each authority will treat operators in a manner comparable to the way it treats members in its own programme, including taking

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them favourably into account in their risk assessment, for the purposes of inspections or controls’. AEO Policy team & ITDLO network are actively promoting AEO to exporters to USA – written to largest exporters to USA and delivering presentations to interested trade bodies.

3.1.2 Fewer physical and document-based controls
This benefit is not limited to controls at import. New EU Guidelines confirm ‘This includes fewer post clearance controls as well as fewer controls at the point of importation or exportation’. This is reflected in the HMRC’s assurance programme. AEOs are excluded from the normal programme of assurance. Assurance activity for AEOs is managed through monitoring and reassessment of the AEO status.

3.1.3 Easier admittance to customs simplifications
Under CCIP businesses need to either be an AEO or meet conditions and criteria to obtain access to following simplifications: Local clearance procedure or simplified declaration procedure under Art 253c Regular shipping service under Art 313b Proof of community status/authorised consignor under Art 373.3 Transit simplifications under Art 373.3 and 454a Benefit of AEO to both trade & HMRC is that we examine the criteria only once and have a common, consistent view of the customer.

3.1.4 Benefits/recognition across Government
Aviation legislation – if an AEOF or AEOS applies for the status of Regulated Agent or Known Consignor, AEO status should be taken into account by the Department for Transport. APEO – need AEO status to be authorised to use simplified procedures for fishery products and presentation of catch certificates under APEO scheme. Others being developed – approved exporters & licensing requirements. Conclusion – AEO is at the heart of HMRC’s strategic objectives: Maximise revenue to close the tax gap – by identifying the willing and able customer population & enabling HMRC to devote resources to the greatest risk. Improve customer experience by reducing costs on customers and making our products and processes more simple and straightforward - reduced costs to businesses/exporters from reduced controls and easier access to simplifications. That is how it stands now in 2012 under the existing CCIP. Under UCC there will be even further benefits:

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  

access to guarantee waivers access to centralised clearance access to self assessment

4. 2. Review of EU AEO Guidelines
In April 2012 the Customs Code Committee approved new EU Guidelines for AEO. These contain a number of important changes, including:               inclusion of guidance on legal persons and who can become an AEO further clarification of the benefits, in particular of fewer physical and document-based controls, confirming this also applies to post clearance controls new section covering mutual recognition clarification of interpretation of minor infringements, repeated infringements and serious infringements for the customs compliance criterion guidance on the use of letters of comfort/guarantees from parent companies for the proven solvency criterion further guidance on the requirements for business partners and service providers for the security criterion further guidance on personnel security additional guidance on the risk-based audit approach for AEO specific guidance for certain economic operators eg express carriers additional guidance on other accreditations that can be taken into account in assessing the AEO criteria inclusion of the right to be heard within the decision making process additional guidance on monitoring and reassessment including factors that may influence future monitoring/reassessment activity inclusion of the new self assessment questionnaire as an Annex a new annex covering threats, risks and possible solutions

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JCCC 16 May 2012 Annex A: attendees

i) Trade representatives
Name Paul Brooks John Carlin Peter Cullum Martyn Fiddler Ken Gower Brian Green Brian Sinden Howard Levene Peter MacSwiney Andy Miller John Powell Barbara Scott Gary Tanner Robert Windsor Trade Body UK Major Ports Group Food and Drink Federation Road Haulage Association Customs Air transport Industry Consultative Group Association of Freight Software Suppliers Airline Operators Committee Cargo UK Association of International Courier and Express Services Society of Motor Manufacturers & Traders Community System Providers Airline Operators Committee Cargo UK (Guest) British Ports Association Customs Practioners Group UK Aerospace Industry Customs Group British International Freight Association

ii) HMRC/OGD attendees
Mike Norgrove Colin Davis Mark Ellis HMRC - Chair HMRC HMRC

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Chloe MacKenzie John McManus Angela Shephard Peter Starling Gary Steele Bruce Stewart Caroline Wilkins Ian Wilkins Bill Williamson Marie Campbell

HMRC HMRC HMRC HMRC HMRC Civil Penalties HMRC HMRC HMRC HMRC HMRC Secretariat

ii) Apologies
Don Armour Tom Dowdall Mike Hodge Graeme Nimmo Sisi Omu Brian Pugh Tim Reardon Andrew Walker Freight Transport Association UKBA UK Warehousing Association Institute of Chartered Shipbrokers BIS Automated Customs and International Trade Association Chamber of Shipping Pharmaceutical Trade Group

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JCCC meeting held on 16 May 2012 Action points
NO ACTION POINT UPDATE

Agenda item - Air Cargo Security No 3 Sept 2011 Peter MacSwiney will send Kerrie Spendiff data on the effect of ICS changes. Agenda item - Newsletter No 12 Sept 2011 AEO to be on the agenda for the next JCCC meeting. Will be carried forward to May JCCC as interested persons will not be at the meeting in January. Live issue to be carried forward.

Agenda item - minutes, action points etc No 1 Jan 2012 Sisi Omu to send information Information sent to JCCC on on the Red Tape Challenge to 27 February 2012. the JCCC. Agenda item - Update on MCCCIP and the EU Vote No 2 Jan 2012 JCCC Secretariat to send Peter Cullum the link to the papers for the European Parliament. Link sent to the JCCC on 1 March 2012. http://www.europarl.europa.e u/sides/getDoc.do?type=REP ORT&reference=A7-20110406&format=XML&language =EN

Agenda item - CHIEF fallback update No 3 Jan 2012 Ian Wilkins to report back at the next JCCC on any further developments on CHIEF fallback. Agenda item - Customs Information Paper review

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No 4 Jan 2012

CIPS trial to be continued until the next JCCC meeting where a report will be given on the results. Agenda item - Any Other Business

No 5 Jan 2012

Mike Hodge will send Kerrie details of the cases where warehouse keepers have been told that their approvals will be removed.

Discharged 19 March 2012

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Joint Customs Consultative Committee
Meeting: May 2012 Agenda item: 3 Author: Colin Davis

Authorised Economic Operator

5. 1. Update
Current levels of application/authorisation in UK as at April 2012:   460 applications, 313 authorisations 47 applications in 2011

Current levels of application/authorisation in EU:   13,292 applications, over 10000 authorisations 4,650 applications in 2011

There is a widespread perception in UK there are no benefits in becoming an AEO. This perception is not shared in rest of EU. Why? UK is said to have third fastest clearance times in the world. Therefore it is not possible to deliver any tangible benefit of fewer physical and document-based controls at import. This misses the point and purpose of AEO. The benefit of fewer physical and documentbased controls is only one of the benefits of AEO status; there are much wider benefits:

5.1.1 Mutual recognition
British Standards Institute website reports results of analysis of C-TPAT. C-TPAT importers are examined on average 5 times less than non C-TPAT importers. Decision signed on 4 May between EU & USA states ‘each authority will treat operators in a manner comparable to the way it treats members in its own programme, including taking

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them favourably into account in their risk assessment, for the purposes of inspections or controls’. AEO Policy team & ITDLO network are actively promoting AEO to exporters to USA – written to largest exporters to USA and delivering presentations to interested trade bodies.

5.1.2 Fewer physical and document-based controls
This benefit is not limited to controls at import. New EU Guidelines confirm ‘This includes fewer post clearance controls as well as fewer controls at the point of importation or exportation’. This is reflected in the HMRC’s assurance programme. AEOs are excluded from the normal programme of assurance. Assurance activity for AEOs is managed through monitoring and reassessment of the AEO status.

5.1.3 Easier admittance to customs simplifications
Under CCIP businesses need to either be an AEO or meet conditions and criteria to obtain access to following simplifications: Local clearance procedure or simplified declaration procedure under Art 253c Regular shipping service under Art 313b Proof of community status/authorised consignor under Art 373.3 Transit simplifications under Art 373.3 and 454a Benefit of AEO to both trade & HMRC is that we examine the criteria only once and have a common, consistent view of the customer.

5.1.4 Benefits/recognition across Government
Aviation legislation – if an AEOF or AEOS applies for the status of Regulated Agent or Known Consignor, AEO status should be taken into account by the Department for Transport. APEO – need AEO status to be authorised to use simplified procedures for fishery products and presentation of catch certificates under APEO scheme. Others being developed – approved exporters & licensing requirements. Conclusion – AEO is at the heart of HMRC’s strategic objectives: Maximise revenue to close the tax gap – by identifying the willing and able customer population & enabling HMRC to devote resources to the greatest risk. Improve customer experience by reducing costs on customers and making our products and processes more simple and straightforward - reduced costs to businesses/exporters from reduced controls and easier access to simplifications. That is how it stands now in 2012 under the existing CCIP. Under UCC there will be even further benefits:

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  

access to guarantee waivers access to centralised clearance access to self assessment

6. 2. Review of EU AEO Guidelines
In April 2012 the Customs Code Committee approved new EU Guidelines for AEO. These contain a number of important changes, including:               inclusion of guidance on legal persons and who can become an AEO further clarification of the benefits, in particular of fewer physical and document-based controls, confirming this also applies to post clearance controls new section covering mutual recognition clarification of interpretation of minor infringements, repeated infringements and serious infringements for the customs compliance criterion guidance on the use of letters of comfort/guarantees from parent companies for the proven solvency criterion further guidance on the requirements for business partners and service providers for the security criterion further guidance on personnel security additional guidance on the risk-based audit approach for AEO specific guidance for certain economic operators eg express carriers additional guidance on other accreditations that can be taken into account in assessing the AEO criteria inclusion of the right to be heard within the decision making process additional guidance on monitoring and reassessment including factors that may influence future monitoring/reassessment activity inclusion of the new self assessment questionnaire as an Annex a new annex covering threats, risks and possible solutions

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CUSTOMS 2013 PROGRAMME

PROJECT GROUP ON CUSTOMS PENALTIES

EXECUTIVE SUMMARY OF THE

FINAL REPORT
NOVEMBER 2010

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EXECUTIVE SUMMARY

1

The Modernised Customs Code (MCC) is conceived for a multinational electronic environment where a decision taken by a MS is applied in all other MS, and customs declaration and procedures often involve more than one MS. Like the for the Authorised Economic Operator (AEO) status, all simplifications foreseen by the MCC will be granted only depending on a satisfactory record of compliance and withdrawn where this condition is no longer met. An infringement to Community Customs law often impacts on customs debt and can trigger the application of penalties. Although customs debts are partially Community own resources and have their its legal basis in Community provisions, in case of infringement the application of penalties is based on national provisions which differ by nature and by severity according to the Member State (MS) that is competent for it. Moreover, the global nature of trade and the existence of global economic operators in Europe, as well as fraud, terrorism and other international threats which customs are called to face, may require a uniform approach of customs related infringements and penalties. For all the above reasons, the Customs Policy Group (Deputies) meeting of 30 January 2008 gave a mandate to the Commission (COM) to examine and assess the situation in the field of infringements and customs penalties. COM established a Project Group (PG) under the Customs 2013 (C 2013) Program on a voluntary basis which would analyse the national regimes of customs infringements and penalties and report back to the Commission. 24 out of 27 MS divided in two sub-groups managed by two Member States (UK , Finland as sub-group leaders), and including also Austria, Belgium, Cyprus, Bulgaria, Estonia, , France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia and Spain actively participated in the PG and their tasks were to: • • • • • •
1

identify the key features of the infringements/penalties national regimes identify the legal sources spot the differences identify areas of convergence record different views as to whether it would be beneficial or not to align penalties provide indications on the feasibility of such an alignment

Regulation (EC) No 450/2008 of the European Parliament and of the Council of 23 April 2008 (OJ no L 145 of 4.06.2008, p. 1).

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For some MS the situation has evolved in so far that their legislation concerning infringements and penalties related to customs has been modified. Therefore several updates of the contributions took place and there might still be changes in their legislation by the time this report is published. The structure of the report follows to a certain extent the structure of the Questionnaire established by the Commission although it has been slightly modified in order to avoid duplications. The report has 12 Sections and 6 Annexes. The Union legal background has been highlighted in the beginning of the Report (Lisbon Treaty, MCC (Regulation (EC) No 450/2008, the Convention on the protection of the 2 European Communities' financial interests ) National legislation covering customs infringements MS were asked to state the national legislation applicable to customs infringements and penalties. As expected most MS have a number of acts and codes forming the legislative framework within which they penalise customs infringements. All MS contributing to this report consider that they operate a system of penalties for dealing with customs infringements that they consider to be effective, proportionate and dissuasive (the very criteria identified with Article 21 of the MCC). MS provided the following general details concerning their systems. The nature of national penalties for customs infringements 16 out of 24 MS advised that their penalty systems provide for both criminal and non criminal penalties to be applied. Main & Ancillary Penalties For the purposes of this report we agreed that an ancillary penalty is one that cannot stand alone but is often applied with a main penalty. The legal systems of 5 MS do not provide for ancillary penalties. The most common main penalties applied by all MS are fines /pecuniary charges (and this regardless of their criminal or non criminal nature) and imprisonment. The most common ancillary penalties (8 MS) concern the disqualification from business/commercial activities Other measures MS take other action than penalties or sanctions against those failing to comply with customs laws. Typically these will include the revocation, suspension or amendment of authorisations held by the person or persons concerned, or the insistence on new conditions connected with such authorisations (for example the provision of a monetary

Council Act of 26 July 1995 drawing up the Convention on the protection of the financial interests of the European Communities [OJ C 316, 27.11.1995].

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security against future duty debts). Article 21.2 of the Modernised Customs Code provides that these types of measures may be envisaged as administrative (non criminal) penalties. However many MS do not see them as penalties at all, rather as a consequence of non-compliance. All MS but one confirm that their national system provides for measures aimed at ensuring compliance in addition to criminal and non criminal penalties. An area of convergence is to be found in the main type of measure employed as 19 MS engage in the refusal, annulment, suspension and or withdrawal of authorisations, approvals and licence (although one of those MS foresees them only in criminal procedures Persons liable in cases of infringement All MS identify three types of persons who can be held liable for customs infringements (the actual perpetrator, the instigator and anyone involved to assist the person who committed the infringement). For the MS who have non criminal penalties the only point of convergence is the liability of the actual perpetrator Almost all MS (with the exception of 3 MS for criminal penalties and 1 MS for non criminal penalties) do not foresee in their legislation the transfer of a penalty to another

Intent / negligence / strict liability We sought to establish the requirements MS have in place aimed at establishing the presence of intent behind an infringement. Most MS require the presence of intent, negligence, or elements of careless or reckless behaviour in all infringements dealt with under criminal procedures (save of course for any strict liability offences punishable under criminal law). This is also true for many infringements dealt with under non criminal procedures. However 11 MS foresee some strict liability infringements in their legislation, either for criminal or for non criminal infringements.

Treatment of attempted infringements Treatment under criminal law 4.28 MS were asked if an attempt to commit a customs infringement under criminal and under non criminal law was punishable. In 21 MS an attempt to commit a customs infringement is punishable under criminal law and in 7 MS it is punishable under non criminal law. Moreover in 10 MS under certain conditions (different in each MS) the prosecutor has the

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discretionary power to pursue attempted customs infringements.

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Infringements committed in other MS MS were asked about what action they might take in respect of customs infringements committed in another MS. 11 MS indicated that they can only do so in specific circumstances. Examples include criterion that the offence must have been detected there or that the perpetrator must be a national and must not have already been punished in the MS where the infringement occurred 12 MS indicated that they cannot normally prosecute offences committed in other MS, although again caveats were identified. Only 1 MS can take action under non criminal procedures in respect of infringements committed in other countries where the results are felt in that MS. Time limits MS were asked whether they had specific time limits for initiating a procedure (whether this be classed as starting an investigation, bringing charges or some other action), if such time limits can be suspended or interrupted, and if so what can trigger the suspension or interruption and what maximum time limits apply so that after their expiry any investigation or legal action is time barred. We also sought information as to whether MS have time limits concerning the imposition (that is the decision to penalise and the notification of that decision) and the execution of penalties (that is the carrying out of the sentence or attempted collection of the financial penalty). Time limits are to some degree an area of convergence, in that all but one MS employs them. However, the actual limits applicable vary considerably. All such time limits are the result of national legislation that in many cases applies not only to customs infringements but also to non-customs offences and infringements. 22 MS have time limits (either variable or fixed for initiating the infringement procedure For infringements under criminal law the time limits vary between 1and 30 years. In most MS the time limits run from the date the offence was committed Concerning the suspension and interruption of time limits, most MS impose a maximum deadline after which, notwithstanding any interruptions or suspensions, the investigation will be barred. All but three MS have time limits for imposing a penalty although they vary considerably All but five MS have time limits for the execution of the penalty.

AEO authorisations and the impact of infringements

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We analysed how infringements can affect AEO status of businesses.

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The 22 MS who contributed to this section of the report all pointed out that the Community provisions for granting AEO status apply equally to all and the basic criteria for implementation are standard. MS were also asked whether as a matter of law or national policy they excluded minor customs infringements when considering the compliance records of established AEOs or new applicants for AEO status. Again there is evidence of convergence here, with 18 MS reporting that they do overlook minor infringements when considering overall compliance. The types of infringements classified as minor by these MS include • • • • • typing mistakes in customs declarations incorrect tariff classification (including status) with minor effect minor deviation between declared and assessed value and quantities failure to comply with time limits use of an incorrect account number.

However, it should be noted that several MS indicated that the nature and the frequency of such minor infringements are factors which help determine their overall view of trader compliance.

CRIMINAL PENALTIES

Types of criminal penalties MS were asked to consider 15 types of penalties and comment as to whether they are deemed to be considered a criminal penalty, a non criminal penalty or both within their national legislation. The answers to the questionnaire suggest that not all of the 15 alternatives considered in this part of the questionnaire are provided for within the legislation of all MS. . Fine. 22 MS commonly apply financial penalties of this nature in criminal infringements.. Pecuniary Charge. 11 MS do recognise the term and utilise pecuniary charges in criminal infringements. A number of other MS commented that their legislation does not distinguish between a fine and a pecuniary charge or that pecuniary charges are not provided for, although some use both terms within their legislation, and some use the term pecuniary liability rather than pecuniary charge. Imprisonment. All 24 MS consider this a criminal penalty and for some it is the main criminal penalty. As with financial penalties the range of sentences across MS depends on the severity of the infringement and takes into account aggravating and mitigating factors). MS reported a range between 1 day and 20 years+.

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Disqualification for a natural person from engaging in an activity requiring authorisation or approval, or funding, managing or directoring a company or foundation. 10 MS – advise that this may be considered as a consequence of a criminal penalty. In 3 MS it is a ancillary penalty.. Confiscation of the goods. 2 MS consider this may be either a criminal penalty or a criminal measure Ban on access to public assistance or subsidies. Only 4 MS consider this as a criminal penalty. Most MS advised that this is not provided for in penalty legislation. Publicising Judicial decisions. 9 MS consider this to be a criminal penalty. . Refusal to grant authorisation. Only 2 MS considers this to be a criminal penalty, (only imposed on legal persons). 12 MS consider this type of action or measure as a consequence of the infringement rather than as a criminal penalty. Withdrawal of granted authorisation. 4 MS consider this may be a criminal penalty. Again other MS comment that this is considered a measure or consequence and not a penalty. Suspension of granted authorisations. 2 MS apply it as a criminal penalty– Temporary or permanent disqualification from the practice of industrial or commercial activities. 13 MS considered that this may be a criminal penalty. Placing under judicial supervision. 4 MS consider this may be a criminal penalty. Judicial winding up order. 9 MS –consider this as a criminal penalty. This is only applicable in cases where the offender is a legal person. The obligation to adopt specific measures in order to avoid the consequences of conduct such as that on which the criminal liability was founded. 3 MS consider this as a criminal penalty. Some MS comment that this is not provided for in legislation or applicable to customs infringements. . Aggravating and mitigating factors MS were asked to state whether any aggravating and/or mitigating factors are taken into account when penalising in criminal cases. They were also asked to provide details of the factors taken into account. One area of convergence is that all MS confirm that an obligation to consider aggravating and/or mitigating factors is provided for in law. Not all specific factors are identified, and the matters MS may take into account are quite wide ranging. Generally they are not specific to customs infringements, and customs authorities’ practices and/or policies may be relied upon. It is usually necessary to give consideration to these factors on several occasions throughout the process starting from qualification of the infringement itself through to imposition of the penalty. In some MS within their legal framework the judge

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has certain discretion to take into consideration other aggravating and/or mitigating factors.

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Concerning the main aggravating factors constituting the circumstances of the offence, 19 MS consider perpetration by members of an organised crime gang to be one and 13 MS consider the amount of duties evaded to be an aggravating factor while for the aggravating factors constituting characteristics of the offender and 20 MS see recidivism and 14 MS fraudulent intent as mitigating factors. The situation is less homogeneous with regard to mitigating factors as so many of them seem to be taken into account across MS. Partial convergence (9MS) considers cooperation with customs authorities (including confession) as a mitigating factor NON CRIMINAL PENALTIES

Types of non criminal penalties Those MS that have non criminal penalty regimes were asked to advise which of the 15 penalty types identified in the questionnaire are used. However, 8 MS do not operate non criminal penalty regimes. The main non criminal penalties are: Fine. This is the principal penalty imposed in non criminal cases, with 16 MS – Pecuniary Charge. 13 MS do recognise the term within their non criminal penalty regimes. A number of other MS commented that their legislation does not distinguish between a fine and a pecuniary charge or that pecuniary charges are not provided for. Although a fine and a pecuniary charge are in effect similar outcomes (a financial penalty) there are differences in terminology across MS. Several MS use both terms within their legislation, and some MS use the term pecuniary liability rather than pecuniary charge. Imprisonment. One MS only considers this as a non criminal penalty. Disqualification for a natural person from engaging in an activity requiring authorisation or approval, or funding, managing or directoring a company or foundation. 6 MS advise that this type of consequence of an infringement may be considered a non criminal penalty. This type of measure is not considered a penalty in the others . Confiscation of the goods. 16 MS –consider confiscation of goods can be a non criminal penalty. Ban on access to public assistance or subsidies. Most MS advised that this is not provided for in legislation therefore is not considered any type of penalty. Only 4 MS – provide for this action as a non criminal penalty . Publication of condemnatory decisions. Several MS commented that any publication of condemnatory decisions is not done by the Customs authorities.

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Temporary or permanent disqualification from the practice of industrial or commercial activities. 4 MS consider this a penalty in non criminal cases.

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Aggravating and mitigating factors MS were also asked to consider if there are any aggravating and/or mitigating factors to be taken into consideration when penalising in non criminal cases. As with the findings for criminal penalties, it is clear that, although terminology varies across MS, they all consider the same factors when applying penalties. However, in comparison with the field of criminal penalties, there is less common ground as far as aggravating and mitigating factors are concerned These factors can be divided into two separate groups; those which constitute the circumstances of the offence, and those that constitute characteristics of the offender. All MS confirm that an obligation to consider aggravating and/or mitigating factors is provided for in law. Not all the specific factors are identified and are generally quite wide ranging. Generally they are not specific to customs infringements and customs authorities’ practices / policies may be relied upon. Even in non criminal cases it is usually necessary to give consideration to these factors on several occasions throughout the process starting from qualification of the infringement itself through to imposition of the penalty. In some MS within their legal framework the judge has certain discretion to take into consideration other aggravating and/or mitigating factors. In some MS certain factors act as eliminating factors that stop certain infringements from being classed as an offence at all. In some these considerations can be the deciding factor between whether the infringement is dealt with as a criminal prosecution or an administrative settlement. Concerning the main aggravating factors constituting the circumstances of the offence, 8 MS consider perpetration by members of an organised crime gang to be one and 6 MS consider the amount of duties evaded to be an aggravating factor while for the aggravating factors constituting characteristics of the offender 11 MS see recidivism and 8MS fraudulent intent as aggravating factors. The situation is event more divergent concerning the mitigating factors.

BOUNDARIES BETWEEN CRIMINAL AND NON CRIMINAL INFRINGEMENTS AND PENALTIES WITHIN MEMBER STATES

Boundaries between types of infringements/offences The Project Group sought to establish the most common infringements committed in MS. Smuggling, evasion of import or export duties, tax evasion / fraud, tax receiving, importing or exporting goods illegally, receiving stolen goods, and forgery of business documents including false invoices are the most common types of customs related

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infringements.

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MS are divided with regard to the treatment of infringements involving the payment of customs debt as 11 of them do not differentiate it from the treatment of other infringements but 12 MS do so. The boundaries between criminal and non criminal treatment of customs infringements are diverse. Financial thresholds are one of the means to establish the nature of the treatment of customs infringement and of the penalty to be imposed. Although there is a threshold of 4000 EUR in the Convention of the Protection of the Community's financial interests (see point …) the specific thresholds in the MS vary between 266 EUR and 50000 Euros. Of those MS who have both criminal and non criminal penalties for customs offences, 10 MS consider that joint application is prohibited, while 4 consider it to be possible

LEGAL PERSONS The term ‘legal person’ is generally used to describe an entity that is not a natural person but which allows natural persons or groups of natural persons to act as a single entity and to possess autonomous legal capacity for various purposes. Participating MS were asked whether legal persons are defined in national legislation. Responses showed that most MS have either a specific legal definition or identify a number of bodies which are considered in national law (though not necessarily in specific customs legislation) as legal persons: 20 MS have a legal definition of “person” which includes both legal and natural persons. Four MS indicated that they provide neither a definition or otherwise specifically identify what they consider a legal person to be. However, information from these MS indicates that the concept of non-natural entities is accepted. MS were asked to clarify the rules concerning the accountability (responsibility) of legal persons in cases of infringements of customs law. In particular, we wished to establish whether a legal person can be held responsible for an infringement. In most MS national legislation does provide that the legal person itself can be held responsible for their actions relating to any customs related infringements they commit. In those MS customs law does not provide for legal persons to be held responsible but considers the natural representative or representatives of the legal person as the liable person. In most MS a legal person responsible for a customs infringement punishable under criminal law can be prosecuted. This is not the case however in, 8 MS. A number of factors determine liability for customs infringements, including whether the infringement is created under criminal or non criminal laws, and whether the penalty imposed is a criminal or non criminal one. As a result there is little uniformity in the way that MS determine the liability for a penalty.

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For infringements dealt with under criminal law 9 MS, impose penalty liabilities only on natural persons All other MS participating in the survey are able to make both natural and legal persons liable, either through separate penalties being levied at the same time, or through joint and several liability provisions, or through the ability to transfer the obligation to pay penalties from one to the other in cases where behaviour can be attributed to a natural person.

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BURDEN OF PROOF The study sought information about the rules on burden of proof applicable in each MS. The presumption of innocence is present in the legislation of MS In all MS, both in criminal and non criminal cases the burden of proof lies with the State (customs authority or national prosecutor), while in non criminal cases the relevant authority assigned is usually the customs authority In 8 MS and under specific circumstances the burden of proof shifts from the authority to the perpetrator In all MS the authorities have the right to oblige the traders to provide information and documentation relevant to the customs infringement Similarly, all MS have the right to collect seize or acquire evidence although the scope of this right can vary.

RETROACTIVITY The COM questionnaire sought information on retroactivity. Retroactive or retrospective law is that which takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a new and different legal effect to transactions or considerations already past. The Report diistinguishes between: a) retroactive law that imposes penalties where none previously existed and b) retroactive application of new law where there is a benefit to the person or entity committing an infringement. Retroactive imposition of penalties MS were asked whether under their national legislation penalties can be imposed retroactively, for example if there is a change of law between the time the infringement was committed and the judgement. Responses indicated strong convergence, in that no MS retroactively applies any law where none existed before. Nor does any MS retroactively apply any new law which increases a penalty that existed before. Retroactive application of more lenient law Another area of strong convergence is to be found in the application of the ‘principle of more lenient law’. The principle provides that where the law changes between the commission of an infringement and the imposition of a penalty, the person penalised for the infringement benefits through the application of the more lenient law. 20 MS adopt the principle of more lenient law for customs infringements. Only 4 MS do not apply the

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principle to customs infringements..

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Regarding the time limits applied to retroactive application, together with any conditions imposed by MS, there is close alignment in national practice. All 21 MS applying the more lenient law principle appear to apply that law at the time the infringement is actually penalised regardless of the timescale between the infringement being committed and the judgement imposing any penalty. For those MS with both criminal and non criminal regimes there is no differences in the application of retroactivity occurring.

PROCEDURAL ISSUES Settlement The COM sought information from MS concerning the potential and procedures for settlement of customs offences. 24 MS responded. For the purposes of this report we have used the following definition. Settlement is the term applied to any procedure within the legal or administrative system of a MS that allows the authorities (whether they are the Customs administration or an institution of the national legal system) to enter into an agreement with an offender to settle the matter of a customs infringement as an alternative to initiating or completing legal proceedings. Typically there is no power to impose a settlement and the offender is under no obligation to accept an offer. If an agreement to settle cannot be reached, the normal procedure for prosecution of the infringement would be followed. MS were asked if there are any procedures in their country for settlement in respect of customs offences. 15 MS indicated that they have a procedure for settlement of customs offences. In all of those MS but one, it is considered as an alternative action usually for criminal penalties. If the deadlines for reaching settlement are not respected, in most MS who make use of this alternative, this means that the liable person loses the possibility to have his penalty reduced or the procedure terminated.

Territorial competence, appeals, and the impact on the appeals procedure of payment of customs debt MS were first asked about territorial competence in deciding which authority is competent to deal with the infringement. The rules determining which authority is competent to deal with the infringement are in principal similar in all MS. It is determined either by the place of detection, the place of commitment of the infringement or the place of living of the person committing the infringement or the place where the person has been arrested. In most MS, it is the place where the infringement has taken place that determines the competent authority, in most cases, the competent customs office or directorate.

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MS were asked to identify the competent authority for settling appeals against customs penalties. In the case of criminal penalties, the courts are the competent authorities. The names (and perhaps the relative status) of these courts varies from MS to MS, but the essential point is that they are all judicial bodies separate from the customs authority. For those MS who employ non-criminal penalties the position is slightly different. In 4 MS, the competent authority is the customs administration . In 8 MS, the competent authority is the court. Again, the names vary, but they can be a civil court, administrative court or a specialised court. MS were also asked whether the payment of the customs debt during the appeals procedure has any effect on the appeal itself. 17 MS, confirmed that payment has no impact on the appeal. 5 MS, stated that payment can be a mitigating factor in an appeal case, but the decision lies in the hands of the competent court.

Treatment of several imports MS were also asked to provide information concerning the penalty treatment of scenarios in which infringements cover several separate importation events, and where the same conduct results in several different infringements. It seems that the majority of MS opt for a ‘one import one infringement’ system, but that there are several types of exceptions and ‘special treatments’. For instance, several countries recognise the concept of a continuing offence and, depending on the circumstances of such cases, may some treat such types of infringement as a single event for penalty purposes. As regards conduct resulting in several infringements, a number of MS impose penalties in respect of the most severe infringement, even where they separately identify the different infringements It can also be seen that the vast majority of MS do not allow overlapping of criminal and non criminal penalties where several infringements occur. It is clear that diversity is well implanted in the individual systems of the MS.

GENERAL CONCLUSIONS AND RECOMMENDATIONS:

Conclusions The study gives an overview of the convergences and divergences in MS legal penalty systems, based on identification of MS legal texts (legal analysis and practices completed by the 7 cases). The partial conclusions give a detailed picture of specific convergences and divergences. The study deals with provisions relating to purely customs infringements; any other infringements are not part of the study.

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Part of the MS penalty systems are based on customs provisions; part on general criminal (and where relevant non criminal) law. Possible recommendations will have to respect this distinction. At first sight the diversity of legal systems and the diversity of the treatment of customs infringements, the difference on the nature of the penalty for the same customs offence and the procedure according to which the customs penalty is imposed and executed is obvious. However convergence areas have been identified by the group (in particular regarding the terms of treatment of the infringement and of the imposition of the penalty and some times in terms of the procedure (e.g. time limits). Recommendations Recommendations to the COM: (1) The implementation of customs legislation by the MS and the effects of the convergences and divergences on day to day work of trade in the EU and the MS need to be further examined. (2) In examining these questions the guiding principles of the MCC, such as electronic declaration, AEO, systems based approach and centralised clearance, should be the starting point. (3) In order to get a balanced view the compliance strategy of MS should be taken into account, including elements such as general measures for improving compliance and the checks on declarations and internal management systems within companies. (4) Care should also be taken to include in the impact assessment all MS accounting for the highest number of dealings with customs. The distinction between small and large MS is less relevant (5) COM should take action to invite the MS who have not participated to the group yet, to provide the relevant information in order to have a complete view of the situation in the EU. Recommendations to the MS: (1) MS are invited to co-operate to the further examination of the penalties regime by the Commission. (2) MS (in particular those reviewing their legislation) should take into consideration good practices identified during the life of the project and actively consider adopting those which are likely to provide simplification benefits for the customs authorities and the trade, like: -strict liability infringements: not all MS have strict liability infringements, which is however a concept which may be considered a useful simplification in less serious customs infringements;

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-time limits: some MS do not foresee time limits to impose the penalty, while consideration should be given to the fact that this might have an adverse economic impact to the liable companies which are waiting for the decision.

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IMPACT ASSESSMENT ON THE PROPOSAL TO APPROXIMATE CUSTOMS OFFENCES AND PENALTIES TCG – CONSULTATION. Explanatory note (CLECAT secretariat) Questions as in the Commission’s questionnaire Question 1 Does any of your members or your own company have experienced problems with differences in Member States' policy on customs offences and penalties (qualifications of offences as "criminal" or "non-criminal", procedural rules or types and levels of penalties)? If so, please specify and provide examples Explanatory note The idea is that the respondent provides concrete examples. Types of penalties The Project Group distinguished 15 types of criminal penalties and 8 types of noncriminal penalties: see page 6 of the PG report. Are there maybe aggravating factors (or lack of mitigating factors) which are typical for your country and therefore problematic? ‘Procedural rules’ refers to issues like: - the time limits for initiating a procedure; - time limits for the imposition and the execution of penalties; - procedures for the settlement of offences (=agreement with an offender to settle the matter as an alternative to initiating or completing legal proceedings) - the competent authority; - the appeal procedure; - treatment of the situation where the same conduct results in several different infringements -possible overlap of criminal and noncriminal offences QUESTION 2 Are you or any of your members aware of any different treatment in granting AEO status or authorising simplified procedures to economic operators throughout EU due to divergent approaches on the "non-compliance with customs requirements" criterion from national Customs Administrations?

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QUESTION 3 Having AEO status issued in your country, did any of your members or your own company experience any reluctance from other MS regarding the granting of that status, provided for in customs legislation? If so, was this due to the fact that your members or your own company did not comply with customs requirements compared to that MS' standards on the criterion "noncompliance with customs requirements"? QUESTION 4 Do you or any of your members have knowledge of any situation where an AEO status of a company has been suspended due to some specific offence to customs rules, whereas other company holder of an AEO authorisation who committed the same offence in another MS didn't suffer the same consequence? And are you aware of any situation like that with regards revocation of the AEO certificate? QUESTION 5 Have you or any of your members experienced totally different customs penalties and related procedures on dealing with similar customs offences by different national customs administrations? If so, did that differences had any financial impact on you or your members? QUESTION 6 From your experience with MS policies on customs offences and penalties (qualifications of offences as "criminal" or "non-criminal", procedural rules or types and levels of penalties) that you and your members have dealt with, would you indicate one as "best practice" and one as "bad practice", from your business point of view? If so, please explain the main reasons for your choice.
QUESTION 7

There is always a consultation procedure among Member States before AEO status can be granted. This may confront economic operators with national rules and practices in Member States other than their own.

Question 3 concerns AEO application; this question concerns in particular possible suspension of the status.

This question overlaps with question 1

Do you or any of your members find that different MS policies on customs offences and penalties (qualifications of offences as "criminal" or "non-criminal",

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procedural rules or types and levels of penalties) throughout EU have a negative impact on EU companies' competitiveness? Why? How can you describe the effects?
QUESTION 8

Are potential customs penalties and the severity there of a factor within your or your members’ organisation which is taken into account when assessing new business opportunities in other MS than the ones you have your regular business in? To what degree?
QUESTION 9

This is about so-called penalty-shopping. Is this a reality as far as or just a fantasy?

Would you or any of your members be in favour of the creation of one common framework on customs offences and penalties, which would be applicable throughout the EU and reduce the differences between MS policies on customs offences and penalties?
QUESTION 10

The Commission stresses that the aim of the initiative is to examine if and how national customs penalties and treatment of offences can be approximated, not harmonised. Approximation for instance means that you set a maximum and a minimum level.

Is there an estimation of "compliance costs" in your members or your own company in relation to MS policies on customs offences and penalties? If so, could you provide us with some information on this?
QUESTION 11

Which one of the four options for action below would you and your members favour? Why? A. Do nothing While being bound to provide for effective, proportionate and dissuasive penalties for failure to comply with Union customs legislation (on the basis of caselaw of the Court of Justice and Article 21 MCC), each Member State would keep its own policy and legislation on customs offences and penalties, with national courts being in charge of applying it. B. Soft law approach - To issue guidelines/recommendations for Member States on the interpretation of customs compliance legal concept, which is the basis for economic operators to accede the main customs

The Commission indicated that the donothing option (option A) is under pressure. As far as the soft law approach is concerned (option B), it should be noted that E.U. guidelines or recommendations will necessarily have the effect of recommendations to Member States to change their national legislation. A Regulation as in option C (intended to approximate national practices, not to harmonise them) takes precedence over national legislation. A definition of types of customs offences within the scope of this Regulation would in effect lift particular types of customs offences out of national legislation to include them in the scope of the Regulation. This may include types of offences which are currently, in

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simplifications and is directly related with customs infringements and penalties issue. And, in parallel, - To develop, in close and voluntarily collaboration with Member States, monitoring measures to assess the effectiveness, proportionality and dissuasiveness of Member States' penalties for failure to comply with Union customs legislation, mentioned in Art. 21 of the MCC. C. New legislative initiative through a regulation That legislative approach would imply the adoption of a regulation based on Article 207 TFEU (EU area of competence: common commercial policy) to approximate the types of customs offences and the level of penalties, together with some common procedural rules, in order to eliminate the most unacceptable divergences. D. New legislative initiative through a regulation and a directive. That legislative approach would imply the adoption of two separate new legislative acts, with different legal bases, in order to take action on both criminal and noncriminal customs offences and penalties: -a regulation on the approximation of noncriminal customs offences and penalties based on article 207 TFEU, as foreseen in option C; and - a directive on the approximation of criminal customs offences and penalties beyond the scope of EU financial interests, under article 83(2) TFEU (EU area of competence: judicial cooperation in judicial matters); a possible approximation of some elements of criminal procedure may be considered as well in that context, on the basis of Article 82 TFEU.

some of the Member States, treated as criminal ones. Option D is like option C, but foresees in addition a Directive on the approximation of criminal offences (so the ones which are outside the scope of the Regulation)

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Standing agenda item IMPACT ASSESSMENT ON THE PROPOSAL TO APPROXIMATE CUSTOMS OFFENCES AND PENALTIES

CONSULTATION

TAXUD'S TRADE CONTACT GROUP

The European Union is a customs union and constitutes a single customs entity with regard to international agreements concluded under the EU common commercial policy and WTO's EU membership. While customs legislation referring to the trade in goods between the customs territory of the Union and third countries is almost unified, law enforcement which secures the compliance with customs rules and the lawful imposition of penalties or sanctions is still regulated through national legislation.

The Modernised Customs Code (now to be recast as the 'Union Customs Code'), not only further pushes the degree of legislative harmonisation, but is conceived for a multinational electronic environment where a decision taken by a Member State is applied in all other Member States. For example, the granting of the Authorised Economic Operator status, which provides the reliable economic operators with reduced requirements in terms of security or safety and/or an easier access to customs simplifications, depends largely on the record of compliance of the economic operator. If compliance with customs law has different criteria, such status – as any simplification based on the same conditions - may not be granted in a uniform manner.

A first assessment of the situation took place through a report prepared by the Commission services with a group of 24 Member States (MS) on the legal situation and through an external study on the impact of existing national penalty regimes on the competitiveness of EU companies.

These studies have highlighted the existence of divergences throughout MS' legal systems regarding the qualification of offences, their procedural treatment and the respective levels of penalties.

Given these circumstances, the Commission has envisaged in its Working Program for the first quarter of 2013 a legislative proposal to approximate customs offences and penalties, aiming at: (i) ensuring effective implementation and law enforcement in the area of customs legislation; (ii) providing for a common framework for the approximation of non criminal

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customs infringements and penalties and (iii) assuring a level playing field with regard to simplifications concerning reliable economic operators, through the existence of common grounds on the customs offences and penalties field.

In order to determine the best option to reach the proposed objectives, an impact assessment is being developed, under which the economic operators, as one of the main stakeholders, have an important role to play by sharing their experiences in this field and giving their point of view.

For that purpose, TAXUD has developed the following questionnaire. By replying to these questions you will help the Commission shaping the future legislative proposal.

Answers to the questionnaire should be provided by the 14th May and, if companies wish so, can be anonymous

QUESTION 1: Does any of your members or your own company have experienced problems with differences in Member States' policy on customs offences and penalties (qualifications of offences as "criminal" or "non criminal", procedural rules or types and levels of penalties)? If so, please specify and provide examples.

QUESTION 2: Are you or any of your members aware of any different treatment in granting AEO status or authorising simplified procedures to economic operators throughout EU due to divergent approaches on the "non-compliance with customs requirements" criterion from national Customs Administrations?

QUESTION 3 Having AEO status issued in your country, did any of your members or your own company experience any reluctance from other MS regarding the granting of that status, provided for in customs legislation? If so, was this due to the fact that your members or your own company did not comply with customs requirements compared to that MS' standards on the criterion "non-compliance with customs requirements"?

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QUESTION 4 Do you or any of your members have knowledge of any situation where an AEO status of a company has been suspended due to some specific offence to customs rules, whereas other company holder of an AEO authorisation who committed the same offence in another MS didn't suffer the same consequence? And are you aware of any situation like that with regards revocation of the AEO certificate?

QUESTION 5 Have you or any of your members experienced totally different customs penalties and related procedures on dealing with similar customs offences by different national customs administrations? If so, did that differences had any financial impact on you or your members?

QUESTION 6 From your experience with MS policies on customs offences and penalties (qualifications of offences as "criminal" or "non criminal", procedural rules or types and levels of penalties) that you and your members have dealt with, would you indicate one as "best practice" and one as "bad practice", from your business point of view? If so, please explain the main reasons for your choice.

QUESTION 7 Do you or any of your members find that different MS policies on customs offences and penalties (qualifications of offences as "criminal" or "non criminal", procedural rules or types and levels of penalties) throughout EU have a negative impact on EU companies' competitiveness? Why? How can you describe the effects?

QUESTION 8 Are potential customs penalties and the severity thereof a factor within you or your members which is taken into account when assessing new business opportunities in other MS than the ones you have your regular business in? To what degree?

QUESTION 9

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Would you or any of your members be in favour of the creation of one common framework on customs offences and penalties, which would be applicable throughout the EU and reduce the differences between MS policies on customs offences and penalties?

QUESTION 10 Is there an estimation of "compliance costs" in your members or your own company in relation to MS policies on customs offences and penalties? If so, could you provide us with some information on this?

QUESTION 11 Which one of the four options for action below would you and your members favour? Why? A. Do nothing –. While being bound to provide for effective, proportionate and dissuasive penalties for failure to comply with Union customs legislation (on the basis of case-law of the Court of Justice and Article 21 MCC), each Member State would keep its own policy and legislation on customs offences and penalties, with national courts being in charge of applying it. B. Soft law approach - To issue guidelines/recommendations for Member States on the interpretation of customs compliance legal concept, which is the basis for economic operators to accede the main customs simplifications and is directly related with customs infringements and penalties issue. And, in parallel, - To develop, in close and voluntarily collaboration with Member States, monitoring measures to assess the effectiveness, proportionality and dissuasiveness of Member States' penalties for failure to comply with Union customs legislation, mentioned in Art. 21 of the MCC. C. New legislative initiative through a regulation That legislative approach would imply the adoption of a regulation based on Article 207 TFEU (EU area of competence: common commercial policy) to approximate the types of customs offences and the level of penalties, together with some common procedural rules, in order to eliminate the most unacceptable divergences. . D. New legislative initiative through a regulation and a directive That legislative approach would imply the adoption of two separate new legislative acts, with different legal bases, in order to take action on both criminal and non-criminal customs offences and penalties: -a regulation on the approximation of non criminal customs offences and penalties based on article 207 TFEU, as foreseen in option C; and - a directive on the approximation of criminal customs offences and penalties beyond the scope of EU financial interests, under article 83(2) TFEU (EU area of competence: judicial cooperation in judicial matters); a possible approximation of some elements of criminal procedure may be considered as well in that context, on the basis of Article 82 TFEU.

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Joint Customs Consultative Committee
Meeting: May 2012 Agenda item: Customs Information Paper (CIP) review Author: Caroline Wilkins

Report - CIPs being quality reviewed by the JCCC Introduction
At the September JCCC it was agreed that there would be a trial period to allow draft CIPS to be reviewed by the trade members of the JCCC prior to issue. The intention was to reduce the number of CIPS with mistakes or incorrect wording.

Mechanics of the trial
The intention was for CIPs to go to the JCCC trade members for review for three working days before issue. On occasion this time has been truncated or waived when the CIP was urgent. (Please see below for a list.) This was agreed at the start of the trial. On the 1 February a new system was instituted to allow single points of contact within HMRC to review CIPS prior to them being looked at by the JCCC. From this date CIPs are circulated four times. It is sent for review by the internal reviewers and then the JCCC trade members. It is then numbered and sent to the internal distribution list and the external distribution list.

Summary of the trial
The trial was originally intended to run from 17 October 2011 to the 16 February 2012 - four months. However in this time only 19 new CIPS were issued. It was decided to therefore let the trial continue giving a six month period to review. During the period 17 October 2011 to 30 April 2012 the following has been observed:

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  

49 new CIPs have been issued during the trial. 19 at the end of 2011 and 30 in 2012. (2 are still in the process.) 26 CIPs were not sent for review by the JCCC. 25 were deemed urgent and one was regarding a review of LVBI In most cases the queries did not change the CIP itself. The exception was CIP (11) 99 Previous Document code for export declarations. Although the CIP itself was not factually incorrect the response from the trade raised some issues on the interaction between the Excise Movement Control System (EMCS) and Customs regimes. CIP (11) 90 on Import Accounts was 'passed' by the JCCC but then Large Business raised technical issues and as a result the CIP was amended.

Comparison with 2010-11
From the 17 October to 31 December 2011 19 CIPs were issued. In a similar time frame from the year before there were 22 CIPs. From 1 January to 30 April 2012 30 CIPs were issued - in a similar time frame last year 41 were issued.

Points for discussion
1. Should the trial now become working practice? 2. Who decides whether a CIP is urgent? - Currently it is the author 3. Do all CIPS need to be reviewed? - For example CIPS giving a change of address - CIPS advertising 'downtime on a computer system - Tariff Preference CIPS even when not urgent

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CIPS not sent for review - 26
(11) 89 Non Compliance with the Export Procedure (11) 93 Tariff Preference: South Korea - derogation from origin rules for some products (11) 94 Customs Civil Penalties: Amended Legislation (11) 100 Tariff Preference: West Bank & Gaza – Improved Rates of Duty for Chapters 1-24 (11) 102 Tariff Preference: Norway (EEA) Improved Rates of Duty for Chapters 1-24 (11) 103 Tariff Preference: Better GSP Rates of Duty for Goods Originating in Cape Verde (11) 104 Import Control System downtime and KEL 23 system upgrade (11) 106 Tariff Preference: Derogation from Rules of Origin - tuna loins from Kenya (12) 04 Enhanced EU sanctions against Syria (EU Council Regulation 36/2012) (12) 06 Publication of the proposed Union Customs Code (12) 11 Removal of Low Value Consignment Relief (LVCR) for all Goods Imported Into the UK from the Channel Islands (12) 13 Removal of Low Value Consignment Relief (LVCR) for Low Value Goods Imported Into the UK from the Channel Islands (12) 14 Anti-Dumping Duty: Footwear originating in China and Vietnam (12) 15 ICS downtime 08 and 09 April 2012 (12) 16 Removal of two defunct CHIEF Freight Locations (12) 18 Anti-Dumping Duty: Footwear originating in China and Vietnam (12) 20 Tariff Preference: Extended Derogation - Preserved Tuna & Tuna Loins from Mauritius, Seychelles & Madagascar (12) 21 New EU Council Regulations on restrictive measures against Iran - Overview (12) 22 New EU Council Regulations on restrictive measures against Iran – Exports general (12) 23 New EU Council Regulations restrictive measures against Iran – oil, gas & petrochemical Industry (12) 24 EU Council Regulation on restrictive measures against Iran –internal repression (12) 25 New EU Council Regulations on restrictive measures against Iran - Imports (12) 26 Review of Low Value Bulking Imports (LVBI) concession {A REVIEW} (12) 28 UKBF National Frontiers Approval Unit - Update to CIP (12) 08 (12) 29 Tariff Preference: Derogation from Rules of Origin - peaches, pears and pineapple in fruit jelly or fruit juice - from Swaziland (12) 30 Tariff Preference: Extension of Derogation from Rules of Origin - tuna loins from Kenya

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JCCC meeting held on 16 May 2012 Appendix F Low Value Bulking Imports (LVBI) Emerging findings from the review What has happened since CIP 12 (26)? • • • • Visits to stakeholders, inc LC, LBS, BF and AICES. Visits to LVBI clearance locations in UK. Receipt of comments from individuals. Regular internal discussions with other policy makers to ensure proper governance and joined-up policy making.

What have we found? • • • Evidence of mis-declaration and under-valuation of values for VAT (inc tobacco products). Smuggling of prohibited and restricted (P&R) and Intellectual Property Rights (IPR) goods (inc tobacco packaging). Data on safety and security not submitted to ICS as per requirements.

What does this mean? • • • • Potentially significant revenue gap, which has to be closed. Smuggling of goods which actively harms UK trade and society. No guarantee that UK is safe from the threat from terrorism via LVBI freight. All risks already seen during the postal strategy work.

What would help? • • • • Clear that these risks are best addressed at the border, before goods enter black economy. BF and LC can and do work together, but there is always scope for closer working, esp. where post-clearance action is required. BF lack the right data at the right quality at the right time. As with postal sector, information is key to the solution.

Right information? • • • Bulking of goods item data on CHIEF means it is unsuitable for either risk analysis at border or credibility checking post-clearance. Paper manifests make automated risk analysis impossible. Most LVBI clearance locations are not inventory linked.

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• •

ICS requirements are not being fully complied with in all cases (ie data at item level). Therefore, how does BF get the right information? How can the compliant trade help us to get it right?

Other emerging considerations • • • • • • • • • • Prohibit foodstuffs, clothing and other goods used as cover for smuggling and under-valuation from LVBI. LVBI clearance locations could be inventory linked (where no ASN in place). Linking LVBI with AEO (fiscal) in some way. Tightening of current definitions, esp. commercial/non-commercial. Special rules for Channel Islands low-risk traffic. Greater clarity over penalties and sanctions for non-compliance with approval. Focus on ICS completion rules. Work with BF to review resources at high-risk locations. LVBI approval reviews to take place at regular intervals. Review of 99 item rule (this enables non-compliance to be easily hidden and CHIEF to be ineffectual when most needed – more clarity of goods item level data).

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Joint Customs Consultative Committee
Meeting: May 2012 Agenda item: 8

EU and US officials sign a Mutual Recognition agreement to recognise each other's 'trusted traders' (4 May 2012, Washington)
EU and US certified trusted traders will enjoy lower costs, simplified procedures and greater predictability in their transatlantic activities, as a result of a mutual recognition decision signed today. The European Union and the United States of America formally agreed to recognise each other's safe traders, thereby allowing these companies to benefit from faster controls and reduced administration for customs clearance. Importantly, mutual recognition will also improve security on imports and exports, by enabling customs authorities to focus their attention on real risk areas. There are currently over ten thousand companies approved as Authorised Economic Operators (AEOs) in the EU of which over 5000 have a certificate covering security and safety– numbers which are growing year on year. The EU and USA are strategic trade partners, with imports and exports accounting for almost €500 billion in 2011. This decision will further boost trade opportunities and contribute to the smooth flow of goods between both sides, without compromising the high security standards on either side of the Atlantic. The joint decision will start to be implemented from 1 July 2012. Under this agreement the EU and the US will recognise each other’s security certified operators. At the current time authorised economic operators in the EU will receive benefits when exporting to the US market. The EU will reciprocate for certified members of the US Customs-Trade Partnership against terrorism (C-TPAT) when the US includes export in the programme. Mutual recognition of trade partnership programmes prevents the proliferation of incompatible standards, and promotes harmonisation of customs practices and procedures worldwide.
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Since 2008 European companies can apply for an AEO status to have easier access to customs simplifications and to be in a more favourable position to comply with EU security requirements. The AEO status (AEOS or F type) at EU level identifies safe and reliable businesses that are engaged in international trade. This means they deliver high standards of security and compliance, therefore making these companies highly trusted trade partners at customs checks. Fewer inspections on goods are necessary and formal customs procedures are quicker to complete. This benefits the companies because the goods can move faster from one destination to another and help to lower transport costs. It also allows EU customs administrations to concentrate their efforts on checking high risk transactions. Mutual Recognition of respective trade partnerships is a very important step towards improving the protection of citizens against security and safety risks. At the same time, recognising each other as 'reliable traders' will also lead to more effective container inspection and important cost saving for companies, in particular SMEs. In terms of the EU US agreement the signing is a big step forward at the political level. The EU US Joint Customs Co-operation Council (JCCC) now needs to look at the practical implementation of the agreement. The EU wants its major trade partners across the globe to recognise the AEO status - to facilitate and protect international trade even more in the future. Switzerland, Norway and Japan mutually recognise the EU's certification. A similar agreement is also being explored with China.

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Joint Customs Consultative Committee Date of meeting: 16 May 2012 Subject: Update on JCCC sub-groups Update on JCCC sub-groups The information table below provides key issues and updates from JCCC SubGroup/Working Group meetings.

The minutes from each sub-group or Working Group meeting will continue to be posted onto the HMRC website.

Please note - current Group Objective:

This is used to assess the stage reached by each individual, according to the following criteria:

1 2 3 4

= Discuss/influence policy proposals. = Policy framework agreed. Discuss/influence design of requirements. = Discuss/influence implementation of requirements. = Review implementation and delivery of business benefits.

WG = Working Group

7. Definitions
 JCCC Sub Group - for projects/initiatives which are finite and  JCCC Working Group - for 'perpetual meetings

JCCC Secretary, email – JCCC Secretariat

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Name of Group Customs Change

Next Meeting
20 June 2012

Contact Type of group
John Nightingal e SG

Update and Key issues from recent meetings
Last meeting 13 March 2012. Discussed AEO Rejection figures for AEO across the EU average out at 9%, whilst the UK average is 8.5%. Other MS currently receive and process more applications than the UK - a number of reasons were considered which included the visibility and marketing of AEO in the UK. HMRC, in response, plans to promote AEO at a number of Trade events Cion aim to adopt the UCC by 24 June 2013 at the latest. To achieve this, negotiations with the Member States will need to have been completed by the end of the calendar year or very soon thereafter. A key part of the recast UCC is alignment with the Lisbon Treaty. HMRC keep UKBA updated regularly. The meeting received an update on the CHIEF STE project. Last meeting 11 June 2011 - meetings are arranged on a perceived need basis. Oversight of this group will be moved to a new team shortly

Special Procedur es (CPEI) working Group Internatio nal Trade Operating Systems Working Group (ITOSWG)

None planned

David Exton

WG

Ian Turner

WG

Duty Liabilities

21 June 2012

Valerie Smith

WG

Last meetings were held on 17 January and 24 April 2012. Steve Partridge will now be the single point of contact for CSP including live Infrastructure changes. Other changes included Belinda Dent and Theresa Cantello as IMS Live Service Managers for CHIEF. The CHIEF DR Rehearsal was successfully completed. The meeting discussed the Live Implementation Date moving from May to October to avoid Olympic preparations and the scheduled and unscheduled outages. HMRC live services had a successful enterprise release in April. The problems with service performance will be taken forward. Previous meeting held 21 Feb discussed classification, valuation and tariff preference matters. Topics included the classification of multifunctional printers, LCD monitors and ‘e’ tablets / smart phones. It also had reports on ADD,

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valuation earlier sales and the call waiting times for the tariff classification helpline. The meeting minutes are available on the JCCC web pages.

Name of Group Transit

Next Meeting
2 July 2012

Contact Type of group
Bill Hudson WG

Update and Key issues from recent meetings
Previous meeting held 29 November 2011. Report available on HMRC website. Items discussed include: MCC/MCCIP Update; Level 2 air/sea simplifications; Replacement of national transit with temporary storage;  NCTS Upgrade;  Accession of Croatia/Turkey to the Common Transit Convention;  Blue Belt Project; EU Pilot Project: Risk Analysis inn the transit procedure. Last meeting held 27/03/2012. ICS update provided. A small study completed at Felixstowe showed that there were omission errors and that any assurance and strategy approach would need to consider national and EU concerns. A strategy was being formulated to take this work forward. Ex-works - Changes in treatment of exworks agreed with trade whereby an agent will be treated as an indirect representative when acting for the overseas buyer in an ex-works transaction. The UK seller will be shown as the exporter on the declaration and will retain responsibility in areas such as export licensing and IPR. It was agreed that if the UK seller was prepared to provide instructions to the agent the agent could act in a direct capacity.

  

Import – Export (incl. NCH )

Richard Sabatini

WG

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