1. Symposium on Trade Facilitation
WTO
Symposium on Trade Facilitation
Practical Experience of Implementing Trade Facilitation Reforms
(8-9 November 2011)
Michael Lux,
Head of Customs Procedures Unit
TAXUD/A3
European Commission

2. BEST PRACTICES IN THE EU
Based on
The Convention on a Common Transit Procedure

3. Approx. 12+ million movements per year*
Some data
Geographical scope:
- 30 countries (EU 27)
Volume:
Approx. 12+ million movements per year*
Approx. 33+ thousand of movements in NCTS per business day*
* Community transit + common transit

4. Crossing borders in transit- Best Practices

5. A main characteristic of the common transit procedure One single procedure from start to finish
End
Compare to the TIR Convention based on a series of standardized national transit procedures
Start
End

6. How does the procedure operate ?
Let us take a closer look at:
New Computerised Transit Procedure (NCTS)
Guarantees
Enquiry procedure and recovery
Simplifications

7. MS 1 MS 2 MS 3 MS 4 MS 5 MS 6 MS 7 MS 8 MS 9 MS 10 MS 11 MS 12
A single Customs Union but national fiscal territories required internal facilitation : Community transit procedure
MS 1
MS 2
MS 3
MS 4
MS 5
MS 6
MS 7
MS 8
MS 9
MS 10
MS 11
MS 12
Trade facilitation was therefore urgently needed and in 1969 the Community transit procedure was created to facilitate the movement of goods and customs formalities between and within its Member States and of course to allow for the movement of goods from third countries (called non-Community goods) from the Member State of entry to the Member State of destination.
Where transit is normally regarded as a procedure to pass through a territory the Community transit procedure extended to movement within a territory.
EU goods (free circulation) :
Non-EU goods:

8. IS MS 1 MS 2 MS 3 Third country NO MS 5 CH (+ LI) MS 6 MS 7 MS 8
Extension of Community transit to neighbouring countries: common transit procedure (starting 1972) IS
MS 1
MS 2
MS 3
Third country NO
MS 5
CH (+ LI)
MS 6
MS 7
MS 8
The extension of the Community transit procedure to non-EU countries started in 1972 with Switzerland and Austria (the latter now an EU-Member State). The bilateral transit agreements were replaced by the Convention on a common transit procedure in The Convention has a model function for other countries in the region who may in the future become Contracting Parties.
EU goods (free circulation) :
Non-EU goods:

9. IS MS 1 MS 2 MS 3 Third country NO MS 5 CH (+ LI) MS 6 MS 7 MS 8
EU Internal Market (1993) IS
MS 1
MS 2
MS 3
Third country NO
MS 5
CH (+ LI)
MS 6
MS 7
MS 8
The completion of the EU internal market in 1993 was a very important step and one that eliminated the need to use the Community transit procedure for the movement of Community goods between EU Member States. These goods can now freely circulate within the EU and this because of the harmonisation of rules at EU level (while separate control systems were created for fiscal control). Non-Community goods remain of course subject to customs control and their movement within the EU can take place under the transit procedure, in particular when the MS of entry is not the place of destination in the EU. Transit allows then to pay both import duties and national taxes at the same time and in the same location.
EU goods (free circulation) :
Non-EU goods:

10. Geographical scope today
Convention on a common transit procedure / SAD Convention applies between the EU, Iceland, Norway, Switzerland, Liechtenstein
Community transit applies in the customs territory of the EU (27 MS) + Andorra & San Marino (Customs Unions)
Note: in the territory of the EU the common transit convention follows the rules of Community transit
Community and common transit are the most used.

11. Goals
Facilitation of border crossing
Trade facilitation
Cost saving
Efficient controls
Balance between the economic interest of operators and the interest of customs (simplified procedures, modulation of guarantee, authorised consignor/consignee, etc.)
Alignment of legislation, formalities and procedures
Safety/Security declaration can be combined with transit

12. Accession to the Conventions
A country must be invited by the EC/EFTA Joint Committee
Formal accession procedure is described in Articles 15.5 and 15a of the Common Transit Convention (Articles 11.5 and 11a of the SAD Convention)
Communication (COM(2001)289 of ) sets out the general conditions that must be met by the EU pre-accession countries
Communication (COM(2010)668 of ) sets out a strategy to prepare certain neighbouring countries for accession to the Conventions and re-confirms the conditions for accession
- Council support received ( , 6800/2/11) - conclusions on a strategy to prepare certain neighbouring countries for accession

13. General conditions for accession
Ability to implement the whole acquis:
- adopt the legal provisions;
- have the operational administrative structure in place;
- a computerised transit system (NCTS);
- connection to the CCN/CSI network linking all
Contracting Parties (separate Convention), alternative
ways of connection are under consideration (SPEED2)

14. Future accessions
Croatia and Turkey are first in line to accede to the Conventions
Formal process may start after positive evaluation missions and presentation of missions reports (November-December 2011)
Council Decisions on the EU position concerning an invitation to Croatia and Turkey to accede to the conventions required (already prepared, to be discussed after the evaluation missions)
Decision of the EC-EFTA Joint Committee (February 2012)
Deposit of the accession instruments (April 2012)
Extension of the Conventions (July 2012)

15. NCTS Principles and Benefits
For Customs:
‘Real time’ exchange of information (declaration, advance arrival information, guarantee check, etc.)
Customs authorities are linked electronically
More effective customs control (risk analysis, guarantee, discharge)
Statistics
Safety/security data combined with transit
Since 1 January 2009 this computerised system is also used for TIR movements in the customs territory of the Community. 15 15

16. NCTS Principles and Benefits -2
For business:
Fast administrative process
Faster release of guarantee
More information available (e.g. movement status info)
Faster discharge (less open movements and enquiries)
Safety/security data combined with transit

17. NCTS System Architecture
International domain
27 EU Member States NO IS
CH & LI
TAXUD
Common Communications Network and Interface (CCN/CSI)
AND SM
We distinguish three so-called domains in NCTS in function of the parties involved.
CCN/CSI exchanges on average 630 million messages per year (it is used for number of customs applications: quotas, tariff information, etc).
National domain
Customs offices
External domain
Traders

18. Guarantee Individual guarantee: Covers a single operation
By cash deposit, by guarantor or by voucher (€ 7000)
Covers the full amount of potential customs debt
Comprehensive guarantee (simplification):
Covers several operations
Calculated as the potential debt of one week’s operations (reference amount)
Guarantee level 100% of potential debt or reduced to 50% or 30% or guarantee waiver (depending on meeting specific criteria)
Guarantee furnished by guarantor (third party established in a Contracting Party)
Comprehensive guarantee covers a number of transit operations (reference amount covers the operations of at least one week).
Reductions on the basis of criteria (to 50% sound finances, sufficient experience, to 30% sound finances, sufficient experience, close co-operation, waiver if also in command of transport operations).

19. Fast electronic procedure based on exchange of messages via NCTS
Enquiry procedure
Objective is to determine how the debt incurred, identify the debtor(s) and determine the authorities for recovering the debt
Fast electronic procedure based on exchange of messages via NCTS
Starts at the latest one week after the goods should have been presented at the office of destination
Recovery of customs debt starts seven months from the date the goods should have been presented at destination (shorter period in case the operator provides no or insufficient information)
In around 1,5-2% of operations the enquiry procedure will be started but the percentage of cases where duties and taxes have to be collected is lower than that.

20. Recovery procedure
Customs debt covers import and export duties and other charges
There can be more than one debtor (joint and several liability)
If there is a guarantor he is liable for the debt incurred by the principal (holder of the procedure)
Customs debt must be notified to guarantor within specific time-limits in order to maintain his liability
Recovery is carried out in accordance with the country’s own regulations

21. Customs may authorise simplifications to operators meeting general and specific conditions
- Use of comprehensive guarantee/waiver
- Status of authorised consignor/consignee
- Use of seals of a special model
Exemption of prescribed itinerary
- Simplified transit procedures (rail, air, sea, pipeline)
- National/bilateral/multilateral simplifications

22. Example: Authorised consignor/consignee
Authorisation stipulates how and when to inform customs / measures of identification / categories of goods
Authorised consignor:
Places goods under transit from authorised premises without presentation to customs
Must hold a comprehensive guarantee / guarantee waiver
Electronic communication with supervising customs office
Authorised consignee:
Receives goods placed under transit at authorised premises without presentation to customs

23. TIR Convention Objectives:
allow the movement of goods between and through different customs territories (68 Contracting Parties) under customs seals under relief from import duties and taxes and without application of economic commercial policy measures
Provide an international system replacing national procedures (including documentations, guarantee) but providing the same guarantees for the national revenue

24. Weakness of the current paper TIR system
Paper format
Formalities for holders at every border crossing
No risk management prior to physical presentation of goods
Movements in the EU monitored on the basis of information exchange on paper
Prolonged time limits for enquiry
Fraud fighting mainly at national level
No automatic guarantee checks
Statistics collected and available only from Contracting Parties

25. Computerization of the TIR procedure
The eTIR project
Discussed since 1997 by the Contracting Parties to the TIR Convention
Aims to progressively computerise the TIR procedure between all Contracting Parties
NCTS/TIR
Computerization of the TIR procedure within the European Union- as of 1st January 2009

26. What we want to avoid

27. Transit should be trouble free
IDEAL SITUATION

28. Follow EU transit operations on line
Transit map

29. Thank you
Website:
- Legislation
- Transit Manual
- Brochure
Name: Michael LUX
Telephone: