On September 11, 2013, the European Parliament adopted the Modernized Customs Code. Upon its entry into force, this code will be renamed the EU Customs Code and will simplify EU customs procedures and expand the scope of centralized clearance, thereby reducing costs for businesses.
A modernized customs code will serve as the framework for customs rules and procedures across EU member states. It will codify various measures currently implemented on a case-by-case basis, clarifying legal provisions for non-EU companies operating in the EU. Furthermore, customs rules and procedures will be simplified, leading to more efficient trade transactions.
The European Council is expected to adopt the customs code regulation in the coming weeks, so the code could come into effect on November 1, 2013. The proposed regulation will be implemented 30 months after its adoption by the European Parliament; in other words, the modernized customs code will be implemented on May 1, 2016.
The modern customs code stipulates that all exchanges of data, documents, resolutions and notices between economic operators and customs must be conducted using electronic data processing technology to achieve paperless and fully electronic transactions, with the goal of fully utilizing information technology by the end of 2020.
The new Customs Code was originally scheduled to come into effect on June 24, 2013, but the implementation date was delayed because the required electronic systems were not yet ready. In fact, all manual operating systems will continue to exist until 2013 and even after the new Customs Code comes into effect (May 2016), during which time non-electronic data processing technologies may be used.
The new Customs Code makes the rules for implementing customs decisions more uniform. These modern rules will regulate the rights and responsibilities of traders and specify solutions for customs fees that must be paid for violations of customs rules.
Other provisions in the code will expedite the customs clearance process for Authorized Economic Operators (AEOs). The authorities will decide whether to grant "Authorized Economic Operator" status based on the following factors:
a. Records of compliance with customs and tax regulations;
b. A robust business and transportation record management system;
c. Proof of solvency;
d. Competency standards or professional qualifications directly related to the activities performed;
e. Appropriate security and safety standards
Streamlining customs procedures can benefit authorized economic operators (either by maintaining existing streamlined procedures or by establishing new ones). One benefit is the implementation of "centralized clearance," which allows authorized economic operators to declare customs electronically and pay duties at their local customs import/export office.
Once an accredited economic operator submits a customs declaration, their goods are released and can circulate freely in the EU market. However, even after release, customs authorities still have the right to inspect documents or goods. Inspections may be conducted at the premises of the person in charge of the goods, the person involved in the operation, or the person in charge of the documents.
Another important change, closely related to non-EU businesses, is the integration of inbound processing, customs-supervised processing, and goods destruction. Authorized administrators, after goods are imported, can decide the quantity of goods to be re-exported, processed, destroyed, or allowed to circulate freely.
Temporary storage remains a special regime, and the security deposit requirement continues. However, the storage period has been extended to 90 days. Goods may also be transferred from one temporary storage facility to another by the same person or other persons, provided that no transit procedures are involved. Furthermore, authorized managers must obtain recognized economic operator status before they can transfer goods to other Member States.
Simplifying customs legislation is expected to reduce costs for businesses, while establishing more comprehensive regulations will clarify legal provisions for businesses and the public. A modernized customs code will allow traders to fully benefit from the EU customs' use of the latest information and communication technologies, helping to promote trade and save costs, while improving the effectiveness of customs controls.
Sources: HKTDCEconomic and Trade Research (2013-09-27)
