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EU Adopts Strategy and Action Plan to Improve Customs Risk Management

Friday, August 22, 2014
Sandler, Travis & Rosenberg Trade Report

The European Commission adopted Aug. 21 a new strategy to improve customs risk management and supply chain security along with an action plan of priority measures to be taken toward that goal. The Commission states that while the European Union common framework for customs risk management is firmly established, it needs to continue to adapt and develop to become more coherent, efficient and cost effective in identifying and supervising supply chain risks in a way that reflects continuing growth in the volume of global trade and the increasing complexity of the international supply chain. The main priorities in the new strategy include the following.

Data quality. The Commission states that the most fundamental underlying challenge concerns the need for high-quality data on supply chain movements and its proper availability and exploitation for risk management purposes by customs and other competent authorities. As a result, adjustments need to be made to certain legal, procedural and information technology systems to ensure that customs authorities have high-quality, timely information on goods entering and leaving the EU. These adjustments (e.g., to the IT systems that process entry summary declarations) should be implemented in a way that does not create undue costs for businesses or public authorities.

The EC commissioned a study that focused on three potential solutions for improving data quality, availability and use for risk management purposes relating to goods entering the EU: (1) a fully decentralized approach with all developments carried out at member state level and peer-to-peer communication; (2) a shared services approach with the creation of a common repository to support data availability to member states and a related platform to integrate and streamline the communication workflow between member states; and (3) a shared services approach with the addition of a common external interface for the submission of data by the trade independent of the member state competent to receive the data. The study supports the third option, but the Commission states that it will carefully consider the available options and practical implementation issues, including organizational and funding implications.

Efficient controls and risk mitigation. The EU will put in place methodologies and procedures so that risk-based controls are carried out at the most appropriate time and place in the supply chain, results are shared between customs authorities, and unnecessary or duplicate controls are avoided. For example, the risk of a bomb or infectious disease needs to be dealt with before the shipment is loaded for transportation in a third country, whereas financial misdemeanors can be addressed through post-clearance audits. Authorized economic operator programs and trusted trader concepts are of particular importance in facilitating and accelerating the movement and customs clearance of trade between identifiably secure traders posing a lower risk.

Information sharing. To ensure that customs authorities can effectively analyze and mitigate risks, mechanisms should be put in place to improve the availability of data and the sharing of risk-relevant information among customs authorities throughout the entire control process.

Interagency cooperation. Customs authorities should work closely with other law enforcement authorities. Common risk criteria and improved information sharing would allow the various authorities tackling supply chain risk to support and complement each other's work. Efforts will be made to promote and gain broader recognition of the AEO program by non-customs authorities and regulators.

While implementing this strategy and action plan the Commission will pursue complementarity and coherence with ongoing, related initiatives in areas including customs, internal security, air cargo security, maritime security, export control policy, logistics, food and product safety, environmental protection and intellectual property rights.

Cooperation with traders. Partnerships with legitimate economic operators, supply chain actors and logistics providers will be pursued to (1) improve knowledge and visibility of international supply chains, in particular in the framework of the e-Freight initiative; (2) detect new trends of illicit trade crossing EU borders and supply chain threats; (3) promote the re-use of customs data submitted electronically by economic operators to streamline customs procedures and thus reduce costs and improve efficiency; and (4) promote and strengthen the AEO program and further facilitate legitimate trade.

Capacity building. To ensure that all customs authorities implement risk management to a high standard across the EU, divergences between member states should be identified and addressed. EU-level support could be given to help address weaknesses, including possible further capacities at EU and member state level where needed, and cooperation between national customs authorities should be further enhanced.

International customs cooperation. The EU should remain active in helping to set global standards in international fora, should work to implement and promote these standards among international trading partners, and should continue to pursue recognition of its AEO program by international trading partners as well as mutual recognition of trusted trader programs and controls.

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