Explanatory Memorandum to COM(2006)866 - Amendment of Council Regulation (EC) No 515/97 on mutual assistance between the administrative authorities of the Member States and cooperation between the latter and the Commission to ensure the correct application of the law on customs and agricultural matters - Main contents
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| dossier | COM(2006)866 - Amendment of Council Regulation (EC) No 515/97 on mutual assistance between the administrative authorities of the Member ... |
|---|---|
| source | COM(2006)866  |
| date | 22-12-2006 |
The corollary of trade facilitation, which is an essential component of the commercial policy of an enlarged European Union for gaining access to new markets, is the emergence of international economic and financial crime undermining the financial interests of the European Communities and the prohibition, restriction and control measures imposed in the context of certain Community policies.
Fraud groups have been focusing much of their attention on transactions in breach of customs and agricultural regulations among the various forms of fraud and other illegal activities to the detriment of the Community’s financial interests, on account of the amounts concerned. Customs duties on imports, agricultural levies and VAT on imports, which are charged by Member States when customs formalities are completed, generate almost a quarter of the revenue in the Community budget. There is a great temptation for fraud organisations to evade controls or the payment of duties or to benefit from reduction or suspension of duties without being properly entitled.
On the expenditure side, fraud organisations are very interested in the Community budget for the payment of export refunds on agricultural products and processed products, which the customs authorities verify when customs export formalities are completed and the goods leave the Community customs territory.
And the concern to maximise profits leads such organisations to circumvent anti-dumping measures and bans or restrictions. Even where circumventing these measures has no direct impact on the Community budget, it can have detrimental consequences for the economy, employment and consumer health and therefore indirectly harm the Community budget (e.g. BSE crisis).
To gain a better picture of irregularities in these fields and to supplement the preventive aspect, linked to better organisation of customs controls, the European Community enacted Council Regulation (EC) No 515/97 of 13 March 1997 on mutual assistance between the administrative authorities of the Member States and cooperation between the latter and the Commission to ensure the correct application of the law on customs and agricultural matters.
This Regulation is the legal basis for requests for assistance between these authorities to combat irregularities and fraud against Community legislation having a financial impact on the Community budget or affecting the Community commercial policy.
It also is within the framework of this legal mechanism that a specific database was developed – the Customs Information System (CIS). This system, which came on stream on 24 March 2003, enables the relevant administrative authorities to alert their European partners to risks of irregular operations, by transmitting information for the purposes of sighting, reporting, discreet surveillance or specific controls.
Contents
- 2. MAIN PROVISIONS
- Subsidiarity
- Proportionality
- 3. CONTENT OF THE PROPOSAL
- 3.2. Automatic data exchange (Article 15)
- 3.3. Setting-up a platform of services in the customs sector
- 3.3.1. European data directory (Article 18a)
- 3.3.2. Coordination structure for operational cooperation (Article 18b)
- 3.4. Article 19 (third countries)
- 3.5. Article 20(2)(d)
- 3.6. Title V: Articles 23 to 37 (Updating of the provisions of the Regulation on the control of personal data under the Customs Information System)
- 3.7. Use of CIS data for analysis purposes (Article 27)
- 3.9. Title VI: Article 42 (Data protection)
- 3.10. Title VIa: Article 42a (Financing)
- 3.11. Title VII: Article 43 (Committee procedures)
Despite the good results obtained in the prevention of fraud against Community customs and agricultural legislation, there are many reasons for amending Regulation (EC) No 515/97.
The need for more operational cooperation
As enlargement has shifted and extended the European Union’s land and sea borders, with a dual trend for fraudulent activities to both intensify and diversify, the existing legal mechanism must be adapted, as otherwise fraud organisations are likely to take advantage of the situation. Given the transnational and versatile nature of economic and financial crime, the only approach that will make it possible to limit fraud as much as possible is to strengthen cooperation between the Member States and between them and the Commission, the accent being more strongly on the operational dimension. New needs for coordination and support at the European level have been identified by those actively involved in fraud prevention, and a solid and adequate legal basis should now be supplied.
Changes in the legal context and the institutional balance
When Regulation (EC) No 515/97 was adopted, there was no Treaty Article devoted specifically to Community customs cooperation. The Member States’ general duty to cooperate under Article 5 of the EC Treaty and the coordination of action by the Member States to protect the Community’s financial interests under Article 209A of that Treaty likewise did not give the Community the power to adopt measures in the area of Community customs cooperation.
Article 135 of the EC Treaty, relating to customs cooperation, and Article 280, relating to the protection of the Community’s financial interests, now confer powers on the Community in these matters. But these powers must be exercised in accordance with Article 5 of the Treaty, i.e. if and in so far as action taken at Community level offers clear advantages, by reason of its scale or effects, over action at Member State level. The proposal for a Regulation satisfies these criteria.
The new draft Regulation also aims to provide a legal basis for the Community customs files identification database (FIDE) and for other projects developed on the basis of needs expressed by the Member States and the European Commission, with a view to strengthening cooperation between administrative authorities responsible for the sound application of customs and agricultural legislation.
The draft must also take account of a number of institutional developments, in particular the strengthening of cooperation with European Union bodies and agencies and with international organisations.
The national administrations are not individually in a position to set up a Community technical infrastructure and ensure full and integrated European coordination of mutual administrative assistance in customs and agricultural matters. It is therefore necessary to create a platform of services to improve operational cooperation between them. Apart from Community missions in third countries, administrative investigations are actually carried out by the Member States alone.
The aim of the draft regulation remains unchanged. Like Regulation (EC) No 515/97, which it amends, the objective pursued by the draft regulation is the sound application of Community customs and agricultural legislation, where the Commission has well-defined powers of action, in the same way as the Member States’ customs and other authorities.
3.1. Alignment of the definition of customs legislation on the Naples II Convention (Article 2 i, 1st indent)
The definition of customs legislation in Regulation (EC) No 515/97 has been brought into line with the Convention drawn up on the basis of Article K.3 of the Treaty on European Union, on mutual assistance and cooperation between customs administrations (the “Naples II Convention”) so as make Community instruments more consistent with instruments under Title VI of the Union Treaty regarding prosecutions for offences against Community customs rules.
Without prejudice to Council Regulation (EC) No 1798/2003 of 7 October 2003 concerning administrative cooperation in the field of VAT,[1] customs legislation continues to apply on entry and exit of goods in Community customs territory even if they are exempt from customs duties or zero-rated. When applying Community prohibition, restriction and external border control measures, in particular for the detection of counterfeit alcohol and cigarettes or illicit dealings in dual-use assets or precursors, the customs authorities should be able to exchange information making it possible to check quickly with another Member State whether the company established in the latter Member State still exists or is in business, thanks to the VAT identifier. Moreover, the customs authorities, which are also responsible for formalities and/or the collection of VAT and/or excise duties when customs formalities are completed, should be able to prevent and detect fictitious exports of highly-taxed products to third countries by effective customs cooperation.
The central liaison offices and the liaison departments responsible for VAT-related administrative cooperation ensure effective cooperation with their counterparts in other Member States. But horizontal cooperation between these central liaison offices and liaison departments and the authorities responsible for applying Regulation (EC) No 515/97 is not possible for organisational reasons or because of the material or operational powers conferred in each Member State and for reasons related to the communications network and the absence of stand-by officers (nights and weekends). On the other hand, the customs authorities have a minimum of information concerning the existence and VAT status of an economic operator to satisfy urgent requests from the customs authorities of the other Member States.
The current spontaneous case-by-case exchange mechanism has been supplemented by an automatic and/or structured information exchange mechanism without a prior request from the receiving Member State. This mechanism is similar to that set up under Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax i and Council Regulation (EC) No 2073/2004 of 16 November 2004 on administrative cooperation in the field of excise duties i.
The computerisation of customs clearance procedures and the real-time satellite monitoring of means of transport generate an increasing dematerialisation of the information exchanged between customs authorities and/or economic operators. The result is a proliferation of databases managed by public or private service providers doing business in the field of logistics and the carriage of goods.
In fraud prevention, activities aiming specifically to detect consignments of goods that may be in breach of customs or agricultural legislation and/or means of transport, including containers, used for this purpose, service providers are generally open to the idea of giving the competent authorities access if they ask for it only on a limited basis and do not create additional workload. Consequently, the idea of giving the Commission (OLAF) a single general access to certain databases or sites is likely to reassure the service providers that they will not be receiving multiple repeated requests from the Member States. Consequently, the proper solution, in economic terms also, was felt to be to empower the Commission (OLAF) to negotiate with service providers for the pooling of data in a single directory accessible to the Member States or to channel access to sites managed by such providers.
The aim of this directory is to collect data commonly used in international trade for analysis purposes with a view to detecting, upstream of physical checks on goods, operations presenting risks of irregularity in relation to customs and agricultural legislation.
In this directory, the Commission should be empowered to transfer the contents of the databases in whole or in part, with the consent of the holders of rights in the information, free of charge or for a consideration, and in compliance with the applicable legal environment as regards intellectual property rights. The information thus extracted could be indexed and analysed.
The European directory would be made available to the Member States’ liaison officers assigned to the permanent coordination unit, and to the relevant authorities referred to in Article 1 i of Regulation (EC) No 515/97.
The establishment of the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union by Council Regulation (EC) No 2007/2004 of 26 October 2004 i, the extension of Europol’s mandate to the fight against serious forms of international crime (Council Decision of 6 December 2001) and the operational activities of certain international or regional organisations all call for closer cooperation between the Commission, the Member States and the other European Union bodies or agencies.
The aim of the new draft is to promote the idea of development by the Commission of an interface allowing better coordination of operational cooperation between the Member States and between them and the Commission and closer operational association with European, regional or international organisations and agencies within the limits of the powers conferred on each of the authorities concerned.
In its Resolution of 2 October 2003 on a strategy for customs cooperation, the Council of the European Union recognised that an integrated approach towards combating crime, including a contribution to the fight against terrorism, within an area of freedom, security and justice should include, besides customs cooperation, close and efficient multilateral cooperation between customs and other law enforcement authorities as well as other European Union bodies and agencies, for example OLAF, Europol and Eurojust.
In this context, the resources and developments established at Community level could be re-used for the purposes of customs cooperation under Title VI of the Treaty on European Union, without prejudice to the mandates of Europol and of Eurojust.
In these circumstances, a directly applicable legal instrument such as a regulation could provide a valuable impetus in the customs sector without necessarily conferring new powers on Commission staff. The new Article 18b of Regulation (EC) No 515/97 would enable Member States to involve Commission (OLAF) staff as experts and to use the Commission platform of services for cases started under Regulation (EC) No 515/97 for which a common joint team should be set up.
In the current situation, if a Member State receives information from another Member State and that information then has to be communicated to a third country under an agreement or protocol on mutual administrative assistance in customs matters, the receiving Member State must seek the agreement of the supplier Member State within the framework of a joint action even if the supplier Member State has already given its prior consent enabling the receiving Member State to use the information.
It is therefore proposed that the current procedure be supplemented by a measure to permit the Commission or a Member State to communicate to a third country information received from another Member State, provided the latter Member State gives its prior consent. In such a case, it would no longer be necessary to exchange consents within the framework of a joint action. That would apply only in the event of an exchange of information treated by more than two Member States.
The provisions of Article 20(2)(d), concerning the payment of the expenses of the Community missions carried out in the third countries, have been taken over with others in the new Article 42a (financing).
3.6. Title V: Articles 23 to 37 (Updating of the provisions of the Regulation on the control of personal data under the Customs Information System)
Implementation of Parliament and Council Directive 95/46/EC of 24 October 1995 by the Member States requires an amendment of the provisions of the Regulation on the national processing of personal data. The adoption of Parliament and Council Regulation No 45/2001 and the establishment of an independent supervisory authority, the European Data Protection Supervisor, likewise affects the Articles of Regulation (EC) No 515/97 relating to the processing of such data by Community institutions and bodies.
All the provisions of Regulation (EC) No 515/97 dealing with questions concerning the protection of personal data have been adapted to changes in the legal environment since it entered into force, in particular the data-protection rules applicable to the Community institutions under Article 286 of the Treaty and Parliament and Council Regulation (EC) No 45/2001 of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data i and the rules applicable to Member States on the basis of Parliament and Council Directive 95/46/EC of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data i.
In view of the current purposes of the customs information system, it cannot achieve all the objectives which were set for it by the Regulation, namely to assist prevention, detection and prosecution of operations in breach of customs and agricultural legislation. In the current mechanism, the information entered in the CIS only makes it possible to strengthen the effectiveness of controls. Consequently, only the fraud prevention objective is achieved. On the other hand, the objectives of assisting the detection and prosecution of operations in breach of customs and agricultural legislation require the development of new objectives and functionalities, and that alone requires an amendment of Regulation (EC) No 515/97.
Article 27 must accordingly be amended to make analysis, whether it be strategic or operational, a new purpose of the system.
To match the extended functionalities of the system, a new category of information available is created, relating to goods detained, seized or confiscated.
3.8. Title Va, Articles 41a to 41d – Creation of the Community Customs Files Identification Database
To optimise the effectiveness of the cooperation mechanisms, the administrative authorities of the Member States should have access to a file enabling them to better target the recipients of requests for administrative assistance. That is the objective of FIDE, which records references to past or current investigations in each Member State and enables any competent authority which so requests to find out which other authorities have conducted investigations on a similar subject.
The purpose of introducing the FIDE into the draft Regulation amending Regulation (EC) No 515/97 is to supplement a comparable intergovernmental initiative formalised in the Council Act of 8 May 2003 drawing up the Protocol amending the Convention on the use of information technology for customs purposes.
Without prejudice to the specific measures to protect individuals in relation to personal data processing in Title V (Articles 23 to 40) of Regulation (EC) No 515/97 as regards the use of CIS and FIDE, it is felt necessary to refer to Regulation (EC) No 45/2001 and Directive 95/46 concerning data exchange and processing, whether or not automatic, under Titles I to IV of Regulation (EC) No 515/97.
The second subparagraph of Article 23 i of Council Regulation (EC) No 515/97 of 13 March 1997 on mutual assistance between the administrative authorities of the Member States and cooperation between the latter and the Commission to ensure the correct application of the law on customs and agricultural matters, i as amended by Regulation (EC) No 807/2003 of 14 April 2003 adapting to Decision 1999/468/EC the provisions relating to committees which assist the Commission in the exercise of its implementing powers laid down in Council instruments adopted in accordance with the consultation procedure (unanimity) i, was regarded as being the basic act for the purposes of Article 49 i of the Financial Regulation as regards operating expenditure relating to the Anti-Fraud Information System (AFIS).
This act covers the financing of AFIS activities coming under both the first pillar (Regulation No 515/97) and the third pillar (Convention drawn up on the basis of Article K3 of the Treaty on European Union on the use of information technology for customs purposes (CIS Convention i)) when these activities are inseparable.
In this connection, there was a reference to the first subparagraph of Article 22 i of the CIS Convention and to the joint declaration of the Council and of the Commission of 13 July 1995 concerning Article 22 i of the Convention i and the list of inseparable IT expenses established by the Commission in document SEC(94) 813 of 6 May 1994 on the budgetary implications of the use of the technical infrastructure of the Community CIS under the Convention on the use of information technology for customs.
To clearly meet the requirements of the Financial Regulation, an article should be inserted determining that Regulation (EC) No 515/97 is a basic act for the implementation of operational expenditure defined in that article.
Article 43 devoted to committee procedures has been adapted in line with the proposed amendments to the previous Articles. Moreover, the European Ombudsman, designated by the Council in accordance with Article 286 of the Union Treaty to supervise the Community institutions and organisations as regards protection of individuals in relation to personal data processing pending the designation of an authority created expressly for the purpose, has now been replaced by the European Data Protection Supervisor since Regulation (EC) 45/2001 entered into force. Article 43 i is amended accordingly.