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EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud
"Priorities and Challenges of an Evolving Customs Union"
Conference "European Customs in a Changing World"
Brussels, 14 September 2010
Good morning, ladies and gentlemen,
Let me start by warmly thanking AMCHAM EU for organising this conference and for offering me the opportunity of sharing some thoughts about European Customs in a Changing World with this distinguished group of customs and business experts present here today.
Considering the in-depth panels with experts that will follow, I will limit myself to some general framing remarks about the changing context and about the ongoing and future customs reform contributing to the competitiveness of EU businesses and the wellbeing of EU citizens. I will also comment briefly on what lies beyond the present in the context of the longer term future of EU customs.
Indeed, the large majority of our efforts today are engaged in the implementation of legislation adopted some years ago. Let me be clear: Delivery of modernisation and electronic customs is no small project. When the project was started in 2005, the context and outlook for the future were very different - the challenge, which was big to start with, is today massive. Especially, as the Member States and the Traders are still engaged in the implementation of the Security Amendment.
We are working very hard to deliver, and need the strong commitment and support of trade to ensure successful implementation by 2013. When we have completed this ambitious modernisation project, I truly believe we will see both better safety and security, and increased facilitation of legitimate trade. Considering the importance of customs-to-business dialogue in this project, I am happy to see that the state of play on the implementation project will be taken up in a panel later this morning.
At the same time, we must not forget to keep a watchful eye on the longer terms horizons. I think it is safe to say that it will be a changing world in the future as well.
So, to pick up on that theme of change, what is the scope of this ‘change’ that we refer to? What is changing?
In a nutshell, one could say that the entire paradigm of customs in the EU has changed in the last two decades or so. Apart from the obvious global phenomena of globalisation and growth of global trade (which I will not go into), there have been both evolutionary and revolutionary changes in the environment and expectations for EU customs.
If you consider the starting point as the traditional role of customs of collection of duties and taxes, a role dating back hundreds of years and still relevant today, and the implementation of trade policy measures, the latest major evolutionary processes affecting the customs union can be traced to the early 1990s; the creation of the internal market and the series of EU enlargements.
Since the removal of internal borders and the emphasised importance of the external border, supporting the completion of the internal market, facilitating trade and business and enhancing the competitiveness of the EU have become the heart of EU customs policy. In short, this evolutionary process of integration is the push for the current modernisation project and the e-Customs vision.
The evolution of the customs union, in addition to the removal of internal borders, has included geographical growth from 12 to 27 Member States, and produced an entirely new external border in the East – all this in only 15 years. Furthermore, the customs union became a proper member of the World Trade Organisation in 1995, implying the rights and, in particular, obligations of acting as one. In short, these internal and external pressures push and pull us to working seamlessly as one with 27 administrations and the Commission.
While these evolutionary processes, challenging in themselves, can be considered logical phases in the context of the EU integration process, the revolutionary events have been at least as significant.
To mention just a few of the most important revolutionary events of the last years, I refer first to the unfortunate events of 9/11 that gave a significant shove to the customs security agenda. The heightened global attention to security of supply chains concretised the role of customs in national security. In the EU the concrete application of this role, globally articulated in the WCO SAFE Framework of Standards, took the form of the Security Amendment of the Customs Code, which is now being implemented. In short, this shift in global priorities has underlined the security and safety agenda of EU customs. Note that it has certainly not displaced the trade facilitation/competitiveness agenda but rather joined it at the heart of policy concerns.
I also refer to the more recent economic crisis as another kind of fundamental and ‘revolutionary’ change that will affect us for years to come. It may be too early to assess the full impact of the crisis, including for EU customs, but some aspects of the effects are already painfully clear.
From the customs perspective, the crisis has added to the pressure on already limited resources. To illustrate: Customs currently deal with more than 200 million declarations a year, which translates to more than 6 declarations per second. Disregarding the downturn of 2008/2009, this figure has been rising steadily over the past 40 years! On the other hand, this ever-increasing activity level is handled by an ever-decreasing work force. Today there are around 122,000 customs officers; compared with 5 years ago this figure is estimated to have gone down by some 10 per cent. Customs has been expected to deliver productivity gains for many years, but due to the crisis, the pressure has multiplied overnight - and at a time when we should be implementing fundamental reform and massive IT systems. In short, the challenging task in the area of customs policy is to do ‘increasingly more for increasingly less’.
In summary, all these changes - evolutionary and revolutionary – imply that the EU customs union, as implemented by the 27 administrations plus the Commission, will need to serve a larger group of stakeholders. Customs will need to serve them better; they need to serve them faster; and they need to serve them more efficiently, using fewer resources than before.
Let me switch viewpoint for a moment to that of the stakeholders, and to the mechanisms by which EU customs policy can support them.
To say that the global business environment, which you represent here today, has become much more challenging than before is probably an understatement. For customs this means that:
Equally, although I will not go into this in detail, citizens and consumers need to be protected. Society in general is faced with the risks of an increasingly global market environment and the growing international threats of organised crime and terrorism.
There may be short term trade-offs between better security and facilitation of trade, but in the longer term I believe that we can develop mechanisms to serve both objectives, hopefully so that they are mutually reinforcing. Developing proper, multi-layered risk management is the prime example, which we are pursuing actively.
On this point, I had an interesting discussion with the IMCO Committee of the European Parliament yesterday. The topic was the US legislation on a 100% scanning requirement, or rather what we can propose as more effective and less costly alternatives to such legislation.
Security and safety concerns are best addressed in close cooperation with likeminded parties. We want to ensure that no consignment goes unchecked, and if resources are combined and coordinated we can do this at lower cost. Looking carefully at exports in relations with our main trading partners will enable us to target risks at earlier stages in the supply chain. For instance, we have appealed to our Chinese counterparts to strengthen efforts to detect potentially counterfeit goods before they leave China. Similarly, IPR-related control at export is a key EU interest in the ongoing negotiations of an Anti-Counterfeiting Trade Agreement (ACTA). The message I received from the IMCO committee was strong support for our efforts in finding a common approach with the main trading partners, targeting real risks while avoiding excessive burdens and delays the supply chain.
Coming now to my last point, on the longer term future that I alluded to at the start: EU customs are a service provider for the governments whose policies they implement. They will continue to be tasked with implementing rules, regulations, and formalities, including security requirements, but most likely with fewer resources.
Better use of IT by the 27 administrations and the Commission will help. But IT is not enough. We need to improve working methods, and innovate new working methods.
It may be difficult, but it is not an impossible task. In a customs union implemented by 27 administrations there must be redundancies, duplication and things done in inefficient ways. Going towards 2020, and already for 2013 if possible, we need to seek them out - economies of scale, rationalisation of activities, benchmarking and wider implementation of best practices, as well as increasing the scope of things we do together.
Indeed, the world is changing. If we wait until 2020 or even 2013 to address these questions, it will be too late and the future will already be the present.
We need to continue to innovate: What will be the next steps of further facilitation of trade when the on-going modernisation is completed? What kind of business models and supply chains do customs need to control and support?
We need to understand future risks: What will be the new risks and threats of supply chains in 2020? How will we protect the EU and its citizens against the new threats?
We need to consider how we could make better use of IT and implement innovations in technology.
We also need to think about how to prepare our organisations and human resources for the changing future. What skills and operating models will be needed to implement the tasks of the customs union?
These are the main challenges being addressed under the Future Customs Initiative. I count on you and other stakeholders for support and dialogue in dealing with these longer term challenges, as well.
Right now, in the immediate future, the full and timely implementation of the modernisation project, which is subject to the second panel today, must be our joint priority. It will not be easy and it will not be painless. But with mutual dedication to the goals, we will succeed and we will share the benefits.
On the longer term projects, we need your help in projecting what the future will look like. We need your expertise in global trade, in business needs, in supply chain developments. It is clear that no-one can know supply chains like the businesses that run them. So in designing the future I will ask your active contribution: We need your input.
Ladies and gentlemen, I shall conclude here by encouraging an open and active discussion and exchange of ideas in this forum today. I thank you for the opportunity to share these thoughts with you, and wish you a successful conference.