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Algirdas Šemeta

EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud

"Pooling our efforts to build a modern Customs Union"

78th meeting of the Directors General for Customs of the EU Member States and Turkey

Vilnius, 19 May 2011

Chairman, Directors General, Ladies and Gentlemen.

It is a particular pleasure for me to open this meeting of the Club of Directors General here today in my home country. In addition to leading a successful meeting, I trust that Director General ŠIPAVIČIUS will share with you the very best that Vilnius and Lithuania have to offer!

This is an annual event, with a long history and tradition. For more than a generation, its participants will have followed the development of the Customs Union, which has now reached the ripe old age of 43. It is a suitable age for reflection: Taking stock, drawing lessons from the past, and looking ahead. I am pleased to see from the agenda of this meeting that you will contribute to this reflection exercise.

Taking a look at the present policy context, everyone will agree that these are challenging times. The EU is gradually recovering from the economic crisis, and trade flows are returning to more normal levels. But we are left with severe fiscal constraints. On the one hand, the current situation makes the role of customs more important: We need to sustain the recovery by ensuring smooth trade flows, and at the same time effectively tackle fraud to protect budget revenue. On the other hand, the resources available for the required investments in IT, equipment, and training are extremely limited. The challenges are significant, but should not discourage us, as I am confident that progress can be made.

This morning, I would like to address three topics, which are high on my policy agenda. Firstly, our efforts to ensure smooth trade flows while effectively tackling fraud, specifically along the Eastern border of the EU. Secondly, let me pinpoint recent and upcoming initiatives for the protection of safety, security and financial interests of EU citizens and businesses. And finally, I will share with you my intentions for the overall legislative and budgetary tool box at our disposal.

Eastern Border Customs cooperation

With many of our Eastern neighbours, the regional economic integration process has been intensified within the framework of on-going or upcoming negotiations to deepen and extend cooperation.

Customs cooperation is an integral part of this process. It is nevertheless facing a number of challenges. In spite of numerous efforts by the partner countries, by the EU Member States and by the Commission, progress has not been as fast as hoped. One of the reasons is the lack of sufficient consistency and coordination of actions taken so far. For this reason, we have proposed a new strategy, recasting the basic framework for cooperation. Focus should be on three strategic priority areas of mutual interest, namely 'Safe and fluid trade lanes', 'Risk management and the fight against fraud', and 'Investing in customs modernisation'. As declared at the high level seminar organised by the presidency in Budapest a few weeks ago, there is wide agreement on this approach for the whole region. I find this very reassuring as it paves the way for quicker implementation and concrete results.

I am also encouraged that Poland stands ready to take the baton from Hungary. At a follow-up seminar in Kraków during the Polish presidency we will have an opportunity to discuss and agree on the implementation of this strategy.

As you know, we are finalising an EU Eastern Border Action Plan to tackle smuggling of tobacco in particular. This is a first attempt of a specific yet comprehensive, regional initiative to complement, enhance and streamline our efforts in the fight against such fraud. I am keen to gather all good ideas and get inspiration from a range of stakeholders, so please do not hold back in your discussions later today.

Risk management and air cargo security

Let me move on from the fight against fraud to the general issue of security and safety risks tackled by customs.

The implementation of safety and security risk analysis based on advance cargo information has been a challenge, but seems largely successful so far. This analysis should now enable EU customs to improve the detection of serious threats and to take action even before goods arrive in the EU.

Fortunately, no major incidents have been reported since the 1st of January, but following these few months of practice some important issues have emerged, which do need to be addressed in order to improve the system. Air cargo security in particular has been a hot issue following the Yemen incident last October. The incident clearly showed that no single authority can protect citizens, and no country or region can work in isolation.

Determining the EU response to these security threats is a task that stretches beyond my portfolio. But my services are ensuring that the contribution of customs to the protection of citizens by cooperating and sharing expertise and effective risk analysis of advance information plays a key part. By cooperating closely with the other authorities involved, with partner countries, international organisations and stakeholders, we should ensure common standards to avoid creating unnecessary burdens for businesses.

The unfortunate events in Fukushima have alerted us to additional risks related to radioprotection and tested our capacity to manage critical situations in a coordinated manner. A first step, developed in response to the avian flu some years ago, was to ensure the proper dissemination of risk related information. Experts have now been able to share information instantly and collect feedback information on actual controls carried out and their results. The mechanism has successfully demonstrated the capacity of EU customs to coordinate quickly with a view to enhance border protection against potentially dangerous cargo. At the same time, however, the Japanese misfortune has revealed a need to deepen our knowledge about radioactive contamination, and about the responsibilities of authorities at the border.

IPR, product safety

Businesses and consumers will receive good news in the customs field next week, as the Commission will propose a new regulation on the customs enforcement of their intellectual property rights. The objective is to strengthen the enforcement of IPR at the border, streamline procedures and address the concerns of legitimate traders. The proposal should also solve the dispute with India and Brazil over the issue of generic medicines transiting the EU territory. I hope that the Commission can count on your support to have this upcoming proposal adopted quickly, in order to curb the worrying trends that the annual statistics continue to reveal.

Consumers as well as legitimate businesses will have further good news with regard to product safety in the near future. Guidelines for border controls are being finalised with the support of national customs and market surveillance authorities. This is a first step to better equip customs to stop dangerous goods, and establish proper cooperation with other responsible authorities.

This multitude of risks – related to terrorism, radioactive contamination, fake, sub-standard and harmful goods – is a source of great concern for European consumers and businesses. And these risks have demonstrated that customs remains in the frontline at the EU external borders. They are expected to react quickly to prevent risky products or modes of transport from entering the EU territory. The Commission is sensitive to these high expectations. We are committed to supporting the Member States customs administrations in enforcing an increasing number of measures at the border to protect the EU.

We can draw potential strength and synergy from the fact that we are faced with the same challenges. Together we can be both more effective and more efficient. What we need is the appropriate tools to do so.

This brings me to my final points – our legislative and budgetary tool box.

Challenges for the next Customs Programme

The Commission will present a proposal later this year for a successor to the Customs 2013 programme. I would like to highlight a few thoughts for your further reflection already now.

Having a solid Customs Programme will be very much in our mutual interest. As I mentioned just now, many if not most of the challenges that it needs to address are shared challenges for the 28 administrations. The future programme should support our efforts in several ways.

Firstly, it should support and boost the effectiveness of Member State customs administrations in implementing policy and legislation. It should add value to your operational work: improve, modernise, digitalise. It should provide budgetary savings for Member State governments from economies of scale of doing things together, at EU level. Examples include shared databases, IT development, exchange of best practice, joint actions, trainings and methodologies, and so forth.

Secondly, the programme should enable the effective and uniform functioning of the European customs union. By this I mean provide the physical, IT and human networks, as well as the mechanisms and platforms for developing the necessary collaboration and trust between administrations to form and function as a union.

Customs 2013 and its predecessors have established a longstanding partnership between the Commission and Participating Countries. The impact of the programme largely outweighs the relatively small budget invested at European level.

However, given the current political and economic context, the next programme will require further steps both in substance and form. We will need to show how the future Customs Programme would deliver in terms of economies of scale and savings for national budgets. And we must consider how to ensure the availability of appropriate equipment and infrastructure in all Member States. This should also help in sharing the burden of protection of the external borders, which, for geographical and historical reasons, is heavier on some Member States than on others.

In the design of the future Customs programme we should look at more intense cooperation structures where they may be useful. We also need to think broadly about the cooperation between customs authorities in the EU, and increasingly about the cooperation with other authorities both within and outside the EU.

Intentions for MCC

Now, let me end my remarks on a "last but not least" item: the Modernised Customs Code.

As you must be aware, your representatives in the MCC Implementation Ad Hoc High Level Steering Group were recently informed about the various challenges in the implementation of the Modernised Customs Code. The Commission also explained what the available options to move forward are.

Today, I can confirm that, by the end of this year, I intend to submit to the College a proposal for the European Parliament and the Council to amend the Modernised Customs Code.

Such a proposal should serve three purposes:

First, it should postpone the date of application of the Code. This postponement should allow a phased, binding but realistic implementation of new, electronic-based processes. This would allow the main benefits expected from the modernisation to be implemented;

Second, it should align the Code with the provisions of the Lisbon Treaty. This alignment is needed in particular as regards the use of either delegated or implementing powers by the Commission.

And thirdly, we should use the occasion to correct some provisions of the Code. These corrections would involve elements which are either no longer in line with the changes introduced since 2008 to current EU legislation, or elements that have revealed too difficult or unworkable to be implemented.

It will not be a straightforward exercise, especially as we are bound by the deadline of 24 June 2013. Whether we succeed, will to a large extent depend on the emergence of a common understanding amongst the parties involved. We will need to develop a shared understanding of the objectives and scope of the initiative.

There is little sense in relaunching a debate on the purpose and principles of the modernisation of the customs legislation, repeating the discussions that took place between 2005 and 2008. It would also be a waste to undo the comprehensive work done to draft legislation matching the reality of our economic operators and our administrations.

Instead, I would recommend a limited and targeted intervention in the Code and sustained efforts to finalise the draft implementing legislation as quickly as possible. This way, jointly, the Commission, the European Parliament, the Council and national customs administrations can implement and conclude this chapter in the modernisation of the Customs Union.

Closing words

As Commissioner for Customs, Tax, Anti-Fraud and Audit, I have come to realise that the full commitment of Member States is a common precondition for success in any endeavour. The smooth functioning of the Customs Union, fruitful cooperation with our Eastern neighbors, the effective management of a wide range of risks and successfully fighting fraud; all the initiatives I have touched on today depend on mutual commitment and support. With a plea and a pledge, for continued commitment and support, I close my remarks. Ladies and gentlemen, I thank you for your attention.

I will now leave you in the capable hands of Director General ŠIPAVIČIUS to begin discussion of the business of the day. I also wish you a particularly enjoyable stay in Vilnius!

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