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European Commission

[Check Against Delivery]

Algirdas Šemeta

Commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud

EU customs policy: achievements and way forward

Committee on the Internal Market and Consumer Protection (IMCO) - European Parliament

Brussels, 7 April 2014

Chairman Harbour, Honourable Members,

Thank you for the invitation to be here today, I very much welcome this opportunity to take stock of what we have achieved together.

At the start of the mandate in 2010, the world was in a bleak state. The EU, and the incoming college, faced quite a challenge. The agenda – indeed the joint agenda of the EU institutions- has been centred around the need to recover from the crisis and achieve a path of economic recovery. We are not totally out of the woods yet, but I dare say we've come a long way since then.

Speaking for myself, I am certainly proud of the achievements in my areas of responsibility. And I am very aware that many of these achievements were made possible by the involvement and strong support of the European Parliament.

Specifically, today, I am here to express my appreciation for the very constructive and fruitful cooperation with this Committee for Internal Market and Consumer Protection.

I would like to briefly review what I see as our main achievements in the areas I am responsible for: customs, anti-fraud, and taxation.

First, some remarks on our work in the area of customs. Indeed: efficient and smooth trade flows are critical to Europe's competitiveness. At the same time, we also need to keep effective control over our supply chains and target the risks. To ensure the safety and security of Europe and its consumers. And to protect the integrity of the EU's internal market against fraud, illicit trade and smuggling.

In this respect, we made great progress. Both in facilitating trade flows and in improving control. Thanks in great part to this Committee.

The Union Customs Code now provides a solid basis for implementing a modern, truly pan-European electronic customs environment. For this I would like to specifically thank Sylvana Rapti, Olle Schmidt and Heide Rühle. And, in particular, Constance Le Grip and yourself, Malcolm.

You all worked extremely constructively with the Council, and together found a way to reconcile safety and security with trade facilitation for reliable traders.

As highlighted in the Communication on the State of the Customs Union in 2012, completing the modernisation of customs legislation was the foremost step to a more performing, robust and unified customs union by 2020.

Adoption of the Code was a major milestone. One of which we can be proud. Of course work is still ahead for full implementation. But now, together with Member States, we have fixed the next milestones. The step-by-step approach promoted in the report by Matteo Salvini will be pursued. And many thanks to Raffaele Baldassarre for his efforts to ensure the adoption of the Customs 2020 programme. Now this key EU instrument to support the modernisation is in place.

Another priority set out in the 2012 Communication, the review of the Customs Union's current governance, is also under way. The current decentralised system of implementation and management in the customs union has some weaknesses. For example, in the uniform implementation of legislation. And in relation to the unnecessary and costly duplication of IT development.

In March this year, Directors General of the 28 customs authorities called for more equivalence of results in the implementation of customs legislation. They also underlined the need to raise the political profile of customs and the services that customs provide to EU society.

In the coming months, we will prepare a blueprint for the era beyond 2020. It will be presented before the end of my mandate. The next Commission and the next Parliament will have to set the level of ambition. I hope the level is set at least as high as it has been: keeping the EU customs union as a top performer by international comparison.

Speaking of our international partners, significant efforts have been put in promoting partnerships and cooperation with our neighbours and international partners. We have significantly reinforced customs cooperation with third countries to support and complement our domestic efforts. We have focused on trade facilitation, supply chain security and IPR enforcement with our main trading partners, including the US, China and Japan.

Our public-private partnership approach, as exemplified in our Authorised Economic Operator concept, now extends to several of our trading partners. Reliable EU traders can already enjoy the benefits of mutual recognition with trusted trader programmes of Japan, the US, Switzerland and Norway. I expect that we shall also achieve mutual recognition with China very soon.

Multilaterally, the finalisation of the WTO Agreement on Trade Facilitation in Bali was a significant victory. It signals a new era for customs worldwide. EU customs can and will lead the way.

In parallel with facilitating trade flows, we have also achieved major progress in terms of protection of the EU. I can say we are now providing better protection. In many ways: of citizens, of the internal market and of intellectual property rights.

Notably, customs play a crucial role in stopping fake goods from reaching the EU market. The effective enforcement of intellectual property rights has been a top priority for the Commission, certainly so for my customs portfolio.

I have seen the same commitment reflected in this house. I would like to thank Jürgen Creutzmann for his efforts in enacting a new Regulation on the customs enforcement of IPR. The Regulation has extended the scope of IP rights to be enforced. And it has clarified procedures. The small consignment procedure has facilitated enforcement in the most problematic area. That of booming internet sales. We have simplified the work of customs. We have ensured stronger protection for rights holders and of consumers.

The Regulation has also addressed the issue of access to medicines. I am confident this is now definitely settled. I am also happy to point out that the Regulation was not only proposed, negotiated and adopted during this legislature. It is already operational: as of 1st January, the Regulation is actually being applied. And the COPIS database which inter-connects all EU Member States is now fully operational.

With the adoption of the new Regulation on customs enforcement of IPR, the EU has also continued to set the gold standard at international level on IPR protection by customs. I know that our American and Chinese friends are seeking inspiration in our Regulation.

In earlier interventions in this Committee, I have made reference to the Commission's initiatives on product safety. We have been very busy working in this area, including with other authorities and with Trade. We are now implementing the multi-annual action plan for the surveillance of products. This will improve the efficiency of our border controls. The Commission is encouraging all Member States to implement the dedicated Guidelines. We will map out the differences in border controls. Soon we will have a common approach to managing risks at the border.

I am happy to see that this Committee, in particular Christel Schaldemose and Jürgen Creutzman, have supported the Commission's expert working group on import controls and compliance. Your show of support has been much appreciated.

More generally, during the last 4 years, systematic electronic risk management has been successfully implemented as the core of all EU customs activity. Implementing the Security Amendment, including the enormous IT projects involved, was a long process. But we succeeded. And we have already generated next steps from the lessons learned from the experience.

Improving the global identification of risks and risky goods at import into the EU will remain one of the priorities of the next Commission. Resources in national administrations are decreasing. So effective and efficient use of resources is more and more essential. In line with the priorities identified in the State of the Customs Union Communication, EU customs risk management has been comprehensively reviewed and assessed.

In January last year, the Communication on Risk Management and Supply Chain Security identified the existing gaps and weaknesses to be tackled. A strategy and action plan for improving and enhancing risk management will be established in the coming months.

Last but not least, on customs, a Directive on customs infringements and sanctions was proposed at the end of last year. The objective is to ensure effective and equivalent enforcement of the obligations of the Union Customs Code. This is a critical element of ensuring that the customs union has equivalent results and equal treatment of trade across the EU.

I would like to thank Constance Le Grip and Evelyne Gebhardt for their work on the draft Resolution and the support this committee has expressed for the proposal. I hope the legacy is effectively carried over. I hope the new Parliament is able to support this important initiative with the same determination.

On the subject of determination, I should also commend Antonio Correia de Campos for the very effective work on the report on our proposal to enhance European anti-fraud capacity by amending the Regulation 515/97 on mutual assistance. The clear support of IMCO is very much appreciated. I am happy to note that the report looks set for vote still before the end of this legislature.

While most of our joint work has been in the area of customs, the second subject we have had a common interest in, albeit to a lesser extent, is taxation. Notably in the context of completing the digital Single Market. I would like to say a few words on this. In particular about the taxation of e-commerce. And the state of play for ongoing initiatives.

On 1 January 2015, new VAT rules will ensure the taxation of economically significant "business to consumers" supplies of electronic services, at the place of consumption. We are working together with national authorities and traders on a One-Stop-Shop which will allow a trader to register and manage VAT in one Member State for sales to other Member States. This will represent a significant simplification for business.

I have taken note of Pablo Arias Echeverría's report on the Digital Single Market. Among other things it calls for extending the scope of this One-Stop-Shop. I completely agree with you. Current VAT legislation is a clear obstacle to cross border trade. Especially for SME’s who are discouraged from doing business in other Member States.

A broader One-Stop-Shop would facilitate access to the Single Market. In particular for businesses developing distance selling of goods via internet. My services have started the necessary preparatory work, including an impact assessment. This could assist the next Commission in deciding on the next step forward.

In the next years, the Commission will also need to address the challenge of finding solutions for the taxation of the digital economy. Most notable is the question of how to tax the digital economy. Specifically, in a way that ensures fair taxation without hampering the growth of this important sector. There are no easy answers or quick-fix solutions. The next Commission will have a good basis for reflection based on the report of the high level expert group on taxation of digital economy. It will be presented by summer 2014.

Ladies and Gentlemen, Honourable Members, Chairman,

I would like to stop here with my remarks and hear from you. Before taking your comments and questions, I would also like to say it has been an honour and a pleasure to work with you. I wish you all the best for your future, be it here in the Parliament or elsewhere.

I also want pay homage and extend my very special thanks to the man whose personal contribution draws no comparison. Malcolm: Your personal contribution to the work and particularly to the successes of this committee has been remarkable. Without any doubt, I believe that your excellent chairmanship and your personal dedication to finding solutions have made all the difference. Such exceptional leadership deserves special mention and special thanks. I am sorry to hear that you will not continue this work. You will leave some very big shoes to fill.

Thank you Malcolm, thank you ladies and gentlemen. I look forward to remarks and views from your side.

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