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Customs Union: The world’s largest trading block turns 50

MD Staff

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The Customs Union is unique in the world. It is a foundation of the European Union and essential for the proper functioning of the Single Market.The Customs Union is a single trading area where all goods circulate freely, whether they’re made in the EU or imported from beyond its borders. This means that there are no customs duties at the borders between EU countries. Duty on goods from outside the EU is generally paid when they first enter the EU. From then on, there’s nothing more to pay and no more checks. National customs services in all EU countries work together as one to manage the day-to-day operations of the Customs Union. Member countries share one single system for handling the import, export and transit of goods.

The Customs Union comprises the 28 Member States of the EU, Monaco and British territories. Over 114,000 customs officers work around the clock at airports, border crossings, ports, inland customs offices or customs laboratories. The EU’s customs administrations need to work closely to facilitate trade and protect the health and safety of all EU citizens.

How does the EU’s Custom Union help to protect and keep us safe?

The aim of the Customs Union is to protect society at large while making sure that legitimate trade can flow easily. The Customs Union defends against international trafficking and smuggling, protects consumers against illegal and dangerous goods, and preserves the environment and European cultural heritage as well as the financial interests of the EU and the Member States. In the EU, there are 90 state-of-the-art customs laboratories to carry out this job. Some labs specialise in certain types of analysis – for example, toy safety. When human senses are not enough to detect certain types of illegal goods, customs officers partner up with sniffer dogs which specialise in detecting illegal drugs, suspicious food, explosives or even large amounts of cash. 

HOW THE CUSTOMS UNION PROTECTS  

 DRUGS AND CIGARETTES  
  • In 2016, EU customs seized almost 4.6 billion illegal cigarette and 298.9 tonnes of drugs in the EU.
  • In Spain, for instance, law enforcement dismantled an organisation producing contraband tobacco products. In three of these operations, 15 persons were detained and more than 275 tonnes of tobacco products, valued at more than €20 million, were seized. Two types of machines were confiscated: for the manufacturing of the tobacco products and for drying the tobacco. Additionally, numerous sacks containing chemical substances used to fabricate the final product were also seized.
  • In Poland, a tobacco sniffer-dog discovered 10.5 million cigarettes inside a sea-container at the container terminal of the Gdynia sea-port.
  • On the west coast of France, 19 tonnes of cannabis resin were seized in a sailing ship. Three tonnes of cocaine were found in a maritime container. In addition, 120 000 doses of diazepam were seized.
  • In Spain, a customs boat supported by a customs helicopter intercepted a sailing ship loaded with almost nine tonnes of hashish.
  • In Belgium, customs seized 2 275 kilos of drugs which were smuggled through passenger traffic (by air) and 476kg by express consignments.
 
WEAPONS  
  • Some 6,256 firearms were seized in the EU in 2016, along with more than 1 million pieces of ammunition and 1 520 pieces of explosives.
  • Customs officials in Belgium were able to stop 126 pieces of weapons/ ammunition/ explosives from entering the EU. These weapons were being smuggled into the EU through air traffic or post.
  • In Spain, 737 assault rifles and 72 grenade launchers, including chargers and instruction books were seized.
 
FAKE AND DANGEROUS GOODS  
  • EU customs intercepted products suspected of violating intellectual property rights on more than 63 000 occasions. In 2016, more than 41 million articles were detained with an estimated value of nearly €672 million.
  • Estonian customs seized almost 34,000 pieces of fake “Diesel” jeans in Muuga Port.
  • Greek customs seized more than 1.3 million batteries, 537,000 packs of cigarettes and 24,300 wallets.
  • There were almost 14 000 cases of goods presenting a risk for consumers in terms of health (sanitary, phyto-sanitary and veterinary technical standards). More than 37 million items were identified as unsafe or uncompliant in terms of product safety.
 
GOODS VIOLATING ENVIRONMENTAL RULES  
  • 3,500 infringements of regulations for endangered species (CITES) were detected. In 96 cases, exports were detected which did not respect the rules on exports of cultural goods.
  • Estonian customs seized almost 66,000 tubes of face cream which contained caviar.
  • In France, 110,000 cosmetic products with caviar and protected plants were seized, as well as 46 square meters of alligator skin and 20 tonnes of wood from the exotic “Dalbergia retusa” species.
  • In the United Kingdom, 300 map turtles (Graptemys spp), 5 live giant salamanders, 6 kg of caviar, 300 leather items made from python skin, 760 kg of traditional medicines containing protected plant species and 18 kg of ivory tusks were seized.
UNDECLARED CASH
  • Travelers entering or leaving the EU are obliged to declare amounts of cash valued at €10,000 or more (or its equivalent in other currencies or bearer negotiable instruments) to customs authorities. In 2016, there were 571 significant cases, where seizures of undeclared cash amounted to more than €50,000.
  • Each year, more than 100,000 cash declarations are submitted to customs, amounting to more than €62 billion. Each year, more than 10,000 cases of undeclared cash or incorrectly completed cash declarations are recorded
  • As part of the EU’s Action Plan against Terrorism financing, recently-agreed new rules will extend the rules to cover cash sent in postal parcels or freight shipments, to prepaid cards and to precious commodities.

How does the EU’s Custom Union help to facilitate trade?

The EU is one of the largest trading blocks in the world. In 2015, the EU accounted for almost 15% of world trade in goods, worth €3.5 trillion. Managing this volume of international trade requires handling millions of customs declarations per year in a fast and efficient manner. The Union Customs Code removed the need for hundreds of different customs forms and now allows the use of electronic transport manifests for customs purposes and the moving of goods under temporary storage without lodging a transit declaration. It also introduced centralised clearance, and is more straight-forward for businesses, providing uniform and harmonised rules on guarantees. Finally, it also reduces the administrative burden on compliant and trustworthy economic operators (AEOs) by allowing a number of simplifications of customs procedures, and of the use of guarantees, and by allowing self-assessment of customs debts under certain conditions.

What has the Commission proposed to support customs operations as part of the new EU budget?

As part of the plans for the next EU budget, the Commission has now proposed a continued financial commitment of €950 million for the EU’s customs programme, representing just 0.07% of the entire budget. The programme supports the essential cooperation between customs authorities across the EU and protects the financial and economic interests of the European Union and its Member States. It has helped to build a modern and innovative Customs Union that ensures the safety and security of all EU citizens, while at the same time facilitating growing global trade. It allows the joint development and operation of major, pan-European IT systems and establishes networks, bringing together national officials from across Europe.

The new proposed Customs Programme [LINK] will build on this success, helping customs administrations to deal with increasing trade flows and emerging trends and technologies, such as e-commerce and blockchain. It will also support customs authorities through enhanced cooperation on the ground and more training. The programme will help to provide better risk management to protect the EU’s financial interests and to respond to security threats and cross-border crime. A new Customs equipment instrument worth €1.3 billion is also being created to allow the purchase, maintenance and replacement of innovative customs equipment by Member States.

CUSTOMS UNION – TIMELINE AND KEY STEPS 

1 July 1968 

 

All customs duties and restrictions lifted between the six member countries of the European Economic Community (EEC). A common customs tariff replaces national customs duties on products from the rest of the world. Trade between the countries multiplies and investment and economic growth increases.
1987  One Single Administrative Document replaces hundreds of national customs declaration forms. At the same time, the common transit system is created.
1992  EU adopts the Community Customs Code, creating a common rulebook for customs legislation. This milestone leads to much simpler guidance for traders and customs alike.
1993 

 

Free movement of goods become a reality: no more customs formalities at internal borders of the EU and no more long queues for lorries filled with goods to be checked at border crossings. For the first time, uniform customs legislation becomes directly applicable in all Member States of the EU.
1994  Launch of the integrated tariff of the European Union in digital format (TARIC) with daily transmissions to the EU Member States. It replaced the first TARIC database with weekly transmissions since 1987.
1996 EU-Turkey Customs Union enters into force.
2003  A new computerised transit system becomes operational. It is the first European customs system that uses electronic declaration and processing.
2004  10 new countries join the EU and the EU Customs Union, marking the largest expansion of the EU Customs Union in its history.
2005

 

 

EU launches the Customs Risk Management system that connects more than 800 customs offices and provides a digital platform to exchange information about risks and irregularities. New security legislation is introduced providing for advance cargo information, risk-based controls and measures aimed at end-to-end supply chain security, including through use of technology.
2008 

 

 

EU introduces the Authorised Economic Operator (AEO) status: an internationally-recognised quality mark indicating that a company’s role in the international supply chain is secure, and that customs controls and procedures are efficient and compliant. It is voluntary and enables simplified customs procedures and in some cases the right to ‘fast-track’ shipments through some customs and safety and security procedures.
2011  Customs becomes a major actor for increased security in the EU. Common risk criteria for security and safety start to apply to all goods crossing the EU borders, ensuring equal protection of all EU citizens and member states.
2016 

 

 

The Union Customs Code takes effect, further modernising and streamlining customs procedures throughout the EU. It also introduces a number of IT systems to support harmonised customs rules and to reduce the administrative burden for trade. Full implementation of IT systems is foreseen in steps, with the majority of systems being available by 31 December 2020, with further upgrades during the period up to 2025.
2018 The EU Customs Union celebrates 50 years of operation.
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Europe

Dayton Peace Accord 23 Years On: Ensured Peace and Stability in Former Yugoslavia

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For the past twenty-three years life has been comparatively peaceful in the breakaway republics of the former Yugoslavia. The complicated civil war that began in Yugoslavia in 1991 had numerous causes and began to break up along the ethnic lines. The touching stories and the aftermath effects of the breakaway republics of Bosnia- Herzegovina, Croatia and in Kosovo are still unfolding. Though the numbers of deaths in the Bosnia- Herzegovina conflict in former Yugoslavia are not known precisely, most sources agree that the estimates of deaths vary between 150,000 to 200,000 and displaced more than two million people. During the conflict a Srebrenica a North-eastern enclave of Bosnia once declared as a United  Nations  (UN ) safe area” saw one of the worst atrocity since second world war.

It has been estimated that more than 8,000 Muslim Bosniaks were massacred in Srebrenica and it was one of the most brutal ethnic cleansing operations of its kind in modern warfare. The US brokered peace talks revived the a peace process between the three warring factions in Bosnia- Herzegovina. For Peace in Bosnia and Herzegovina a United States (US ) -brokered peace deal reached in Dayton on 21st November 1995. In a historic reconciliation bid on 14 December 1995 , the Dayton Peace Accord was signed in Paris, France, between Franjo Tudjman president of the Republic of Croatia and Slobodan Milosevic president of the Federal Yugoslavia (Serbia and Montenegro), Alija Izetbegovic, president of the Republic of Bosnia-Herzegovina.

When conflict in Bosnia- Herzegovina, Croatia ended, the reconciliation began between ethnically divided region. The US played a crucial role in defining the direction of the Peace process. In 1996, North Atlantic Treaty Organization (NATO) -led 60,000 multinational peace enforcement force known as the Implementation Force (IFOR)) was deployed to help preserve the cease-fire and enforce the treaty provisions. Thereafter, the Court was established by Resolution 808 and later, Resolution 827 of the United Nations Security Council, which endorsed to proceed with setting up of the International Criminal Tribunal for the former Yugoslavia (ICTY) to try crimes against humanity . International Criminal Tribunal for the Former Yugoslavia (ICTY) was the first United Nations (UN) war crimes tribunal of its kind since the post-second world war Nuremberg tribunal.

In the late 1990’s, as the political crisis deepened a spiral of violence fuelled the Kosovo crisis between the Kosovo Liberation Army (KLA) and the Yugoslav forces. Unlike the Bosnia- Herzegovina, Kosovo was a province of Serbia, of former Yugoslavia that dates back to 1946, when Kosovo gained autonomy as a province within Serbia. It is estimated that more than 800,000. Kosovos were forced out of Kosovo in search of refuge and as many as 500,000 more were displaced within Kosovo.

Subsequent t hostilities in Kosovo the eleven week air campaign led by NATO (North Atlantic Treaty Organisation) against Yugoslavia in 1999 the Yugoslavian forces pulled troops out of Kosovo NATO. After the war was over, the United Nations Security Council, under the resolution 1244 (1999) approved to establish an international civil presence in Kosovo, known as the United Nations Interim Administration Mission in Kosovo (UNMIK). Nevertheless UNMIK regulation No 1999/24 provided that the Law in Force in Kosovo prior to March 22, 1989 would serve as the applicable law for the duration of the United Nations Interim Administration Mission in Kosovo (UNMIK).

In this  context reconciliation is a key to national healing of wounds after ending a violent conflict. Healing the wounds of the past and redressing past wrongs is a process through which a society moves from a divided past to a shared future. Over the years in Serbia, Bosnia- Herzegovina, Croatia and in Kosovo the successful peace building processes had happened. The success of the peace building process was possible because of participation of those concerned, and since appropriate strategies to effectively approach was applied with all relevant actors. The strengthening of institutions for the benefit of all citizens has many important benefits for the peace and stability of former Yugoslavia. Hence, the future looks bright for the Balkan states of Serbia, Bosnia- Herzegovina, Croatia and Kosovo.

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Hungarian Interest, Ukraine and European Values

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Diplomatic conflicts that have recently arisen between Hungary and its neighboring countries and the European Union as a whole most clearly show the new trend in European politics. This trend is committing to national and  state values of a specific  European country, doubting  the priority of supranational  interests within the European Union. Political analyst Timofey Bordachev believes that “the era of stale politics and the same stale politicians, who make backstage decisions based on the“ lowest common denominator,” are finally coming to an end. Politicians with a new vision of the world order come to power, such as Hungarian Prime Minister Viktor Orban, Austrian Federal Chancellor Sebastian Kurtz, or the new head of the Italian Interior Ministry, leader of the right-wing League of the North Party, Matteo Salvini ”.

It is not the first year that Hungary is trying to protect the interests of its citizens and the state from external influence, to protect the Hungarians in the territory of neighbouring states  by establishing for this  a special position (Commissioner  for the development of the Transcarpathian region of Ukraine), to determine relations with other countries on the basis of their attitude to the rights of Hungarians. This is how conflicts with the European Union arose, after Hungary refused to let migrants into the country, in the same manner, a conflict  arose with Ukraine, which is trying to build a state ideology, based on nationalism, which a priori does not provide for the proper level of realization and protection of the rights of non-titular nations.

In relation to Hungary, Ukraine follows the same policy as in relation to Russia – to initiate various accusations, to call for punishment, to talk about the inconsistency with European values of the Hungarian policy under the leadership of  Orban. Doing so Kiev has its multifaceted interest: cooperation with NATO and the EU, support  for any decisions of Brussels, the anti-Russian course, domestic policy based on the nationalist  ideology. And in all these areas  Hungary poses  a problem for Ukraine. In the description of relations with Hungary  Kiev even  uses the word “annexation“.

Hungary is hardly planning to seize any Ukrainian territory, but on what  grounds Ukraine falsely accuses Hungary of its annexation intentions in relation to Transcarpathia?  The Ukrainian side highlights several positions:

Issuing Hungarian passports  to Ukrainian citizens (ethnic Hungerians)

This  is an old story, it has come to light again recently due to the growth of Ukrainian nationalism. Moreover,  there are concerns about the implementation by Hungary of the “Crimean scenario” in relation to Transcarpathia.

The Hungarian government has created the position of  “Commissioner  for the development of Ukraine’s Transcarpathian region and the program for the development of kindergartens in the Carpathian region”.

Ukraine demanded an explanation. A note of protest was delivered to the Hungarian Charge d’Affaires in Ukraine, and the Foreign ministers of Ukraine and Hungary had a telephone conversation on the problem. Hungary continues to ignore the requirements of Kiev.

Ukraine fears further disintegration processes

At the same time, in Kiev there is no understanding  of the fact that combining the ideology of nationalism with the country’s national diversity and European integration is hardly possible.

Ukrainian experts note the growth of separatism in the Transcarpathian region, as well as the “strange behavior” of the governor, who plays on the side of Hungary. They also complain that “pro-Ukrainian ideology”(?) is not being сonsolidated in Transcarpathia, and this region is not controlled and monitored by  the Ministry of information. In a word, the state is losing control over the territory, which it neither develops nor controls. Such behavior of the governor and the region’s residents may indicate that the state is not sufficiently present in the lives of residents of Transcarpathia, and this a financial and humanitarian drawback they compensate with the help of Hungary, – experts believe.

Apparently, Ukraine is unable to reach an agreement with Hungary as relations are tense. In response to the Ukrainian law on education, adopted in the fall of 2017, which infringes the rights of national minorities, Budapest blocked another, the third, Ukraine-NATO meeting. Ukraine witnessed this embarrassing  situation  in April 2018.  At the same time elections were held in Hungary, in  which Viktor Orban’s party won a majority in the parliament. Such a tough stance of Budapest in relation to the Ukrainian educational policy Kiev considered to be just a sign of electoral populism. However, this was a mistake.

Viktor Orban’s victory in spring 2018 was convincing, and a convincing victory means obvious support of his migration policies as well as his support  for compatriots abroad. The party of Orban – Fides – not only won a majority but a constitutional majority – 133 of the 199 seats  in the National Assembly of Hungary.

There is no doubt  that Hungary has become Ukraine’s another serious opponent in the process of its European integration. And it is unlikely that either  country  will take a step back: there will be presidential elections in Ukraine soon, and in Hungary, the victory won by Orban, apparently, confirms the  approval of his independent  foreign  policy  by  the citizens.  So the conflict is likely to develop.

First published in our partner International Affairs

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Belt and Road Alternatives: The European Strategy

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The European Union (EU) has put forward a plan for enhancing connectivity within Asia, which has been dubbed as the Asia Connectivity Strategy.

The EU does not want to give an impression, that the Asia Connectivity Strategy (ACS) is a counter to the Belt and Road Initiative (BRI). Yet, senior officials of the EU, while commenting on the broad aims and objectives of the project, have categorically stated, that the primary goal of the Asia Connectivity Strategy, is enhancing connectivity (physical and digital) while also ensuring, that local communities benefit from such a project, and environmental and social norms are not flouted (this is a clear allusion to the shortcomings of the BRI). There are no clear details with regard to the budget, and other modalities of the project (EU member countries are likely to give a go ahead for this project, before the Asia-Europe Meeting in October 2018). EU has categorically stated, that it would like to ensure that the ACS is economically sustainable.

Other alternatives to BRI 

It is not just the EU, but even the US, along with Japan and Australia. which are trying to create an alternative vision to the BRI.

The US alternative to the BRI, is being funded by the recently created United States International Development Finance Corporation (USDFC) (an organization which will merge Overseas Private Investment Corporation and other Development Finance Programs) which came into being after the passing of the BUILD  (Better Utilization of Investments leading to Development) Act recently.

It would be pertinent to point out, that the US which has been accused of lacking a cohesive vision to counter China’s BRI has in recent months spoken, on more than one occasion, about greater the dire need for robust connectivity in the Indo-Pacific. In July 2018 US Secretary of State while speaking at the Indo-Pacific Business Forum committed an amount of $113 million for U.S. initiatives to support projects related to digital economy, energy, and infrastructure. The Secretary of State, while speaking about close links between US and Indo-Pacific, also spoke about the need for greater private sector involvement in projects in the Indo-Pacific. Pompeo off late, has also been reaching out pro-actively to a number of countries in South East Asia, and visited Malaysia, Indonesia in August 2018.

It would be pertinent to point out that OPIC  (now part of USFDC) has already signed with the overseas finance development arms of Japan and Australia, and is in talks with India to work jointly. Some of the areas being explored for joint investments are energy, infrastructure.

It is not just the US, even Japan has come with it’s own alternative, Partnership for Quality Infrastructure (PQI), to the BRI.

Potential Appeal of the Asia Connectivity Strategy

So the question then arises, why would countries seeking an alternative to China, not come on board the US’ connectivity initiative. The ‘Asia Connectivity Strategy’ may be especially acceptable to leaders, who do not want to be seen as blindly following US diktats, but who are also uncomfortable with Beijing’s economic policies, and want to avoid falling into what has been dubbed as Beijing’s ‘debt trap’ diplomacy. A perfect example being Malaysian Prime Minister, Mahathir Mohammad who scrapped projects worth 40 Billion USD, and also referred to the rise of a ‘new colonialism’ being promoted by China. The Malaysian PM has not shared a particularly cordial relationship with the US in the past. While addressing the United Nations General Assembly (unga), Mahathir made some interesting points, saying that Malaysians want a Malaysia, which seeks relations based on ‘mutual respect’ and a Malaysia, that is ‘neutral’ and ‘non aligned’

EU itself trying to strike a balance

EU Chief, Jean Claude Juncker, has been pitching for a more pro-active response to Trump’s insular policies, as well as China’s BRI. Given the fact, that EU has taken a divergent stand from US on the Iran issue, and has proposed a Special Purpose Vehicle (SPV) which will ensure that trade with Iran continues, even before the impending US sanctions to be imposed on Iran in November 2018. The SPV was announced, jointly with Russia and China, on the sidelines of the UNGA.

At the UNGA, French President, Emmanuel Macron disagreed with Trump’s views with regard to Iran, and supported the 2015 Vienna Accord. Said Macron: We know that Iran was on a nuclear military path but what stopped it? The 2015 Vienna accord.”

While it remains to be seen, if the SPV set up by EU works or not, but a number of countries which do not want to be part of the Chinese or American orbit would be attracted towards the EU, in spite of all the problems it is facing, due to it’s capacity to take an independent stand.

Asia Connectivity Strategy is not only about competition

It remains to be seen whether the Asia Connectivity Strategy can gain traction. In terms of connectivity, there may even be strong overlaps with the ‘Indo-Pacific vision’. France, which has strengthened strategic ties with Australia and India, is already seeking to play a pro-active role in the Indo-Pacific.

French President Emmanuel Macron had referred to the need for a strong Paris-Canberra-New Delhi axis, during his Australia visit, as a counter to China’s increasing assertiveness.

Interestingly, while there is a realization, that Asian Connectivity Strategy has a competitive element, and there are some clear differences between EU’s strategy and BRI, there are also some who believe, that there is space for collaboration between the Asia Connectivity Strategy and BRI. This point has been put forward by some policy makers and strategic commentators in EU, as well as sections of the Chinese media. Wang Wen Wen in an article for the Global Times, argues:

‘Asia needs Europe as much as it needs China. Since the EU and China are the two largest economic entities in Eurasia, it is vital that they steward the continent’s economic development agenda. Some programs in the BRI have carried out cooperation with the European side on technology and equipment procurement.’

In conclusion, the Asia Connectivity Strategy is an interesting idea. A lot will depend upon available resources and the response of potential stakeholders. But EU going ahead with such an initiative in spite of numerous problems within is truly laudable.

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