The European Commission should enhance uniform application of customs controls and establish a fully-fledged analysis and coordination capacity at EU level, according to a new report published on Tuesday by the European Court of Auditors (ECA). [ Ссылка ] The Customs Union, which celebrated its 50th anniversary in 2018, is important for EU trade, and customs duties on imports are a significant source of EU revenue. In 2019, the EU member states collected €21.4 billion of customs duties to the EU budget, representing 13 % of the total EU budget revenue.
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However, despite a recently adopted customs financial risk framework, the member states are carrying out custom controls inconsistently which affects custom revenues negatively and is vulnerable to corruption.
“To prevent fraudulent importers from avoiding customs duties by targeting border entry points with lesser customs controls, the control selection procedures must be applied in a uniform manner throughout the Customs Union,” said Jan Gregor, the ECA member responsible for the report.
“Currently, EU customs controls are not well harmonised, which hampers the EU’s financial interests.”
The main objective of the audit, which was carried out before the outbreak of the coronavirus pandemic, was to analyse whether the implementation of the new control framework ensured uniform application to safeguard EU financial interests. At a press briefing yesterday (30 March), Jan Gregor deplored that the audit scope did not include the quality of the controls and their results.
In fact, in a previous audit in 2017, ECA recommended that the Commission, together with the member states, should estimate the customs gap, but no such estimation has ever been carried out.
Asked by The Brussels Times about the loss in customs duties, ECA replied that it is a complex exercise to calculate the gap but that it is not neglible. Any gap in customs duties’ collection must be compensated by higher Gross National Income (GNI) contributions from member states and is ultimately borne by European taxpayers.
Risk to EU’s financial interests
The auditors visited the customs authorities of five member states and sent a questionnaire to the authorities of all member states to collect information on their perceptions regarding the current level of customs control harmonisation.
All 27 member states replied to the questionnaire and a majority of them, misleadingly at it appears, replied that they consider themselves to be in compliance with the new rules. The auditors explained that it could be either because of insufficient ambition on part of the Commission or reluctance by the member states to implement the new rules fully.
What is clear is that administrative capacity varies by member state. In for example Belgium, customs officers were reported to be going on strike in the coming days if the federal government does not commit to improving their working conditions. Member states generally try comply with the rules but they also apply different control approaches, according to the audit.
Contrary to other audit reports, ECA did not disclose in this report what countries were visited and the findings are not related to countries by their names. According to ECA, a disclosure would threaten the financial interests of the EU since operators could use the information to target countries with weak custom controls.
Overriding custom controls
The control standards were adopted in 2018 and should have been implemented by now. In practice, they have not significantly changed the way how member states select imports for control. Surprisingly, the concept of risk was not well defined by national customs administration or largely absent, giving the member states too much leeway in reducing controls.
As a result, the proportion of import declarations subject to controls varied significantly between EU countries, ranging from less than 1 % to over 60 %. Furthermore, the auditors observed that member states had different rules for overriding controls selected by the risk management system. As a result, the rate of overrides ranged from 2 % to 60 %.
The auditors write that the lack of rules or conditions for overriding recommendations gives member states complete discretion as to whether to apply the controls recommended.
Member states also diverge on the procedure to justify the override: in some of them override is only possible when some predetermined characteristics are met, while others provide justifications on a case-by-case basis. In most cases, no hierarchical approval is mandatory.
The auditors did not look at corruption and did not identify any cases but agreed that overriding controls could be a corruption risk and should not happen in a well-functioning control system.
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