UCC – Extension of transitional periods

One of the main objectives of the Union Customs Code (UCC) applied since 1 May 2016 is to handle customs processes using new electronic systems wherever possible. Until these systems are created and put into operation by 2020 at the latest, the UCC provides for a transitional arrangement under which existing electronic systems and paper-based processes can continue to be used until the new systems are completed and put into operation. However, not all of the 17 planned electronic systems are expected to be completed by 2020, which is why the European Commission is proposing to amend the IPPC to allow the re-use of transitional measures by 2025 at the latest.

UCC prescribes electronic customs systems

The aim of modernisation is to move towards the full use of electronic systems for interaction between customs authorities and traders, between customs authorities themselves and paper minimisation. In order to implement this project, a work programme was established for the UCC to initiate and implement the planning of 17 electronic systems. The 17 electronic systems comprise 14 trans-European systems, some of which will have components developed by the Member States, and 3 national systems to be developed and updated by the Member States alone.

Existing transitional arrangement until 2020

Art. 278 of the Customs Code stipulates that the existing electronic and paper-based systems may continue to be used for customs clearance until new electronic systems are put into operation. However, according to this article, this transitional regime may only be applied until the end of 2020 at the latest. In order to implement this project in line with the deadline, step-by-step plans have been established for the completion of the relevant work on the systems.

Only 80% of the planned work is expected to be completed, but experience shows that the final development phase of IT systems is the longest, so that some of the planned systems will only be partially completed by 2020.

When the work programme was adopted, it was expected that direct adoption of the ICC and its implementing acts would ensure early processing and reorganisation of systems. However, the talks lasted longer and some legislative acts were not adopted until the end of 2015, beginning of 2016, delaying the start of work. In addition, the scale of the work and the complexity of some systems were underestimated to ensure EU-wide networking.

There were also unexpected difficulties in harmonising data, which is essential for the interoperability of systems in order to ensure uniform application of the law and cooperation with cross-border services. Harmonisation of data is equally important for linking to third country IT systems for trade facilitation.

A major and evolving challenge is also the sequencing of the individual systems, as the order in which individual systems are adopted is inherent to their impact on the customs and trade ecosystem. In order to comply with interdependencies, the planning of sequencing is of great importance, which is why delays occurred here too.

For these reasons, it was necessary to allow a later deadline (until 2025) for some of the 17 systems to ensure a complication-free and structured introduction of the completed systems and a complete completion of the remaining systems.

Transitional arrangements to be amended

The extension of the delivery date for electronic systems until 2025 is contrary to Article 278 of the Customs Code, which only allows the use of existing systems in the transitional phase until 2020. There is therefore a need for regulation to create legal certainty, as serious problems would arise for economic operators and customs authorities if some of the electronic systems were not introduced by 2020 and Article 278 of the Customs Code prohibits the use of alternative arrangements. On average, Member States and economic operators need two years to make arrangements, so certainty must be given on the reprogramming of some systems by 2018, or a possible extension of the transitional regime from 2020 to 2025.

Proposal of the European Commission

To solve this problem, on 2 March 2018 the European Commission proposed to amend Article 278 of the Customs Code so that the transitional arrangements for the exchange and storage of data until 2020 could be maintained for electronic systems not yet introduced. The deadline of Art. 278 of the Customs Code remains, but it would include an extension until 2025 to replace such electronic systems that cannot be completed or are not operational by 2020.

A decision on the proposal by the European Parliament and the Council remains to be taken.

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