The European Commission received this Thursday The report of a group of experts on the shortcomings of the customs union, a document that begins the countdown to adapt the border controls of products to the reality of the 21st century. The analysis reflects the serious shortcomings of a system that has been overwhelmed by globalization, the technological revolution and the explosion of electronic commerce during the last decade, with the added acceleration of the pandemic. “As a result, the EU’s single market is in jeopardy, and this could be a question of sovereignty for Europe,” the report concludes.
Failed controls expose European consumers to the use of imported products that do not meet the health or environmental standards in force in the EU market. And they deprive public coffers every year of billions of euros in tariffs.
The fiscal hole is of such magnitude that the report, prepared by a group of experts led by Arancha González-Laya, former Spanish Foreign Minister, has not been able to achieve it. But she notes that national audits “suggest it could be in the billions of euros.” And that the most prudent estimates suggest that the losses would be around 1,500 million euros only due to the evaded tariffs on the importation of products valued below 150 euros, a threshold that exempts from the customs declaration.
The European Commissioner for Economy, Paolo Gentiloni, pointed out in the presentation of the report that “an efficient customs system is vital to protect citizens and companies in the EU”. And González-Laya has advocated “an urgent structural change” to ensure that the EU goes from having 27 customs control models to just one. “We need more union in European customs”, summarizes the president of the group of wise men. The Commission plans to present a comprehensive reform project before the end of the year.
The reform, according to the recommendations of the report, should include the creation of a European Customs Agency or Authority in charge of identifying fiscal and non-fiscal risks, supervising economic operators, managing customs data and having a rapid reaction mechanism. in the face of potential crises.
The centralization of data and, above all, its management, would be part of the great change. Currently, the authorities are satisfied with a customs declaration on the supposed value of the transported goods, but these data are provided by transport companies or by customs agents, who do not know the exact content of the cargo.
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The report recommends focusing surveillance on individual carriers or companies rather than individual deliveries. Authorized and controlled operators must provide the true commercial value of the goods entering the European market, which will foreseeably increase the amounts declared and the collection of tariffs.
remove exemption
The experts also propose to abolish the tariff exemption that goods with a theoretical value of less than 150 euros enjoy in electronic commerce, as was already done for the purposes of value added tax. Expert investigations have shown that some operators fragment shipments or undervalue the merchandise to benefit unduly from the exemption.
Another of the reforms would lead to the preparation of a periodic report on the gap between the potential income from customs duties and the figure obtained. In the case of VAT, this study is already being carried out, which has made it possible to identify possible cracks in the collection system or the excessive use of certain exemptions or reduced tax rates.
The interest for the community coffers is evident because the tariffs cover 11% of the EU budget. In 2020 the EU entered 20,000 million of the 25,000 million euros collected in total. And the changes would also adjust controls to new business models. The traditional system of large containers transported by land, sea or air has been joined by the shipment of millions of small packages as a result of the explosion of electronic commerce.
Data from the second half of 2021 show that the number of declarations derived from electronic commerce is more than double that of traditional imports, although the value of the former (4,800 million euros) is much lower than that of containers (1, 25 billion euros).
The report presented this Thursday is the result of six months of research and field work by the 12 experts selected by the Commission, including González-Laya. And the diagnosis reveals a customs union overwhelmed by the explosion of commercial exchanges, totally fragmented in terms of the quality and rigor of product control and organized in certain cases with parameters more typical of its foundation in 1968 than of 2022.
“The vast majority of the parties interviewed for this report, if not all, complain about the systematic absence of a common implementation of customs measures, due to the difference in the controls applied at the border points of entry, both between countries and within the same State, due to the difference in the priorities of the controls, in the investigation capacities and in the methods and sanctions against non-compliance”, the document lists.
The situation has further deteriorated over the last decade with the exponential increase in international trade. Between 2010 and 2021, imports from outside the EU have increased by 16.5% and exports by 34.6%. Every year, according to the report, almost 700 million products enter the EU, 350 million are declared for export to third countries and 15 million pass through the Customs Union in transit. “This means that every second 33 products are declared for a total customs value of about 150,000 euros,” the report states.
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