Category Archives: Customs

Union Customs Code

Union Customs Code, a striking enforcement of articles 290 and 291 of the Treaty on the Functioning of the European Union (TFEU) organising the comitology bipolarity between delegated and implemented acts.

The very expected Union customs code of October 9th, 2013 has finally been issued in the Regulation 952/2013, published in the OJEU of October 10th, 2013.

Whereas most of its articles will not enter into force until June 1st, 2016, some of them will in the very near future (October 30th, 2013). It hence seemed useful to have a look at these articles, in order to gather what they are about.

The purpose of most of the articles entering into force is actually to define the delegated powers to the European Commission, as well as the executive powers of the latter.


The other few articles entering into force on October 1st 2013 are the following:

Article 52, “Charges and Costs”: this article is almost identical to article 30, §1 of the modernised Customs Code.
Article 286: Repeal and amendment of legislation in force
Article 287: Entry into force
Article 288: Application

A correlation table is annexed to the Regulation, with the articles of the Union Customs Code and the 2008 modernised Customs Code. One will regret that solely a correlation table with the 2008 modernised Customs Code (which was, overall, never applied) is provided for, whereas a similar table including the 1992 Code (in its current consolidated version) would have been very helpful…

We also note the editorial explosion of the Union Customs Code, with 288 articles against only 188 in the 2008 modernised Customs Code…
This seems mainly due to the abovementioned articles (delegated and executive powers conferred to the European Commission). It should be noted (article 284) that this delegated power to adopt delegated acts to the European Commission is conferred for limited periods of five years, as from October 30th 2013, automatically renewable… unless the European Parliament and the Council of the UE object to the renewal at least three months before the end of the five years period.
The European Commission will also have to draft a report on this delegation of powers at least nine months before the end of the period.
In view of the foregoing, the European Parliament and the Council of the EU will have no more than six months at most to possibly object to the tacit renewal of the delegation of powers to the European Commission.
It should, nevertheless, be noted that on one hand, the European Parliament as well as the Council of the EU can (article 284-3) revoke this delegation at any moment, and on the other hand, that the European Commission has the obligation (article 284-4) to immediately notify the European Parliament and the Council of the EU of the adoption of any delegated act. The European Parliament and the Council of the EU shall then have a period of two months at most from receipt of the notification to issue an objection, and at their own initiative, this period can be extended by two months.
This possibility means, therefore, an increased control over the European Commission’s actions and through that, confers a new role of “watchdog” to the these two institutions. The question, however, is to know whether or not, but also how, the democratic institution and the governmental institution will agree on issuing such an objection.

All these articles actually reflect the impact of the Lisbon Treaty, which significantly changed delegation of executive competence of the European Commission, both as a theory as a practice.
The entry into force of articles 290 and 291 of the TFEU organised, in fact, in a binary way, the world of comitology: delegated acts, and executive acts.

  • The transcription, in this Union Customs Code, of objection and revocation possibilities now offered to the legislators, is very clear, killing on one hand the old regulatory procedure with scrutiny (PRAC), and reinforcing on the other hand the control by the legislators of the European Commission’s action.
  • The drafting of this Union Customs Code also translates new comitology rules into practice, rules resulting from the Regulation 182/2011, notably from the examination procedure of its article 5.

With this in mind, we look forward, as customs engineering consultants close to the operators concerned, to reading, in the light of these articles entering into force on the 1st of June 2013, the projects of implementation rules of this new Union Customs Code.

How the EUCJ takes WTO DSB decisions into consideration

Whereas reports, recommendations and decisions made by the Dispute Settlement Body of the WTO may, in certain circumstances, be called upon with the EUCJ, they may not have a retroactive effect.

In the present case a WTO Panel (DSU1) had specified in 2006 that multifunctional machines (photocopier, printer, fax, scanner) cannot fall within the scope of subheading 9002 12 of the EU’s Combined Nomenclature .
This DSU had required2 the EU to integrate this report into its regulation within a 5 year delay, i.e by June 30th 2011.
The Commission took account of the reports of the WTO panel in adopting Implementing Regulation n° 620/2011 (entered in force on July 1st 2011, under article 2 thereof).

One operator wanted to take advantage of the antecedence of this report for multifunctional machines he had imported in April 2009.

The Court notably indicated that it cannot conduct a review of the lawfulness of the European Union measures in the light if this WTO report for facts which occured between 2006 and the enforcement of EU Regulation n° 620/11 of July 11th 2011, due to the fact that doing so would render that reasonable period, granted by the WTO to the EU to accordingly modify its regulation, ineffective.

Having discharged this piece of argumentation, the Court then imposes its point of view, based on both a detailed description of the various functions of the machines and on its own case-law (C-67/95 Rank Xerox and C-362 & 363 /07 Kip Europe) whereby multifunctional machines – had they been placed in free circulation prior to January 1st 2007- would have been classified under 9009 12 subject to a 6% customs duty (and not under one of the two mentioned positions : 9009 11 00 or 8471 60 20, both exempt).

From there, the Court easily concluded that the modification put in force as from January 1st 2007 (whereby only position 8443 31 91 subject to a 6% customs duty was available) by the Commission did not amend the applicable 6% customs duty and that consequently, by publishing its Regulation 1549/2006, the Commission has not exceeded the powers conferred on it by Article 9 of Regulation 2658/87.

  1. Dispute Settlement Body  established as per the provisions of article 3 (2) of the « Understanding on Rules and Procedures Governing the Settlement of Disputes » (DSU) of the World Trade Orgnization (WTO). []
  2. As per the provisions of article 21 of the « Understanding on Rules and Procedures Governing the Settlement of Disputes » (DSU) []

AEO, ENS and mutual recognition

The new EU regulatory change (58/2013/EU)  legally defines  the groundwork for potential benefits for AEO-qualified exporters from Japan, and  USA  C-TPAT members  from the US on consignments they export to the EU.  More partner countries may be added in the future.  The change allows for identification of a consignor as an AEO/C-TPAT member on the EU pre-departure message (the so-called Entry Summary Declaration or ENS) through use of a government-approved numerical identifier.  The EU and the partner government will exchange this number (along with other information) on the AEO/C-TPAT members) to allow the other to validate the consignor’s current good standing in the AEO/C-TPAT program.  The US and Japan have already announced their own implementation requirements to enable consignments from EU AEOs to be recognized as “low-risk” in their own national import risk management systems, so this EU amendment is intended to allow reciprocity.

It should be noted that the way the ENS was implemented in the EU (as a carrier requirement, rather than—as in the US 10+2—an importer of record requirement) has led to ongoing difficulties where the carrier claims inability to obtain the information on the true consignor of goods, and has, with varying degrees of resistance in different EU Member States, often been not obligated to do so.  There  can be no risk assessment targeting based on the consignor unless that information is in fact available (and let’s ignore for now the fact that any risk assessment on an ENS today must as a practical matter take place in the national targeting systems—such as they exist—in the individual Member States and not at a consolidated EU level, since no EU-wide system yet exists).   This amendment should hence assist the EU in correcting a deficiency of the ENS—at least for an identified group of AEOs in the US and Japan.  The change will, if the AEOs can ensure that the carriers have access to and file ENS with the appropriate identifiers, lead to a situation where qualified AEO consignments are identified as such with the ENS and (one assumes) granted beneficial treatment in the EU (Member State) risk targeting system.   This should stimulate Japanese and US AEO/C-TPAT members to ensure that their shipments to the EU are identified as such by the carrier.   And could lead to a situation where non-AEO consignment –being, by default, everything which is not identified as consigned by a qualified AEO or C-TPAT member– will be assigned a higher risk rating and be subjected to a higher likelihood of inspection or intervention.

Customs warehouse : IN or OUT the Customs territory of the EU ?

A customs warehouse is, as understood in the light of the VAT sixth Directive, part of the Customs territory of the European Union. The operations conducted therein are consequently in the scope of VAT…  to which they will be subject  but for the case where the  Member State (where such operations take place)  has made the option for an exemption as possible under the provisions of article 16 §1 of the said 6th Directive.

An EUCJ judgment of November 2012 has indeed confirmed that no provisions of EU law –including the EU Customs code and its Implementation Provisions- indicate that a customs warehouse (whether public or private) would be considered as situated outside the customs territory of the EU.

The judges’ analysis of both EU customs and VAT law reveals some similarity with the European VAT rules applicabe to both intra-Community supplies and exportations which do fall in the scope of VAT but –under certain conditions- enjoy the benefit of an exemption ; the condition being here  the placement of the goods under one of the suspensive customs regimes listed in the fiscal provisions (either customs warehouse or inward processing relief in the present case).

Criteria for the Customs Tariff Classification of MODEMS

In a Court case of Nov 22nd 2012, the EUCJ has considered that  the capacity to access to internet (and not the technique used for this purpose )  is the pertinent criteria for the customs tarif classification of Modems.

To do so the  judge did not try and give a definition (which might reveal restrictive) of what is a Modem but searched, in the existing EU legal environment if such a definition of « what is a Modem ? » already existed.

The judge finally based his decision on the definition of a Modem as given by the provisions of the international ATI agreement .

The judge has been careful when indicating that the provisions of such an agreement do not though create any rights for the individuals (hence preventing them to try and use them directly in Court as per the EU law). It is indeed clear that when some EU law exists in the domain concerned, the primacy of international agreements signed by the EU over the legal texts derived therefrom imposes to interprete these -inasmuch as possible- in the light of the said international agreements.

This EUCJ decision confirms and specifies the terms of the April 2011 British Sky Broadcasting Court decision.