Customs revamp in Europe “radically alters the rules” for travel retail

EUROPE. Travel retail would be one of the main industries to benefit if customs was better integrated with economic and trade policy and implemented identically across the European Union (EU).

That was one of the key conclusions of a recent conference on the future of EU customs and the application of the new Union Customs Code, which could “radically alter the rules for travel retail businesses”.

The event was held in Brussels by seven trade bodies [the American Chamber of Commerce to the EU; CLECAT (European Association for Forwarding, Transport, Logistics and Customs Services); EuroCommerce; the European Express Association; the Foreign Trade Association; the International Air Transport Association; and the World Shipping Council, with support of EurTradeNet] and was supported by the World Customs Organisation.

It was the first forum of its kind to bring together all stakeholders on EU customs policy after the new Union Customs Code entered into force in May 2016.

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EuroCommerce Director Christian Verschuren, Commissioner Pierre Moscovici, Graham Austin and EuroCommerce Director of Trade Ralph Kamphoner at the recent conference

On the importance to travel retail, GBat Beckenham Director Graham Austin [who is serving as EuroCommerce representative on the European Commission’s Trade Contact Group – a collection of European-level trade bodies advising the Commission and Member States on the business implications of the new rules] commented: “Making customs work more easily for companies is key for any industry. It is especially so for travel retail that distributes or sells goods at the end of a chain that, in many cases, involves every aspect of customs and related tax controls in import, stocking and movement of goods across the EU – before their eventual sale at airport/ ferry or border shops, where many of the goods will exit the EU.

“The conference looked at facilitating trade and competitiveness across customs after the Union Customs Code started to apply last May. That means reducing burdens, bottom line costs and improving cash flows.

“Finding ways to make customs more responsive to the needs of business includes improving simplified customs procedures and looking at how such procedures can be given added value for users, such as in travel retail.”

For example, Austin noted that operators can self-assess themselves as an Authorised Economic Operator (AEO). AEO is an internationally, mutually recognised quality mark that allows a faster application process for customs simplifications and authorisations and reductions or waivers of comprehensive guarantees.

The conference also highlighted the need to address and solve difficult obstacles to trade facilitation, such as how VAT can hinder making customs rules easier and less obstructive.

Conference participants discussed in depth a number of ways in which customs could act as a tool for business competitiveness and facilitating trade, while supporting the EU’s security and safety. Economic and Financial Affairs, Taxation and Customs Commissioner Pierre Moscovici delivered the keynote speech.

The conference looked at two broad themes: a future vision for customs policy, and lessons learned from the modernisation programme so far. One important conclusion reached was that, while the Union Customs Code has only just entered into force, there is scope for further improvements to be considered in the coming years.

“This is especially the case with the new electronic customs systems needed to implement elements of the Union Customs Code by 2020,” said the trade bodies behind the conference, in a joint statement. “The business community needs a much more coordinated, efficient and harmonised interface with customs across the EU and many regard 2020 as a very challenging deadline.”

EuroCommerce Director-General Christian Verschueren, who introduced the conference, noted the significant impact customs procedures have on EU businesses in all sectors: “Customs must of course ensure that our borders are secure and that the goods are properly imported. But customs procedures also impose burdens and impact directly the free flow of products for businesses and consumers.

“Whether you are a shipper, an importer, an exporter, an express deliverer, a carrier, a freight forwarder, a wholesaler or a retailer, customs touch businesses at every part of the value supply chain. Making sure that customs procedures work smoothly and efficiently, by taking account of their key role in the competitiveness of our economies will make a significant contribution to growth and jobs in Europe and around the world.“

Brexit impact

Austin also noted that a potential “game changer” to customs at the political level could be the UK’s Brexit negotiating position on the single market.

“At the moment Whitehall is unclear if their aim will be to retain some form of access to the single market or actually press the Article 50 ‘nuclear’ button and leave the Customs Union entirely,” he said. “Single market membership means applying common rules for the free movement of goods, services and people. If Britain retains some form of single market access, which many call ‘Brexit lite’, any changes to the wider business should not change significantly.

“On the other hand, the Customs Union is just trading without trade barriers and a common external tariff. But if Britain leaves the Single Market and the Customs Union, it would become an entirely separate state, no different to the USA or Japan until trade and other deals are struck. The UK would, therefore, need to create its own version of the tariff and decide its own customs rules.”

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Exit from the Customs Union would require a wholesale round of negotiations over every aspect of Britain’s position with the EU on trade and security and safety, Austin said.

“If that Article 50 ‘nuclear’ button is pressed, it is not necessarily all bad news. One obvious benefit (depending on the type of trade deal struck between Britain and the EU) could be grounds to lobby the return to duty free sales between the UK and the rest of the 27 EU Member States.

“But the downside is Britain would become a destination outside of the EU and that would have serious operational implications, like with liquids and gels and how those goods are treated until an agreement is in place.

“Full exit from the Customs Union could be significant in terms of divergences in tariff treatments, definitions and application rules that could impact on businesses that need to operate across borders. That is why tackling more efficient and easier access to simplified systems now, such as the mutually recognised AEO, is important for both UK operators and those elsewhere in the EU.

“Full exit could also affect the coverage of goods contained on the list of allowances both out of and into the UK because all goods would potentially be subject to either an excise or customs duty. At the higher level there are also fraught political issues over the re-introduction of a land border between Northern Ireland and the Republic.

“Operationally movement of goods, for instance, between an EU warehouse and Britain would require a whole battery of export/ import documentation, such as proof or origin. That situation would become even more complicated if the EU embarks on a different pace of computerisation than the UK.”

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