Uniformity of Customs Administration in the European Union

Kathrin Limbach

• Publisher: Hart Publishing
• Year: 2015
• Print ISBN:
  9781509920020
• Edition: 1
• eBook ISBN:
  9781782256731
• Topic: Law
• Subtopic: International Law
• Index: Law

Uniform customs administration is of great importance for the EU and the competitiveness of EU businesses in global trade. However, the EU's so-called executive federalism raises the potential for the non-uniform application of EU customs law. This problem has already arisen in the European Communities – Selected Customs Matters WTO dispute settlement. Therefore, the central research question of this book concerns the challenge presented to executive federalism in the EU Customs Union by the WTO. It also examines those safeguard measures for uniform customs administration which are in operation. Valuable empirical analysis of the decision-making procedures and practices of the national customs authorities allows for the fullest understanding of the operation of the customs administration. An important feature of the exploration is its analysis of the reform of EU customs law and of the effectiveness of the European Union's strategies to enhance uniform customs administration. That analysis helps to identify potential weak points in the decentralised administration of EU customs law and suggests ways in which it might be improved. Scholarly, rigorous and timely, this important study will be required reading for all scholars of EU customs law.

Part I

Introduction

1

Uniform Customs Administration in the European Union

IN THE CURRENT era of increasing globalisation, the European administrative area cannot be understood in isolation from worldwide harmonisation processes. The scope for European and Europeanised administration is determined in part by external forces. Of especial importance in this context is the World Trade Organization (WTO), an international organisation of which the European Union (EU)¹ is a member, as are the individual EU Member States, and which has developed an extensive legal order of its own. The WTO even has at its disposal a Dispute Settlement Body and a Panel and Appellate Body that have their own dynamics. In the area of EU customs administration that is the focus of this book, the WTO has specific requirements binding on its members and, therefore, has an impact that cannot be ignored. To some extent, it can even challenge the decentralised concept of the administration of customs law in the EU, the so-called ‘Executive Federalism’.

In the area of EU customs administration, several levels interact with each other. On the one hand, the EU is a customs union² and its customs law is extremely harmonised because it is enacted centrally on the EU level. There exist several EU regulations that determine the European customs tariff rate and deal with other questions of substantive customs law, including even customs procedures. Therefore, the EU Customs Union is based on common legislation and policy.³ On the other hand, EU customs law is applied and implemented by the national customs authorities of the EU Member States. Therefore, customs administration in the EU is decentralised, which makes the operational functioning of the EU Customs Union rather complex.⁴

This decentralised approach to EU customs administration raises the potential for the non-uniform application of EU customs law, since the national customs administrations in the different EU Member States are organised autonomously, and to some extent can act independently from each other. The European Commission is not a supervisory authority for the national customs administrations and thus cannot give instructions. EU customs law is open to interpretation, because many provisions contain undefined legal terms, while other provisions provide for a margin of discretion when making certain customs decisions. Therefore, customs procedures can differ significantly in different EU Member States. Especially in a paper-based environment, without common criteria and standards, the conditions for uniform customs administration are not ideal.

Nonetheless, uniform administration of EU customs is of great importance for the EU and the competitiveness of EU businesses in global trade. Non-uniform customs administration limits effectiveness and efficiency, giving rise to duplication, inconsistency and mismatches of resources.⁵ Moreover, non-uniform customs administration has the potential to weaken the strong economic position of the EU by producing legal uncertainty, expensive and drawn out judicial proceedings, and loss of revenue (customs duties are part of the EU’s own resources). It can even have negative economic/political or security/political consequences, by leading to trade diversion and security vulnerabilities. Uniform administration of EU customs is a legal obligation and a necessity for the proper functioning and security of the EU Customs Union.

In this context, the national customs authorities not only have to administer EU regulations, but simultaneously have to respect the requirements of the WTO. In Article X of the General Agreement on Tariffs and Trade of 1994 (GATT 1994), the WTO established certain standards regarding the uniform administration of customs law. The requirement for uniformity in the administration of EU customs law is defined not only by the interest of the EU in the coherent administration of EU law, but also by the demands of the WTO, which have considerably different consequences. It is this very request for uniformity in customs administration that can challenge the Executive Federalism of the EU as a decentralised approach to the administration of EU customs law.

This problem has already arisen in the WTO dispute settlement EC—Selected Customs Matters,⁶ which took place from 2004 until 2006. In this WTO dispute, the United States claimed that EU customs law was administered non-uniformly, in the sense of Article X:3(a) GATT 1994, by the national customs authorities of the EU Member States, and that, therefore, the EU was violating its obligations as a member of the WTO. However, the main question was left open, as the Panel in the WTO dispute settlement did not analyse whether the EU was indeed administering EU customs law in a non-uniform manner in the sense of Article X:3(a) GATT 1994—it only discussed single cases of allegedly non-uniform administration, not the EU customs administration system as a whole.

Therefore, a central research question of this book is the challenge presented to Executive Federalism in the EU by the WTO with regard to the administration of EU customs law. Is Executive Federalism in the administration of EU customs law compatible with the obligations of WTO membership? What safeguard measures exist to provide for uniformity in EU customs administration even given decentralised implementation through national customs authorities?

To answer these questions this book will analyse to what extent Article X:3(a) GATT 1994 promotes processes in the decentralised EU customs administration through its binding requirements for a uniform customs administration, especially in the interpretations of the WTO Dispute Settlement Body. Furthermore, an analysis will also be made of the safeguard measures for the uniform administration of EU customs law that are in operation, that can meet the standards of both EU law and WTO law, and in how far the EU succeeds in doing so. This requires identification of the potential deficits in the EU legal framework regarding uniform customs administration.

Apart from the legal analysis, it is also of some interest to look at whether and how the European instruments for securing uniform administration actually work. Therefore, a short empirical analysis of the decision-making procedures and practices of the national customs authorities is included herein. This short analysis supplements the legal findings with impressions based on empirical conclusions, regarding to what extent the European mechanisms for securing the uniform application of EU customs law work in actual administrative practice, and how aware the customs administrations of the EU Member States are of WTO law when making decisions. For this analysis, 20 customs officials of the customs administrations in Germany and in the United Kingdom were interviewed, using the same interview guide for both groups. Those two national customs administrations were chosen because of certain differences between them, one of which played a role in the EC—Selected Customs Matters WTO dispute settlement, already mentioned.

Part II of the book takes a look at the legal system of the EU Customs Union and its potential shortcomings with regard to uniform customs administration, as well as the role of the WTO in this matter. Chapter 2 will discuss the EU Customs Union and outline its legal framework, including its structure, functions and potential deficits with regard to uniform implementation. The focus will be on the Common Customs Tariff (CCT) and the Customs Code with its implementing provisions, as these legal texts constitute the main parts of EU customs law.

In Chapter 3, the role of WTO law in EU customs administration and the degree of uniformity in customs law implementation that is required by Article X:3(a) GATT 1994 will be discussed. This will include a detailed analysis of the relevance of the obligation of uniform customs administration with regard to the EU system of customs administration.

Part III of the book analyses the efforts to reform the current legal system of the EU Customs Union. Chapter 4 covers the ‘great reform’ of EU customs law that began at the time of the WTO dispute settlement EC—Selected Customs Matters. It also discusses the EU’s strategies to enhance uniform customs administration. The main strategies are the simplification of EU customs law with regard to its structure and legal terminology and, simultaneously, the adoption of detailed provisions, supported by administrative guidance, that restrict the margins of discretion in EU customs law held by EU Member States in implementing EU customs law. Another important strategy is the establishment of an electronic customs environment with central databases and interoperable IT systems capable of standardising working processes as well as criteria and standards. A further strategy is the promotion and coordination of cooperation in order to promote best practices and common understandings among the national customs authorities of the EU Member States. Thus, this extensive reform agenda includes legal aspects, IT aspects and operational aspects, all intended to prepare EU customs for current and future challenges in a globalised world with severe security issues. In fact, the whole Customs Code has been rewritten, and EU customs is to be a paperless environment based on electronic customs systems.

However, this reform of the EU customs system is still ongoing, as it has turned out to be even more difficult than was first expected. In fact, a recasting of the reform has already been started and the final outcome of this long-term process, now to be concluded presumably in the year 2020,⁷ cannot be forecast with certainty. This recasting of these reforms and its potential to improve uniform customs administration will be the object of analysis in Chapter 5. This study covers the period until 31 December 2013.

The largest part of the book (Part IV) analyses the implementation of EU customs law and the effectiveness of the EU’s strategies, including a discussion of its possible features as a customs procedure union as well as a customs administration union (Chapter 6). Administrative cooperation (Chapter 7) and the role and competences of the European Commission (Chapter 8) in the implementation of EU customs law will be analysed in order to outline the possible features of an integrated administration in the EU Customs Union. A brief summary will close this part (Chapter 9).

Part V takes a closer look at customs areas of special interest for this study. Herein, Chapter 10 does not focus on the overall uniform functioning of the EU Customs Union, but instead concentrates on special tools and mechanisms for ‘uniformisation’ of EU customs law implementation in three specific areas of EU customs administration: classification, valuation and rules of origin. These fields of EU customs constitute the main parts of EU customs law and are of special importance in day-to-day customs work. Furthermore, they were areas criticised in the EC—Selected Customs Matters WTO dispute settlement.

The analysis of the challenge presented to Executive Federalism by Article X:3(a) GATT 1994 regarding the uniform administration of EU customs law allows for a more thorough understanding of the relevance that WTO law has for administrative practice. It can contribute to the identification of potential weak points in the decentralised administration of EU customs law, and provide information for the improvement of the uniform customs administration. The results and recommendation of this study are presented in the Final Conclusion (Part VI, Chapter 11).

¹After the Treaty of Lisbon came into force on 1 December 2009, the European Union (EU) is now legal successor to the European Communities (EC), pursuant to Art 1 para 3 Treaty on European Union (hereinafter TEU), and has its own legal personality, pursuant to Art 47 TEU, and can sign international agreements, pursuant to Art 216 para 1 Treaty on the Functioning of the European Union (hereinafter TFEU). Therefore, in this document the term ‘European Union’/‘EU’ is used instead of ‘European Communities’/‘EC’, even when describing a time of the past where actually the European Communities had been acting. Only in literal citations or in case there is the potential risk of confusion single exceptions will be made.

²By ‘Customs Union’, this document refers exclusively to the EU Customs Union and territory as defined in Chapter 1 TFEU, excluding customs unions with Turkey, Andorra and San Marino.

³COM (2012) 791 final, p 9.

⁴ibid, p 9.

⁵ibid, p 15.

⁶WT/DS315.

⁷COM (2012) 791 final, p 13; Zeilinger, in: Koszinowski (ed), 2013, pp 103–07 (105); Witte, 2012 AW-Prax 4, p 119 (119); Boysen, in: von Arnauld (ed), 2014, § 9 pp 447–514, para 75.

Part II

The EU Customs Union and the WTO

2

The EU Customs Union in the European Union’s Legal System

ACCORDING TO ARTICLE 28 TFEU, the EU comprises a customs union for which the Union itself has exclusive and all-encompassing competence, determining its legal organisation in the form of a common tariff customs law as well as a common customs procedural law pursuant to Articles 31, 207 TFEU. The EU’s exclusive competence is laid down in Article 3 paragraph 1 section (a) TFEU. The harmonisation of customs law in the EU was basically completed on 1 January 1993 with the realisation of the European Single Market, through the abolition of goods control at the borders between the EU Member States.¹ Since this point, no physical customs controls at the internal frontiers of the EU have been carried out, as all the goods within the customs area of the EU count as Union goods.²

I. EU CUSTOMS LAW AS A PIONEER FOR THE EUROPEANISATION OF ADMINISTRATIVE LAW

When it comes to the ‘Europeanisation’ of national administrative law, it is EU customs law that has had th...

Table of contents

• Cover
• Title Page
• Acknowledgements
• Contents
• Table of Cases
• Part I: Introduction
• Part II: The EU Customs Union and the WTO
• Part III: The Great Reform of EU Customs
• Part IV: Implementation of the European Union’s Customs Law and Strategies for Enhancing Uniform Administration
• Part V: Specific Areas of EU Customs
• Part VI: Final Conclusion
• Bibliography
• Index
• Copyright Page