Details of Audit on EU Controls over Simplified Customs Procedures
The following are details of the June 7, 2010 European Court of Auditors report which concludes that European Union Member Country controls over simplified customs procedures for imports are deficient.
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Simplified Customs Procedures Available for Authorized, Frequent Importers
A trader with frequent imports can apply for authorization (based on an audit by a national customs authority) to use simplified customs procedures instead of the regular1 customs procedures in order to accelerate the clearance process. Under the three types of simplified procedures,2 much of the key information is provided after the goods are released, which means that any controls that are carried out also take place after release of the goods. These controls are in the form of a check of customs documents or reconciliation checks, or as full “ex-post” audits at the trader’s premises.
Two thirds of all imports in the EU (around 70%) are made through the simplified customs procedures.
EC Member Controls over Simplified Procedures Vary, Are Inadequate
The auditors found that EU Member Countries use varying and sometimes deficient approaches to the control of simplified procedures, resulting in:
- weak authorization audits - generally poor or poorly documented audits before authorizing a trader to use simplified procedures;
- little use of automated techniques - little use of automated data processing techniques for carrying out checks during the processing of simplified procedures;
- excessive use of simplification practices - excessive use of simplification practices, namely the notification waiver under the local clearance procedure, which prevent risk-based checks before goods come onto the EU market;
- high frequency of error -- a high frequency of error, often due to the fact that traders did not possess the necessary documents entitling them to import goods subject to trade policy measures or to benefit from the application of a preferential duty rate; and
- poor quality of ex-post audits - ex-post audits of the trader’s commercial documents and accounts were of poor quality, insufficiently frequent or did not adequately target transactions.
Common Standards, Automation, and Outreach Recommended
Among other things, the auditors recommend that the EC take the following measures to improve its controls over simplified customs procedures:
- Common standards for ex-post audits - put in place common standards for ex-post audits in customs, using sound audit methodology and a systems-based approach;
- EU-wide risk profiles - develop automated EU-wide risk profiles and the common trade policy and critical review Member States’ simplification practices;
- Automation - encourage Member Countries to computerize all aspects of the processing of simplified procedures for imports;
- Implement recent guidelines -- encourage Member Countries to rapidly implement the regulatory framework and guidelines that were developed in 2008; and
- Outreach -- invite Member Countries to make traders more aware of their obligations and responsibilities and promote trader compliance measurement.
(The goal of the audit was to find out whether the legal provisions and supervision procedures in place ensure a correct functioning of simplified customs procedures, so as to guarantee the correct collection of duties and application of non-fiscal measures (such as quotas).)
1Under standard customs procedures, a trader has to present the goods to Customs, submit a standard declaration and pay or provide a security for any duties before the goods are released. Customs may check documents and/or inspect the goods.
2These include the: (1) incomplete declaration procedure - in which missing documents are provided at a later stage (this procedure was not analyzed by the auditors); (2) simplified declaration procedure (SDP) -- in which a commercial document (e.g. an invoice) is presented to secure release and the full import declaration is provided later; and (3) local clearance procedure (LCP) - in which no document has to be presented at import, the goods are available for customs inspection at the trader's premise, and the full import declaration is provided later.
(See ITT’s Online Archives or 06/08/10 news, 10060811, for BP summary announcing the availability of the report.)