An effective and efficient Customs Union is one step closer to EU-wide digital single market

  • Insights
  • 13/09/2017 13:31

Economic and Financial Affairs Council (ECOFIN)

#eu2017ee

Urmas Koidu
Written by Urmas Koidu, the Head of Customs Organisation Department of the Estonian Tax and Customs Board (photo: Estonian Ministry of Finance)

With a total share of 16% of global trade, the EU is one of the main players of the global economy. Besides providing protection to EU citizens, EU Customs authorities collect 15% of the EU’s total revenue each year. Over a three-day event in Tallinn, finance ministers will gather for an informal Ecofin meeting and will, amongst other things, touch on the topic of the governance reform of the Customs Union: They will discuss, in particular, long-term strategic questions related to a customs IT system that would ensure a sustainable and cost efficient e-system worthy of the digital single market. Could the central development of common customs IT systems be a solution?

Written by Urmas Koidu, the Head of Customs Organisation Department of the Estonian Tax and Customs Board

Having 28 different IT-systems is not cost-effective

At almost five decades old, the Customs Union is constantly evolving. It now relies on the new Union Customs Code, which envisions a uniform application of customs formalities and customs controls to allow goods to clear customs more quickly and easily. This saves consumers time and money. One of the cornerstones of the implementation of the Union Customs Code are its IT-systems. 

It is the responsibility of each member state to set up IT systems at a national level, an approach originating from the era where the reliance on IT systems was not as crucial as it is today. Thus, all member states and the Commission are spending from national budgets as well as from the EU budget’s scarce public funds to develop the same IT systems 28 times. It is estimated that the development of 28 independent IT systems would entail a cost of nearly 2 billion euros plus maintenance costs.

Leaving the financial aspect aside, current IT-system development patterns have resulted in considerable delays in the implementation of EU customs law. The costs of such delays – in terms of administrative burden to economic operators, trade volumes, and consequently to the EU’s competitiveness and economic growth – cannot be underestimated.

During the Maltese Presidency, Council conclusions on developing the EU Customs Union and its governance were adopted. There was a commitment to develop a comprehensive mid- and long-term strategy for customs IT systems to enable the effective implementation of the Customs Code. The Commission was also invited to consider and evaluate the long-term benefits and added value of a permanent structure to manage IT infrastructure, as well as possible synergies with existing agencies.

Common systems provide more opportunities

It has been agreed upon that, as of the beginning of 2021, all data exchange between customs authorities and businesses must be electronic. It is self-evident that instead of developing 28 separate national IT systems, it is more appropriate to develop one common system.

Here are some reasons why: 

  • The development of 28 independent IT systems would entail a cost of nearly 2 billion euros. It’s more cost effective to have just one.
  • It ensures a uniform application of EU customs legislation and risk management, and improves interagency cooperation between customs and the border guard. 
  • A harmonised system would allow for more agility in the future. 
  • It would increase entrepreneurial competitiveness and reduce entrepreneurial costs as entrepreneurs wouldn’t need to connect their IT systems to the interfaces of 28 member states and will have better access to online customs services.