EU: Community Customs Code (implementation)

The European Community (European Union) is more than a free trade area. It is a customs union with a common commercial policy with regard to the rest of the world (third countries), as laid down in Article 131 of the Treaty establishing the European Community (TEC).

Here are some updates for import and export businesses, depending on where they are located.


Community Customs Code

The centerpiece is the Community Customs Code. The latest consolidated version of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code is of 1 January 2007.



***

Implementing provisions

Implementing provisions are contained in: Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code.

The regulation has been amended several times, and the latest consolidated version of Regulation 2454/93 is of 1 January 2009.




***

Latest amendments


Amending implementing provisions have now been published by:


Commission Regulation (EC) No 414/2009 of 30 April 2009 amending Regulation (EEC) No 2454/93 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code (Text with EEA relevance), in OJEU 21.5.2009 L 125/6.





Ralf Grahn

EU customs: Economic Operators Registration and Identification number (EORI)

This eliminates one strip of red tape for importers of goods into the European Union: A lower level implementing Commission Regulation has been published in the Official Journal of the European Union (OJEU) 17.4.2009 L 98/3, and it is set to enter into force on 1 July 2009.

EORI - single identification number

The object of the exercise is to admit a single EORI number (Economic Operators Registration and Identification number), unique in the European Community, assigned by a Member State customs authority or designated authority or authorities to economic operators and to other persons in accordance with the rules laid down in Chapter 6.


The act is called Commission Regulation (EC) No 312/2009 of 16 April 2009 amending Regulation (EEC) No 2454/93 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code.




Ralf Grahn

European Union: Common import rules

Here is a piece of EU legislation of interest to ’the whole world’.

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:084:0001:0017:EN:PDF

Council Regulation (EC) No 260/2009 of 26 February 2009 on the common rules for imports (Codified version), published in the Official Journal of the European Union (OJEU) 31.3.2009 L 84/1.

The recast Regulation 260/2009 applies to most imports from the rest of the world (third countries) into the European Community (European Union), and it is based on Article 133 of the EC Treaty, on the common commercial policy.



The more exact scope of the Regulation is laid down in Article 1 Imports under Regulations 517/94 and 519/94 are excluded from the scope. The bulk of the recast Regulation concerns European Community surveillance of imports and safeguard measures:

Article 1

1. This Regulation applies to imports of products originating in third countries, except for:

(a) textile products subject to specific import rules under Regulation (EC) No 517/94;

(b) the products originating in certain third countries listed in Council Regulation (EC) No 519/94 of 7 March 1994 on common rules for imports from certain third countries.

2. The products referred to in paragraph 1 shall be freely imported into the Community and accordingly, without prejudice to the safeguard measures which may be taken under Chapter V, shall not be subject to any quantitative restrictions.


***

Certain textile imports


Council Regulation (EC) No 517/94 of 7 March 1994 on common rules for imports of textile products from certain third countries not covered by bilateral agreements, protocols or other arrangements, or by other specific Community import rules (originally published in the Official Journal 10.3.1994 L 67/1) has been amended many times. The latest consolidated version is dated 1 January 2008.


***

Excluded countries

Council Regulation (EC) No 519/94 of 7 March 1994 on common rules for imports from certain third countries and repealing Regulations (EEC) Nos 1765/82, 1766/82 and 3420/83 (originally published in the Official Journal 10.3.1994 L 67/89), has been amended many times.

The latest consolidated version of Regulation 519/94 is from 9 March 2003, but the all-important country list in Annex I has last been amended by Commission Regulation No 110/2009.

The shrinking country list now contains only:

Armenia
Azerbaijan
Belarus
Kazakhstan
North Korea
Russia
Tajikistan
Turkmenistan
Uzbekistan
Vietnam



Ralf Grahn

EU TFEU: Prohibited remissions, repayments and countervailing charges

According to Article 112 of the EU Treaty on the Functioning of the European Union (TFEU), the Council could, for a limited period, approve remissions and repayments in respect of exports to other member states or countervailing charges in respect of imports from member states. Otherwise they are prohibited.

As far as I know, exceptions concerning these forms of direct taxes on the basis of current Article 92 of the Treaty establishing the European Community (TEC) have never been granted, so the prohibition has stood unassailed.

***

Article 112 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated version of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/93:

Part Three ‘Union policies and internal actions’

Title VII Common rules on competition, taxation and approximation of laws

Chapter 2 Tax provisions

Article 112 TFEU
(ex Article 92 TEC)

In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the measures contemplated have been previously approved for a limited period by the Council on a proposal from the Commission.

***

In Article 2, point 78 of the Treaty of Lisbon (ToL) the IGC 2007 amended Article 88 of the Treaty establishing the European Community (TEC) and in point 79 it dealt with Article 93 TEC. This means that no specific amendments were made to Article 92 TEC. Cf. OJ 17.12.2007 C 306/69.

***

The TFEU table of equivalences tells us that Article 92 TEC first became Article 92 TFEU (ToL) in the original Treaty of Lisbon, but later renumbered Article 112 TFEU in the consolidated version (OJ 17.12.2007 C 306/211).

***

The current Article 92 of the Treaty establishing the European Community (TEC) is found under Title VI ‘Common rules on competition, taxation and approximation of laws’, Chapter 2 ‘Tax provisions’, in the latest consolidated version of the treaties in force (OJ 29.12.2006 C 321 E/79).

Although thee was no specific amendment, we notice the disappearance of the words ‘acting by a qualified majority’ from Article 112 TFEU according to horizontal amendment 2(d) of Article 2 of the Treaty of Lisbon (OJ 17.12.2007 C 306/41), when we look at the wording of Article 92 TEC:

Article 92 TEC

In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the measures contemplated have been previously approved for a limited period by the Council acting by a qualified majority on a proposal from the Commission.

***

We have now seen that 92 TEC in force and 112 TFUE are the same, except for one horizontal amendment. .

Still, for the sake of systematic comparison, we look at the arcana of the Article during the intervening treaty reform stages.

First, we turn to the European Convention, the closest thing to a constituent assembly EU citizens have had. The Article in question is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 6 ‘Fiscal provisions’.

Article III-61 of the draft Treaty establishing a Constitution for Europe differed from Article 92 TEC slightly, without altering the substance. The word ‘measures’ was replaced by ‘provisions’, the act of approval was categorised as ‘by a European decision’ and the draft Constitution consistently used ‘Council of Ministers’ instead of ‘Council’ (OJ 18.7.2003 C 169/38):

Article III-61 Draft Constitution

In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the provisions contemplated have been previously approved for a limited period by a European decision adopted by the Council of Ministers on a proposal from the Commission.

***

In the Treaty establishing a Constitution for Europe the tax provisions were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 6 ‘Fiscal provisions’.

The IGC 2004 created Article III-170 with three paragraphs by housing Articles III-59, III-60 and III-61 of the draft Constitution under the same roof (OJ 16.12.2004 C 310/73. Cf. OJ 18.7.2003 C 169/37–38).

Article III-170(3) of the Constitutional Treaty was the same as Article III-61 of the draft Constitution, except for the ‘Council’ reappearing in shorter form:

Article III-170 Constitution

1. No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.

Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.

2. Where products are exported by a Member State to the territory of another Member State, any repayment of internal taxation shall not exceed the internal taxation imposed on them whether directly or indirectly.

3. In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the provisions contemplated have been previously approved for a limited period by a European decision adopted by the Council on a proposal from the Commission.

***

What has anyone been able to say about Article 112 TFEU, with the wording practically unchanged from the current Article 92 TEC?


United Kingdom

Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.3: Revised text of Part Three, Titles I to VI of the Treaty establishing the European Community (TEC): Internal Market and competition’ (Version 2, 23 October 2007) includes the current Title VI Common rules on competition, taxation and approximation of laws.

Peers indicated the changing numbering of Article 92 TEC and TFEU (ToL), to be renumbered Article 112 TFEU in the consolidated version, without comment (page 29).

The analysis 3.3 and other useful Statewatch analyses are available through:

http://www.statewatch.org/euconstitution.htm


***

The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 112 TFEU, Article 92 TFEU (ToL) in the original Lisbon Treaty (page 12):

“Unchanged from Article 92 TEC.”

The FCO comparative table is available at:

http://www.official-documents.gov.uk/document/cm73/7311/7311.asp

***

The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed taxation on page 60 (although the heading ‘2. Taxation’ continued with (tax) harmonisation from page 60 to 61).

Having found at least one general comment in English, we gratefully reproduce the text on Articles 90 to 93 TFEU (ToL), later renumbered Articles 110 to 113 TFEU in the consolidated version:

“Articles 90–93 (Constitution Articles III-170 – III-171) concern taxation. They incorporate the existing tax provisions set out in Articles 90 to 93 TEC. There is a considerable body of European law concerning the harmonisation across Member States of indirect taxes: that is, VAT and excise duties on alcoholic drinks, hydrocarbon oils and tobacco products. At present the Treaty base for this legislation is Article 93 TEC, which states:

The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market within the time limit laid down in Article 14. (122)

The new Article 93 (Constitution Article III-171) has one substantive change. Legislation for harmonising indirect taxes may be adopted (emphasis added) “provided that such harmonisation is necessary for the establishment or the functioning of the internal market and to avoid distortion of competition.” It remains the case that any such legislation must be agreed by the Council acting unanimously.”

---
Footnote 122 stated: Article 14 refers to the establishment of the single European market on 1 January 1993.
---

The Library Research Paper 07/86 is available at:

http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf

***

The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) is a valuable resource on the Treaty of Lisbon, but I found no reference to Article 112 TFEU (Article 92 TEC and ToL).

The report is accessible at:

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf

In case anyone wants to dig deeper, taxes, unanimity and harmonisation are discussed ‘passim’ in Volume II of the report ‘Evidence’.


***

Sweden

The consultation paper ’Lissabonfördraget’ is still valuable as a description of the Lisbon Treaty amendments, and it is available at:

http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf

The Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, was published 29 May 2008 and sent to the Council on Legislation (Lagrådet) for an expert opinion. The draft deals with the EU’s internal policy areas in Chapter 23 ‘Unionens interna åtgärder’, and section 23.1 presents the internal market (Inre marknaden), on pages 175 to 181.

Tax provisions are dealt with on page 179 in a section called ‘Bestämmelser om skatter’. The government of Sweden remarks on the essentially unchanged nature of the tax provisions in general and it then explains the clarification of Article 93 TFEU (ToL):

”Bestämmelser om skatter

Bestämmelserna om skatter är i princip oförändrade. I artikel 93 i EUF-fördraget om harmonisering av lagstiftningen om omsättningsskatter, punktskatter och andra indirekta skatter eller avgifter på den inre marknaden görs ett förtydligande. Som nödvändig förutsättning för att harmonisera lagstiftning anges som tillägg “att undvika snedvridning av konkurrensen”. Rådet ska, i likhet med nu gällande EG-fördrag, fatta beslut med enhällighet i skattefrågor efter att ha hört Europaparlamentet. (Se artikel 2.79 i Lissabonfördraget.)”

The draft bill ‘Lagrådsremiss – Lissabonfördraget’ can be downloaded through:

http://www.regeringen.se/sb/d/5676/a/106277

***

Finland

The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), under the heading Provisions on taxes and charges (Veroja ja maksuja koskevat määräykset), offers a brief statement on the unchanged nature of Article 92 TFEU (ToL), renumbered Article 112 TFEU (page 208):

”92 artiklaa (uusi 112 artikla), jonka mukaan välillisistä veroista ei vapauteta tai niitä ei palauteta jäsenvaltiosta toiseen tapahtuvan maastaviennin yhteydessä ilman neuvoston määräaikaisia toimenpiteitä koskevaa päätöstä, ei muuteta.”

The Finnish ratification bill is available at:

http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf


The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), makes the same remark under ’Bestämmelser om skatter och avgifter’ on the unchanged nature of Article 92 TFEU (ToL), the future Article 112 TFEU, on page 211:

”Artikel 92 (blivande artikel 112), enligt vilken befrielse och återbetalning i fråga om indirekta skatter vid export till andra medlemsstater inte får medges utan att rådet beslutar om åtgärder för en begränsad tid, ändras inte.”

The ratification bill in Swedish can be accessed at:

http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf

My comment: Here the drafters of the Finnish government bill seem to have made a mistake, missing the meaning of ‘other than’ the forms of indirect taxation mentioned, which translates into charges of a direct, not an indirect, nature.


Ralf Grahn

EU TFEU: Agricultural countervailing import and export charges

If EU agriculutural products are outside a common market organisation and the internal market is disrupted by national measures, the Commission can decide on countervailing charges to offset the imbalance.

***

Article 38 of the Treaty establishing the European Community (TEC) is one of those provisions, where the intergovernmental conference (IGC 2007) had nothing specific to say in the Treaty of Lisbon (ToL). Cf. OJ 17.12.2007 C 306/54.

We fetch the current Article 38 TEC from the latest consolidated version of the treaties (OJ 29.12.2006 C 321 E/57), add the numbering of the Tables of equivalences as well as the headings indicating the context of the provision (OJ 17.12.2007 C 306/207-208) and watch out for possible horizontal amendments (none, as far as I see). Here is what the Article should look like, before we check against a few earlier consolidations (IIEA, FCO, Statewatch and Fischer):

Part Three Policies and internal actions of the Union

Title II (renumbered Title III) Agriculture and fisheries

Article 38 TFEU (ToL), renumbered Article 44 TFEU

Where in a Member State a product is subject to a national market organisation or to internal rules having equivalent effect which affect the competitive position of similar production in another Member State, a countervailing charge shall be applied by Member States to imports of this product coming from the Member State where such organisation or rules exist, unless that State applies a countervailing charge on export.

The Commission shall fix the amount of these charges at the level required to redress the balance; it may also authorise other measures, the conditions and details of which it shall determine.

***

If we look at the draft Treaty establishing a Constitution for Europe, we notice only the more developed terminology for statutory instruments proposed by the European Convention and abandoned by the Lisbon Treaty as part of the ‘constitutional concept’ (OJ 18.7.2003 C 169/52):

Article III-128 Draft Constitution

Where in a Member State a product is subject to a national market organisation or to internal rules having equivalent effect which affect the competitive position of similar production in another Member State, a countervailing charge shall be applied by Member States to imports of this product coming from the Member State where such organisation or rules exist, unless that State applies a countervailing charge on export.

The Commission shall adopt European regulations or decisions fixing the amount of these charges at the level required to redress the balance; it may also authorise other measures, the conditions and details of which it shall determine.

***

The corresponding Article III-232 of the Treaty establishing a Constitution for Europe divided the last sentence into two (instead of using a semicolon), but otherwise adopted the draft text wholesale (OJ 16.12.2004 C 310/102).

***

Countervailing duties (counterbalancing or offsetting) are perhaps more generally known in international trade, but ‘duties’ and ‘charges’ are used interchangeably, and no customs duties were supposed to exist within the then common market (wholly replaced by the term ‘internal market’ by the Lisbon Treaty). And the common agricultural policy (CAP) aims at instituting a common market for agricultural goods, too.

The provision concerns only a small part of agricultural products, namely those outside a common market organisation.


Ralf Grahn

EU TFEU: Quantitative import restrictions

Besides security, the main objective of European integration is prosperity for the citizens of the European Union.

The prohibition of quantitative restrictions between member states on imports is one of the fundamental principles of the internal market.

The drafters of the earlier treaties have been smart enough to include ‘all measures having equivalent effect’ and the Treaty of Lisbon to leave the single market provisions undisturbed.


***

In the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) is silent between point 45 on Customs cooperation and point 46 on Agriculture and fisheries (OJ 17.12.2007 C 306/52-53). The annexed Tables of equivalences however give us an indication that there is a whole chapter to look at, brief but of fundamental importance to the internal market (OJ 17.12.2007 C 306/207).

We notice that Article 28 of the Treaty establishing the European Community (TEC) first becomes Article 28 of the Treaty on the Functioning of the European Union (TFEU) in the Lisbon Treaty version (ToL), later to be renumbered Article 34 TFEU in the coming consolidated version.

We set the provision into its future context (from the Tables of equivalences) and present its contents (taken from the latest consolidated version of the current treaties, OJ 29.12.2006 C 321 E/52):

Part Three Policies and internal actions of the Union

Title I The internal market

Chapter 2 (renumbered Chapter 3) Prohibition of quantitative restrictions between Member States

Article 28 TFEU (ToL), renumbered Article 34 TFEU

Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.

***

The European Convention proposed the following Article III-42 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/34):

Subsection 3
Prohibition of quantitative restrictions

Article III-42 Draft Constitution

Quantitative restrictions on imports and exports and all measures having equivalent effect shall be prohibited between Member States.

***

The IGC 2004 took over the draft text ‘verbatim’ as you see in Article III-153 of the Treaty establishing a Constitution for Europe (OJ 16.12.2004 C 310/65):

Subsection 3
Prohibition of quantitative restrictions

Article III-153 Constitution

Quantitative restrictions on imports and exports and all measures having equivalent effect shall be prohibited between Member States.

***

If we take a look at the following Articles of the current TEC and the proposed TFEU, we are able to see that they have separate provisions concerning quantitative restrictions on imports and on exports, whereas the draft Constitution and the Constitution shortened the text by merging the two.

A citizen of the European Union can only dream of the brevity of the Constitution of the United States of America, but shorter, sharper and clearer treaty texts would in general be an improvement.

In this case, however, the provisions under discussion are among the shortest, and despite their brevity they carry a lot of punch. In addition, they are much sinned against. Preserving the distinction between two different Articles makes it easier to track case law back in time and to deal with different measures where in depth study is called for.

It is therefore preferable to let the coin preserve its two sides, considering the fundamental importance of these distinct provisions for the working of the internal market.

***

Clear quantitative restrictions in international trade are usually called quotas, in this case import quotas.

Import quotas are protective or protectionist measures, since they leave part of the demand to be filled by domestic suppliers (leading to a privileged position for them and conversely to higher prices and less choice for enterprises looking for components or raw materials as well as for consumers).

Creating national artificial bottlenecks on imports contradicts the basic ideas behind the internal market.

***

‘What’s in a name? that which we call a rose
By any other name would smell as sweet.’

Or, as nasty, Shakespeare might have said, had he been into trade instead of young love and protectionism instead of flowers.

One of the main contributions of the drafters of the treaties is the appropriate and repeated use of the phrase ‘and all measures having equivalent effect’. Member states’ restrictive legislative acts or administrative practices do not escape (in the long run) despite creative labelling. Their effects count, not the label.

***

Since the basic tenets of the internal market are left unchanged, they are barely noticeable if you read the research papers or the commentaries on the Lisbon Treaty. You just have to go to text books or case law, if you want to study the single market. (My intention is to look at the treaties as a whole, as they would stand when the Treaty of Lisbon has entered into force. At the present time, earlier posts cover most of the TEU and the beginning of the TFEU.)

***

Some of the treaty provisions need clarifying (secondary) legislation to become effective. Others, like Article 28 (new 34) of the Lisbon Treaty TFEU are clear enough to have direct effect, automatic application. Only by having priority over national provisions does European Community law offer redress to EU firms and citizens.

***

There are permissible prohibitions and restrictions on imports (and exports and goods in transit), but these will be dealt with another day, after we have looked at quantitative restrictions on exports.


Ralf Grahn

EU TFEU: Common Customs Tariff duties

The member states of the European Union have a common Community Customs Code, about to be replaced by a Modernised Customs Code, which aims to simplify customs operations in an increasingly paperless, electronic environment.

The Customs Code, further implementing acts and detailed decisions on tariffs are based on Article 26 of the Treaty establishing the European Community, preserved in the amending Lisbon Treaty.

***

The current Article 26 of the Treaty establishing the European Community (TEC) forms the legal base for setting customs tariff duties. We locate the provision in the latest consolidated edition of the existing treaties, OJ 29.12.2006 C 321 E/52:

Article 26 TEC

Common Customs Tariff duties shall be fixed by the Council acting by a qualified majority on a proposal from the Commission.

***

In the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) made no express amendments to Article 26 TEC. Still, the treaty is renamed the Treaty on the Functioning of the European Union (TFEU), the words ‘acting by a qualified majority’ are deleted according to horizontal amendment 2(d) and readers of later consolidated versions of the amended treaty are going to see the provision under a new number (as presented in the tables of equivalences, OJ 17.12.2007 C 306/207):

Article 26 TFEU (ToL), renumbered Article 31 TFEU

Common Customs Tariff duties shall be fixed by the Council on a proposal from the Commission.

***

There were minor differences in wording, but the previous stages of treaty reform were substantially the same as the provisions presented above:

Article III-39 Draft Constitution (OJ 18.7.2003 C 169/34).

Article III-151(5) Constitution (OJ 16.12.2004 C 310/65).

***

Two days ago I pointed the interested reader towards additional information including the following: The potential exporter or importer can start on the Commission’s web pages Taxation and Customs Union: Free circulation. There are links to the 78 page Community Customs Code (CC) and its 700 pages of implementing provisions. The Modernised Community Customs Code (MCCC) was approved without amendment by the European Parliament 19 February 2008, and it is expected to enter into force in the middle of 2008. New implementing provisions are then expected for the end of this year or the beginning of 2009. Start the tour at:

http://ec.europa.eu/taxation_customs/customs/procedural_aspects/imports/free_circulation/index_en.htm

Now we could take an additional step, by looking up what the European Parliament had to say about the Modernised Community Customs Code (MCCC).

The European Parliament, at second reading, without amendments approved the Council common position on the adoption of a regulation laying down the Community Customs Code (Modernised Customs Code):

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-2008-0049+0+DOC+XML+V0//EN&language=EN

In all its formality, the EP legislative resolution presents a number of documents we can access, if we want to study the matter more closely. We choose to take a look at the Council common position (OJ 11.12.2007 C 298 E/1), found in the Official Journal, under Information and Notices:

http://eur-lex.europa.eu/JOIndex.do?year=2007&serie=C&textfield2=298E&Submit=Search&_submit=Search&ihmlang=en

The first four pages of reasons (‘Whereas’) offer the general reader an overview of the Community customs union as the basis for the specific decisions to be taken pursuant to Article 26 TFEU (ToL), renumbered Article 31 TFEU. The specialist may want to peruse all 68 pages of the Modernised Customs Code.


Ralf Grahn
.

EU TFEU: Customs union

Within the internal market customs duties on imports and exports are banned. But in addition to these obvious prohibitions other charges or ‘taxes’ can have discriminatory effects. The Court of Justice has repeatedly drawn the line between genuine measures and discriminatory practices.

***

Article 25 of the Treaty establishing the European Community (TEC) is one of the provisions left alone by the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL). In the renamed Treaty on the Functioning of the European Union (TFEU) the Article number is initially preserved, but in later versions of the treaty the provision will appear as Article 30 (OJ 17.12.2006 C 306/207):

Part Three Union policies and internal actions

Title II Free movement of goods

Chapter 1 The customs union

Article 25 TFEU (ToL), renumbered Article 30 TFEU

Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.

***

The unchanged provision can be followed through the preceding stages:

Article 25 TEC in OJ 29.12.2006 C 321 E/52.

Article III-38 Draft Constitution in OJ 18.7.2003 C 169/34.

Article III-151(4) Constitution in OJ 16.12.2004 C 310/65.

***

As a customs union the European Community (in the future the European Union) has a common customs border in relation to third countries.

Within the customs union customs duties are prohibited on both imports and exports.

This prohibition is extended to all discriminatory measures, whatever they are called. For instance inspection charges on imported goods or ‘taxes’ targeting imports unfairly compared to domestic products are prohibited. A measure is judged not by its name, but by its effects.

Since taxation is largely a matter for the member states, and the efforts to harmonise taxation have yielded fairly modest results, the Court of Justice (to be known as the Court of Justice of the European Union, CJEU) has frequently had to pronounce legislative acts of member states to be contrary to the prohibition.

***

If your business wants support or advice on business opportunities within the European Union or information on EU legislation, you can turn to one of the 600 partner organisations of the Enterprise Europe Network, in 40 countries, launched in February 2008, but building on previous experience.

More about the Enterprise Europe Network on:

http://www.enterprise-europe-network.ec.europa.eu/index_en.htm

***

A citizen or business facing problems caused by misapplication of internal market law by public authorities can use the good offices of the SOLVIT network to solve problems without legal proceedings:

http://ec.europa.eu/solvit/site/index_en.htm

***

Discriminating charges having equivalent effect, including customs duties of a fiscal nature, between member states are less a question of misapplication of EC legislation and more of mis-legislation. Therefore the Court of Justice has often been called on to draw the lines between prohibited and justified national measures.

The handy Alphabetical Table of Subject-matter (Table alphabétique des matières) covers the volumes from 1985 to 2001. Unfortunately it is available only in French, but under ‘Droits de douane et taxes d’effet équivalent’ you find more than four tightly spaced pages of cited cases:

http://curia.europa.eu/fr/content/outils/tm.pdf

Without the ECJ as the final arbiter individuals and businesses would often lack the means to effectively challenge discriminating legislation.


Ralf Grahn

EU TFEU: Free circulation of imported goods

Once goods imported into the European Union have cleared customs border control, they are allowed to circulate freely within the EU, subject to the same rules and restrictions which apply to Community products.

***

Article 24 of the Treaty establishing the European Communities (TEC) offers us the opportunity to see a provision untouched by the intergovernmental conference (IGC 2007). The name of the treaty changes to the Treaty on the Functioning of the European Union (TFEU), and there were changes when Part Three was named Policies and internal actions of the Union, and Title I The internal market was inserted.

As shown in the Annex Tables of equivalences referred to in Article 5 of the Treaty of Lisbon (ToL), most provisions have been given a number initially, but will be given a new, more palatable number in coming consolidated versions of the treaties.

Thus, Article 24 TEC is numbered 24 in TFEU (ToL), but will be renumbered Article 29 TFEU (OJ 29.12.2007 C 306/206), but even the horizontal amendments leave the wording alone.

Here is the text (OJ 29.12.2006 C 321 E/51 for the latest consolidated version of the current treaties):

Article 24 TFEU (ToL), after renumbering Article 29 TFEU

Products coming from a third country shall be considered to be in free circulation in a Member State if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied in that Member State, and if they have not benefited from a total or partial drawback of such duties or charges.

***

The corresponding provision in the draft Treaty establishing a Constitution for Europe is Article III-37. The wording is identical, which you can check by looking up OJ 18.7.2003 C 169/33.

The Treaty establishing a Constitution for Europe presented five different Articles as one, but Article III-151(3) reproduces exactly the same wording as the Article under discussion (OJ 16.12.2004 C 310/65).

***



But the third country exporter or the EU importer needs to know how to get the products legally into the European Community (European Union) and thus into free circulation. There are three cumulative criteria to fulfil before imported goods are cleared for free circulation within the European Community:

1) Import ‘formalities’ have to be complied with.

2) Customs duties and other charges have to be paid.

3) The goods have not benefited from drawback of duties or charges.


A few pointers:

Customs authorities play a crucial role. ‘Import formalities’ are much more than what the word ‘formality’ would lead one to believe. In addition to customs duties, Customs officials implement and enforce Community legislation concerning commercial policy measures (quotas, anti-dumping, pirated goods) as well as security, environmental, consumer protection, cultural and agricultural controls. The following Commission web page offers a quick introduction:

http://ec.europa.eu/taxation_customs/customs/customs_controls/general/index_en.htm

The potential exporter or importer can start on the Commission’s web pages Taxation and Customs Union: Free circulation. There are links to the 78 page Community Customs Code (CC) and its 700 pages of implementing provisions. The Modernised Community Customs Code (MCCC) was approved without amendment by the European Parliament 19 February 2008, and it is expected to enter into force in the middle of 2008. New implementing provisions are then expected for the end of this year or the beginning of 2009. Start the tour at:

http://ec.europa.eu/taxation_customs/customs/procedural_aspects/imports/free_circulation/index_en.htm


Once goods from third countries have cleared import requirements and duties, they are allowed to circulate freely in the internal market (single market). The Commission published an introduction to the single market 14 March 2008, a 20 page brochure aimed at the general reader: Single market for goods – Information pack 2008. Available at:

http://ec.europa.eu/enterprise/regulation/goods/docs/single_mk_info_08/2007_5598_en.pdf

These introductions serve as a base for more detailed information gathering.


Ralf Grahn

EU TFEU: Free movement of goods

The European Community is more than a free trade area. The EC (in the future the EU) is a customs union with a common customs border in relation to third countries. Once a product has legally entered the EC, it can circulate freely within the Community.

Customs duties between the member states are prohibited. So are all charges having equivalent effect (including penalising taxes) as well as quantitative restrictions (quotas) on goods from member states or emanating from third countries but in free circulation in member states.

The Treaty of Lisbon preserves and protects these fundamental principles of the free movement of goods, with some changes of order and terminology.

***

In the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) added the following light touches to Article 23 of the Treaty on establishing the European Community (TEC), renamed the Treaty on the Functioning of the European Union (Official Journal, OJ, 17.12.2007 C 306/52):

43) Title I on the free movement of goods shall become Title Ia.

44) In Article 23(1), the words ‘shall be based upon’ shall be replaced by ‘shall comprise’.

***

The less is said about an amended Article, the more we are dependent on the current provision. Article 23 TEC looks like this (in the latest consolidated version of the TEU and the TEC, in OJ 29.12.2006 C 321 E/51):

PART THREE
COMMUNITY POLICIES

TITLE I
FREE MOVEMENT OF GOODS

Article 23 TEC

1. The Community shall be based upon a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.

2. The provisions of Article 25 and of Chapter 2 of this title shall apply to products originating in Member States and to products coming from third countries which are in free circulation in Member States.

***

The context and the contents of the amended Article should be the following when the Lisbon Treaty is consolidated, after replacing ‘Community’ by ‘Union’ according to horizontal amendment 2(a), replacing the words as instructed above and checking the referrals in the second paragraph:

Part Three Policies and internal actions of the Union

Title 1a TFEU (ToL), new numbering Title II Free movement of goods

Article 23 TFEU (ToL), after renumbering Article 28 TFEU

1. The Union shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.

2. The provisions of Article 25 [TFEU (ToL, renumbered Article 30 TFEU] and of Chapter 2 [TFEU (ToL), after renumbering Chapter 3 Prohibition of quantitative restrictions between Member States, TFEU] of this title shall apply to products originating in Member States and to products coming from third countries which are in free circulation in Member States.

***

For the sake of easy comparison we look up the corresponding Article in the draft Treaty establishing a Constitution for Europe proposed by the European Convention (OJ 18.7.2003 C 169/33):

SECTION 3
Free movement of goods

Subsection 1
Customs union

Article III-36

1. The Union shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.

2. Article III-38 and Subsection 3 of this Section shall apply to products originating in Member States and to products coming from third countries which are in free circulation in Member States.

***

Without disturbing the contents, the IGC 2004 chose to present the customs union differently, building the equivalent of Articles 23 to 27 TEC and Articles III-36 to III-40 Draft Constitution into one long Article. Although only the first and the second paragraph correspond directly with the provisions we are presenting, offering the full contents of Article III-151 Constitution allows the reader to see a greater whole at a glance (OJ 16.12.2004 C 310/64-65):


SECTION 3
FREE MOVEMENT OF GOODS

Subsection 1
Customs union

Article III-151

1. The Union shall comprise a customs union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.

2. Paragraph 4 and Subsection 3 on the prohibition of quantitative restrictions shall apply to products originating in Member States and to products coming from third countries which are in free circulation in Member States.

3. Products coming from a third country shall be considered to be in free circulation in a Member State if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied in that Member State, and if they have not benefited from a total or partial drawback of such duties or charges.

4. Customs duties on imports and exports and charges having equivalent effect shall be prohibited between Member States. This prohibition shall also apply to customs duties of a fiscal nature.

5. The Council, on a proposal from the Commission, shall adopt the European regulations and decisions fixing Common Customs Tariff duties.

6. In carrying out the tasks entrusted to it under this Article the Commission shall be guided by:

(a) the need to promote trade between Member States and third countries;

(b) developments in conditions of competition within the Union insofar as they lead to an improvement in the competitive capacity of undertakings;

(c) the requirements of the Union as regards the supply of raw materials and semi-finished goods; in this connection the Commission shall take care to avoid distorting conditions of competition between Member States in respect of finished goods;

(d) the need to avoid serious disturbances in the economies of Member States and to ensure rational development of production and an expansion of consumption within the Union.

***

The UK House of Lords European Union Committee has a wonderful introduction, both general and topical, to the single market in its report “The Single Market: Wallflower or Dancing Partner? Inquiry into the European Commission’s Review of the Single Market”.


Ralf Grahn


Recommended reading:

UK House of Lords European Union Committee: The Single Market: Wallflower or Dancing Partner? Inquiry into the European Commission’s Review of the Single Market; Volume I: Report; 5th Report of Session 2007-08; HL Paper 36-I; Published 8 February 2008.

Available at:

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/36/36.pdf

Read from the Foreword to Chapter 4: General Conclusions (pages 1 – 21). In addition, the report looks in depth at three important sectors: energy, telecommunications and financial services. Volume II (HL Paper 36-I) contains the evidence (which is not restricted to national sources).