A customs union, without borders, presupposes that the customs relations of the Member States with the rest of the world be regulated in the same way. The common customs legislation is, in fact, applicable to the jurisdictions of all Member States as internal law. For this purpose, the Community Customs Code (CCC) groups together and presents all of the provisions of customs legislation governing the EC/EU's trade with third countries in the light of its undertakings within the World Trade Organisation [see section 23.4]. In its modernised version of 2008, the CCC is designed to implement the initiative for online administration in the field of customs, meet the commitment to 'better regulation' by bringing together several regulations and enhance the competitiveness of companies doing business in and with the EU [Regulation 952/2013].
The Code contains, first of all, the basic rules of common customs legislation: customs territory of the European Union, customs value, goods origin, etc. The definition of the customs territory of the EU includes inter alia the coastal Member States' territorial sea, a matter of particular importance to the fishing and offshore activities of Member States. Value for customs purposes can sometimes have a greater impact on trade than customs duties. The Community Customs Code specifies the method by which such value is determined, the customs clearance criteria for goods finished or processed out of their country of origin, and the conditions under which goods are temporarily exempt of import duties. The rules of origin determine to what extent products coming from third countries may be exempt of duty by determining the degree of processing or transformation they have undergone. These rules are important for the proper application of preference systems and several provisions of the commercial policy of the European Union [see sections 5.2.2, 23.2.1 and 24.5].
The CCC governs also the export procedures of European goods, the deferred payment of customs duties on imports or exports, the refund or remittance of these duties and the post-clearance collection of export duties not imposed on goods entered for a customs procedure. For EU exports, the Commission has adapted the model certificate of origin to the overall frame recommended by the UN [Regulation 2454/93, last amended by Regulation 2015/428].
Common customs regulations, uniformly applicable in the EU's trade relations with other countries, involve setting up various customs procedures with economic impact. The Community Customs Code harmonised the legislative, regulatory and administrative provisions relative to customs warehouses procedures, free zones procedures, and usual forms of handling, which can be undertaken in customs warehouses and free zones [Regulation 952/2013 and implementing Regulation 2454/93, last amended by Regulation 2015/428]. Thus, it includes provisions on: the customs treatment of goods entering the EU's customs territory and on the temporary storage of these goods; goods brought into the customs territory of the EU until such goods have received a destination for customs purposes; returned goods in the customs territory of the EU; and admission to free circulation of goods.
Transit systems (Community transit, common transit and TIR) are at the heart of the customs union and the common commercial policy, but these systems are subject to fraud [Decision 2009/477 and TIR Convention, last amendment in OJ L 346, 02.12.2014]. The provisions of the Customs Convention on the international transport of goods under cover of TIR carnets (TIR Convention) and its amendments are binding on the institutions of the EU and on its Member States [OJ L 165/2009 and OJ L 245/2013]. A common transit procedure exists between the EC countries and the EFTA countries [Convention and Decision 87/415, last amended by Decision 2/2015]. The EU implements the principles of the revised Kyoto Convention on the simplification and harmonisation of customs procedures [Decision 2003/231 and Decision 2004/485].
The CCC also governs the processing of goods under customs control before their release for free circulation in order to avoid, by use of tariff measures, the processing operations of certain imports, such as certain petroleum products, taking place in third countries rather than in the EU. To facilitate the use of containers in, for example, combined road/rail carriage, a regulatory system for the temporary admission of containers is defined [Regulation 2454/93, last amended by Regulation 2015/428]. Bearing the mark of their Member State, the containers are deemed to meet the conditions of free circulation provided by articles 23 and 24 (TEC).
Of particular interest are inward processing arrangements allowing for the temporary release for free circulation of products coming from third countries processed in a member State and re-exported to a third country. The Member States must properly apply these procedures especially when the inward processing deals with agricultural products and when compensating products are released for free circulation in a Member State other than where the processing took place. In an attempt to lighten the formalities for those involved, specific provisions are applicable to certain inward processing arrangements or processing under customs control carried out in a customs warehouse, free warehouse or free zone [Regulation 2454/93, last amended by Regulation 2015/428].
The reverse mechanism, outward processing arrangements, is of interest to many European enterprises which, in the context of the international division of labour, export goods with a view to re-importing them following processing, working or repairs. This alleviates the enterprise's production costs and thus favours production in the EU. Established in 1982 as part of the multifibre arrangement for textile and clothing products [Regulation 3036/94, see sections 17.3.3 and 23.5], outward processing relief arrangements were expanded, in 1986, to standard exchange arrangements and, in 1988, to triangular traffic concerning two Member States. The Member States can check the relevant documents in order to ensure that the compensating products have been manufactured using goods temporarily exported.
Customs legislation is susceptible to fraud. In order to prevent fraud arising from irregularities of origin, it is necessary to determine uniformly the origin of goods obtained entirely in a certain country, as well as the origin of goods obtained in a country after substantial transformation of raw materials and semi-products originating in other countries. Thus, goods admitted under preference agreements must come entirely from the exporting country or, if imported from a third country, have undergone substantial processing or finishing. The action to combat fraud in the field of rules of origin is mainly concerned with textile products imported from developing countries [Regulation 1541/98]. The rules on origin are now incorporated in the agreement establishing the World Trade Organisation [Agreement and Decision 94/800, see section 23.4.].
A Regulation on checks for conformity of products imported from third countries with the rules of the Directive on product safety aims to ensure an efficient and coherent management of the common external frontier and to equalise the conditions of competition between European products and imports [Regulation 765/2008]. It enables the customs authorities of the Member States to temporarily suspend the customs clearance procedure in cases where imported products present characteristics which may constitute a direct health or safety hazard. Agreements on mutual recognition in the field of conformity assessment signed between the European Community/Union and Australia [Decision 98/508, last amended by Decision 2012/837 and Agreement], New Zealand [Decision 98/509], Canada [Decision 98/566], the United States [Decision 1999/78], Japan [Decision 2001/747] and Israel [Decision 2013/1 and Protocol] provide market access throughout the territories of the parties, since they authorise product testing and certification in the exporting countries and no longer only in the countries of destination [see section 6.2.3.]. However, as the United States had failed to respect the procedures for recognition of conformity assessment bodies designated by the EU, the Council decided to suspend the EC/EU's obligations stemming from the mutual recognition agreements binding them [Decision 2003/57].
The action to combat fraud in trade with non-member countries is organised by a Council Regulation on the mutual assistance of the administrative authorities of the Member States and on their collaboration with the Commission to ensure the proper application of customs or agricultural rules [Regulation 515/97, last amended by Regulation 2015/1525]. The European Community/Union has signed agreements on customs cooperation and mutual administrative assistance in customs matters, including fraud prevention, with the Republic of Korea [Agreement and Decision 97/291, Hong Kong, China [Agreement and Decision 2004/889], Canada [Agreement and Decision 98/18], Norway [Agreement and Decision 97/269], the United States [Agreement and Decision 97/541 and Agreement and Decision 2004/634], India [Agreement and Decision 2004/633] and Japan [Agreement and Decision 2008/202].
In order to improve the recovery of the EU’s own resources in the event of fraud, a Regulation raises to 100% the level of the comprehensive guarantee covering Community transit operations for all goods, but provides for substantial reductions of this amount for certain particularly reliable operators [Regulation 2153/96]. The EU, however, lacks uniform penal provisions to prevent the infraction of customs legislation.