Lufthansa Group

LUFTHANSA GROUP Public 1/4 REVISION OF THE UNION CUSTOMS CODE November 2023 Lufthansa Group and all its affiliates, which are internationally operating companies, are affected by nearly all legal changes of international trade regulations. As part of the aviation industry, which heavily depends on internationally interconnected supply chains, we rely on a fast cross border movement of goods. A frictionless flow of goods is of utmost importance. Therefore, a modern EU Customs law is a basic prerequisite for a strong EU market and reliable environment for EU economic operators. Lufthansa Group fully agrees with the stated considerations to modernize the EU customs regulations. A modernization would ensure that EU-based operators remain competitive internationally.

…the EU customs regulations. A modernization would ensure that EU-based operators remain competitive internationally. A look at fast-developing industries and international markets shows that there are many new challenges within international trade that must be acknowledged and dealt with. Therefore, the overall decision to initiate a paradigm change in the field of EU customs, considering also the learnings and feedback of many different stakeholders over the past years, is a promising approach to protect and strengthen the EU, its citizens and its economy at the same time. Therefore, Lufthansa Group fully supports the approach to align the EU Customs regulations with new developments and requirements within international trade and appreciates the opportunity to comment on the proposal of a new Union Customs Code.

…within international trade and appreciates the opportunity to comment on the proposal of a new Union Customs Code. New EU Customs Authority Lufthansa Group welcomes a more centralized approach to underline and enable the Customs Union, for example by a standardized implementation of rules or an EU-wide training concept for customs authorities. The creation of an independent EU Customs Authority, which would support the uniform application of EU customs regulations, would be particularly valuable in this regard. When creating such a new organization, it is important that the roles of the European Commission, the EU Customs Authority, and the National Customs Authorities are clearly defined to ensure an efficient and effective structure of competences, responsibilities and rights of intervention.

…to ensure an efficient and effective structure of competences, responsibilities and rights of intervention. For Lufthansa Group and all its affiliates, it is indispensable to have dedicated points of contact for our day-to-day business, who are unambiguously empowered to decide on requests in a timely manner. Ref. Ares(2023)7554941 - 07/11/2023 LUFTHANSA GROUP Public 2/4 EU Customs Data Hub Digitization is a core trend of our modern world. The efficient use of data for customs purposes by enabling operators to hand over data just once in a coordinated and well- maintained IT architecture, while ensuring that this data can be used manifold throughout the whole sequence of a shipment, would be a clear advantage compared to today’s IT landscape. This is because industry to date is still faced with many different IT systems, implementation statuses and national characteristics.

…industry to date is still faced with many different IT systems, implementation statuses and national characteristics. Moreover, there is currently also still a need to hold and keep all these IT systems and interfaces up to date, while considering the individual implementing schedules in terms of changes and updates of each Member State. Centralized IT systems hold the opportunity to combine all best practices of the current IT systems of EU Member States in one system. This could ensure an efficient, effective and standardized IT system as a base of sufficient use of data for the competent authorities as well as all the individual companies. Nevertheless, to have a clear picture, more details on the envisaged IT landscape and its functions are needed. It is our understanding that this would also offer economic operators the ability to analyze their own data and retrieve reports on e.g.

…that this would also offer economic operators the ability to analyze their own data and retrieve reports on e.g. all declarations treated on their behalf at all times. This is currently not possible in all EU MS but would create the opportunity for companies to have an additional option for compliance checks. The EU Customs Data Hub, with all its advantages, also harbors risks that can be decisive for a company's data security. The amount and quality of the data deployed are mostly but certainly combined strictly confidential. In the case of cybercrime activities, it could lead to severe damage for single companies or the economy as a whole. We are concerned that data or information can be leaked and used by unauthorized parties.

…or the economy as a whole. We are concerned that data or information can be leaked and used by unauthorized parties. While setting up the IT system, cybersecurity always needs to be in the focus and within all aspects necessary to ensure a resistant and protective environment for the sensitive data provided by the economic operator. Another aspect that was part of our analysis is the question of which data or information is required to be provided. Whereas several articles of the proposal list a minimum set of required data, which already goes beyond the current data sets, it must always be taken into consideration how costly the data collection is for companies. Especially available data might differ for non-sale transactions where e.g. parts are sent by Non-EU companies to the EU for repair purposes.

…differ for non-sale transactions where e.g. parts are sent by Non-EU companies to the EU for repair purposes. From our point of view and with regard to the data protection act of the EU, such requests for data should be restricted to the minimum required and reasonable for the purposes the data are used for. AEO versus Trust & Check status High expectations were attached to the introduction of the Authorized Economic Operators (AEO) program. However, especially with regard to the associated easements for companies reaching the AEO status, the implementation still offers room for improvement. LUFTHANSA GROUP Public 3/4 We are therefore pleased with the recognition that there is a need to enhance the AEO program. The UCC reform proposal nevertheless foresees the complete replacement of the established AEO-C by a newly introduced Trust & Check trader (T&C).

…foresees the complete replacement of the established AEO-C by a newly introduced Trust & Check trader (T&C). The status of a T&C offers advantages which have not been implemented in the current AEO practice yet, such as the option of self-assessment, e.g. regarding the determination of the customs debt of own imports. Whereas this development is a necessary step to underline a cooperation in partnership between authorities and trusted traders, the requirements to become a T&C go beyond the ones of an AEO. For a T&C, the transfer of manifold data in real time from the traders’ system to the EU Data Hub is mandatory. As the required scope of data, their level of detail as well as the expected way of data transfer is not clear from the proposal, it is not possible to conclusively assess how a T&C status can be reached.

…transfer is not clear from the proposal, it is not possible to conclusively assess how a T&C status can be reached. Especially when taking into account that commercially sensitive data might be requested as well, which can contradict cyber and business risk management strategies of companies. This might lead to a situation where, on the one hand, established AEO-Cs, which have already demonstrated the fulfilment of the requirements for a responsible and compliant trader, might lose their status of simplifications and easements for border crossing trade. It is not reasonable that these AEO-Cs will lose, for example, the possibility to defer the payment of customs debt or to get granted a waiver of the required guarantees. On the other hand, smaller companies will face difficulties keeping their simplified processes as they are often not even an AEO.

…hand, smaller companies will face difficulties keeping their simplified processes as they are often not even an AEO. The granted simplifications are tailored to their needs in terms of simplified processes where an AEO would be too burdensome. The application and monitoring that comes with the T&C status will increase the level of bureaucracy even more unproportionally. Especially for smaller companies, it is of great importance to have the opportunity to have authorizations for special procedures and simplifications granted without holding the AEO, or in the future the T&C status. Processes and customs procedures The proposal defines future customs special procedures, which generally mirror today’s procedures. It is very important that such special procedures (e.g. end-use procedure or inward processing) can be applied, even for companies without T&C status.

…special procedures (e.g. end-use procedure or inward processing) can be applied, even for companies without T&C status. One of the obvious changes compared to today’s customs clearance process will be the reduced timeline for goods being placed under temporary storage. According to the UCC proposal, Non-Union goods can only be placed under temporary storage for three days or six days in case of authorized consignee. In case of a succeeding, the goods shall be placed under the customs warehouse procedure until a final decision on the desired customs procedure for the goods is made. However, a request for an extension of the deadline is possible in exceptional cases. The proposal does not state in which cases these exemptions are foreseen and what the exact requirements for such an application are.

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