FEPORT

…1 FEPORT feedback on the EU Commission proposal for a Regulation establishing the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) No 952/2013 1. Introduction FEPORT represents the interests of 1225 private port companies and terminals performing cargo handling and logistics related activities in European ports. FEPORT Members employ over 390.000 workers. FEPORT welcomes the possibility to provide comments regarding the EU Commission Union Customs Code (UCC) reform proposal. FEPORT members, which in Customs legislation usually take on the role of operator of temporary storage facilities or customs warehouse operator, are directly impacted by changes to the EU Customs legislation as it affects their operations.

…warehouse operator, are directly impacted by changes to the EU Customs legislation as it affects their operations. Terminal operators carrying out cargo handling activities in seaports form the junction between maritime and sustainable hinterland transport modes and are thereby contributing to the success of the EU’s modal shift targets. FEPORT members therefore have a strong interest in Customs legislation that enhances the efficiency of customs controls – in order to hinder seamless operations as little as possible - while combating illicit trade. At the same time, in a context where some EU neighbouring countries seem to move down a pathway of customs simplifications and loosening of controls while pursuing less ambitious environmental policies, it is crucial to assess how the UCC reform package impacts the competitive position of ports in the EU vis-à-vis their non-EU competitors.

…how the UCC reform package impacts the competitive position of ports in the EU vis-à-vis their non-EU competitors. In light with the above, FEPORT strongly supports a reform aiming at simplifying procedures for “Trust and Check” operators while further enhancing and harmonizing risk management thanks to the introduction of an EU Customs Data Hub and the establishment of an EU Customs Authority. Moreover, the transition to “Trust & Check” should be as simple as possible for authorized economic operators (AEOs). The Federation of European Private Port Companies and Terminals Ref. Ares(2023)7539973 - 07/11/2023 2 However, even though they strongly support the abolishment of the guarantee for goods held in temporary storage, terminal operators are concerned that the newly proposed rules for the temporary storage of goods can give rise to inefficiencies.

…are concerned that the newly proposed rules for the temporary storage of goods can give rise to inefficiencies. These concerns will be elaborated in Section 3 of this document while in the next section, some recommendations will be provided on how to further improve the proposed rules on risk management. 2. Risk Management According to current practices, customs authorities scan 100% of cargoes that are considered “high risk”, for example, if these cargoes are considered as likely to be used for illicit trade. Such scanning practices are important from a law enforcement perspective but have a high operational impact on terminal operations. National customs administrations still have different practices as to how “high risk cargoes” are defined and also have different procedures in place regarding the stage in the handling process at which high risk cargoes can be checked.

…different procedures in place regarding the stage in the handling process at which high risk cargoes can be checked. FEPORT therefore recommends aligning definitions and procedures for the scanning of high risk cargoes across the EU, especially between the main EU gateway ports. Different levels of “strictness” could play in the hands of organized crime as ports with the lowest level of control - or with the highest amount of loopholes - would be chosen as hubs for illicit trade. In addition, a harmonized approach towards the scanning of high-risk cargoes would positively impact the level playing field between ports in the EU. Following the above considerations, FEPORT agrees with the assessment of the Commission as expressed in the UCC reform proposal (p.7, explanatory memorandum), which states that the harmonization of risk management is currently insufficient.

(p.7, explanatory memorandum), which states that the harmonization of risk management is currently insufficient. The UCC reform proposal aims for customs supervision, controls and mitigation measures based on risk management of the supply chain with an EU perspective. At the same time, the proposal allows the Commission to establish common risk criteria and standards and priority control areas via Implementing Acts (article 55.1). Such efforts aimed at improving common risk management should be welcomed, as well as the fact that article 52 gives clear examples of which kind of elements could be included in the common risk criteria and standards, for example: - A description of the risks; - The risk factors to be used to select goods or economic operators for customs controls; - Mitigation measures in the supply chain, including information requests and instructions not to load/transport.

…measures in the supply chain, including information requests and instructions not to load/transport. 3 It is a positive development that national customs authorities are, in principle, required to implement the control recommendations issued by the EU Customs Authority, but to further strengthen common risk management, FEPORT recommends making the implementation of the control recommendations referred to in article 51(6) mandatory. 3. Temporary storage and customs warehouses FEPORT members – terminal operators active in the seaports of the EU – under the current UCC (hereinafter UCC 2013) normally take the role of operators of temporary storage facilities (TSO). According to UCC 2013 (article 149) goods can stay in temporary storage for up to 90 days, after which they either need to be re-exported or placed under a customs procedure.

…storage for up to 90 days, after which they either need to be re-exported or placed under a customs procedure. Article 147(3)(a) of UCC 2013 stipulates that, during those 90 days, TSOs should ensure that the goods are not removed from customs supervision. Nevertheless, recital 36 of the UCC reform proposal states that, in order to ensure appropriate customs supervision, the time goods remain in temporary storage should be limited to a maximum of 10 days. Article 86(5) of the reform proposal, in addition, stresses that goods in temporary storage should be placed under a customs procedure no later than 3-6 days after the notification of their arrival, although article 86(7) states that the Commission is empowered to adopt Delegated Acts specifying circumstances under which this time limit may be extended.

Commission is empowered to adopt Delegated Acts specifying circumstances under which this time limit may be extended. FEPORT supports the Commission’s aims to improve customs supervision of goods and thereby combat illicit trade but has identified a number of practical difficulties that may result from the reduction of the time limit for temporary storage from 90 to 3-6 days. These and other concerns related to the UCC reform proposal’s provisions on temporary storage and customs warehousing are specified below. a) When are goods considered to be in temporary storage? According to recital 36 and article 86(1) of the reform proposal, goods are considered to be in temporary storage from the moment the carrier notifies the arrival of the goods to the EU customs territory, which could be before the goods are actually unloaded.

…notifies the arrival of the goods to the EU customs territory, which could be before the goods are actually unloaded. As will be elaborated below, reducing the time limit for temporary storage from 3-6 days already gives rise to a number of practical and operational concerns. It should therefore be confirmed that goods are only considered to be in temporary storage from the moment that they are unloaded from the ship and enter the TSO’s facilities. If not, the challenges related to the reduced time limit for temporary storage would be aggravated even further. b) 3-6 days’ time limit The time cargo remains in temporary storage strongly varies per port and also per cargo type, but FEPORT internal survey showed that in many cases cargo stays longer in temporary storage than 4 the 3-6 days that are currently proposed.

…showed that in many cases cargo stays longer in temporary storage than 4 the 3-6 days that are currently proposed. This is especially true for bulk cargoes and containers stored in transhipment ports, but also non-transhipment cargoes stay longer than 6 days. Furthermore, in some other cases, the customs document (to place the goods under the next customs regime) is also drafted based on the (amount of) goods which are actually discharged in order to avoid discrepancies. In that case, if goods are discharged from the vessel on Friday that would mean that the goods should be placed under the next customs regime during a weekend. This is not workable, especially as customs administrations are not always available 24/7.

…regime during a weekend. This is not workable, especially as customs administrations are not always available 24/7. In some exceptional cases, that especially occurred during some recent crisis such as COVID-19, the Shang Hai lockdown and the war in Ukraine, this time limit even had to be extended and FEPORT supports the simplifications provided in that context allowing to place goods under the customs warehouse procedure at the same facilities. In light of the above, FEPORT suggests maintaining the 90-days limit for temporary storage, while allowing for some flexibility in cases where this time limit is exceeded due to force majeure related circumstances. The 3-6 days’ time limit proposed could also give rise to concerns related to liability as TSOs do not control when the exporter or importer/owner of the goods places the goods under a customs procedure such as customs warehousing.

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