Customs Union EU Experience (1)

7/27/2019 Customs Union EU Experience (1)

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ms Union and Economic Integration:

The European Experience

Tim Clarke

Ambassador

EC Delegation in Tanzania

EAC, Arusha, 30th October 2009


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The European Union. A model for the EAC?


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The European Union is a living example of how conflict, poverty and

destruction can be transformed into peace and prosperity

A continent divided and in shambles has been transformed into the worlds:

Biggest economy

Biggest importer and exporter of goods and services

Biggest force for peace and security

Biggest provider of development cooperation and humanitarian aid

This is no mean achievement. The EUs founding fathers would have beenproud!


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Justiceand

homeaffairs

Security

and

foreignpolicy

Economic

integration

This success has been possible through a process of political

integration built on three pillars

Unified vision

Common principles

Shared values

Mutual interest
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The journey has not been a smooth one, and integration has

proceeded in fits and starts

have been overcome thanks to

Visionaries

Courage and conviction

Constant review and re-

assessment strategies

Institutionalization and

consolidation

Support from civil society and

democratic forces

Periodical set backs

Increase in membership: 6,

9, 11, 15, 25, 27

Referenda: France,

Netherlands, Ireland

Implications of Lisbon

Treaty


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6

20XX. Political federation?

2012. Single currency?

2010. Common market2005. Customs Union

2000. East African

Community

10 years

In comparison with the EU the EAC has made important progress

towards economic integration in a short span of time

1999. Euro

1993. Single Market1968. Customs Union

1957. European

Economic Community

37 years


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The Customs Union in the European Union


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A Customs Union in line with Art. XXIV GATT:

- A single customs territory

- An external common customs tariff

- Free movement of goods and identical rules of origin (no tariff or non-tariff

barriers)

Beyond the GATT

- The common customs tariff as a cornerstone of a common commercial policy

- The free movement of goods as a basis for a single market

- Border controls between members eliminated

The EU Customs Union


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Single currency

Common market

Customs union

Free trade area

The customs union has been a critical step in the process towards

increased economic and political integration


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Consumers

Get a wider choice of goods and the lower prices resulting from increasedproductivity

Land locked countries

Have free circulation rights when moving between countries of the CU,improving access to ports and transportation corridors

CU Members

Intra-regional trade is enhanced as there are no tariffs or quotas on goodsoriginating from within the region,

The larger market promotes cross-border investment and foreign investment

And has contributed to economic growth and prosperity (2)


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Political vision resulted in the adoption of key treaties and

documents

"The Community shall be based upon a

Customs Union which shall cover all trade

in goods (Art. 23 EC Treaty)

Customs Union and Free Movement of

Goods (Art. 23)

Common/Single Market (Art. 95)

Common Commercial Policy (Art. 133)

Customs Cooperation (Art. 135)

A single customs territory

An external common customs tariff An internal free movement of

goods (no tariff or non-tariff

barriers)

The common customs tariff as a

cornerstone of a common

commercial policy

The free movement of goods as abasis for a single market

The Rome Treaty of 1957 defined the customs

union as a pillar of the

European Communities

Political

vision
http://upload.wikimedia.org/wikipedia/en/f/f7/Rometreaty.jpg


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Revenue collection and distribution from the payment of

customs duties

Mechanism for enforcement of the common customs

legislation with dispute settlement

Common policies (trade, agriculture, competition)

Political

vision

A key set of principles was defined to support the custom union


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A classical tariff policy

A fiscal policy

A security and safety policy

A trade facilitation policy

An agreed set of polices has led the definition and

implementation of a legal frameworkLegal

adaptation


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Era of consolidation/codification in a Single Market context

- Expansion of Community customs legislation to other domains

- Adaptation of the customs law to security and safety demands

- A modernized Community Customs Code

Era of Regulations directly applicable throughout the EC

Era of procedural Directives to be transposed by MS

Basic factors (territory, tariff, origin, value, transit)

90s

80s

70s

60s

Translating the political vision into reality has required a gradual

process of adaptation and harmonization of EU and national lawsLegal

adaptation


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The EU customs legislation includes:

- Community Customs Code and its Implementing Provisions

- Common Customs Tariff and Duty Relief legislation

- International customs agreements or customs provisions contained in

international agreements

The EU does NOT include:

- Residual national rules for the implementation of the Community

customs legislation- National rules on customs administrative organisation and operational

actions

- National rules on customs penalties

- Individual customs decisions

Legal

adaptation

The EU legislation include key legislation and provisions but


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The European Commission

DG Taxation and Customs union (TAXUD)

DG Justice, Freedom, Security (JLS)

OLAF antifraud office

The Council (of the European Union):

- Customs Union Group (CUG)

- Customs Cooperation Working Party

(CCWP)The European Parliament

Court of Auditors, Statistics Office

27 Member States

Institutions

Implementation of the

agreements is responsibilityof the member states

The EC has been given the

power and the resources to

monitor and enforce

commitments undertaken by

member states

Institutions have been set and provided administrative capabilities

to coordinate and enforce implementation of the customs union


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Technical standards

Countries required different standards for the

commercialization of some products. Also, some

products did not work in other countries (e.g. Electrical

plugs)

Local content and rules of origin

Local laws required foreign firms to buy fixed

percentages of their production supplies from domestic

firms

Physical barriers

Internal customs stations slowed down communication

and impose bureaucratic burdens

Fiscal frontiers

VAT, excise taxes, corporate taxes, very different among

countries

Government procurement

Government units purchased their supplies from

domestic companies as much as possible

Despite political declarations, the actual implementation of the

customs union was hindered by differing national regulations

Single European White Paper

(1985)- Proposal of legislation to eliminate

the existing non-tariff barriers

Single European Act (1986)

- Approved most of the legislation

proposed in the White Paper and

other legislation promoting the

liberalization of capital

Flexibility


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Goods trade liberalization

Technical standard

The SEA adopts the principle of Mutual Recognition: if a product is legal in one country, it

can access all other countries markets, given no security or safety problems

Physical barriers

Simplification of export-import documentation and custom checkpoints procedures

Fiscal barriers

Harmonization of VAT and corporate taxation. Countries could choose, for each product, to

eliminate the VAT or impose a minimum VAT of 15 percent

Government procurement

The SEA requires governments to open up their purchases from firms of other member

countries

Factors trade liberalization

Increased capital market integration

Liberalization of cross-border market entry policies, including mutual recognition of approvals by

national regulatory agencies

The Single European Act took the necessary provisions to push

member states to eliminate the existing Non trade barriers Flexibility

Single European Act (1986)


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Relevance for the EAC?


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The EAC an the EU share a common drive towards regional

integration

Similar political vision

But EAC more ambitious than the EU in seeking a full political

federation

Variable timeframe

EU CU achieved after 11 years, EAC CU in 5 years

EU single currency (partial) after 42 years, EAC after 12 years(?)

Common desire to expand membership


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The EAC Customs Union established in 2005 is moving towards a

common market in 2010

EAC Customs Union Protocol

(March 2, 2004)

Article 2.4

Within the customs union

customs duties and other charges

of equivalent effect imposed onimports shall be eliminated save as

is provided for in this Protocol;

non-tariff barriers to trade among

the Partner States shall be removed;

and

a common external tariff in respect

of all goods imported into thePartner States from foreign

countries shall be established and

maintained

Treaty for the Establishment of the

East African Community aims at theformation of a single customs territory

enjoy economies of scale

support economic development


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But as was the case in the EU, practical obstacles towards actual

mplementation remain

Examples

Commitment to a unified customs revenue system not yet

implemented

Lack of recognition of national standards amongst member

states

No enforcement capacity


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The European Commission is supporting the process of regional

integration wholeheartedly

RIP 10th EDF:644 million (EAC,

Comesa, IGAD, IOC)

Regional economic integration:

548 million

Regional political

integration/cooperation:64million

Other programmes:32 million

NIP 10th EDF (EAC): approx.2,000

million

Total EU assistance to the EAC:

2,000 million / year


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Conclusions

Congratulations to EAC for the accomplishments of the last ten

years

The road towards economic and political integration is a bumpyway, and requires political vision, legal frameworks, institutions

and execution capabilities

EU and its member states are willing partners to make these

efforts succeed

Documents

Customs Union EU Experience (1)