Traders face increased costs under new customs' restrictions

By Ahmed ElAmin

- Last updated on GMT

Related tags: European union, Eu

The EU's exporters and importers face paying tens of millions of
euros to comply with a new regulation aimed at reducing terrorism,
fraud and counterfeit products.

The legislation, which comes into effect on 1 January 2007, requires all of the bloc's importers and exporters to have a special security certificate for easier access across borders.

The EU Customs Security scheme allows those qualifying for the special security certificate to move their goods quickly to and from the EU.

Companies that fail to comply with the new rule could face crippling delays to their exports and imports, burdening them with extra costs, says Charles Meechan, tax director at Ernst & Young.

"Companies which do not have the certificate will not be seen as a secure supply chain partner,"​ he said in a statement about the new requirements. "They will be subject to delays and audits. This could leave businesses with higher supply chain costs and dissatisfied customers."

He estimates that in the UK along up to 130,000 businesses may be affected if they do not obtain a certificate. At present, about 9,000 of them qualified simplified customs procedures through UK customs. These businesses can expect to have most of their operations scrutinised during the application process.

For some big businesses it may take up to 18 months to apply and would require a team of full time employees working on the application, he forecasts.

"Businesses need to start planning now for their certificate, as it may take several months to complete the application,"​ he said.

He noted that if businesses do not obtain a certificate, UK Customs can hold back their goods until they have been security checked.

"Adding up all labour and administration costs, it's estimated that the application and implemention of the certificate will cost UK businesses in excess of £20m",​ Meechan said.

The Commission published the security amendments to the Community Customs Code on 4 May 2005. The measures cover three major changes to the customs code.

They would require traders to provide customs authorities with information on goods prior to import to or export from the EU. "Reliable traders" would qualify for the fast-track security certificate as an "authorised economic operator".

The European Commission confirmed the criteria for the certificate in June.

The amendments would also introduce a mechanism for setting uniform EU risk-selection criteria for controls, supported by computerised systems.

The Commission tested the use of security certificates in a pilot involving 11 member states customs authorities and 11 companies. The test, from January to July this year, included an audit of the 11 companies to determine whether or not they were meeting the criteria and conditions to become an authorised economic operator.

Similar certification programmes are already in place in the US, Canada, Australia and New Zealand and other countries are planning similar moves, Meechan stated.

The European Commission's guidelines and other information on the programme are available by clicking here​.

Related topics: All Asia-Pacific, Market Trends, Oceania

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