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The computerization of Cyprus Customs in the context of EU Accession

last updated 2003
The entry of the Republic of Cyprus into the European Union is contingent upon, among other things, Cyprus Customs being able implement and enforce the Acquis Communautaire. The body of EU laws, rights and obligations, actual and potential, of the community system and its institutional framework. In practical terms this means that we must operate as a fully functioning Customs Administration in the management of the Customs Union where members agree to adopt a common external Tariff and to abolish Customs duties on goods passing between them and to refrain from imposing changes having equivalent effect or quantitative restrictions., one of the foundations on which the European Union is based. Our focus will shift from the protection of solely national interests to the protection of the Community΄s external frontier. We will be required to concentrate operational controls on the external trade of the EU as, since the creation of the Internal Market on 1st January 1993, border controls may not take place on intra-community exchanges of goods in free circulation unless specific suspicion gives rise to individual control. The computerization of Customs operations is crucial in support of the Community Customs Code and its national implementing provisions. Although not impossible, it would be extremely labour intensive and onerous to handle the Community΄s integrated tariff (TARIC) (TARIC is an information system managed by the Commission, which compresses more than 4000 Community legislation acts into one electronic publication of 18,000 lines. It is updated and transmitted to the Member State each working day in each of the Community languages) without a national computerized system. TARIC also has a big impact on the application of trade and economic policy, particularly in ensuring uniformity in the application of tariff measures.

Among the major changes which Cyprus Customs will face on EU Accession include:

  • Customs Role in Revenue Collection

Traditionally, the role of Customs has been inclined towards preventive controls and the collection of Customs duties as part of the national budget. The numerous reduction of national tariff measures resulting from World Trade Organisation negotiations and the spread of Community preferential agreements has resulted in a decrease in national import duties (1999: CY 445 m or 40% of national budget) and EU import duties (1999: Euro 14,193 or 17.3% of Community budget). In the future Pursuant to Article 2(3) of Council Decision of 29 September 2000 on the system of the European Communities own resources (O.J. L253 of 7.10.2000 P.42) and as an EU member State, Cyprus will retain, by way of collection costs, 25% of the import duties collected, recovered or covered by a guarantee, compared to the 10% retained by Member States previously.

Full account should also be taken of the role of Customs as the first and last official point of contact for imported or exported goods liable to VAT. In the context of the Single Market, Customs have a vital role in ensuring that goods enter the tax system rather than disappearing into the black economy and in preventing fraud resulting from fictitious exports.

  • Increasing External Trade Regulation

Prior to the EU Single Market, when intra community borders were controlled, a mistake made by one Customs administration could be corrected by another and hence limit the damage to trade or citizens in an individual Member State. In the Single Market, once goods are cleared for free circulation in any one Member State, the damage can be felt anywhere within or across the Community.

  • Protection of Intellectual Property Rights

Counterfeiting is, as we know, subject to exploitation by organized crime particularly for money laundering. The illegal production and marking of such diverse goods as car parts, pharmaceuticals, textiles, microprocessors, software, CD΄s, shoes, toys etc., is growing rapidly and threatening the employment, nesting and security of EU citizens. In 1999, Member State Customs Administrations detained over 25 million articles with an estimated value of Euro 780 million. According to an OECD study Council Doc 10707/999 ENFOCUSTOM 40 PI 45 carried out in 1998, over 100,000 EU jobs were lost as a result of production in contravention with IPR.

  • Environment and Health Controls

Customs are and will continue to be, in the front line of protecting the Community from imports and exports of dangerous or environmentally harmful products, the protection of cultural goods and in protecting rare species under the CITES convention. According to the WCO report of the 3rd Meeting of the CITES Group, Customs was responsible for over 60% of all seizures of illegal traffic in endangered species. Customs took a lead role in the risk analysis of irradiated goods after the Chernobyl disaster.

  • Growing and changing patterns of international trade

The increase in global trade has been accompanied by major changes in the way goods are moved. Just In Time production and the growth in ECommerce has created a major shift in the way goods are moved. The risk analysis module in the new computerized system will facilitate the identification, selection and checking of suspect importers and the detection of illicit traffic. The growth in express courier traffic and the demands than these economic operators make for rapid clearance of goods is a burden that can only be met with modern computerized systems. Some interesting benchmark statistics include:
  • Customs at Brussels Airport clear 150,000 parcels per day; and 1 container is handled at Rotterdam every six seconds, 24 hours a day throughout the year.
    • What will computerisation mean to the Department
    The computerisation of Customs is a major strategic step for the Republic of Cyprus. It will provide a solid platform for the reform and modernization of Customs business and, enable Customs to operate as a fully functioning EU Customs Administration from the date of Accession, scheduled for 1st May 2004. The new computerization system (THESEAS), will improve the service to economic operators by reducing compliance costs and improving turn around times for clearance through the Computerized Risk Analysis module and audit based controls. No other project will have such a fundamental effect on Cyprus Customs. This development creates an opportunity to consolidate and enhance the performance of Customs.

    Through this system we will shift the burden of current labour intensive work to automated systems, allowing staff to focus on our key business areas of intelligence, control, facilitation and enforcement.

    • How and when is it going to be implemented?

    The THESEAS project will be implemented in a phased approach over the 2 year period. Every officer in each station will be connected to the system and through the government data network to the Customs services of other EU Member States and the EU Commission. The necessary training is being provided in the new system and staff and the trading community will be encouraged to identify and make proposals for new ways of working and to pave the way for future changes. Furthermore at every customs station a team of officers will be available to assist you to get familiarized with the system and answer any questions you may have.

    • Why your commitment is a key to success?

    Cyprus Customs needs to change and keep pace with the business environment within which the trading community operates. Furthermore, EU and other international developments will have a considerable impact on how we conduct our business in the future. The THESEAS project will facilitate but not impose such future changes and development. The new system will not threaten the job security of our clients. What it will do is to shift the burden of routine manual work and improve our ability to deliver a more efficient and productive service to Government and the trade, thus improving your communication with the Department and rendering our co-operation more effective. The commitment and involvement of all stakeholders is essential, as this is the key to success in our efforts to reform, modernize and strengthen the role of Customs to facilitate legitimate trade and business.

    • Where can you find out more information?

    The project team will continue to deliver a series of workshops and presentations throughout the project lifecycle where all interested parties will be kept informed of developments. In addition, we have created an operational support structure whereby a help desk facility will be available to customs staff and traders for problem resolution. We will issue specific newsletters and notices as the project progresses. The specific contact details of our help desks is available on this website.



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