Committee Reports > List of Committees > Joint > 1979 > Committee on the Secondary Legislation of the European Communities > Report No. 39 - Commission's Proposals relating to Certain Customs Matters

REPORT

A. INTRODUCTION

Proposals Examined

1. The Joint Committee has examined the following Commission proposals for Community secondary legislation relating to customs matters:

Draft Council Regulation on mutual assistance between competent authorities of the Member States and between the latter and the Commission for ensuring the correct application of the law on customs or agricultural matters [R/471/78].

Draft Council Regulation on the customs procedure applicable to stores of vessels, aircraft and international trains [R/599/78 (ECO 50)].

Draft Decision on the conclusion of a Protocol to the Agreement on the importation of educational, scientific and cultural material [S/261/78 (SID)].

Draft Council Regulations [2]—

(a) amending Regulation No. 1798/75 on the importation free of Common Customs Tariff duties of educational, scientific and cultural materials [R/2113/78 (TDC 47)J, and

(b) on the importation free of Common Customs Tariff duties of materials for the use of the blind and other handicapped persons [R/2112/78 (TDC 46)].

Consideration at Community Level

2. The proposal R/471/78 set 1st July, 1978 as the date the Regulation was to enter into force. However, discussions on the proposal within the Council Working Group on Financial Questions were not concluded before that date. The Committee is advised that it is more likely that the Regulation will come into effect from 1st July, 1979.

3. Proposal R 599/78 was submitted to the Council on 8th March, 1978 having been discussed since 1976 in the Commission (Customs Legislation Committee). Although 1st January, 1979 was set tentatively as its implementation date, the Joint Committee is advised that it is possible that the proposal may not be concluded before 1st January, 1980.

4. The proposed Decision S/261/78 relates to a Protocol to the Florence Agreement, 1952 and the proposed Regulations R/2112/78 and R/2113/78 will implement the Protocol when it is ratified by the Community. The Joint Committee is advised that it is expected that the recommended Decision will be taken by Council and the Protocol ratified by the Community, on behalf of the Member States as soon as Ireland ratifies the 1952 Agreement. It is informed that the Government decided in May, 1978 to accept the Agreement and that arrangements to have the formal instrument of Acceptance deposited at the United Nations, New York are being made.

B. MUTUAL ASSISTANCE

Contents of Proposal

5. The proposal envisages the competent authorities of the Member States mutually providing each other with information and collaborating with the Commission to ensure the proper application of the law on customs duties as well as levies and charges within the framework of the common agricultural policy, in particular, by the prevention and investigation of infringements of the law as well as the investigation of any activity designed to circumvent the law. The proposal provides for the giving of information on a specified request or spontaneously. The competent authorities shall not, however, be required

(a) to supply information obtained from banks or related institutions, or

(b) to communicate information which would involve violation of an industrial, commercial or professional secret.

The draft Regulation does not deal with mutual assistance arrangements in regard to VAT and excise duties.

Community Involvement

6. Since the adoption of the Naples Convention in 1967 a system of mutual assistance similar to that envisaged by the draft Regulation has been operated by the Customs Authorities of the Member States and Greece. The present proposal arises from the Commission’s insistence on Community competence to regulate mutual assistance between national authorities in regard to customs duties and agricultural levies. The Commission maintains that the Naples Convention is ill-adapted to the requirements of the customs union and the common agricultural policy mainly because of the ending of national tariffs as from 1st July, 1977 and of two unacceptable provisions in the Naples Convention, viz. a reciprocity clause and the right of unilaterally denouncing the Convention.

Views of the Joint Committee

7. As customs duties and agricultural levies form part of the community’s own resources for revenue purposes the Joint Committee accepts that it is reasonable that mutual assistance by national authorities in these areas should be regulated on a Community basis. It agrees that the proposed Regulation provides a simple and precise legal basis for the Commission’s justified involvement. From a practical viewpoint the adoption of the Regulation will not make any change in the current practice and mutual assistance in regard to VAT and excise duties will continue to be regulated by the Naples Convention.

C. STORES OF INTERNATIONAL CARRIERS

Contents of Proposal

8. The customs legislation of all the Member States provides for a special procedure to be applied to products intended as stores for vessels, aircraft and international trains. This procedure, which is based on the consideration that these products are mainly intended to be consumed outside the customs territory, consists primarily in granting a relief from import duties under certain circumstances on the arrival in that customs territory of the means of transport in question, and, on the departure of the aforesaid means of transport, in treating the shipment of stores in the same way as an exportation of goods outside that customs territory.

9. The aim of the proposal is to put Community transport operators on an equal footing with transport operators from third countries as regards stores for ships, aircraft and international trains and also to combat certain fraudulent practices detrimental to the economy of the Community and its budget (in particular the granting of export refunds which are not justified). Under the proposal, stores intended for consumption on board means of transport would be granted relief from customs duties and CAP charges. The Sixth VAT Directive already provides similar relief in respect of VAT. For the purpose of the Regulation “stores” means catering supplies, fuels, lubricants and other oils for technical use and sundry stores. The proposed Regulation does not apply to excise duty or to goods sold in duty-free shops or on board ships or aircraft.

Implications for Ireland

10. The Joint Committee is advised that most of the provisions of the draft Regulation are already being implemented in Ireland, However, the proposal will require

(i) the abolition of certain national provisions providing relief—

(a) In the case of stores for

—pleasure vessels e.g. yachts

—private aircraft,

(b) In the case of fuel for

—outgoing aircraft on an international flight if passengers are embarked for disembarkation within the State

—Aer Lingus aircraft engaged in internal flights

—Aer Lingus aircraft carrying out engine runs, aircraft testing and crew training,

(ii) the adoption of new provisions e.g. to grant exemption in the case of fuel, oil and sundry stores for coastal fishing vessels and vessels used for life-saving and assistance at sea even if they do not leave territorial waters, and

(iii) the extension of existing provisions e.g. by granting stores free of CCT and CAP charges to any vessel (other than pleasure vessels) which sails outside territorial waters. At present fishing vessels are granted duty-free stores only when engaged in deep-sea fishing and in practice very few qualify for this relief.

The provisions in the proposal covering stores for vessels engaged in international inland waterways transport and stores for international trains do not affect Ireland.

Views of the Joint Committee

11. Insofar as the draft Regulation seeks to abolish some existing concessions the Joint Committee was concerned in particular with its effect on fuel for aircraft. The Committee is advised, however, that the effect will be negligible since fuel for aircraft does not normally contain any element of CCT duties. This being so it has no objection to the proposed Regulation insofar as the stores proposed for relief are concerned and indeed it welcomes the provision envisaged for fishing boats although it is advised that in practice the concessions envisaged will not be significant. The Committee fully supports the proposal insofar as it seeks to combat practices of a fraudulent nature in the agricultural sector as these are a drain on Community funds and tend to prejudice the effective operation of the CAP.

Acknowledgement

12. The Joint Committee wishes to record its appreciation of the assistance it received from British and Irish Steam Packet Company Limited in examining the proposal.

D. EDUCATIONAL, SCIENTIFIC AND CULTURAL MATERIALS AND AIDS FOR THE HANDICAPPED

Florence Agreement

13. An Agreement on the importation of educational, scientific and cultural materials, the principal purpose of which is to provide for the freer dissemination of such goods by exempting them from customs duties, was drawn up in 1950 under the auspices of the United Nations Educational, Scientific and Cultural Organisation (UNESCO). The Agreement provides generally for the duty-free importation of—

(a) Books, publications and documents

(b) Works of art and collectors’ pieces of an educational, scientific and cultural character

(c) Visual and auditory materials

(d) Scientific instruments or apparatus

(e) Articles for the blind.

Under the Agreement contracting States undertake not to apply customs duties on any of the materials covered by it. However, in relation to the duty-free importation of scientific equipment under Annex D to the Agreement, there is a clause which states that this is conditional on goods of equivalent scientific value not being manufactured in the country of importation.

14. The Agreement entered into force on 21st May, 1952 and over seventy States, including all Member States of the EEC, are parties to it. The Agreement was not, until recently, accepted by Ireland because it would have meant some loss of revenue and of protection for Irish industry. The formal instrument of acceptance of the Agreement by Ireland was deposited with the Director General of UNESCO in Paris on 18th August, 1978. EEC Regulation 1798/75 incorporated into Community law the provisions of the Florence Agreement and, although Ireland until recently was not a party to the latter, she has as a member of the EEC been implementing Regulation 1798/75 since 1st January, 1976.

15. At its 19th General Conference in Nairobi in 1976 UNESCO adopted a Protocol to the Agreement which provides for the extension of the range of products covered by the Agreement to include:

(a) aids for the handicapped

(b) sports equipment

(c) musical instruments and equipment

(d) material and machines for the production of books etc.

Commission’s Proposal

16. A draft Council Decision proposes that the new Protocol be concluded on behalf of the Community but that, as to the range of products, the Community be bound by the Protocol vis-à-vis contracting States only as far as aids for the handicapped are concerned. The Commission is also proposing two Council Regulations to effect the necessary changes in Community law if the Decision to become party to the Protocol is accepted.

17. The draft Regulation No. R/2112/78 provides for the duty-free entry of materials specially designed for:

(i) the educational, scientific or cultural advancement of blind persons (Annex I to the draft lists the materials);

(ii) the educational or scientific or cultural advancement of blind persons, if imported directly by bodies concerned with the education of or assistance to the blind (Annex II to the draft lists the materials); and

(iii) the education, employment and social advancement of the handicapped, other than the blind, when intended for bodies mainly catering for the handicapped. However, in the case of these materials the duty-free grant is subject to the condition that similar articles are not manufactured in the Community. A derogation may, however, be made from this condition provided that Community production of such articles does not suffer by such reliefs of duty. Duty-free admission will also apply to spare parts and accessories if imported at the same time as the said material or, if imported later, readily recognisable as being for materials originally imported duty-free or eligible to be so admitted.

Materials sent as gifts to institutions or organisations catering for the handicapped, other than the blind, shall not be subjected to the Community availability clause. The gifts, however, must be genuine and not prompted by commercial considerations on the part of the donor.

18. The draft Regulation No. R/2113/78 contains amendments to Regulation No. 1798/78 which may be summarised as follows:

(a) a more detailed description in the Annexes of the products covered;

(b) the removal of articles for the blind from Regulation 1798/75; as will be noted these will in future be included with aids for the handicapped in a separate Regulation;

(c) the Regulation will in future cover tools to be used in connection with scientific instruments admissible under the Regulation;

Views of the Joint Committee

19. The Joint Committee notes that the only substantial change which would result from the adoption of the Commission’s proposals is that certain aids for handicapped persons could be imported from outside the Community free from payment of a customs duty ranging between 7 and 10% ad valorem. Duty-free importation of aids for the blind is already allowed under Regulation No. 1798/75 but the Committee is advised that little use has been made of this facility perhaps because such goods are more likely to be imported from Britain than from third countries. (Even before the adoption of Regulation 1798/75 duty-free importation of aids for the blind by institutions or societies could be allowed under section 18 of the Finance Act, 1938). Insofar as other handicapped persons are concerned the Joint Committee is advised that the protective clause is likely to be invoked to exclude from the facility such common aids as wheelchairs and orthopaedic beds as these are manufactured in Ireland and in the Community. The facility is therefore likely to be confined to articles of a specialised nature such as specially adapted typewriters and cassette players. The benefit likely to accrue to handicapped persons is therefore a very modest one but should nevertheless be welcome for some handicapped persons at least.

20. The Joint Committee is satisfied that the interests of Irish manufacturers would be adequately protected if the proposals are adopted. Apart from the availability of a protective clause it should be borne in mind that while Ireland and the other Member States would grant duty-free facilities for imports of goods described in the two draft Regulations, other countries subscribing to the Florence Agreement should similarly grant duty-free facilities in respect of imports from Ireland and the Community.

Acknowledgement

21. The Joint Committee wishes to thank the Confederation of Irish Industry for its assistance in examining these proposals.

7th March, 1979