Transit reform delay under attack

Date: 08/01/1998

By Rory Watson

ALMOST a year after MEPs highlighted fundamental flaws in the EU's creaking transit system, the industry is still waiting for much-needed reforms to be introduced on the ground.

It claims that despite "a lot of good intentions" little has so far been achieved. "It is still a climate of wait and see in 1998," said Jean-Marie Parasie, director of the European Liaison Committee of Freight Forwarders (CLECAT).

Political recognition of the need to update transit procedures emerged after a special European Parliament inquiry produced 38 separate proposals last February to improve the operation of a system seen as essential for the efficient operation of the single market.

The MEPs' year-long investigation also drew attention to the scale of fraud as high-value goods such as cigarettes and alcohol disappear en route to their declared destinations and are instead sold tax-free on the black market. Some estimates suggest that the various scams cost the Union and national exchequers up to 10 billion ecu a year.

In its report, the Parliament warned that not only the viability of the transit system, but also the credibility of the EU institutions depended upon the Commission, the Council of Ministers and the member states "acting swiftly and effectively to put these recommendations into practice".

Many of the MEPs' suggestions were taken on board by the Commission in an action plan put forward two months later. But, apart from changes to the customs code adopted by Union governments last month, the majority of proposals for plugging loopholes are still at the drawing-board stage.

In addition, a recent review has revealed that plans to end the cumbersome system of paper-based controls by computerising the complete transit system are well behind schedule.

"We very much appreciate the European Parliament's original report and the Commission's subsequent action plan, but while there are a lot of good intentions, the conclusion we must draw is that nothing has really changed," said Parasie.

Commission sources acknowledge that legislative progress is proving slow, but insist that practical improvements are being made to the system. They say the overall action plan has won widespread support and every country except Iceland participating in the system has already designated national transit coordinators, with more than 250 local 'correspondents' now in place.

While some operators believe the attention drawn to transit fraud has encouraged authorities to be more vigilant in policing the system, and the UK government is aiming to push through further changes when internal market ministers meet in May, critics believe the reforms do not go far enough.

"They do not get to the core of the problem and at the moment we are unlikely to get legislative amendments before 1999. In addition, many of the changes being considered would require the approval of 30 ministers - those responsible for the internal market and for economic affairs - and we know how difficult that will be," said Parasie.

CLECAT wants a more fundamental overhaul of the transit system and is lobbying the Commission and EU governments to establish a fairer division of responsibility between private operators and customs authorities.

At the moment, freight forwarders are solely responsible for putting up the guarantees when goods are in transit. They are thus in the front line when customs authorities demand compensation for the missing tax on goods sold on the black market and are facing demands for at least 8 billion ecu.

"We believe that when goods and the necessary documents reach their destination, that should be the end of our responsibility. That is not the case now and freight forwarders can be held responsible for months, or even years, after the freight is delivered. It is an outdated system and even dangerous for the internal market," explained Parasie.