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US Complaint Over the EU Customs System. PENDING WTO CASE Dzifa Acolatse ● Jean-Guy Afrika ● Sarah Ayers ● Aleksandra Ciric. Background of the Case - Introduction.

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Us complaint over the eu customs system

US Complaint Over the EU Customs System.


Dzifa Acolatse ●Jean-Guy Afrika ●Sarah Ayers ●Aleksandra Ciric

Background of the case introduction
Background of the Case - Introduction

  • U.S. request for a dispute settlement panel to hear its complaint concerning the lack of uniformity in the European customs procedures.

  • Request for panel establishment filed in January 2005 due the failure to resolve the dispute in mid-November 2004 in consultations.

Background of the case main argument brought by the us
Background of the Case – Main Argument Brought by the US

  • Violates WTO Customs Law

  • Lack of Uniformity in Implementing Customs Rules Throughout the 25 EU Member States

  • Lack of Procedures for Prompt EU-Wide Review

Three reasons for requesting wto consultations
Three Reasons for Requesting WTO Consultations

  • The EU has just recently expanded from 15 member states to 25 member states (as of May 1, 2004). The trade barrier inherent in the lack of a uniform customs administration expanded when the new member states joined.

  • Enhancing trade facilitation is a key part of the DOHA Development Agenda.

  • “Over the past months, the U.S. has tried to work with the EU to address the concerns of U.S. exporters… and although the EU trade commissioner and his staff have tried to help with individual problems, it has become clear that the allocation of authorities within the EU and even the commission has precluded achieving the necessary systematic solutions.”

    ~ Robert Zoellick

Us complaint alleged lack of uniformity
US ComplaintAlleged Lack of Uniformity

  • Differences in licensing requirements for importation of food products.

  • Differences in procedures for processing express delivery shipments.

  • Differences in penalties and differences in procedures regarding the imposition of penalties for violation of customs rules.

  • Differences in record-keeping requirements.

Us complaint continued alleged lack of uniformity
US Complaint ContinuedAlleged Lack of Uniformity

  • Differences in the classification and valuation of goods.

  • Differences in the provision of binding classification and valuation information to importers.

  • Differences in procedures for the entry and release of goods; some member states have automated systems, others do not.

  • Differences in certificate of origin requirements.

  • Differences for physical inspection of goods.

Statement from the us trade representative
Statement from the US Trade Representative

“Although the EU is a customs union, there is no single EU customs administration. Lack of conformity, coupled with lack of procedures for prompt EU-wide review can hinder US exports, especially for small to mid-sized businesses.”

~ Robert Zoellick, (former) US Trade Representative,USTR Office

Export statistics on us small and medium sized enterprises
Export Statistics on US Small and Medium-Sized Enterprises


  • SMEs accounted for 96.5% of all US exporters, up from 95.7% in 1992.

  • SMEs’ share of exports hit 30.6% in 1997, up from 29.5% in 1992 and 26.4% in 1987.


  • Overall, there was a 3% decrease in the number of exporting companies between 2000-2001.


  • SMEs accounted for 96.8% of all US exporters.

  • SMEs share of export value was 29.2%.

Source: US Dept. of Commerce-US Census Bureau-Foreign Trade Division

Exports to the eu15
Exports to the EU15

Data Source: US Dept. of Commerce - “A Profile of U.S. Exporting Companies, 2000-2001”, Table 5b & Table 5a

Critical issues
Critical Issues

GATT 1994 Issues

  • Regarding Article X:1: Laws, regulations, judicial decisions and administrative rulings of general application pertaining to the classification or the valuation of products for customs purpose shall be published promptly in such a manner as to enable governments and traders to become acquainted with them.

  • Regarding Article X:3(a): Customs laws must be administered in a uniform, impartial and reasonable manner.

  • Regarding Article X:3(b): A forum must be maintained for prompt review and correction of administrative actions relating to customs matters.

Critical issues1
Critical Issues

Customs laws in the EC are administered by Member States authorities.

● Key aspects of customs law administration

are left to the discretion of Member States,

reviewable by national courts.

● Review by an EC forum (the European

Court of Justice) may be available only after

years of domestic litigation.

Critical issues2
Critical Issues

♦Member States of the EU are required, due to the EC Law of supremacy over national laws, to adopt all laws and regulations and bring them into their national governing system.

♦However, due to the variation of forms that administration efforts take on in each Member State, the speed and efficiency with which this is performed varies as well.

♦This is a HUGE concern given the recent enlargement of the EU to include many Central and Eastern European nations whose administrative techniques are underdeveloped.

♦In addition, some of the newer Member States are allowed an extra amount of time to incorporate EC Law into their national system.

Eu customs and tariffs
EU Customs and Tariffs

Customs Code

  • The Community's basic customs legislation is contained in the Customs Code (Council Regulation (EEC) No 2913/92) and the Code's implementing provisions (Commission Regulation (EEC) No 2454/93).


  • Tariff Schedule (Council Regulation (EEC) no 2658/87 and annexes thereafter) – gives tariff and statistical nomenclature on the Common Customs Tariff.

  • TARIC - presents all third-country and preferential duty rates currently applicable, as well as all commercial policy measures.

Customs and tariff administration in the eu
Customs and Tariff Administration in the EU

European Commission- Administrative and Executive Body

  • Commission draws up legislation proposals and presents it to the European Council and European Parliament for approval.

  • Directorate-General for Taxation and Customs Union Division (DGTAXUD)

    • Responsible for the management and implementation of customs and tariffs.

  • Commission is entrusted by EU Treaty to supervise the compliance of EC laws and regulations by Member States.

  • If the Commission feels that a Member State has failed to comply with EC law, then the Commission can bring the Member State before the European Court of Justice.

    • France: Duty rate on dark and Virginia-type tobacco cigarettes

  • European community law hierarchy
    European Community Law Hierarchy

    International Law

    (i.e. WTO)

    EC LAW


    Transposed into:

    Transposed into:

    Member State¹ Law

    Member State² Law

    Member State³ Law

    Implemented and Enforced by:

    Implemented and Enforced by:

    National Customs Authority¹

    National Customs Authority²

    National Customs Authority³

    European communities gatt wto signatory january 1 1995


    Austria Portugal

    Belgium Spain

    Denmark Sweden

    Finland United Kingdom








    10 New Members

    Central and Eastern European

    Countries-CEEC, plus Cyprus & Malta


    Czech Republic







    Slovak Republic


    2007 Accession

    Bulgaria and Romania

    European CommunitiesGATT/WTO Signatory – January 1, 1995

    How it all works
    How It All Works

    • Decentralization

      • Initially, implementation, complete compliance and enforcement of law are left up to the Member States

    • Administrative Traditions

      • How the Member States Deal with Laws - Interpretations

      • Different Cultures

      • Issues of Corruption - Bribery

    Judicial concerns
    Judicial Concerns

    • Legal Process Would Take a Lot of Time, Energy and Money

      • In the business world, time is of the essence and time is money.

    • US Success in the EU (or Member State) Situation is NOT Guaranteed

    • Therefore, Could Only be Pursued Out of Altruistic Intentions to Establish a Precedent

    Eu counterpoint
    EU Counterpoint

    • EC dismissed the US claim as “having no legal basis.”

    • The EU Trade Commissioner Pascal Lamy stated that the EU, “regret(s) the US move to bring this issue to the WTO rather than using the bilateral EU-US Joint Customs Council, which would have provided a better forum for resolving these issues.”

    • However, the EU believed that it should proceed with participating in the WTO consultations since the EC was of the opinion that the Community was in fact complying with all WTO rules.

    Eu us customs agreement initialed in washington dc on november 7 1996
    EU-US Customs AgreementInitialed in Washington, DC on November 7, 1996

    • Agreement between the European Community and the US on Customs Cooperation and Mutual Assistance in Customs Matters.

    • Article 22:

    • Established a Joint Customs Cooperation Committee.

    • Obligations:

      1. See to the proper functioning of the agreement;2. Examine all issues arising from its application;3. Take measures necessary for customs cooperation in accordance with the objectives of this agreement;4. Exchange views on any points of common interest regarding customs cooperation, including future measures and the resources for them;5. Recommend solutions aimed at attaining the objectives of this agreement.

    The eu indeed recognizes that it is not perfect
    The EU Indeed Recognizes that it is not Perfect

    In a March 2001 report by the EU Court of Auditors, the European Commission stated:

    “The objective that for all trade in goods the Community should operate as a real customs union with uniform treatment of imported goods can be fully obtained only if the customs union is operating on the basis of a single customs administration, which is not the case.”


    • Is the manner in which the EU has established its customs union lacking in uniformity to the extent that it is indeed hampering exports from the US into its borders?

      ►If a dispute panel is established, the US must present evidence that the EU customs system has indeed harmed US businesses.

    • Is it more productive and beneficial to handle trade disputes at a multi-lateral level (WTO), or through bilateral means (EU-US Trade Agreement)?

    • Which possesses more power – WTO or Trade Agreements between countries?


    • WTO – WT/DS315/1- “European Communities – Selected Customs Matters,”

    • BBC News -

    • Bridges Weekly Trade News Digest, Volume 8, Number 33, Oct. 6, 2004.

    • U.S. Mission to the UN in Geneva, Press Release, “U.S. Statements at the WTO Dispute Settlement Body (DSB),” Jan. 25, 2005.

    • Office of the USTR, “U.S. Requests WTO Panel Against EU Over European Customs System,” Jan. 13, 2005.

    • EUBusiness, “US Files WTO Complaint Over EU Customs System,” Aug. 21, 2004.

    • US Department of Commerce, “Small & Medium Sized Exporting Companies: A Statistical Profile,” Dec. 1997.

    • US Department of Commerce-US Census Bureau-Foreign Trade Division, “A Profile of U.S. Exporting Companies, 2000-2001,” Feb. 2003.

    • Tralac, “EU Responds to US Complain that it Doesn’t Act Like a Customs Union,” Sept. 27, 2004.

    • European Union in the US, “EU-US Partnership,”

    • Hogan & Hartson, LLP, “U.S. Challenges Lack of Uniformity in EU Customs Administration,” Customs and International Trade. October 2004.