Commission Report (2002): Latvia

Subsections

• Progress since the last Regular Report
• Overall assessment
• Conclusions

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Chapter 25: Customs union

Progress since the last Regular Report

Latvia has achieved progress in the customs field as regards alignment and has continued restructuring and strengthening the administration.

As regards alignment of Latvia`s legislation with the customs acquis, in May 2002, the Parliament adopted amendments to the Customs Law, which aim at ensuring full compatibility with the acquis establishing the Community Customs Code. The Law on Customs Duty (Tariffs) was amended in December 2001 in order to bring Latvia`s legislation further in line with the acquis on autonomous tariff quotas, tariff ceilings, tariff suspensions and to introduce the Generalised System of Preferences. Several implementing regulations have been adopted in the reference period, covering issues such as the deferment of payment of customs duties, free zones and warehouses, exportation, re-exportation, abandonment and destruction of goods and returned goods. The Government adopted legislation implementing the acquis regarding re-exportation, abandonment of goods, returned goods, destruction of goods, protection of intellectual property rights, customs declaration procedure and simplified clearance and summary declaration as well as storage of goods. Further legislation was adopted to ensure implementation of the EC Integrated Tariff (TARIC).

As far as administrative and operational capacity to implement the acquis is concerned, progress in modernisation of the customs services of the State Revenue Service (SRS) has been made. Modernisation of Latvian Customs is based on the SRS Customs Business Strategy for the years 2001oe2005. The strengthening of the customs system appear to have resulted in an increase of 15% in total revenues collected by the Latvian Customs in 2001 as compared to 2000.

Regarding organisation and infrastructure, the investment programme to complete customs control points has continued and has benefited from increased budgeting in 2001. Additional financial resources have been also granted for the recruitment of 39 new staff in the National Customs Board (NCB), allocated to the enforcement division, the post-clearance and audit division and the newly established special operations and investigation division. In 2001, border control posts received modern computers and special technical equipment (x-ray for control of postal dispatches, drug, explosives and metal detectors, etc.) for customs control.

In the area of intellectual property right protection, regular training activities for customs officers on counterfeiting and piracy issues have continued.

Since the last Regular Report, activities in the field of corruption prevention have continued. The issue of customs ethics is now part of the basic training of customs officials and customs brokers. As part of the fight against corruption, the rotation of officials exposed to high risk of corruption has continued.

Regarding computerisation, a customs information system, composed of several subsystems, is in place. By April 2002 the computerised entry-processing system was implemented in 92 customs posts, while a new version was installed in only 7 customs offices. In 2001, about 20% of all customs declarations were submitted electronically. The implementation of the computerised entry-processing system has enabled optimisation of the number of customs posts to begin. At present, the number of the customs posts has been reduced by 51.

No new developments are to be reported in the area of Customs IT interconnectivity. The absence of project management structure and ownership for interconnectivity-related projects, coupled with weak national support in terms of human and financial resources, has left problems outstanding in all IT areas.

As regards co-operation, five Memoranda of Understanding were signed in 2001 with economic operators and law enforcement bodies to ensure effective controls, improving co-operation between Customs and other institutions. Furthermore, the use of a simplified declaration procedure with one operator has started on a pilot basis.

Latvia and the Russian Federation signed in April 2002 an intergovernmental agreement on mutual assistance in customs matters, which should further improve the exchange of information.

Overall assessment

Latvia`s customs legislation is largely aligned to the acquis in this field. Nevertheless, further work will be necessary, especially in terms of implementation and enforcement. Moreover, as the full range of EC commercial policy measures and export refunds will not apply until accession, and these affect the context in which the provisions in areas such as non-preferential origin, inward and outward processing are applied, Latvia will have to take steps in this areas.

As regards administrative and operational capacity to implement the acquis, Latvia has still too many customs houses which should be replaced by a smaller number of larger, and modern inland facilities. The reorganisation of customs regions should continue, in particular for the Riga region. A separate budget for the National Customs Board's activities within the State Revenue Service should be established.

Continued efforts are necessary to improve border management, combat irregularities and corruption, improve capacity for risk assessment, intelligence and investigation, and to improve co-operation with other enforcement bodies.

With regards to IT interconnectivity, more support is necessary in both human and financial resources. In order to be ready to connect to the EC customs computerised systems, which is a precondition of managing the customs union and the internal market, the IT issue must be addressed at the highest level; if no urgent and serious measures are taken, Latvia will not be ready to connect in time for accession. It is also important to continue training activities targeted at specific issues such as corruption, risk analysis as well as the fight against smuggling and counterfeit goods and to increase co-operation with other law enforcement bodies.

Conclusions

In its 1997 Opinion, the Commission concluded that Latvia would need to continue major efforts to align its legislation, organisation and staff to the duties that have to be carried out by a modern customs administration. In doing so it might be able to meet EC requirements in the medium term.

Since the Opinion, Latvia has achieved steady progress in aligning with the acquis in this area, and has almost completed the alignment of its customs legislation with the acquis. It has also gradually developed and reinforced the necessary administrative capacity, although a number of issues remain to be tackled in this regard. In terms of administrative capacity, the capabilities of the staff are satisfactory, but the necessary information technology systems are lacking.

Negotiations on this chapter have been provisionally closed. Latvia has not requested any transitional arrangements in this area. Latvia is generally meeting the commitments it has made in the accession negotiations in this field.

In order to be ready for membership, Latvia's needs to focus further efforts on providing the necessary human and financial resources and management structure to make progress on computerisation in the customs area, including interconnection to EC information technology systems. Latvia should continue its efforts on further restructuring and streamlining of the territorial customs organisation. Further efforts should focus on strengthening the customs services` capacity to reduce waiting times at borders and to combat fraud and economic crime, in close co-operation with other enforcement bodies. Latvia should also take steps necessary to prepare for the application of measures and provisions that will be introduced only at the time of accession. Ongoing efforts to address the remaining shortcomings in this field should be stepped up, in particular with regard to the interconnection of information technology systems.

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