Twinning Fiche NCTS Implementation – Management Support
Republic of Croatia
Ministry of Finance
Customs Administration
Programme: Phare 2005
Partner Country: Croatia
Area of Cooperation: Internal Market and Trade
PHARE 2005 TWINNING PROJECT FICHE
NCTS Implementation – Management Support Twinning
Project budget: € 1.000.000
1 Basic information
1.1 Twinning number: HR 05 IB FI 04
1.2 Title: NCTS Implementation – Management Support Twinning
1.3 Location: Croatian Customs Administration, Zagreb, Republic of Croatia
2 Objectives
2.1 Overall Objective(s)
To support Croatia in the process of fulfilling the European Union (EU) pre-accession requirements concerning the Chapter 29 (Customs Union) and parts of the Chapter 16 (Taxation) of the acquis, especially with regard to the development and implementation of national systems required by the Croatian Customs Administration (CCA) to connect with the EU IT systems aiming to enable the exchange of information between the European Commission (EC) and the EU Member States immediately upon accession to the EU.
2.2 Project purpose
The purpose of the project is strengthening of the operational capacity of the Croatian Customs Administration (CCA) in project management, supporting the Croatian Customs Administration in NCTS-related IT project management to ensure full compatibility and inter-operability of the Croatian Customs IT systems with the EU Member States systems.
2.3 European Partnership and National Plan for the Integration in the European Union (NPIEU) priority
European Partnership
Based of its findings in the 2005 Progress Report on Croatia, on 9 November 2005, the European Commission proposed the Decision on the principles, priorities and conditions contained in the Accession Partnership with Croatia[1] that lists the following short and medium-term priorities for the country’s preparations for further integration with the European Union:
- Continue developing the necessary IT systems to allow the exchange of electronic data with the EU and its Member States.
- Strengthen and consolidate the administrative and operational capacity of the customs services. Expand training of all staff and increase the use of EU-compatible information technologies and continue preparations to ensure interconnectivity with EU systems.
- Substantially advance alignment with the acquis, in particular in the areas of free zones, transit, fees, tariff quotas and the surveillance of imports and exports of goods.
National Plan for the Integration in the European Union (NPIEU)
The National Plan for the Integration in the European Union (NPIEU) for 2006 specify the need for improvement of existing IT structures and introduction of new information technologies compatible with EU IT systems as a medium-term priority.
These priorities should be supported by the ongoing CARDS and future Phare projects.
3 Description
3.1 Background and justification
3.1.1. General
The Customs Administration of the Republic of Croatia is a legal enforcement entity operating within the framework of the Ministry of Finance. It consists of the Customs Directorate (Headquarters), 13 Customs houses, 86 inland customs offices and 175 Customs offices. The Customs Administration currently employs 3089 staff, including 167 people in the Customs Directorate. The mandate and structure of the Customs Administration is defined by the Act on Customs Service. (OJ 67/01)
The Headquarters function has been organised into 8 separate Services covering the full spectrum of Customs activities (including the control and administration of all Excise taxes) with the 12 regional Customs Houses.
The Headquarters was reorganised in early 2005, namely its structure and functions. The Service for Customs Systems and Procedures is responsible for legal regulation of all customs procedures, including transit procedure. It is headed by an Assistant Director General and consists of four departments: Department for Customs System, Department for Customs Proceedings, which is directly responsible for transit, Department for Border Procedures and Special Treatments and Department for Common Agricultural Policy. Currently the Service for Customs Systems and Procedures is allocated with 20 staff. The new organization prescribes 30 working positions within the Department for Customs Tariff so accordingly there is a possibility for additional staffing. Four employees of this Service are members of the core business team for the NCTS project. The business team is supported by two members of the core IT team from the Service for Information, System, Statistics and Analyses, which is responsible for all IT functions of Customs Directorate. In addition, IT team is supported by two APIS IT (former GZAOP[2]) employees. At operational level, 12 Customs houses are responsible for implementation of transit procedures.
3.1.2. Relevant Legal Framework
The basic act regulating customs procedures in the Republic of Croatia is the Customs Act which has been mostly harmonized with the Council Regulation (EEC) No 2913/1992 establishing the Customs Act and its amendments. The last amendment of the Croatian Customs Act entered into force on 28. November 2005 (Official Journal No 140/2005). This latest amendment to the Customs Act significantly modified provisions on transit procedure (articles 103 – 139). Following efforts on fulfilling conditions for introduction of common European transit procedure, legal relations among all participants of transit procedure are regulated in details. Also, the preconditions for alignment of guarantee system for payment of customs debt that might occur are regulated and conditions are being created for enabling customs service to implement computerised transit procedures (NCTS). Proposed changes open the possibility for Croatia to introduce common transit procedures of the EU and EFTA countries before actual accession to the EU by accessing the Community Transit Convention and Convention on Simplification on Formalities in Trade.
Amendments to the Decree on implementing the Customs Act (OJ 69/06), which entered into force in July 2006, followed above mentioned changes of the Customs Act..
At present, the customs transit procedures are comprised in Articles 66 and 103-109 of the Croatian Customs Act (Annex 4). A national document – Single Administrative Document – and the international documents ATA and TIR carnets are used for goods transported in transit procedure. The simplified transit procedure in railway transport based on CIM bill of lading and TIR transfer list is not yet being applied, as Croatian Railways are not technically equipped for application of such a procedure.
3.1.3. Relevant Information on EU Accession
With the signing of the Stabilisation and Association Agreement (SAA) in October 2001 and the submission of the membership application to the European Union in March 2003, the Government of the Republic of Croatia demonstrated strong commitment to the EU integration process. Following the positive Opinion of the European Commission in April 2004, Croatia became a candidate country to the European Union on 18 June 2004. Following the decision of the European Council to open negotiations with the Republic of Croatia, the negotiations formally began on 03 October 2005. The multilateral screening on Chapter 29 took place on 31st January and 1st February 2006 and bilateral screening on 15th and 16th of March 2006.
In the European Commission Opinion on the application of Croatia for membership of the European Union it was stated that major efforts would be needed to adopt the Croatian transit procedure to the Community Transit Procedure's requirements including developing of an automated transit system compatible to the New Computerised Transit System (NCTS). The interconnectivity to the NCTS systems, operational in the European Union and the other Contracting Parties of the Common Transit Convention, is an accession pre-requisite in the customs sector. The candidate country has to be fully NCTS compatible at the latest one year prior to accession. Also, the same transit-related requirements (full and stable implementation of all Common/Community transit procedures and a fully operational NCTS system) apply for Croatia to join the Common Transit Convention before its accession to the EU.
Following the European Council decision from 03 October 2005 to open negotiation process with the Republic of Croatia on accession to the European Union the multilateral screening for Chapter 29 - Customs Union, was held on 31 January and 1 February 2006. The bilateral screening took place on 15 and 16 March 2006, during which the Croatian representatives informed the European Commission in detail on the situation in the Croatian legislation and the current level of alignment with the Community acquis regarding the present chapter, as well as regarding the state of accompanying administrative capacities.
There is currently no established accession date.
3.1.4. IT Interoperability Projects
The first DG TAXUD IT interoperability mission took place in October 2004. This mission helped to identify that there was little knowledge within the Croatian Customs Administration as to the requirements for EU Interoperability. The volume of work to be undertaken to achieve Interoperability may have been underestimated. Following the mission findings it has been acknowledged within the Customs Administration that considerable efforts would need to be made, if IT interoperability with the EU is to be achieved in the medium-term. Accordingly, Customs Directorate has set up the core business and IT teams to manage parallel IT interoperability projects for NCTS, ITMS and EMCS. Improvement of business processes and preparatory work for different IT interoperability systems are taking place under different CARDS twinning projects, which have been implemented in the course of 2005 and the beginning of 2006 (see Section 3.5). The draft IT strategy has been prepared and it is expected to be endorsed by the end of 2006. Moreover, the development of Business Change Management plan is ongoing.
The high level objective of the Interoperability programme is “The development and implementation of national systems required by the Croatian Customs Administration to connect with the EU IT systems to enable the exchange of information between the EC and EU Member States immediately upon accession to the EU.”
In order to comply with the EU Customs Legislation and IT system requirements, the following systems require interoperability by the date of accession:
· CCN/CSI[3]: this gateway is mandatory for the communications between the DGTAXUD IT systems and their Member States counterparts. The CCN/CSI must be operational at least three months prior to the beginning of any remote tests.
· ITMS: this integrated tariff management system is a business concept grouping most of the computerised systems dealing with the tariff exchange of information between the Commission and the Members States. Two of the applications under this concept are complex. Being mandatory for the accession date, their development and interconnection should therefore be prepared in advance. These are TARIC (Tariff Integre Communautaire) and TQS (Tariff Quotas and Surveillance).
ITMS also covers some other systems dealing with the exchange of information. For following ITMS sub-systems the Commission has developed web-light client solutions that do not require substantial national adaptations and that can be used instead of national system-to-system solutions:
o EBTI (European Binding Tariff Information)
o ISPP (Information System for Processing Procedures)
o SMS (Specimen Management System).
The following ITMS subsystems do not require any particular IT development:
o ECICS (European Customs Inventory of Chemical Substances)
o BOI (Binding Origin Information)
o Suspensions.
However, all ITMS systems (TARIC, TQS, EBTI, ISPP, SMS, ECICS, BOI and suspensions) are accession-mandatory. Possible future evolution of the ITMS systems should in the beginning be followed by Croatian Customs in close relation with their Twinning partners.
NCTS : by the date of the accession, the National Transit application, fully compatible with the NCTS must be available. This means that by that time, all the legal provisions concerning the transit (primary, secondary and tertiary legislations) should be in force, the IT system should pass all the required conformance tests in national and international modes and that at least all traders with the status of an authorised consignor/consignee should be connected to the NCTS national external domain. Croatia plans to join the Common Transit Convention (CTC) prior to EU accession which in principle requires the same conditions to be met as for Community Transit upon the date of EU accession.
EMCS: This system will modernise and significantly increase the grade of automatisation for the group of three applications that are presently operational and mandatory for Member States (EWSE[4], MVS and SEED[5]). The EMCS is currently in the development phase and will become mandatory for Member States by June 2009.
· Finally, new interoperability systems will be developed under the electronic customs’ DG TAXUD project (within the security and modernisation reform of the EC Customs Act). Currently, the most defined applications being the following[6]:
o AEO (Authorised Economic Operator)
o ECS (Export Control System)
o ICS (Import Control System)
3.1.5. NCTS Interoperability
As mentioned in the previous section, after the first DG TAXUD IT interoperability mission, the Customs Directorate has set up the centralized core NCTS teams, both on business and IT aspects, by recruiting experienced staff. This was one of the pre-condition DG TAXUD required from the Customs Directorate to be fulfilled prior to start of CARDS 2002 NCTS twinning project in order to properly absorb all activities under this twinning project. This project started in July 2005 and up-to-now major project results are the SWOT analysis including recommendations for further actions, prepared National Helpdesk (NHD) relevant strategy, National Helpdesk specifications prepared according to the existing EC NHD specifications, required legal drafts (primary, secondary and tertiary legislation) identified, etc.
In order to establish a stable and sufficient administrative capacity in the area of community transit, including full set-up of the NCTS IT and business team and establishment of a National help desk (NHD), the persons for the following key positions were appointed in March 2006: the NCTS manager, the national NCTS coordinator and 12 regional coordinators, the IT NCTS manager, the NCTS helpdesk manager , two managers of the helpdesk teams and helpdesk agents.
3.2 Linked activities (other international and national initiatives)
CARDS 2002 project “Community Transit - Conform Customs Procedures and IT interconnectivity System”
This 18-month project, which started in July 2005, will provide assistance to the Customs Directorate in strengthening the administrative capacity of the Customs Directorate for implementing Customs transit procedures fully aligned to the external and internal Community Transit Procedures. The project will be composed of two components. Component 1 “Administrative capacity building for NCTS implementation” will focus on gaps and needs assessment of the Croatian Customs Act with regard to existing transit procedures, providing advices in legal drafting if necessary, SWOT[7] analysis of the Croatian Customs Directorate regarding the available resources for Community transit procedures, assisting the Customs Directorate in setting up stable and sufficient administrative capacity in the area of Community transit, preparing training programmes and provide training on Community transit, including trade awareness, Community transit study missions to a Member State/Member States and on-the job assistance to fully align the Croatian customs transit procedures to the Community external and internal transit procedures (normal and simplified). Component 2 “Preparing the development of a NCTS-compatible automated transit system” will be focused on providing assistance in setting up and defining the Business Change Management Plan (BCMP) related to the implementation of the NCTS, including as a minimum Project Initiation Document, including Project Plan, hardware specifications and functional specifications of the trader module.