Twinning fiche TARIC Adaptation – Management Support - Twinning
Republic of Croatia
Ministry of Finance
Customs Administration
Programme: PHARE 2006
Partner Country: Croatia
Area of Cooperation: Internal Market and Trade
PHARE TWINNING PROJECT FICHE
ITMS Adaptation – Management Support Twinning
Project budget: € 500.000
1 Basic Information
1.1 Programme: Croatian 2006 Phare National Programme
1.2 Twinning Number: HR-06-IB-FI-03
1.3 Title: ITMS Adaptation – Management Support - Twinning
1.4 Sector: Internal Market and Trade
1.5 Beneficiary country: Republic of Croatia
2 Objectives
2.1 Overall Objective(s)
To harmonize Croatian Customs system with the European Union standards in core Customs and Taxation business areas of the European Community customs tariff, customs transit control and the control of the movement of excise goods.
2.2 Project purpose
To provide support to the Croatian Customs Administration (CCA) in the management of the ITMS sub-systems IT developments encompassing the management of all business and functional aspects of systems implementation surrounding the introduction of the new computerised system, particularly in the areas of organisational restructuring and procedural reforms.
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 2007 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 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 has a centralised structure, established upon 4 organisational layers:
- 1 Central Office - Headquarters
- 17 Customs Houses
- 109 border customs offices
- 86 inland customs offices.
The HQ is organised in 9 services (Internal Audit; Organisation, legal affairs, HRM; Financing, accounting, maintenance; Customs procedures; International cooperation and European integration; Special taxes; Tariff, Value, Origin, Laboratory; Customs controls; Statistics and IT) covering the full spectrum of Customs activities and 1 independent department as internal organisation unit.
Within the Headquarters the Service for Customs Tariff, Value, Origin and Customs Laboratory is headed by an Assistant Director General and consists of four departments: Department for Customs Tariff, Department for Value, Department for Origin and Department for Customs Laboratory. The Department for Customs Tariff has been allocated with 9 staff (including Head of Department). Five staff forms the full-time business project team for the Master Tariff system. The business team is supported by three members of IT team from the Service for Information, System, Statistics and Analyses. The new organization and systematisation prescribes 16 working positions within the Department for Customs Tariff so accordingly there is a possibility for additional staffing.
3.1.2. Relevant legal framework
The basic act regulating customs procedures in the Republic of Croatia is the Customs Code which has been largely harmonized with Council Regulation (EEC) No 2913/1992 establishing the Customs Code, and its amendments. The last amendment of Croatian Customs Code entered into force oin December 2005 (OJ 138/2006). The last amendments to the Regulation Implementing the Customs Act (OJ 5/07) entered into force in January 2007, followed above mentioned changes to the Customs Act.
Today the main legal framework for the Croatian Customs Administration includes also the Customs Tariff Act. The Customs Tariff Act came into force in 2000 (NN 61/2000, 117/2000). The Republic of Croatia aligned its Customs Tariff with the Combined Nomenclature on 1 January 2002. The Republic of Croatia fully implemented the subdivision up to the eight-digit CN code, as well as additional notes. Subsequently, the Republic of Croatia has been aligning its Customs Tariff with the amendments of the Combined Nomenclature on a regular basis. The Croatian Customs Tariff, valid for 2008, is aligned with the Combined Nomenclature for 2008, respectively with Commission Regulation (EC) No 1214/2007 of 20 September 2007 amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff.
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 a strong commitment to the EU integration process. Following the positive Opinion of the European Commission[2] in April 2004, Croatia became a candidate country to the European Union on 18 June 2004. In its Opinion the European Commission examined under Chapter Customs Union the current and prospective situation in the customs area with a brief assessment of Customs Administration’s ability to assume the obligations of membership in a medium-term. The Opinion highlighted that further efforts are needed to align customs legislation with the acquis and to effectively implement and enforce it in the medium term. Especially the administrative capacity needs to be assessed. Particular attention needs to be given to the modernization and strengthening of the customs administration by providing, amongst others, sufficient budget, IT and human resources, as well as further training to cover the whole range of customs issues, including those which are accession related.
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. After exchanges of the negotiation positions at the second session of the Intergovernmental Conference, held in December 2006, negotiations were opened on Customs Union (Chapter 29).There is currently no established accession date.
3.1.4. IT interoperability projects
Following the findings of DG TAXUD IT interoperability missions, which took place in the course of 2004-2005, it has been acknowledged, within the CCA, that considerable efforts would need to be made, if IT interoperability with the EU is to be achieved in the medium-term. As a result, the CCA has set up the core business and IT teams to manage parallel IT interoperability projects for NCTS[3], ITMS[4] and EMCS[5].
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 - 2007. Both IT Strategy and Business Strategy have been adopted as well as the Interoperability Implementation Strategy and the Business Change Management.
The development of national IT systems (TARIC, NCTS, EMCS, AEO, CCN/CSI, QUOTA, Surveillance, etc) required to connect the CCA with the EU IT systems, in order to enable exchange of information with the EC and EU Member States immediately upon accession to the EU, had been planed under various Phare 2005 and Phare 2006 projects. The implementation of Phare 2005 interconnectivity projects started in the course of end 2007.
3.1.5. ITMS interoperability
As mentioned in the previous section, after the first DG TAXUD IT interoperability mission the Customs Administration has set up the centralized core ITMS teams, both on business and IT aspects, by recruiting experienced working staff. This was one of pre-condition DG TAXUD has expressed the for the Customs Administration to be fulfilled prior to start of CARDS 2004 ITMS twinning project in order to properly absorb all activities under this twinning project.
During the Phare 2005 programming phase for TARIC projects, the Customs Administration left open two options for developing the Master Tariff System: either from scratch or adapting the operational Application of Customs Tariff (ACT) to TARIC-compatibility. In this view a detailed ACT-TARIC gaps-and-needs analyses has been produced. This gaps-and-needs analysis, confirmed that the major strength of adapting the current system (ACT) comes from integrated data model that holds both, the EU legislation TARIC data and nationally required data such as VAT and other data. With integrated data model, it will be easier to develop (or upgrade current) integrated interface to interested parties, thus having one common integrated view of overall system. This was considered as critical advantage of this option. Furthermore, the Document Management System module, considered as vital point in business processes related to management of tariff data, would be preserved. For that reason the CCA opted for adapting the current system (ACT) to TARIC functionality.
3.2 Linked Activities (other international and national initiatives)
CARDS 2004 twinning project “Modernisation of Customs Administration in view of preparing for the Integrated Tariff Management System (ITMS)”
This 24-month project, which ended in November 2007, provided assistance primarily in the EU Customs tariff related areas: classification, valuation of goods, binding tariff information, EU customs procedures with economic impact, EU simplified customs procedures (others than Community transit), quotas and surveillances, preferential agreements, market organsations and other agricultural legislation, anti-dumping and countervailling duties, EU non-tariff measures etc. It will also contribute to further legislative alignment, training of staff and increasing in the capability of the Customs Directorate to manage the implementation of the new procedures in the EU Customs Tariff related areas.
The project was composed of two components. Component 1 “Administrative capacity building in the EU Customs tariff related areas” has been focused on the legal gaps and needs analysis and providing advices on legal drafting, improvement of the administrative capacity in the EU Customs tariff related areas, preparing training programmes and providing training on the EU Customs tariff related areas and on EU non tariff-related measures and binding origin information, study visits or internships in one or more Member States and preparing a basic awareness programme for Customs management and trade community on EU simplified Customs and declaration procedures.
Component 2 “Preparing the development of an Integrated Tariff Management System (ITMS)” has been focused on assistance in setting up and defining a Business Change Management Plan (BCMP) for the full business implementation in the EU Customs tariff related areas (including trade community) according to the progress in the related business activities, carrying out a review (and update/enhance where necessary) of the Terms of Reference for Phare 2005 ITMS service contract (TARIC Adaptations) that were drafted under a separate contract, providing assistance in defining the Project Initiation Document (including implementation plan) for the ITMS project: TARIC, Tariff Quotas and Surveillance (TQS) and other tariff-related IT interconnectivity systems, providing assistance in preparing the Users Requirements for the ITMS project and assistance in preparing the Terms of Reference for Phare 2006 ITMS development project (service contract) and requirements for the ITMS Project Quality Plan (PQP).
Phare 2005 project ‘TARIC Adaptation – Software development service contract‘
This ITMS sub-project will provide support to the Customs administration in adapting the existing software (Aplication of Customs Tariff) to TARIC requirements focusing on the following TARIC-compatible DB modules as first part of ITMS Implementation: Module 0: Skeletons (GUI, Report Layout,), Module 1: Loader and merger, Module 2: Tariff Management, Module 3: Calculation / CDPS Interface.
Phare 2005 project ‘TARIC Adaptation – Management Support Twinning
This project, which started in November 2007, will provide support to the CCA in project management for the development of national TARIC-compatible Master Tariff System, on tariff-related business change management and on preparations for TQS. This support will encompass the management of all business and functional aspects of system implementation surrounding the introduction of the new computerised system, particularly in the areas of organisational restructuring and procedural reforms.
Phare 2006 project ‘ITMS Adaptation – Software development service contract‘ (Sub-project 2)
The purpose of this ITMS sub-project is to upgrade/develop the following EU compatible national ITMS sub-systems: Quota 2, Surveillance 2, EBTI (European Binding Tariff Information), SMS (Specimen Management System), ISPP (Information System for Processing Procedures) and ECICS 2 (European Customs Inventory of Chemical Substances).
Trade and Transport Facilitation in Southeast Europe (TTFSE) project
This project, financed by the World Bank loan, has been completed and closed in March 2005. The purpose of the TTFSE project was to strengthen the Customs Information Systems performance and in general improve the Border Crossing Facilities. One part of this project was the development of the Application of Customs Tariff (the ACT) software, which is utilized for passing, updating and using, as well as publishing data related to the Customs Tariff and data sources. Application of Customs Tariff (ACT) has been completely developed on the base of extended TARIC data base. Many parts of this data base (e.g. Nomenclature) have been used in a way TARIC requires, meaning that certain application modules were useable with relatively small number of changes.
One of the elements of the TTFSE project in Croatia included setting up of a specific Risk Management System, which today consists selectivity and post-release check modules and a distinct targeting data base.
Customs 2007
Customs 2007 programme aims to provide a legal and financial base for electronic information exchange systems between national administrations, training seminars for customs officials and experts, exchanges of officials among national administrations and the basis for an electronic system which will allow business to move towards a paperless customs environment. Candidate countries for accession to the European Union (EU) are participating in the programme, so as to help both them and Member States prepare for enlargement. The Memorandum of Understanding between Croatia and European Union on Croatian participation in Customs 2007 programme was signed in August 2006.