On 1 October, Ukraine will become a full member of the European Union customs conventions: advantages and new tasks

The historic decision for Ukraine opening the possibility of joining international customs conventions on 1 October of this year was announced by the Ukrainian Government after participating in the 8th meeting of the EU-Ukraine Association Council in Brussels.

Vytenis Ališauskas,
International Key Expert on custom reforms, EU4PFM

That was the result of long-term and coordinated work of the Ministry of Finance of Ukraine, State Customs Service, Delegation of the European Union to Ukraine, Reform Support Teams of the Ministry of Finance, State Customs Service, Association4U  and experts of the EU4PFM project, which began its operations in Ukraine in this area in 2019.

Development and adoption of a number of vital laws, as well as the introduction of the current Phase of NCTS operations of more than one year in national transit,were essential elements of customs integration with the EU. Ukraine has also already started to develop software for the implementation of NCTS Phase 5, which is a prerequisite for joining the Convention. That is also indicated as a priority in the MASP-C list, the strategic plan of the European Union aimed to implement E-Customs Programme provided for in the EU Customs Code.

All these changes clearly demonstrate the country’s commitment to European integration in the customs sphere.

Therefore, after considering the conclusions of the final CTC-EU monitoring mission, which took place on 23–24 June 2022, Ukraine was invited to join the Convention on a Common Transit Procedure. Thus, Ukraine will become the 36th country party to the Convention on a Common Transit Procedure. Ukraine was also invited to join the Convention on Simplification of Formalities in Trade in Goods.

In the end, this year, Ukraine signed two very important conventions that pave the way for its joining EU Сustoms and Fiscalis programmes. Ukraine already has an opportunity to participate in the EU Working Groups on e-Customs.

According to the General Secretariat of the EU Council, as Depositary of the Conventions, Ukraine will accede to the Convention on the Common Transit Procedure and the Convention on the Facilitation of Formalities in Trade in Goods, and  from 1 October 2022, Ukraine will be able to start the international application of the New Computerised Transit System (NCTS).

Ukrainian businesses operating in 35 countries party to the Convention will be able to enjoy the benefits and simplifications of the common transits, based on the principle of “one vehicle — one declaration — one financial guarantee”. 

However, it’s not just the Convention that matters but the technology that underpins it. Subsequently, the Ukrainian side will have an opportunity, together with EU member states, to participate in the meetings on the development of a new EU IT systems for E-Customs and will be able to fully enjoy the benefits of such cooperation.

How it happened in the EU

The EU was initially intended primarily as a customs union. Therefore, the issue related to customs, namely the free movement of goods between countries, was considered as one of the key issues in the course of the creation of the European Union.

A common transit procedure became a touchstone for the subsequent establishment of common customs processes. Subsequently, all new ideas were implemented in other customs procedures based on the successful example of common transit. That is why preparations for joining the Convention on a Common Transit Procedure are so important.

Advantages of the customs union with the EU

When Ukraine joins the Common Transit Convention, the border crossing will look like this: the driver comes to the customs office, shows a document with a barcode, the customs officer reads the code with a scanner, and if the risk system is not triggered, then, after checks of the customs seals, the customs clearance is completed. The clearance process will happen so quickly that the driver will not have time to drink even a cup of coffee. But for this, Ukraine still needs to settle all export and import regulations that drag out the transit procedure over time.

Another expected advantage of signing customs conventions with the EU is an effective means of preventing corruption, fraud and other violations.

This was one of the main reasons for the adoption of the new Customs Code by the EU. As a result, the number of customs procedures was reduced, they became more clear and public, and IT tools were implemented to reduce the impact of the human factor. Ukraine is now also moving towards it.

At the same time, we can expect a positive effect for bona fide entrepreneurs. This means that an entrepreneur will be evaluated during the authorisation process, and after receiving this status, will have a number of advantages.

The EU concept of Authorized Economic Operators (AEO) introduced in Ukraine simplifies and facilitates the operations, guarantees the safety of the supply of goods.

Bona fide entrepreneurs can apply for the authorized consignor, authorizedconsignee, or both status at the same time, what is the most beneficial for saving time and money, less checking of goods, etc. 

New Tasks

The situation will become more complicated for unscrupulous entrepreneurs. To this end, in 2022 the EU countries started the operation of the new Customs Risk Management System (CRMS2). Following the European Union Ukraine has already implemented a risk management system, which will enable more frequent and more careful checks of unscrupulous entrepreneurs. To minimize the impact of human error, the EU Risk Management System is being continuously updated. This is a challenge for Ukraine as well.

At the same time, the process of integration into the customs union with the EU will still require Ukraine to make new amendments, and in particular, to current legislation. For example, exports from Ukraine are authorised only at the border, so the driver will still have to go through customs clearance.

In EU member states, this problem is solved by a new functionality of the export control system with a new role of the Customs office — Office of Exit. But in general, joining the Common Transit Convention will reduce the time of customs clearance. In the future, though, these procedures will be simplified, too. The above is already planned and is part of the EU-Ukraine Association Agreement.

Step by step, Ukraine will adopt all the necessary legislation — it is only a matter of time.