Starting 2023: Results and Prospects of Ukraine’s Integration into the EU Customs System

2022 was a year of hard luck and deprivation for Ukraine. However, the outcome was the stronger aspiration of Ukraine and the Ukrainians to be fully integrated into Europe. The European Union was initially established as a customs union, and it still is.

Therefore, achievement of the European standards and integration of the Ukrainian customs into the customs space are gaining special significance. Despite all the military difficulties, Ukraine not only continued, but also accelerated and intensified the process in 2022.

Since the European Union was created primarily as a customs union, and it remains so today, the achievement of European standards and the integration of Ukrainian customs into its customs space are of particular importance. Therefore, in 2022, despite all the difficulties of the war, Ukraine not only continued, but also accelerated and intensified this process.

A special impetus was provided by the fact that the European Union had granted Ukraine the status of a candidate for membership with the European Union owing to the efforts of the Ukrainian authorities and President Volodymyr Zelenskyy personally. Both the President and the Government of Ukraine are well aware of the key significance of the customs aspect in order to meet the requirements for the full-scale EU membership.

The European partners, including the EU Public Finance Management Support Programme for Ukraine (EU4PFM), have been expending all the efforts to provide effective assistance and comprehensive support to the State Customs Service on the path to the European customs system.

Customs Visa-Free Regime

In the first place, it is so called ‘customs visa-free regime’ for Ukraine, i.e. introduction of the computerized transit system (NCTS — New Computerized Transit System) and accession to the Convention on a common transit procedure. That is a major international achievement, which was made by Ukraine in a very prompt manner, within the shortest terms possible.

NCTS is the system for exchanging a full range of information on all the stages of customs clearance of goods in transit that considerably reduces the time and effort necessary to cross the borders of the European countries and creates conditions for lower corruption risks.

At the end of the departing year, there was a meeting of the EU-CTC Working group on common transit and the simplification of formalities in trade where Ukraine participated as a full Member State of the Convention rather than an observer for the first time. The first results of international use of NCTS in Ukraine were highly appreciated by the EU.

The important condition was to develop the timely and quality package of applicable legislative amendments; the representatives of the State Customs Service, the Ministry of Finance and other institutions did their best to meet that requirement. EU4PFM also made its contribution into the ‘customs visa-free regime’ both by assigning experts to develop the laws and organising and holding the workshops on NCTS.

In particular, the online workshop “Ukraine’s accession to the Convention on a common transit procedure. Starting international application of NCTS in Ukraine” was attended by around 1,500 business representatives in September.  Another online workshop dedicated to the experience of one month of international application of NCTS in Ukraine for businesses gathered about 300 participants.

We treat the ‘customs visa-free regime’ as one of the key achievements of our project activities in the customs field. Looking a bit ahead, it should be noted that the new customs code could be the next achievement resulting from our joint efforts.

Amendments to the Customs Code of Ukraine

We believe that the second important achievement is amendments made to the Customs Code since they fulfil a considerable portion of the clauses of the Association Agreement with the EU (around 30% of Ukraine’s commitments). It is the quality co-work performed together with the experts from the State Customs Service, the Ministry of Finance as well as the Reform Support Teams (RST) of the State Customs Service and the Ministry of Finance.

These amendments to the Customs Code of Ukraine are associated with the customs procedures, guarantees, simplifications and other changes connected with the Association Agreement and accession to the Convention on a common transit procedure. In the opinion of the international experts, they will help bring the national legislation of Ukraine in line with the respective articles of the Union Customs Code.

It has not always been smooth, but we were happy to furnish more detailed information and explanations to our partners and Ukrainian legislators.

At the end of October, EU4PFM and the Central Project Management Agency (CPMA) gathered the partners from the Ministry of Finance of Ukraine, the State Customs Service of Ukraine, the State Tax Service of Ukraine, the Delegation of the European Union to Ukraine and other international projects in the public finance management field. It was the first offline meeting of the partners since the beginning of the war.

The Lithuanian colleagues shared their knowledge with the representatives of the State Customs Service and presented the customs IT systems and services, electronic queueing systems, customs procedure simplifications as well as data exchange between the EU Member States and other countries Ukraine needed. They also showed in practice how to prevent violation of intellectual property rights and detect counterfeit products.

Presenting Customs IT Systems and Services

EU4PFM also conducted the workshops for the representatives of the State Customs Service dedicated to the topical issues of bringing the Ukrainian legislation in line with the European one: development of customs audit as an element of post-customs control and practical applicable of the EU customs legislation on protecting intellectual property rights.

War-Related Aid

We can take pride in the fact that the war has increased the scope of aid of the European entities to Ukraine and become a new driver instead of suspending such aid. The technical aid in the IT industry in connection with the information security matters is of priority.  Therefore, the overriding necessity is to enhance the customs infrastructure with the servers, network equipment and software.

The State Customs Service has been provided with the backup mobile data centre and network equipment capable of being reliably connected to the existing network of the State Customs Service. It has also received the advanced Wi-Fi equipment that maintains the necessary security and fault tolerance level. The project has furnished the equipment to join the customs visa-free regime (bar code readers, seals).

Moreover, the technical aid includes generators for the territorial customs offices and, upon request of the customs authorities, hundreds of bullet-proof helmets, body armour and ballistic plates that meet the NATO standards as well as first-aid kits manufactured in the USA.

The EU4PFM representatives have recently been awarded the certificates of merit by the Ministry of Finance of Ukraine for making the considerable contribution to development of the customs industry in Ukraine and bringing the customs legislation of Ukraine in line with the EU legislation. It has been not only appreciation of our work, but also a driver to enhance and intensify it the next year. We are planning to continue both the expert and technical aid the Ukrainians customs authorities need today.

On Plans for 2023

EU4PFM will keep working to amend the legislation in order to cover the customs aspects of the Association Agreement with the EU that still have not been brought in line.

It would be of use to start the translation of the Union Customs Code and other customs legislation and to implement their clauses into the Ukrainian legislation. When Ukraine joins the EU, the Ukrainian version of the customs legislation will be mandatory. It would be great if it was launched at the national level in advance. That is why time has come to work with the new Customs Code based on the European standards.

When the new customs legislation enters into force, in most cases, it enters into force in several years since the customs authorities need time to develop and introduce the new IT systems. This period is also used by Ukraine. Ukraine’s status of a candidate for the EU has encouraged the European entities to think faster and consider what Ukraine will need in the future since the European integration is under way. It must be associated with numerous new IT solutions and infrastructural development. The current EU priority is introduction of paperless processes and transition of all the procedures into the electronic format.

The EU customs legislation creates conditions for efficient procedures and introduction of the new modern IT systems. These solutions are presented by the Electronic customs initiative or eCustoms for short. Its implementation is based on the multi-year plan of the projects to be maintained by all the countries. We have furnished the customs authorities with the considerable volume of information on this matter this year. All the programme clauses have been included into the IT strategy and plans for customs authorities to be adopted. The future plans for customs authorities in this direction are now coordinated based on MASP-C — the multi-annual strategic plan for customs, which is a working paper for the EU countries.

The very important task for the next year is to introduce Phase 5 of NCTS, which was a condition for admitting Ukraine to the Convention. These are the functions of NCTS that follow the first four phases and provide for launch of the new simplifications in work with customs declarations and financial guarantees and automation of all the guarantee working procedures.

Ukraine can rely upon further aid and support on its path to the European Union. EU4PFM is ready to keep helping the Ukrainian customs authorities by all means during these challenging times experienced by Ukraine and to assist in its full-scale integration into the European customs system.