Speeches: Janos Nagy, Director General, Ministry of Finance, National Customs & Finance Guard, Hungary

7^th IRU East-West Road Transport Conference
Budapest, 15-16 May 2003

Budapest Congress Centre (BCC), Alkotas u. 63-67 - 1123 Budapest, Hungary

ROUND TABLE 2:

EU enlargement - Are you prepared?

Janos Nagy
Director General, Ministry of Finance, National Customs & Finance Guard, Hungary

Ladies and Gentlemen,

As you are surely aware, the primary objective of the foundation of the European Economic Community was the establishment of the common market of the member states. The common market is a territory where goods, persons, services and capital (the four fundamental liberties) can move without any restrictions.

The EU is a single economic territory, which functions as a national market therefore the free movement of goods is probably the most important component of not only the operation of the single market, but the whole Union. The free movement of goods is ensured by the customs union (set up in 1968) and the abolition of quantitative restrictions: member states are prohibited to levy import/export customs duties and other related charges between each other, and they implement single tariff and customs documents with respect to external countries.

Following the country's accession to the European Union, the substantial part of Hungary's foreign trade will become part of the internal market and only 15% of the Hungarian export and less than 30% of the import will be subject to the common customs system. It will not be disadvantageous for the operators to apply the customs code of the Union, as harmonization in Hungary is nearly 100%.

Apart from the harmonization of the legislation and the organizational measures being already implemented, the most important task of the Hungarian customs administration is to fulfil the technical conditions of the accession and to ensure the operational background of being a member state.

The most important issues related to the accession to the EU are:

the operational structure based on main customs offices and customs offices;
the creation of TARIC centres: data connection to EU data bases;
the establishment of new bodies controlling the utilization of EU funds and reclaims;
the increased control by the Customs Laboratory of goods imported from third countries;
transferring to the Community budget (in consideration of the tax collection cost, which is 25%) 75% of customs duties payable on imports from non-EU countries.

The changes will result in brand new control methodology at the internal frontiers, as traditional controls will be abolished, passengers will freely move through these borders (but not earlier than 2006, Hungarian citizens must use their passports in the transitional period). This also means that cooperation between the enforcement and security agencies of the member states shall be enhanced in order to prevent infringements, which requires complex mobile groups to increase border zone controls.

Mobile units operating at the internal frontier will perform (among others) the following tasks in the border zone:

control of road transport of hazardous goods;
control of tachograph sheets;
prevention of illegal export of drugs and psychotropic substances;
control of transport of nuclear products and technologies;
cooperation with the Border Guard and the Police in order to combat illegal migration.

Important:The classic tasks of the customs administration have obviously and largely been extended in the course of the integration process. Today not only the interests related to revenue collection are of great significance but the representation of the economic interests of national operators and the Union should also be considered. Furthermore, indirect market regulating activity should be performed, the citizens of Hungary and the Union need to be protected and the objectives of security have to be realized. All these require a so called community role to be played by our administration.

II.

As we all know and as I mentioned earlier Member States abolished control at the internal frontiers but strengthened the control of goods and persons at their external frontiers. This fact will also re-qualify Hungary's borders after the accession to the EU.

Our borders with non-EU states will be the external borders of not only Hungary, but also of the EU. Border control must be performed in accordance with the Schengen rules (single border control system) - not only the Schengen strictness, but the Schengen techniques will be typical: control is and will be performed at an appropriate number of border crossing stations with appropriate technical equipment and simplifications expected by the EU and by the increased use of risk analyses.

We have been developing the border crossing stations (in view of infrastructure, informatics, technical equipment and staff) in consideration of the above and the control of the green border will also be rendered stricter and more efficient. Our country will use the Schengen cooperation database at the external frontiers, where data of persons and objects can be found, who/which are prohibited to enter the country or are under warrant.

Increasing the number of staff of customs offices operating at the external frontiers should also be adequately considered in the course of the preparation process.

Some tasks to be (and already) performed at the external frontiers:

veterinary, phitosanitary tasks;
control of international road transport licenses, levy and collection of vehicle tax, control of compliance to legislation on the restrictions of traffic of heavy vehicles;
control of technical conditions of vehicles;
tasks related to internationally controlled products and technologies;
control of double-use and military products;
tasks stipulated in Act XXIV of 1994 on the prevention of money laundering.

III.

Finally it is important to refer to the security role of customs administrations. After the terrorist attack on 11 September 2001 all states of the world had to reconsider what means are to be used to serve the security of global trade.

The Hungarian legislation provided our administration with a number of powers related to defence and security policy and to the prevention of money laundering and terrorism.

We have drafted a strategy to complete these tasks, which is closely related to the non-proliferation and export control activity. In Hungary military products need to be permitted in 3 steps; beside the general activity permission, case and trade permissions are also necessary to import and export technologies. These products are always subject to detailed control by the Hungarian customs service in cooperation with two concerned Ministries.

The so called 'x-ray gate installation programme' is closely related to border crossing developments carried out in order to completely comply with the security factors.

Our administration also plays an active role in combating money laundering, which forms the financial basis of international terrorism. In the frame of this we are given the means to subject consignments originating in/destined to countries, which evidently support international terrorism, to stricter customs control. We are also given the power to check reports on financial resources moving through the borders.

This work is largely supported by information obtained from important international organisations (MTCR, Wassenaar Arrangement) and from the fellow authorities of the Member States of the EU.

The above require a customs activity becoming ever complicated and accordingly a greater responsibility from the Hungarian customs service. The customs administration of Hungary does its best to completely comply with this responsibility and to meet all other expectations.

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