Customs Trade Law Academy Interview: Part 1 of 4

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E-Origin is driving a R&D project mixing digital technology and legal framework in customs clearance related to e-commerce. The research is led by the Customs Trade Law Academy (CTLA) at the University of Liège, which has set up an educational course at HEC-Executive Education for professionals.

In Part 1 of our 4 part interview, we discuss the CTLA and its objectives, the collaboration with e-Origin and representation model (direct or indirect) for customs brokers dealing with e-commerce flows. The CTLA members interviewed were:

  • Karin Walravens, Project Leader, Customs & Trade Law Academy
  • Raphaël Van De Sande, researcher at the University of Liège within the framework of the e-Origin project, lecturer at HEC – masters specializing in tax law, trainer at HEC Executive Education within the framework of the fundamentals of customs and excise legislation training, member of the CTLA steering committee

Can you tell us about yourself and the CTLA? What is the objective of the CTLA?

The international context has put customs back on the front scene of international trade and international relations. As examples we saw the protectionist measures of the Trump Administration or Brexit. At the same time, Liège Airport has seen a strong growth in activities since 2018, supported by the implementation of simplified procedures for customs clearance and management of customs controls. It is therefore natural that a group of experts from AGDA, the private sector and the academic world wanted to meet to develop a network to promote and consolidate this development of activity.

The key points were as follows: 

  • a lack of customs expertise in the private sector and in the academic world
  • a lack of anticipation of legislative changes with the implementation of the EU Customs Code and new tools for managing the flow of goods
  • the absence of a legal, managerial and operational training offer for companies and students wishing to evolve in this sector of activity
  • the need to create an ecosystem participating in the evolution of the logistics sector in the Liège region

The CTLA was created as a result of a partnership between the University of Liège, the Tax Institute and the University of Antwerp. The first academic level training modules were organized in 2018.

Two main objectives drive the actions of the CTLA:

  • to increase the level of expertise and professional skills in the field of customs and excise through the organization of training courses adapted to the needs of the sector

In addition to the collaboration between the University of Liège and the University of Antwerp via the Tax Institute, this project has received the support of the FPS Finance, the FPS Economy, the Greenlane network and ICC Belgium. Since 2020, it has been financially supported by AWEX and Liège Airport.

The following are some of the achievements:

  • The “Fundamentals of Customs and Excise Legislation” training: an 8-day program, delivered by experts from both the private and public sectors, which received AGDA approval in 2022 as a training course granting access to the profession of Customs Representative
  • The program of specialized training in indirect taxation: customs, excise and VAT, which includes modules such as: special customs regimes, tariff classification, value and origin, import/export, customs declaration, VAT, Customs compliance in e-commerce, etc. This program is declined in the form of a master of specialization in international taxation at HEC, recognized by the EU for the recognition of the criterion “expertise and professional skills”of the AEO certification 
  • The participation of two researchers in the e-Origin project, subsidized by the Walloon Government within the framework of the “Logistics in Wallonia” competitiveness cluster.

In all these projects, there is only one goal:
to allow all the actors active in import/export to improve their knowledge and their practices to become compliant through training and the exchange of expertise.

How did the collaboration between the University of Liège (CTLA) and a freight-tech company like e-Origin on an R&D project come about?

It is a logical step in as this project aims to increase legal compliance by offering operators the possibility to reduce the declarative risk, through an anticipatory risk analysis and decision support.

Our role is to bring our customs expertise to the development of analysis tools and to examine in detail the effects of the current and future regulations on the e-commerce activity. In addition, we identify the legislative elements that need to be adapted to this type of flow, which has its own specificities.

Finally, we clarify the regulatory adaptations (and there are a lot of changes with the implementation of the CDU until 2025). Let’s note, for example, the introduction of the VAT Package on July 1, 2021 and the concomitant introduction of the H7 regime for low-value shipments to individuals in the EU.

Customs agents today need a clear legal framework applicable to their flows and declaration processes. Do you think they can easily address all the issues related to customs clearance of e-commerce goods from China?

We are in a central position to provide added value in this area.

Indeed, we are partners of Liège Airport, we represent the operators of Bierset within the Regional Forum and we are in permanent contact with the local Customs Authorities.

Our objective is to create bridges between companies, which need a clear legal framework, and the administrative authorities, which are responsible for enforcing it on a daily basis. On both sides, there are obstacles to overcome because e-commerce flows represent a real challenge, due to the volume of parcels and data to be processed in a very short period of time.
The first thing to do is to define, in consultation, the needs of each party to create a clear and sustainable working environment.

For example, the question of the direct representation mandate and the orders to declare has been the subject of a joint working group (customs, trade), within the Regional Forum, to agree on the elements that must appear on it, since AGDA had not established a specific model at the national level. There are other issues to overcome, such as the technical operationalization of a regulatory statement (i.e. the direct representation mandate for B2C declarations). These kinds of topics are under discussion at this stage.

Of course, we are dependent on decisions that often go beyond the local framework, which is why we also intervene with more formal bodies, such as DG TAXUD (via the Trade Contact Group) or the WCO. By participating in legislative work at a European level, we bring a perspective on operational needs in the field to the highest level.

Can you detail what is meant by direct and indirect representation? What are the consequences for customs brokers ?

First of all, it should be recalled that in order to obtain the status of Customs Representative, it is necessary to be registered in the register of Customs Representatives managed by the Customs Authorities. This registration is obtained only by respecting certain conditions, including the fact of having a permanent establishment in the country, or proving his customs expertise.

In indirect representation, the customs broker will act in his own name on behalf of another company. He therefore substitutes this third company in the eyes of the customs authorities. The formalities he completes with the data he receives are considered as if these data came from his own entity therefore we can state a co-responsibility between the representative customs broker and his customer (legal order giver). The customs broker assumes full responsibility and is liable for the debts and penalties for the acts they perform, but also for the data they receive and use in the context of customs formalities.

In direct representation, the customs broker will act on behalf of a third party, but not in his own name. He remains responsible for his actions in case of mistakes in the processing of formalities or in the misinterpretation of information received. However, he cannot be held financially responsible for fines related to duties and taxes if he acted in good faith with the information received from his principal. A customs investigation can continue in depth to verify the contractual documents and correspondence between a declarant and his principal. This will verify the true nature of the model of representation.

Therefore, the model of customs representation determines the level of risk exposure for the customs broker.

It is easy to understand that it is much safer for a representative to work in direct representation to protect himself from the risk, but it is not so simple. We notice on the market that many operators work in indirect representation. Not because they like the risk, but probably to get contracts and secure their volumes. Moreover, if the client has no representation or no legal entity in Europe, it will be difficult to really set up a direct representation model.

In the event of a serious dispute and investigation by Customs, the Customs Code provides the possibility of administrative sanctions, such as the withdrawal of authorizations facilitating day-to-day operations or the deletion of the Customs Representative’s registration. The implementation of such a decision would make it impossible for the Customs broker concerned to carry out any customs activity.

Learn more about e-Origin’s automated solution for customs compliance.