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POSITION PAPER OF THE REPUBLIC OF LATVIA
Chapter 25: "CUSTOMS UNION"

Setting the time frame for the process of adoption and implementation of the European Union's acquis communautaire, the Latvian Government adopted 1 January 2003 as the date on which Latvia will be prepared for accession to the European Union.

Latvia accepts and will implement in full the acquis communautaire in the area of the Customs Union before 1 January 2003. Where it is possible Latvia is ready to adopt and fully implement Community Law even sooner. Certain provisions of acquis communautaire applicable exclusively to the Member states will be fully implemented as from the date of accession.

Latvia is a member of the World Trade Organisation and the World Customs Organisation. Latvia is a contracting party to the Nairobi Convention, the TIR Convention, and the Convention on Simplification and Harmonisation of Customs Procedures (Kyoto convention), the Istanbul Convention and the International Convention on the Harmonised Community Description and Coding System.

Latvia will join the Common Transit convention by the end of 2002. The Baltic Transit Agreement that came in force on the 1 January 2000 complies with the European Union requirements for the common transit procedure. Latvia will  harmonise its legal regulations on customs procedures with the Customs Union  of acquis communautaire by 2003.

The ATA carnet will be introduced according to the approved schedule as of 1 January 2001. The TIMS (the computerised risk analysis system) has been implemented in all major customs points. At the same time, there is a plan of gradual replacement of TIMS by the ASYCUDA risk module in line with the implementation of the ASYCUDA system. ASYCUDA ++ system will be implemented in every customs point in 2001. The preparation of a special national intelligence database has started in the year 2000.

Latvia would like to continue to participate in the European Union MATTHAEUS program and other programs of customs technical assistance and co-operation. For the purpose of better transposition of the European Union customs legislation, Latvia requests participation of the Latvian experts at the Customs Code Committees, as observers.

The Cabinet of Ministers has adopted several significant regulations introducing the requirements of Regulation 2454/93 implementing the European Union Customs Code ( Regulation 2913/92 ). Amendments to the Customs Law  have been elaborated in accordance with European Union legislation requirements and recommendations of experts.

To achieve higher efficiency of collecting customs payments, the State Revenue Service manages activities to decrease and avoid corruption in customs offices.

It should be added that the Latvian authorities are fully aware that article 25 of the Treaty as interpreted by the Court of Justice prohibits also fees, duties and other charges having an effect equivalent to customs duties. As a corresponding requirement is contained in articles 12 and 13 of the Europe Agreement, article 25 should not give rise to problems.

Taking into account the aforementioned, the Republic of Latvia will not request any derogation or transitional period and proposes that the negotiations within the chapter "Customs Union" be provisionally closed.

LEGAL ANNEX

This Legal Annex presents an overview of the state of transposition of the main requirements of the acquis communautaire encompassed in the Customs Code of the European Union (Council Regulation 2913/92/EEC), Commission Regulation 2454/93/EEC and other regulations.

1. Origin

The EU compliant norms on the origin of goods have been incorporated in the Latvia's Customs Law (in force since 1 July 1997) and the Regulations of the Cabinet of Ministers No. 274 "Procedure of issuing and checking the certificates of origin" (in force from 15 August 2000). In addition, the issues of origin are regulated by international agreements signed by Latvia.

As regards the pan-European system of origin, Latvia has agreed to the amendments to the system that will come into force in January 2001. For the system to be complete, it remains for Latvia to sign the necessary Free Trade Agreements (FTA) with Romania and Bulgaria. The negotiations with Bulgaria have entered the second round. Consultations are taking place with Romania in order to start the first round of negotiations; the respective information is being prepared.

The list of Free Trade Agreements concluded with the participants of the pan-European system of origin is provided below:

Co-operation with the EU member states concerning the definition of originating products and mutual assistance in these matters takes place in the framework of the 3rd Protocol of the Europe Agreement. The preferential certificates of origin (EUR1) are issued and confirmed by the Customs since 1 September 1995.

Constant training is taking place in the regions on the implementation of the rules of origin.

2. Binding tariff information

Latvia has introduced an EU compliant order of assessing the conformity of a good with the code of the Combined Nomenclature. Respective procedure is specified in the Customs Law and the Regulations of the Cabinet of Ministers No. 234 "Order of providing assessment of the conformity of a good with the Code of combined nomenclature of Latvia" (in force from 29 June 1999).

A special Unit within the Tariff Division of the Customs Board deals with the issue of the Binding Tariff Information (Goods Classification Unit).

3. Binding origin information

Based on the EU requirements the order of providing assessment of the origin of goods was incorporated in the draft amendments of the Customs Law. The amendments have already been accepted in the 1st reading (there should be 3 readings in total) by Saeima, the Latvia's Parliament. Respective amendments have to come into force in 2001. The start of application of the new norms by the customs is scheduled for 1 July 2002.

4. Customs valuation

In accordance with the EU legislation, the order of assessment of a good's customs value has been incorporated in the Customs Law and the Regulations of the Cabinet of Ministers of the Republic of Latvia No. 428 "Procedure for calculating the customs value of goods" (in force since 17 December 1997).

5. Simplified procedures

Based on the EU requirements, the order of applying simplified procedures has been incorporated in the regulations of the Cabinet of Ministers of the Republic of Latvia No. 222 "Procedure for declaring goods" (in force since 22 June 1999).

According to the above mentioned Regulations, there are 3 methods of simplified customs procedures:

• the procedure for incomplete declarations;

• the simplified declaration procedure;

• the local clearance procedure.

6. Rules on end-use

In line with the EU legislation, the order of exemption from customs payments on the basis of their end use have been encompassed in the Customs Law and the Regulations of the Cabinet of Ministers No. 122 "Order of carrying out the customs procedure âÀ“ release for free circulation" (in force since 21 March 2000).

7. Transit

The order of carrying out transit, compliant with the rules applicable in the EU, has been introduced in the Customs Law, the Regulations of the Cabinet of Ministers No. 339 "Procedure for applying the transit Customs procedure" (in force from 8 September 1999), and the Cabinet of Ministers Regulations "Order of declaring goods" that are in force since July 1999.

The guaranty system for transit is determined by the "Regulations on the order of submission and acceptance of guaranties at customs institutions of the SRS" (in force since July 1998). Latvia is going to implement the new guarantee system that will be fully compatible with the EU system as of 1 February 2001.

The Common Baltic Transit Agreement based on the principles of the EU/EFTA Common Transit Convention has been ratified in the three Baltic states, and according to the current schedule joint transit control between Latvia, Estonia and Lithuania will start in January 2001. This is a significant step towards accession to the Convention on a Common Transit Procedure.

8. Customs procedures with economic impact

Inward processing

The rules compatible with the EU norms concerning the performance of inward processing procedure have been incorporated in the Customs Law and the Regulations of the Cabinet of Ministers No. 34 of 30 June 1998 "Regulations on inward processing".

Processing under customs control

The rules compatible with the EU norms concerning the performance of procedure âÀ“ "processing under customs control" have been encompassed in the Customs Law and the Regulations of the Cabinet of Ministers No. 254 of 14 July 1998 "Regulations on customs procedure - processing under customs control".

Outward processing

The rules compatible with the EU norms concerning the performance of outward processing procedure have been incorporated in the Customs Law and the Regulations of the Cabinet of Ministers No. 45 of 18 August 1998 "Regulations regarding outward processing".

Temporary admission/ temporary import

The rules compatible with the EU norms concerning the performance of temporary import procedure have been encompassed in the Customs Law and the Regulations of the Cabinet of Ministers No.349 of 10 October 2000 "Regulations on customs procedure - temporary importation".

Customs warehouses

The rules compatible with the EU norms on holding and using customs warehouses have been incorporated in the Customs Law and the Regulations of the Cabinet of Ministers No. 114 of 31 March 1998 "Order of Performance of Customs Procedure âÀ“ Placing of goods in Customs Warehouse".

9. Free zones

The order partly compatible with the EU norms on operations of free zones has been incorporated in the Customs Law and the Regulations of the Cabinet of Ministers No. 157 of 28 April 1998 "Regulations on special customs control measures in a free zone". An order fully compatible with the EU norms on operations of free zones will be achieved by amending respective legislation. Draft amendments to the Customs Law have been passed by the Saeima in the 1st reading. Respective amendments have to come into force in 2001. The start of the application of the new norms by the customs is scheduled for 1 July 2002.

10. Customs debt and guarantees

Customs debt

The procedure partly compatible with the EU norms on customs debt has been included in the Customs Law. An order fully compatible with the EU norms on customs debt will be achieved through the amendments to the Customs Law which have already been passed by Saeima in the 1st reading. Respective amendments have to come into force in 2001. The start of application of the new norms by the customs offices is scheduled for 1 July 2002.

Guarantees

The principles of guarantees' system provided in the customs legislation of the EU have been incorporated in the Customs Law of the Republic of Latvia. The draft Regulations "Procedure for providing and accepting guarantees in customs offices of the State Revenue Service" (already considered and approved by the Committee of the Cabinet of Ministers) will enter into force on 1 February 2001 ensuring complete conformity with the customs legislation of the European Union. These regulations will replace the current regulations (adopted on 31 March 1998).

11. Common customs tariff/integrated tariff

The implementation of TARIC, closely following EU requirements, is foreseen by the Customs Law of the Republic of Latvia and draft regulations of the Cabinet of Ministers "Regulations on TARIC classificator", that envisage gradual implementation of TARIC. The draft regulation foresees that the State Revenue Service will ensure the maintenance and regular actualisation of the system in conformity with the amendments in the respective legal acts.

As of 1 January 2003 code digits 1-22 shall be applied and the automatic data exchange between the Latvian TARIC classificator's server and central TARIC server of the European Union shall be ensured by the State Revenue Service.

12. Combined nomenclature

The Latvian Combined Nomenclature that complies with the Council Regulation of 23 July 1988 on tariff and statistics nomenclature (EEC, 2658/87) is used by the Republic of Latvia since 1992, regularly actualising it, according to the amendments in the Combined Nomenclature of the European Union.

13. Preferences, quotas, ceilings and suspensions

Canada and Japan apply the GSP (Generalised System of Preferences) regime in trade with the Republic of Latvia. Latvia foresees to apply GSP regime in trade with developing countries starting with the year 2002.

Customs tariff quotas on agricultural goods are applied according to the agreements signed by the Republic of Latvia with the European Union, EFTA states, Poland, Slovenia, Czech Republic, Slovakia, Hungary, Lithuania and Estonia.

The ceilings of customs duties (customs tariffs) are provided by the Protocol of Accession to the Marrakech Agreement Establishing the World Trade Organisation. According to the agreement with the World Trade Organisation, Latvia has the right to reduce the Most Favourable Nation (MFN) customs duties (customs tariffs), to abolish or suspense them, or to raise the customs duties, not exceeding the ceilings provided by the agreement.

14. Duty relief

According to the EC Council Regulation of 28 March 1983 (EEC 918/83) on Customs duty relief system, the relevant provisions have been incorporated in the law "On Customs duties (tariffs) and the Regulations of the Cabinet of Ministers No .363 of 24 October 2000 "Regulations on procedures to be applied when exempting certain goods from the application of the customs duties."

15. Single administrative document (SAD)

The Regulations of the Cabinet of Ministers of 22 June 1999 fully correspond to the prescriptions of the European Union regarding the use of SAD.

Latvia is not yet a member of the SAD Convention. Nevertheless, the Latvian legislation concerning customs declarations is compatible with the Convention Rules.

The above-mentioned Cabinet of Ministers Regulations contain SAD forms that are fully compatible with the provisions of the SAD Convention.

The filling out of the SAD by the Latvian Customs takes place based on the SRS order from 30 September 1999 that approved "Methodical instructions on the filling out of the SAD". The process of filling out of SAD is also compatible with the SAD Convention. Special instructions were also developed on the filling out of the SAD form and control for transit purposes (SRS Order from 11 May 2000 on filling-in of administrative boxes for transit).

The SAD is in use in Latvia in every customs procedure.

16. Cultural goods

The legislation in the area of cultural goods complies with that of the EU. In case of export of cultural goods, permissions are granted by the State Inspection of Cultural Heritage. The permission will not be granted if a good is protected by the state legislation as a cultural article of national value. Importation and exportation of cultural and antiquarian goods from the Republic of Latvia is regulated by order No. 23 of the Ministry of Culture of 11 March 1997 "Instruction on order of importation and exportation of cultural and antiquarian goods from the Republic of Latvia". This instruction stipulates the necessity to obtain permission of the State Inspection for the Protection of Cultural Monuments in cases of exportation of antiquarian goods.

17. Precursors

The Law "On precursors" was accepted by the Parliament (Saeima) and is in force since 6 June 1996. It is in line with the requirements set in the EU legislation and the United Nations Convention against illicit traffic in narcotic drugs and psychotropic substances of 20 December 1988.

Registration and authorisation of economic operators involved in producing, warehousing, wholesaling, retailing and other activities with precursors is performed by the State Drugs Agency of the Ministry of Welfare. The authorisation is obligatory for all activities except those that are connected with declaring of 2nd and 3rd category goods to the Customs, the rent or lease of warehouses and transportation services. The registration is not required for retailers of precursors of 3rd category.

The norms that regulate the documentation of the precursors are identical with the EU legislation. The proper documentation is required containing the precise list of precursors, quantity and weight, the name and address of the exporter and the importer. The documentation shall be kept for a 3 years period.

The responsibilities of economic operators stated in the legislation prohibit selling precursors of the 1st and 2nd category to operators with no licence and retailing these substances. The institutions responsible for control of precursors (including the Customs) are allowed to perform control of documents and premises.

The external trade of precursors of 1st and 2nd category is allowed only with the approval of the State Drugs Agency. The authorisation form has to be presented to the Customs together with the Customs declaration. In case of a request of notification before import of precursors from any other state, the authorisation from that state where goods are imported from is required and must be attached to the export or transit documents.

The list of precursors is stated in the Regulations of the Cabinet of Ministers No. 29 and is fully compatible with the list of substances in Tables 1 and 2 of the Annex of the United Nations Convention against illicit traffic in narcotic drugs and psychotropic substances.

The Drug Enforcement Unit (2 person) of the SRS National Customs Board is operational since 1997. The unit is responsible for prevention of drug smuggling and offences in the area of precursors. Each of the 6 regions having Enforcement Divisions employs also customs officers responsible for the prevention of the above mentioned activities. The Customs is responsible for the prevention of drug smuggling on the state borders. In the first half of 2000, there were 4 cases when customs officers discovered smuggling of drugs and 1 offence in the area of precursors. In order to improve the quality of daily work of drug enforcement activities regular training and informative events are carried out in the regions.

Co-operation with the Drug Enforcement Bureau of the Ministry of Interior mainly takes place by organising preventive actions. On the international level, there are good contacts in the field of drug enforcement with Estonia, Lithuania, Sweden, Denmark and other states. It is planned to establish tight contacts with Russia as well.

Customs authorities have access to modern effective equipment in Riga at both the harbour and the airport.

18. Counterfeit and pirated goods

The Customs Law and the Cabinet of Ministers' Regulations No. 43 "On Customs control measures for protection of intellectual property rights" (adopted on 9 February 1999) ensure implementation of the respective requirements of the EU Customs Code and Council Regulations No.3295/94/EEC of 22 December 1999.

The responsibility of the Customs service of Latvia concerning counterfeit and pirated goods is determined by the above-mentioned Regulations of the Cabinet of Ministers. Besides, relevant SRS instructions are in place.

The Intellectual property rights Subdivision is operational in the SRS National Customs Board since September 1999. 4 seminars have been organised for customs officers regarding intellectual property rights with total attendance of approximately 100 customs officers. Close co-operation between the SRS, the Patent Office, the Economical Police and other institutions is ensured.

Although the activities in the field of Customs control of intellectual property rights have commenced just recently, first positive results have already been achieved. During the year 2000, 11 requests from the trade to detain goods have been received. 7 detentions were performed. Three cases have been forwarded to the Court.

19. International customs co-operation

As regards the international instruments on customs matters, Latvia has acceded to major international agreements that provide free trade measures (see previously submitted Position paper).

Latvia will implement agreements between the EU and 3rd countries on customs matters at the moment of accession.

The principles of the International Convention on the harmonisation of frontier controls of goods are being implemented by:

• construction of the new customs posts and improvement of the existing posts;

• improved co-operation between the Latvian and other customs services (Agreement between the Government of the Republic of Latvia and the Government of the Republic of Estonia on joint border control organisation;Agreement between the Government of the Republic of Latvia and the Government of the Republic of Lithuania on co-operation in carrying out controls in joint border control points);

• joint procedures;

• 3 joint border control posts functioning at the Latvian-Estonian border and 1 joint border control point at the Latvian-Lithuanian border.

The Latvian Customs has been an active participant in the EU MATTHAEUS programme for the training of customs officials since it was started in 1996. The Latvian Customs participates also in the seminars organised within the Customs 2002 programme. Latvia wishes to continue to participate in both programmes.

The mutual assistance between administrative authorities in customs matters between Latvia and EU Member states administrations takes place on the basis of the 5th Protocol of the Europe Agreement.

A list of Bilateral Agreements Regarding Mutual Assistance in Customs Matters signed by the Government of the Republic of Latvia is provided below:

Agreement with Georgia was signed on 5 July 2000 and soon will be ratified.

The Cabinet of Ministers accepted agreements with Russia and Hungary. Intensive correspondence in order to prepare agreements with France, Israel and Tadzhikistan is going on. Latvia has showed initiative to conclude respective agreements also with Poland, Azerbaijan, Armenia and Turkmenistan.

The Enforcement Division of the SRS National Customs Board on behalf of the SRS National Customs Board exchanges requests on mutual administrative assistance in customs matters with a number of foreign administrations. A special Unit âÀ“ the International Desk is in place.

The number of total requests and receipts of information increases steadily:

* - the first half of the year

ANNEX ON

ADMINISTRATIVE/ OPERATIONAL CAPACITY

1. ORGANISATION AND MANAGEMENT

The Customs of Latvia operates on the basis of the Law on the State Revenue Service (SRS), the Law on Taxes and Fees, the Customs Law and the Law on Customs Duty (Tariffs). The legal base of the Customs operations includes also Terms of reference (Statutes) of the National Customs Board (NCB).

The Customs service is a part of the State Revenue Service (SRS), which operates under the supervision of the Ministry of Finance. The SRS comprises two major boards, the National Customs Board and the National Tax Board led by the first Deputy Director Generals of the SRS. The SRS was established 6 years ago. Since 1998, the reorganisation of the SRS has been taking place within the framework of the SRS Modernisation project, which is partly backed by the loan of the World Bank. Therefore, the number of the SRS regions will be decreased from 27 down to 5 âÀ“ 8 until the end of year 2002. The regional customs offices are subordinated to the SRS National Customs Board.

The structure of the SRS National Customs Board comprises 11 divisions (Attachment 1). The regional Customs offices are a part of regional SRS offices.

The development of business strategy is performed by the Customs Modernisation Division and it is followed by operational plans. Customs officers are regularly informed about these plans and the reporting system.

The annual Customs Management Plan is prepared and is in line with the Customs Business Strategy, the Customs Modernisation Programme and the Government Declaration.

2. HUMAN RESOURCES MANAGEMENT

There are 4520 employees in the State Revenue Service (SRS). Of those, the SRS National Customs Board employs 155 and regional SRS Customs offices -1502 officers.

The personnel management is responsibility of the SRS Personnel Division. Human resources are a part of the SRS Customs strategy. A Trade union is also in place and works towards improvement of working conditions. Additional holidays and additional social guaranties, etc. are provided for the SRS staff.

Two recruitment possibilities are used âÀ“ public or internal competitions are held in accordance with the Decree on the SRS Personnel recruitment. The level of education is set as a very important issue for the personnel policies (see also section on Training).

As a result of consecutive measures in the area of personnel management, the turnover of the personnel in the Customs service has substantially decreased:

The human resources management function will be improved by developing the system of motivation and promotion of employees and the system of evaluation of the performance by end-2001.

The responsibility of employees is determined in job descriptions. Tasks of different structures (divisions, subdivisions) are determined by Terms of reference (Statute) of each structure.                

3. CUSTOMS ETHICS

The ethics policy for the Customs service is determined by the SRS Code of ethics. The Internal Audit Division is in place in the SRS National Customs Board to monitor the code of ethics and the legislation on prevention of corruption as well as to develop and implement measures to decrease the risk of corruption.

There are several actions already taken:

• the unified technological schemes have been developed for all customs points

• video monitoring system is in place at the airport and in some major customs points.

In the nearest future, it is planned to implement video-monitoring system in all customs points. Video-monitoring system will be set up in all major customs points until the end of year 2001.

Within the PHARE project "On prevention of corruption" it is planned to develop the internal control system where managers would monitor their employees (the deadline is mid-2001).

The Disciplinary system is in place.

The factors causing corruption will be greatly reduced by completing introduction of a computerised declaration processing system ASYCUDA until July 2001.

The Arusha Declaration is an integral part of the SRS Customs Business Strategy.

4. TRAINING

The SRS Training Division performs the training function. Goals and objectives to be achieved in the area of training are set in the Training Strategy that is an integral part of the Customs business strategy.

Customs officers receive 6 weeks (two weeks classroom studies plus two weeks practice plus two weeks classroom studies) training course before they start work. Other training is provided when necessary âÀ“ for example, post-importation audit personnel receives training in accountancy etc.

The level of education in the SRS increases. In regions at present 32% have higher, 37% - secondary professional and 30% - secondary education. 18% are currently studying in universities and colleges. In central administration (the NCB) 66% of employees have higher education, 16% - secondary professional and 16% - secondary education. 10% are currently studying.

The Institute of International Economical Relations and Customs is operational under the Riga Technical University (RTU) that provides higher education in the respective field. The Customs College of the RTU provides secondary professional education in the respective field.

The quality and infrastructure of training is being increased. There is a central Training centre in the SRS Headquarters and in the two largest regional offices (Daugavpils and Jelgava). It is planned to have the training centre in each of the SRS regions until end-2002.

6. REVENUE COLLECTION

The Customs is responsible for collection of customs duties as well as VAT, excise tax and natural resources tax on import. Customs collect approximately 60% of the total tax revenue.

Export duties are collected only on very few goods, for example, antiquarian goods and pieces of art and historical manuscripts.

The customs revenue collection is the area that is tightly connected with the computerisation of customs service.

It is planned to start the preparation of the introduction (feasibility studies) of TARIC supporting IT systems, BTI and other computerised systems in 2001.

Since 1 January 2000, Latvian Customs uses 11 TARIC digits for the classification of excise goods.

The central customs payments accounting system is operational since November 1999 and is being constantly developed.

The implementation of the computerised declaration processing system (ASYCUDA) will be completed until July 2001 and it is planned to create a system for deferred payments in 2003.

6. BORDER AND INLAND CONTROL

Customs officers have powers of questioning, examination, searching of persons and vehicles. Customs officers have rights to detain a person for three hours. The 1999 amendments of the law on State Revenue Service provided the customs also with investigation powers in anti-smuggling cases.

Although there are investigations and audit functions within the customs service, the powers of the customs officers will be further reinforced in the nearest future.

Physical examination of goods is performed in 5% of total cases. Enforcement units perform physical checks of 0.86% of total import. The methods of examination vary depending on the type of goods and information, it can involve check of weight, quantity, full physical examination as well as laboratory analysis (especially for spirits and oil products).

Based on the risk analysis the physical examination is carried out either by the Anti-smuggling mobile units or customs officers at the local customs points. Other institutions can be involved, if necessary (State police, Border guards, Drug Enforcement Bureau, etc.).

There are post clearance audit units in all regions and the headquarters. They have achieved remarkable results: in 1998, LVL 647 663 surplus was calculated, in 1999 âÀ“ LVL 2 712 619.

The issues regarding warehouses are included in the Customs Law and the Regulations of the Cabinet of Ministers "Procedure of Performance of Customs Procedure âÀ“ Placing in Customs Warehouse" (in force since 3 April 1998.). The warehouse system is compatible with the EU requirements. Altogether there are 153 warehouses in Latvia, of which 109 are situated in Riga. 81 warehouses of the total number of warehouses in Latvia have a customs control point. It is possible to establish all types of warehouses envisaged in the EU legislation; in practice there are 119 warehouses of type A, 15 of type C and 19 of type E in use. The Latvian customs is not planning to reduce the number of warehouses, but is planning to reduce the number of customs control points.

There are 100 customs control points in Riga. In order to decrease a number of customs control points in Riga, the Latvian Customs has created a project to establish 3 joint customs control points in Riga in which 72 existing customs control points would be joined for the purposes of forming Single Administrative Documents (SAD) and collecting customs payments. In the process of such optimisation of Riga Customs, a possibility to introduce a new information processing technology would be ensured that would prevent corruption in Riga Customs.

7. INVESTIGATION AND ENFORCEMENT

On 14 October 1999, the Parliament of Latvia adopted amendments to the Law on "State Revenue Service" (in force from 4 November 1999) which provide Customs with criminal investigation powers in anti-smuggling cases. Such amendments had been made in accordance with the requirements stated in the EU Customs Blueprints. The State Police will help the Customs to train its officers to use these rights properly.

The policymaking and monitoring of the Customs enforcement activities is the responsibility of the highest management of the SRS National Customs Board.

Considering the fact that most issues of the Latvian legislation relating to the customs co-operation have no significant differences from those of the EU, a particular attention is being paid to ensure an appropriate performance of the already existing norms. Measures are carried out to develop mechanism that would provide for efficient enforcement activities. Since 1996 when the reorganisation of the customs' anti-smuggling system started, there has been a significant increase in the revenue collected by customs and a reduction of the level of smuggling.

Latvia has introduced the centralised and computerised risk-analysis program (TIMS) in major customs offices.

With the introduction of ASYCUDA which has a risk module TIMS will be gradually replaced by the ASYCUDA risk module. A preparation of a special national intelligence database has started in the year 2000.

The new structure of the National Customs Board stipulates that the Enforcement Division consists of the International desk, Information Subdivision (Operative Unit, Risk-profiling Unit, Customs Investigation Unit), Mobile Units Subdivision, Enforcement Subdivision, Drug Enforcement Subdivision and Intellectual Property Rights Subdivision. The following structures were created within each regional Anti-smuggling Division in July 1998: Intelligence Unit, Investigation Unit, Operational Work Unit and Mobile Unit.

The tasks of the Enforcement Division are fight against smuggling and commercial fraud, as well as combat against drug smuggling and protection of intellectual property rights. The control is made based on risk analysis. Random checks are made as well. The necessary system is being created to meet the EU requirements on customs control measures for the protection of intellectual property rights.

There are 10 (3 in HQ) investigators and 10 (3 in HQ) intelligence analysts in the Latvian Customs. It is planned to increase the number of investigation officers when legislation will be amended providing Customs powers for performing criminal investigation. The number of intelligence analysts will be increased as well.

Within the PHARE financed project "Customs Information and Intelligence" the Analysts notebook (i2) has been received.

The Enforcement Division, on the behalf of the National Customs Board of Latvia, exchanges requests on mutual administrative assistance in customs matters with a number of foreign administrations (See Point 19 of the Legal Annex).

11 Memoranda of Understanding have already been signed with the private sector.

The Anti-smuggling Centre (AC) has been established to improve the co-ordination between different institutions involved in combating smuggling and commercial fraud. The tasks of this centre include co-ordination and monitoring of anti-smuggling activities, gathering and analysis of information and development and follow-up of operational plans. The State Police, Security Police, Financial Police, Border-guards, Customs and Prosecutor's Office have delegated their officials to participate in the work of the AC. The Head of the AC is at the same time the Deputy Director of the National Customs Board.

The working relationship between the State Police and the Customs Service is a part of the Mutual agreement between the State Revenue Service (SRS) and the Ministry of Interior. The co-operation and exchange of information between Customs and other state institutions takes place based on the Memoranda of Understanding (MoU). Such MoUs are signed with the Ministry of Agriculture, the Drug Enforcement Bureau of National Criminal Police Board and the National Marine Forces.

There is an extensive exchange of information between Customs and the Road Traffic Safety Department under the Ministry of Transport, the Citizenship and Immigration department under the Ministry of Interior and the Ministry of Justice. The Customs has access to the databases of these institutions.

The important field of co-operation between the Customs and the Economical Police is the protection of intellectual property rights.

On 21 December 1999, a Protocol on amendments to the Agreement between the State Border Guards and National Customs Board was signed that approves a new Standard technological scheme for all road border-crossing points. The previously existing problem of division of responsibilities between border guards and customs officers when performing control on the road borders has been successfully resolved through amendments to the above mentioned Agreement.

Very good co-operation between customs and border guards exist both at the level of central administrations and at the regional level. Joint working methods ensure the possibility to use resources and information flexibly. Exchange of lectors, joint training and joint preventive measures take place. Work is commenced on the development of a joint information system that would help identifying high-risk persons as regards drug trafficking.

8. CUSTOMS LABORATORIES

The working methods of the customs laboratory are stated by a variety of regulations of the Cabinet of Ministers.

The Customs laboratory was established in 1994. The responsibilities of the Customs laboratory are to determine correctly the composition of imported goods, to establish the correct tariff classification and to prevent the importation and / or exportation of non-qualitative, environmentally dangerous products. The Customs laboratory is also involved in the customs control measures for the protection of intellectual property rights. The Customs laboratory is working only with customs cases.

Thanks to the PHARE assistance there is enough equipment and chemicals to fully perform analysis.  The international methods and standards are used.

Instructions for the staff are in place.

9. INFRASTRUCTURE AND EQUIPMENT

The overall investment policy is the responsibility of the SRS Finance Planning Board. However, the SRS National Customs Board comprises the Resources Division, which is involved in the identification of needs and the preparation of investment plans.

Taking into account that the Eastern border of Latvia will become the external frontier of the European Union, particular attention is being paid to the improvement of the infrastructure of the Eastern border and the construction and modernisation of the border control posts. With PHARE support two customs points have already been built on the Latvian âÀ“ Russian border (Grebneva and Terehova); on the Latvian - Belarussian border two customs points have already been finished (Paternieki and Silene).

Besides, there are three joint border control posts with Estonia (Ainazi, Valka, Veclaicene) and one with Lithuania (Grenctale). The work is going on to have another three with Lithuania (Medumi, Rucava, Meitene). These points are operational under Agreements between the governments of Latvia, Estonia and Latvia, Lithuania on joint border control.

The Integrated Latvian border management strategy will be developed within the PHARE 2000 programme. Customs, Ministry of Interior (State Border Guards), Sanitary Border Inspection and National Marine Force are involved in the respective project. The objective of the project is to ensure that the Eastern border of Latvia would be compatible with the EU standards, to improve co-operation between institutions involved in the border control and to develop the infrastructure of the border. Within this project, the efficiency of allocating of human resources and equipment will be improved.

10. TRADE FACILITATION AND RELATIONS WITH BUSINESS

The system of Customs brokers (agents) has been introduced in the framework of the Customs Modernisation programme of the National Customs Board. The legislative base regarding Customs brokers has been adopted and is in force since 1 October 1998.

The Customs and Trade Consultative Council has been in operation since April 1997. Their meetings take place regularly once a month. Working parties examine current matters, which require in-depth research into the problems, and discuss draft legislation.

The National Customs Board has concluded 11 Memoranda of Understanding with private companies, for example, with "Shanker BTL", "British Airways World Cargo", "MGH Riga" and Riga international airport. That will generate closer co-operation and increase the trust between Customs and trade. It is an appropriate framework to combat smuggling and fraud without hindering the flow of legitimate commercial traffic and a significant step towards reducing burdens on business and facilitating legitimate trade.

To ensure that the Customs procedures are uniformly understood and information regarding customs matters freely available there are efforts made to prepare informative materials âÀ“ books, leaflets, etc. There are handbooks for determination of customs value, on customs brokers, on use of ASYCUDA, on customs procedures and the book on TIR Carnets.

The new web-site of the State Revenue Service is operational. The web-site will provide all the legislation and instructions related to taxation and customs. The information is available without charge. Electronic forms of different declarations, bookkeeping reports and licence applications will be obtainable on this web-site. Now it is also possible to submit customs declarations electronically.

It is planned that the customs phone consultation centre will become operational at the end of the year 2001.

[For additional information, please refer also to point 5 of the Legal Annex].

11. TRANSIT AND MOVEMENT OF GOODS

The Transit Control Division was established in the National Customs Board in November 1999. It consists of 2 Units and currently there are 25 employees in the Division. The main responsibilities of the Division include control of all transit procedures and recovery of claims for non-cleared procedures. [For additional information, please refer also to point 7 of the Legal Annex].

12. COMPUTERISATION

The installation of the computerised declaration processing system ASYCUDA, which has been selected for the computerisation of the Customs revenue collection, is at the rollout stage. National rollout programme is scheduled for completion in July 2001. Documentation explaining the new system, its procedures and codes, for use by customs and clients is prepared and training of system users (customs officers, customs agents) is taking place. A revised flow path for dealing with passengers and freight is being introduced progressively at customs checkpoints to take account of the changes necessary to ensure the successful implementation of ASYCUDA.

The majority of the main customs points (67 of 70) has already been connected to the common network.

The networks for customs warehouses are to be maintained by warehouse owners.

The computerised risk analysis system (TIMS) has been implemented in major customs points. With the introduction of ASYCUDA, which has a risk module, TIMS will be gradually replaced with ASYCUDA risk module. The preparation of a special national intelligence database has started in the year 2000.

It is planned to start preparation for introduction of other EU used systems (BTI, TARIC, etc.) the next year.