Implementing e-Customs in Europe: An IBM point of view on E Government Solutions

Customs, Borders and Revenue Management Solutions

Implementing e-Customs in Europe:
An IBM point of view

1

Overview
This brochure discusses e-Customs in Europe. It overviews the current Customs
landscape, identifies drivers that are pressuring European Union (EU) member
states towards e-Customs, and discusses the transformational role IBM is playing
in this process. That role is further illustrated by two solutions that IBM and IBM
Business Partner INTRASOFT International currently offer to European Union (EU)
member states – the Excise Movement and Control System (EMCS) and Declaration
Management.

IBM is well suited to play a significant a role in the transition to e-Customs in Europe.
The IBM Customs, Borders and Revenue Management (CBRM) organisation is
dedicated to bringing a strategic framework and leadership expertise to e-Customs
solutions. The IBM Customs team of industry experts and solution architects has
delivered consultancy services and open solutions in Europe, Asia and the United
States. As a market leader in Customs transformation, IBM provides strategic
consulting, hardware, software and integration capabilities.

The purpose of the European e-Customs initiative
is a more efficient customs environment that will
facilitate trade and enhance security.

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The present Customs landscape in Europe many member states already use electronic declarations,
The European Union (EU) is the largest Customs union many of their existing legacy systems can be monolithic,
in the world, with an internal market of some 500 million not fully integrated and not always suitable for the
citizens. EU Customs services handle nearly 20% of changes demanded by a pan-European e-Customs
world imports, some 1,545 million tonnes of sea cargo landscape. Oftentimes, too, there are procedural and
and 3 million tonnes of air cargo each year. In 2007, EU financial difficulties aligning national and international
Customs offices processed 183 million declarations. directives. Nevertheless, member states are modernising
In addition to collecting over €12 billion annually, EU their systems and operational environments to move
member states administrations (MSAs) have to guard toward e-Customs.
against smuggling, fraud, environmental contamination
and counterfeiting. They protect endangered species, the International drivers towards Customs transformation
area’s cultural heritage, and intellectual capital rights. And In addition to pressures towards e-Customs from inside
they collect trade statistics to help policymakers detect individual European member states, there are also
economic trends. Most of these operations have been pressures from the EU itself. The European Commission
document- and paper-intensive – that is, until the coming has guidance in the form of Customs Blueprints, with
of the EU’s e-Customs initiative. the most recent published in 2007.1 These guidelines
are based on European best practices against which
e-Customs means using digital systems to collect and national Customs administrators can measure their own
safeguard Customs duties; to control the flow of goods, operational capacity. They aim to harmonise Customs
animals, personal effects and hazardous items in and out regulations and procedures among EU member states
of member states; and to provide security from crime. and their trading partners by offering assistance in
The initiative aims to replace paper-based customs reconciling a country’s existing situation with blueprint
procedures with European-wide electronic operations, standards and thus providing a basis for Customs reform.
thus creating a more efficient and modern customs
environment. The objectives of the e-Customs initiative More importantly, the European Union has also
are to facilitate trade and enhance security at the EU’s published the “Multi-Annual Strategic Plan” (MASP)2
external borders. which represents the EU’s programme for the creation
of a simple and paperless environment for customs and
However, e-Customs operations in Europe are challenging trade. This programme incorporates a number of different
because the European Customs landscape is immense initiatives including modernisation of customs legislation
and complex. It includes 27 EU member states; countries and IT solutions.
bordering on, and in frequent commerce with, EU member
states; other related trading partners; and the overarching
European Commission (EC). Each EU member state has
it own legislation to deal with national concerns. Although

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National and international drivers are moving
European Union member states to implement
e-Customs initiatives.

MASP is binding and requires member states to In brief, then, the situation is this: EU member states
implement specific systems that will transform current are pressured nationally and internationally towards the
operations incrementally from the present through e-Customs initiative. Nationally, there is need for efficiency
to 2013. This transition could be achieved by simply and cost savings as well as information exchange
developing the appropriate applications and plugging and interoperability between national administrations.
them into existing environments; however, some member Internationally, there are the directives of the European
states have taken this opportunity to change current commission as well as the need for European-wide
systems, architecture and environments to better communications and interoperability. Both pressures
accommodate MASP applications. An important goal are pushing member states to a more homogeneous
is to make all member state customs administrations e-Customs landscape built on solutions that offer flexibility,
act as one by enhancing information exchange and interoperability, cost efficiency and security. A projection of
interoperability between member states administrations a future e-Customs landscape is shown in Figure 1.
and the trading community.

CUS
TOM
SM
ESS
AGI
NG
GAT
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AY

WE)
(C
NE
I B)
ENG (ES
W US
LO B
KF ICE
OR SERV
SW E
OM PRIS
U ST ER
C T
EN

Figure 1. Projection of an e-Customs implementation for a
typical EU member state

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IBM’s role
As a market-leading Customs solutions architect,
integrator and service provider, IBM and its Business IBM Business Partner INTRASOFT International S.A.
Partners have the capabilities necessary to not only help
implement MASP solutions but to also provide services INTRASOFT International, S.A., has demonstrated
necessary to transform current systems and architectures. expertise in the Customs sector through the
This approach is incremental, introducing solutions that building, integration, deployment and operational
can be integrated seamlessly with existing systems. management of specific Customs information
systems across Europe. The company’s offerings
To facilitate the transition to e-Customs, IBM has devel- cover all facets of Customs requirements,
oped a solution framework to be a guide for integrating including the provision of technical expertise,
components on a standard platform. The vision behind computerisation of Customs processes to reflect
the framework, which is shown in Figure 1, is to allow local and European Union legal requirements, and
multiple independent providers of solutions to supply management consulting for streamlining Customs
content that can be integrated seamlessly into an existing processes.
platform. Integration is based on the open principles of
a service-oriented architecture (SOA) in which the com- INTRASOFT International’s competitive
ponents offer well-defined services that can be reused advantages include:
across solutions. • In-depth knowledge of all business and technical
details
The framework consists of: • Recognition by all member states’ customs
• A solution map that identifies components and their authorities as a reliable and reputable contractor
relationships • Efficient operations with DG TAXUD and with
• An industry model that captures the industry the majority of member state administrations in
commonality in a set of standard processes, services the context of consulting activities and training
and data across the components • The execution of projects for the development of
• A technical reference architecture that standardises the other national systems (e.g., transit systems and
platform on which components run export control systems).

The advantages of the SOA-based integration of solutions At the end of 2006, INTRASOFT International
are extended by customisation options that range from S.A. employed 600 professionals working in
simply adapting business rules, through to implementing Belgium, Luxembourg, Athens and Romania, 20%
standard models, to full control of the components from of whom have postgraduate degrees, representing
a standard development environment. This approach 20 different nationalities and mastering more than
supports incremental transformation through a step by 15 languages.
step introduction of platform and components that can
come from various sources.

5

IBM is the market leader in helping businesses transform Existing e-Customs assets like the Declaration
their current systems through SOA into more flexible Management System (DMS), the Excise Movement and
and open systems for tomorrow. We have done this Control System (EMCS) and MASP components are
with clients in many industries including manufacturing, provided by IBM working in conjunction with Business
banking and insurance, and we are also doing it with Partners. Future assets will be developed and provided in
Customs and other Public Sector organisations. IBM the same way. IBM Business Partners have been chosen
can help EU member states move to e-Customs with because of the market-leading qualities of the specific
our robust e-Customs solution framework, built on products and services they contribute to populate the
open systems, supported by IBM’s hardware, software, e-Customs solution landscape. The framework is open,
research and integration capabilities. Figure 2 is a thus allowing independent providers to add contents both
solution map Identifying and differentiating typical assets at the platform level and the solution level. It is also open
against an architectural view. to next-generation components like Automated Export
System (AES), Automated Import System (AIS), Single
Electronic Access Point (SEAP) and Single Window (SW).

MASP

Trader Connect TAXUD Connect
Connect Facility
External
Integration
Cargo Message Broker Risk & Control Reference Infrastructure
Movements Declarations Follow-up Exchange Data

Process & Workflow
Processing
Goods Declaration Infrastructure
ECS ICS EMCS AEO NCTS
Flow Flow

Declaration Goods Customs Risk Customs Control
Management Accounting Management Management

Enterprise Service Bus
Financial Authorisation Tariff Guarantee Master Data Service &
Accounting Management Handling Management Management Information
Infrastructure
Persistence
EORI

Platform Assets Function Assets Messages

Figure 2. Sample component and platform map

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Excise Movement and Control System (EMCS)
A specific example of this approach can be found in
implementations of EMCS by IBM and IBM Business
Partner INTRASOFT International. EMCS is a computerised
system for monitoring movements of excise goods (e.g.,
alcoholic beverages, tobacco products and energy
products) between EU member states under duty
suspension. The system will replace paper documentation
that has accompanied these movements. Member states
are developing their own national EMCS applications, and
these systems will be linked to all other member states
through a common domain, maintained by the European
Commission.

The EMCS asset enables tax and customs administrations
to process excise declarations electronically and to
achieve optimal excise control for exchanging data on
excise declarations among member states (country of
dispatch, country of destination, country of transit). The
platform takes advantage of open standards and service-
oriented architecture. It is modular, separates business
logic from services implementation, and comes with a
GUI that can be individually customised, distributed
and integrated with existing applications. In addition,
by reusing the solution, a client can benefit by knowing
how to build and integrate a National Excise Application
(NEA) that meets the EU requirements but is also flexible
enough for specific national functionality. Present IBM
and INTRASOFT EMCS implementations meet exactly the
specifications and requirements requested by the EC.

EMCS implementations by IBM and INTRASOFT
meet exactly the specifications and requirements
requested by the European Commission.

7

MASP implementation in Belgium

The Customs and Excise Department of the Belgian Ministry of Finance selected IBM Belgium to
implement the full scope of MASP. A multi-year contract includes application development and
maintenance services, IBM WebSphere® software licenses, and taking over the management of
their help desk from incumbent service providers.

The short-term scope of the project involves:
• Transitioning to a steady-state corrective and evolutive maintenance of the legacy declaration
management system (based on BEA WebLogic and IBM DB2® information management
software)
• Implementation and maintenance of the Import Customs System (ICS) Phase 1
• Implementation and maintenance of the Export Control System (ECS) Phase 2
• Implementation and maintenance of EMCS Functional Stage 1 using the EMCS asset developed
by IBM and INTRASOFT
• Implementation and maintenance of the Authorised Economic Operator (AEO) Phase 1
• Implementation and maintenance of Economic Operator Registration and Identification (EORI)
Phase 1
• Re-engineering of the legacy New Community Transit System (NCTS) to SOA-based architecture
as well as maintenance and support
• Transitioning to a steady-state maintenance of Tarbel, the legacy tariff system

The long-term scope includes transitioning to next phases of the customs building blocks plus
implementation of Single Electronic Access Point (SEAP) and Single Window concepts.

The solution will be based on an SOA architecture underpinned by WebSphere Process Server and
WebSphere Datapower.® The project will be implemented by the combined forces of local Belgian
resources together with the IBM Customs Global Delivery Centre in India and INTRASOFT.

8

Enterprise Service Bus (ESB)

Figure 3. SOA-based EMCS

Figure 3 illustrates a SOA-based EMCS facilitating the Systems. Some member states are already in the process
movement from legacy systems and data into the new of replacing their current legacy applications, and others
functionality of an e-Customs environment. are considering options. It appears likely that within the
course of MASP most member states will replace or
Declaration Management modernise current DMS applications.
While the MASP is setting requirements on the exchange
of data among member states, the processing of import, The phasing for common domain applications as defined
export and some other trade declarations is a national by DG TAXUD, changing and evolving specifications,
domain matter and is handled by national Declaration and ambitious timelines are driving MSAs towards flexible
Management Systems (DMS). Thus, DMS is a national and resilient architectures and solutions in order to better
system on top of which the related MASP systems are respond to these emerging and demanding requirements.
used for interaction with other EU member states when The required implementations of the Single Window / One-
necessary. Stop Shop concept and Centralised Customs Clearance
will further increase the complexity demands on MSAs’
The interoperability requirements imposed by MASP on systems. A transition to Enterprise Service Bus/Business
EU member states administrations (MSAs) are fuelling Process Management (ESB/BPM) on a SOA infrastructure
reconsiderations of current Declaration Management appears to be the route that will be sufficiently flexible to
respond to the timely compliance to with EU directives.

IBM and INTRASOFT are also developing a SOA-
based, MASP-compliant DMS to accommodate the
requirements of EU member states.

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Along with Business Partner INTRASOFT, IBM is Examples of other e-Customs offerings
developing a SOA-based, MASP-compliant asset for the In addition to EMCS and DMS, IBM and IBM Business
“Declaration Management System.” The asset is built Partners have been and are collaborating on the following
around a number of generic functional areas within the e-Customs assets:
declaration handling process, and a flexible configuration
of the process, to accommodate the requirements Customs Messaging Gateway, an integrated solution
of various MSAs while complying with the EU MASP featuring a secure, multi-channel communications and
requirements. data transformation gateway leveraging IBM hardware,
software and services
The system is anchored in three main principles:
• Full compliance with national and EU requirements, Customs Message Broker, messaging service through
supporting the future vision of modern Customs which current legacy systems or newly developed
organisations applications can satisfy the information exchange and
• An open architecture and extensive set of functionalities interoperability requirements between EU member state
that lower risk of acceptance and implementation administrations and DG TAXUD
• Transparent, attractive total cost of ownership

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Risk Management, sophisticated capabilities for the Choose market leadership – IBM
systematic identification of potentially fraudulent Customs Customs organisations require more than just new
declarations, for collecting data and information, for technology; they need a comprehensive approach to their
analysing and assessing risk, and for prescribing business challenges based on a clear understanding of
action and monitoring outcomes the issues, a deep knowledge of the Customs business,
advanced business and technological thinking, and
Tariff Management, comprehensive facilities that include talented professionals who are passionate about what
administration and maintenance of tariff data; publication they do.
of tariff information in various formats; integration of tariff
information with Customs applications; validation of IBM is committed to supporting and assisting
commodity codes and tariff measures; and automation of governments and partner organisations as they address
duty calculations to support Declaration Management the challenge of the e-Customs transformation. We
have invested in a dedicated global team of industry
Guarantee Management, guarantees issued and consultants, subject matter experts and solution
accepted as a security of possible Customs debt, which developers, who focus on developing assets and
could arise in Customs regimes such as national transit or providing solutions and services to Customs organisations
a common transit within the total supply chain of global trade.

Our solutions combine IBM’s unique insight into Customs
organisations with leading strategic consulting skills and
unparalleled technical assets to help our clients forge
a new path to more effective, efficient and responsive
operations. Our success is accomplished by building
strong relationships with our clients and their partners, by

IBM has assets, experience completing complex systems integration projects on time
and within budget, by providing consulting services, and
and Partners to help by introducing innovative solutions that are backed by
IBM’s extensive research and development capabilities
governments and partner and underpinned by IBM’s broad portfolio of technology

organisations address offerings.

the challenge of the EU For more information, contact your local IBM Sales Repre-
sentative, or Beat Gnaegi: beat.gnaegi@ch.ibm.com
e-Customs transformation.

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© Copyright IBM Corporation 2008

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1
European Commission, Customs Blueprints: Pathways to modern
Customs, (Luxembourg: Office of the Publications of the European
Communities, 2007).
2
European Commission, “Electronic Customs Multi-Annual Strategic Plan:
2007 Yearly Revision,” TAXUD/477/2004 – Rev. 8 EN, Number 3, “Vision
and Objectives of Electronic Customs,” (Brussels: European Commission,
2007).

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Implementing e-Customs in Europe: An IBM point of view on E Government Solutions

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