Introduction of the European Union’s Import Control System 2 – What Malaysian exporters need to know

1. The European Union’s Import Control System 2

The European Union accounts for around 15 % of the world’s trade in goods worth trillions of EUR per year. It is also an important market for Malaysia with exports into the EU in 2022 amounting to approx. EUR 35.6 billion. Since 2021 the European Union has been implementing a new customs pre-arrival security and safety programme, underpinned by a large-scale advance cargo information system – the so-called Import Control System 2 (ICS2). According to official announcements this pre-arrival security and safety programme aims to support effective risk-based customs controls whilst facilitating free flow of legitimate trade across the EU external borders.

In essence, ICS2 will collect data about all goods entering the EU prior to their arrival. For this purpose, all Economic Operators (EOs) under the new regulation will have to declare safety and security data to ICS2, through the Entry Summary Declaration (ENS). The obligation to start filing such declarations was introduced for different categories of EOs on three separate release dates (Release 1 on 15 March 2021, Release 2 on 1 March 2023). Since Release 2, the ICS2 is applicable to all air freight shipments. Release 3 of the ICS2 will occur effective 3 June 2024 and extend the implementation to all other types of transport of goods (sea, road, rail) to or through the EU, Norway, or Switzerland.

The information required for any item under the ENS to be submitted includes:

• A complete and accurate commercial description,
• The HS 6-digit commodity code,
• Additional details of parties involved (e.g. seller, buyer, etc.),
• The EORI number.

2. How to prepare

To begin, any affected Economic Operator must decide whether to develop their own in-house IT system or use the services of an IT Service Provider (ITSP) to – in future – send the ENS data to ICS2. Economic Operators will then have to request a deployment window from the EU Member State of their EORI registration to connect to ICS2 within the legal timeframe as displayed in the graphic below. Part of the deployment process is mandatory self-conformance testing. Its purpose is to confirm that an IT system to be used for sending and receiving technical messages to and from ICS2 is ready to carry out ICS2 operations. If an EO is already connected to ICS2 (e.g., a freight forwarder or postal operator involved in air transport), they need to test exclusively the new business processes for the third release. If, however, an Economic Operator is connecting to ICS2 for the first time, they need to test all core processes.

In addition, Economic Operators will also need to make early arrangements with various parties in the supply chain for how the ENS data is to be filed. This depends on whether the supply chain parties agree to make the necessary commercial documentation data available to the carrier.

EOs who fail to comply with the necessary steps as above will have their goods stopped and delayed at the EU customs borders. Inadequate declarations will either be rejected with the goods in question not being cleared by the customs authorities or subject to intervention, with possible sanctions imposed for non-compliance.

Checklist:

1. Ensure you have an Economic Operators Registration and Identification (EORI) number from one of the EU Member States’ customs authorities.
2. Decide whether to update your own IT system or whether to engage services of an ITSP.
3. Develop or update your IT system on the basis of the latest ICS2 common functional and technical system specifications (CFSS and CTSS).
4. Get the necessary digital certificates from the certificate authority in the List of Trusted Lists (LOTL) to authenticate your identity (applicable to the Sender only).
5. Run the mandatory self-conformance testing.
6. Make arrangements with clients whether to submit the complete ENS dataset to the ICS2 yourself, or instead, arrange contractually that, as a carrier, you submit the master level data and they submit the necessary partial information to ICS2 under their responsibility.
7. Contact the responsible national customs administration (which issued the EORI) and request a deployment window to connect to ICS2.
8. Train your staff to operate the new IT system.