Further to the letter from my predecessor, the former Paymaster General, dated 27 March 2007,[6] I am writing to update you further on the position regarding negotiations for the proposed amendment to Regulation 515/97.

  The detailed Article by Article discussion of this proposal in the Council's Customs Union Group finally commenced in June, but progress to date has been slow. Nonetheless, the Portuguese Presidency of the Council has indicated that concluding the Council's discussions will be one of its priorities in the customs area. The European Commission has reported that it expects the First Reading of the proposal in the European Parliament to take place in September.

  Several Member States including the UK have expressed concerns about the definition of "customs legislation" in the proposal, which as drafted extends to VAT and would be unacceptable to the UK, and there are associated questions as to whether the proposal has been made under the correct legal base. The discussion on these points is ongoing.

  Member States have also raised questions and concerns about the plans for the creation of a central "data directory" of public and private sector databases relating to movement of goods, and the Commission has agreed to prepare a presentation to inform further debate on this. As regards data protection issues generally, the discussions are still in the very early stages, but all are agreed that it is important to achieve clarity as to which data protection legislation applies and when.

  I shall continue to keep you informed of progress.

26 July 2007

  Thank you for your letter dated 26 July 2007 regarding Explanatory Memorandum 5048/07. This was considered by Sub-Committee A at their meeting on 9 October. The Sub-Committee are grateful for this update and look forward to details of progress in due course.

10 October 2007