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How the EU intends to crackdown on low-value ecommerce goods from China

The European Finance Ministers agreed to move forward the customs duty on low-value parcels until next year to combat cheap Chinese ecommerce imports through online platforms such as Shein and Temu.

The European Union has taken action to address the concerns of Europe about cheap imports from e-commerce.

What is the problem?

For parcels of e-commerce arriving in the EU, there is a "de minimis exemption" from customs duties.

Customs exemptions allow online platforms such as Shein, Temu and AliExpress to deliver clothes, accessories, and gadgets directly from Chinese factories to consumers at a rock-bottom price.

Last year, the number of low-value packages that arrived in the EU doubled to 4.6 billion. According to the Commission, more than 90% are from China.

According to the EU executive, 65% of all small parcels that enter the EU are valued below their actual value in order to avoid paying customs duties.

The EU also fears that non-compliant goods could harm consumers, cause environmental damage by shipping products of short life spans, and damage the EU's industry, particularly retailers, due to an increase in imports.

There are concerns that the cheap imports from China will cause more people to migrate to Europe.

What is the EU plan?

According to the Commission the EU is planning to overhaul its customs system by creating an EU Customs Authority, as well as an EU Customs Data hub to replace the IT infrastructure of EU members. This will save them up to two billion euros per year and allow for greater coordination.

In the EU, there is no trade tariff between EU member countries. It is a customs Union, which means that imports from other countries are subject to a common tariff. Each country has their own customs agency and currently the EU has 189 different IT systems for customs. This is why the data center is needed, according to Dutch legislator Dirk Gotink who oversees reforms at the European Parliament.

Due to the sensitive nature of the data, the hub will need to work closely with European technology companies.

The data are a kind of MRI scan for the European economy, and trade flows. It is very sensitive data and its access must be strictly regulated.

The date set for the roll-out of the data hub, which will give ecommerce companies access is 2028. This is the same year that the 150 euro de minimis exclusion is scheduled to be eliminated. This is too slow for many.

SHORT TERM FIXES

The bloc is looking to introduce "simplified temporary tariffs" for low-value packages of e-commerce, perhaps in November 2026. The finance ministers will decide on a single duty based on a percentage for all packages at their meeting scheduled for December 12.

The Commission also proposes a handling fee of 2 euros for low-value packages delivered directly by e-commerce to consumers, or 50 cents in the case of parcels handled at warehouses. The online retailers or importers will be responsible, in addition to temporary customs fees.

The handling fee will likely be introduced by November 2026 or sooner if a suitable IT solution is found to support the implementation.

COUNTRIES JUST RUSH FOR A CUSTOMS AGENT

France, Poland, The Netherlands and Portugal, among others, are vying to host the EU's new customs authority before the deadline of November 27.

France proposed Lille in the north, near Belgium's border, as the host city. Poland argues for Warsaw which is already the European border and Coast Guard agency Frontex. Portugal has suggested Porto.

(source: Reuters)