As anyone who imports into the European Union (“EU”) knows, each member country maintains its own customs administration, customs interface, and information technology infrastructure. This can lead to different interpretations of provisions for the same goods across countries and create inefficiencies (or worse) for importers.
Recognizing these shortcomings, all of which have been exacerbated by the rise of e-commerce shipments, the European Commission has proposed a complete overhaul of the current customs system. The proposal calls for the creation of a EU Customs Authority and a single interface for the submission of all customs information on imports dubbed the EU Customs Data Hub. The proposed authority would begin operations in 2028. The proposed data hub would be open to e-commerce consignments in 2028, all other business in 2032, and would be mandatory in 2038.
The Commission’s proposal is intended to decrease the complexity of enforcement, increase communication and interconnectivity, and decrease operating costs. The Commission proposal stated that the EU Customs Authority and Data Hub would provide authorities with a “360-degree overview of supply chains and movement of goods.” While the plan is ambitious and wide-ranging, the Commission believes it would benefit governments, business, and consumers in the long-term. Governments would be expected to see increased revenues and decrease backup at the border. Businesses would likely have reduced compliance costs associated with the fact that they will work only with one agency and one online interface (although one wonders if the “increased revenues” for the governments doesn’t offset this savings).
The proposal was created in large part as a reaction to sales on e-commerce platforms, although they seem to be the only party not benefiting from the proposal. The proposal would shift the responsibility for customs duties, value added tax, and compliance with EU environmental, safety, and ethical standards from individual consumers and carriers to the e-commerce platforms. This would reduce unexpected paperwork and hidden costs for consumers and increase transparency, but directly impact the business model for many e-commerce sites.
Finally, the Commission indicated that the proposed overhaul would reduce “fraud.” In specific, the Commission cited “border shopping,” where ill-intended traders import through a “weak link” to avoid duties, regulations, etc. while gaining access to the European market. One might wonder whether this is “fraud” or complying with current EU law. In addition, the de minimis threshold for imports under €150 would be eliminated in favor of a 4-tier bucket system. The Commission indicated that this will avoid fraud in the form of undervalued goods, which are estimated to be as high as 65 percent of parcels entering the EU, as well as split consignments.