Most comprehensive reform to EU customs in decades will have 'huge ramifications' for traders

Thu 18 May 2023
Posted by: William Barns-Graham
Trade News

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The European Commission (EC) has proposed what it has called “its most ambitious and comprehensive reform of the EU Customs Union since its establishment in 1968”.

This includes a plan to introduce a new EU Customs Authority that will oversee an EU Customs Data Hub – a single system for the entire bloc that will replace existing customs infrastructure across the EU’s 27 member states.

This could save EU countries up to €2bn a year in operating costs, according to Economy Commissioner Paolo Gentiloni, who presented the proposals yesterday (17 May), reports Euractiv.

Huge moment for trade

The Institute of Export & International Trade’s (IOE&IT) director of strategic projects and international development, Kevin Shakespeare, has said that this could be a significant moment for any businesses doing trade with or within the EU.

“These reforms could have huge ramifications for traders and this announcement is a landmark moment in the digitalisation of trade. This will definitely impact how businesses do trade with and within the EU.

“The EC’s proposals could save significant costs and administrative burden for businesses, thereby reducing costs for consumers.

“The IOE&IT will be closely following how these proposals develop, informing members and the wider trader community about their implications through our bulletins, webinars and training.”

E-commerce impact

The reforms will also have a significant impact on the e-commerce sector.

Bloomberg reports that platforms including Amazon and Alibaba will need to ensure that customs duties and VAT are charged at the point of purchase on their platforms, under the plans. This will mean that consumers “no longer face hidden charges or unexpected paperwork when the parcel arrives”.

It is reported that the new data hub would open for e-commerce consignments in 2028, with other importers able to start using it on a voluntary basis in 2032.

Response to growing trade

The EC has said that the reforms are a response to the “current pressures under which EU customs operate”, citing a significant increase in trade volumes, particularly in e-commerce, as well as an increase in the number of checks that need to be imposed at the union’s borders.

The EC also cites “shifting geopolitical realities and crises”.

According to lawyers at Baker McKenzie, writing on legal analysis site Lexology, the proposals seek to:

“Increase duty revenue, avoid illicit and non-compliant products, align the current customs framework with the current e-commerce landscape [and] uniformise the operational implementation of customs in the different EU Member States.”

Single point of entry

According to Shakespeare, the EC’s plans could also lead to:

  • The creation of a single ‘customs one-stop shop’ for traders to provide customs and trade information to the EU Customs Union
  • A new ‘Trust and Check’ programme around release of goods into free circulation
  • The increased use of AI and data to monitor consignment risk levels, enabling the EU to adopt a ‘risk-based’ approach to checks

Shakespeare said the EC’s reforms follow global trends toward digitalisation, citing the recent draft publication of the Border Target Operating Model in the UK and the World Customs Organization’s data strategy which seeks to create a “global data ecosystem”.