ZPP Newsletter
Report: The Future of EU Customs: Challenges, Opportunities, and Implications
The rapid expansion of e-commerce has fundamentally reshaped global trade, presenting both opportunities and challenges for customs systems worldwide. In the European Union (EU), cross border online sales have surged, necessitating reforms to modernize the Customs Union and adapt it to the complexities of the digital economy. This paper examines the pressing need for change in customs policies, driven by increased parcel volumes, evolving business models, and the rise of e commerce. In 2023, EU customs authorities processed over 2.6 billion imported items, with a significant portion declared under the H7 regime for low-value goods. The current system, originally designed for bulk shipments, struggles to ensure compliance with VAT, customs duties, and safety regulations, leading to revenue losses and the infiltration of non-compliant or counterfeit goods. However, industry representatives emphasize that revenue losses are also linked to systemic undervaluation practices, rather than being solely due to the de minimis exemption. According to European Anti-Fraud Office (OLAF) investigations, certain sectors, such as textiles and footwear, have seen systematic undervaluation practices that significantly impact the EU budget. To address these challenges, the European Commission has proposed a series of reforms, including centralized clearance, digitalization of customs processes, enhanced risk management, and collaboration with e-commerce platforms. While these measures aim to create a resilient, efficient, and future-proof Customs Union, business stakeholders stress the importance of risk-based enforcement and improved data-sharing to ensure compliance without overburdening businesses. They emphasize that reforms should focus on enhancing customs capacity and modernizing enforcement mechanisms rather than solely relying on increased compliance obligations for platforms and importers. The proposed changes will not only affect trade within the EU but will also have implications for EU candidate countries such as Moldova and Ukraine, which align their customs regulations with EU standards. Ensuring a smooth transition and regulatory predictability will be key in fostering trade relations between the EU and its future members. Customs policies may be better supported by the EU, protect income sources, and encourage fair competition by being in line with the reality of contemporary commerce. However, we emphasize that reforms should be implemented in a manner that does not disproportionately impact SMEs or create unintended monopolization within the e-commerce sector.
See the full report: The Future of EU Customs: Challenges, Opportunities, and Implications
