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