EU Customs Reform to Target Online Sellers Like Amazon, Alibaba

(Bloomberg) -- The European Union proposed reforming its customs union with objectives that include making sure that trading platforms such as Inc and Alibaba Group Holding Ltd. comply with the bloc’s regulations.

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The European Commission’s proposal would introduce data-driven systems, streamlining reporting requirements for traders by reducing the time needed to complete import procedures, providing a single EU interface and facilitating data re-use.

Platforms like Amazon, Alibaba or Zalando SE would have to ensure goods sold online comply with all customs obligations. In addition, they would have to charge customs duties and VAT at the time of purchase, so consumers will no longer face hidden charges or unexpected paperwork when the parcel arrives.

“This is the most ambitious and comprehensive reform since the creation of our customs union in 1968,” EU Commissioner Paolo Gentiloni told reporters.

The customs union, one of the EU’s key features, facilitates trade with the rest of the world worth €4.3 trillion ($4.7 trillion) in 2021. It has been facing challenges including the rise of e-commerce, while customs officials play a significant role in enforcing sanctions against Russia since its invasion of Ukraine.

The commission’s proposal will reorganize and simplify the custom system for e-commerce parcels, which represent over 73% of all customs declarations with a new hub open for e-commerce consignments in 2028. The e-commerce regime is expected to bring additional customs revenue worth €1 billion per year.

The proposal will abolish the current exception under which goods valued at less than €150 are exempt from customs duty, seen as heavily exploited by fraudsters. “Up to 65% of such parcels entering the EU are currently undervalued, so they can avoid customs duties on import,” Gentiloni said.

EU Customs Authority

The reform would set up a new EU Customs Authority to oversee the data hub, a single online portal where importers will be able to log all the information on their products and supply chains, according to a statement from the EU’s executive arm.

This hub would replace the existing customs IT infrastructure in EU member states, saving them as much as €2 billion a year in operating costs. In addition, artificial intelligence will be used to predict problems before the goods are shipped to the EU.

Under the proposal, the data hub would open for e-commerce consignments in 2028, followed on a voluntary basis by other importers in 2032.

--With assistance from James Regan.

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