Latest developments on biggest EU customs reform since 1968 - First vote

Following concerns with the current framework, the European Commission proposed large reforms of the EU’s customs legislation in the first half of 2023. Since then, the European Parliament’s Committee on Internal Market and Consumer Protection (IMCO), responsible for the planned reform, has clarified its position and voted on amendments.

Current status of customs procedure harmonisation

E-commerce is burgeoning. And as it flourishes, so do the EU regulations on product standards, bans, obligations and sanctions. With the aim of preserving a functional and secure customs union, customs authorities are gearing up to restructure their practices. This is intended to simplify procedures for both businesses and authorities.

The IMCO has now essentially approved the EU Commission’s plans, but it is calling for more simplifications and regulations on processing data. To speed up relief for businesses and reduce the burden on small and medium-sized enterprises, a new EU data hub is to be up and running sooner than planned. An initial proposal to limit temporary detention to three days, which received intense criticism from associations and was deemed nearly impracticable, has now been discarded. Instead, the previous duration of 90 days is to remain.

More efficient customs controls

The EU estimates that around 65% of goods in e-commerce are deliberately undervalued. This is done to thwart customs duties, resulting in significant losses in revenue. A similarly high level of commercial goods in e-commerce are thought to fall short of current EU safety standards. Yet, they still manage to land on the European market. This presents substantial risks, particularly to health.

That's why the IMCO wants to hold large e-commerce platforms to a much higher degree of accountability. In the future, they will be expected to communicate information to customs authorities about goods being shipped from a third country to the EU within one day of a purchase being carried out. This should provide the customs authorities with a clearer overview of incoming goods, including those that fail to comply with EU standards and regulations.

To improve existing procedures, a specific group of Trust & Check traders will be created. A simplified procedure will allow traders to voluntarily undergo preliminary checks and inspections, giving EU Customs maximum supply chain transparency. Trust & Check traders will not have to undergo full inspections for every import, allowing customs authorities to focus on higher-risk importers. This will cut out a huge layer of administration for the traders in question as well as minimising customs controls and formalities. The Trust & Check system will build on the existing AEO programme.

In the latest amendment to the reform proposal, additional requirements will be imposed on traders wishing to obtain the Trust & Check status.

This will involve granting customs authorities access to the electronic systems they use to document compliance with the regulations and the transport of their goods. Safety and compliance standards, including product safety, should be appropriate and proportionate to the nature and scale of the activity.

Earlier introduction of the EU DataHub as a pilot project

The new regulations would mean establishing an EU DataHub as the primary platform for passing information to the customs authorities. This would enable better monitoring of suspicious discrepancies, potential cases of duty evasion, and risks associated with specific companies or goods. As a result, authorities could allocate their inspection resources to the shipments and companies deemed least trustworthy.

The platform would also benefit businesses because it would replace the more than 111 separate customs-related IT systems currently used in Europe. Providing information would become easier, reducing effort and costs.

There are now calls to launch the EU DataHub earlier than initially proposed by the Commission (in 2028), first as a voluntary pilot project. Additionally, a separate platform for whistleblowers is to be set up, enabling consumers and companies to easily report goods not complying with EU standards.

Parliament will vote on the draft in a first reading expected on 13 March 2024. Further implementation steps can then be expected after the European elections in June 2024.