Last week, the European Commission announced the contents of the massive and drastic reform of the European Customs Union. The commission itself calls it the most ambitious and comprehensive reform of the European Customs Union since its creation in 1968. This blog discusses the main changes point by point.
Customs needs a major upgrade due to substantially increased trade, e-commerce and changed and increased (compliance and climate) legislation. The main changes proposed to make the customs union "up to date" again are:
· A new European Customs Authority
Supervision in the European Union of world trade is currently very fragmented as member states perform their control duties as they see fit. Part of the reforms, therefore, is the creation of a European customs authority.
A new European Customs Authority will oversee a - also new - European Customs Data Hub that will act as the engine of a new IT system. As a central operational authority, the new authority will also contribute to a better overall European approach to risk management and customs controls, among other things.
· European Customs Data Hub
A second initiative to combat the fragmentation of supervision is the creation of a European data hub. This hub constitutes a centralized and digital system for reporting, processing and storing all information relevant for customs purposes.
The establishment of a European Data Hub will need to provide a modern, integrated set of electronic services. This will allow seamless collection, processing and exchange of information essential for the implementation of the new customs legislation. This should give Customs a 360-degree view of the supply chain and goods traffic.
Consequently, businesses will also have only one portal to use to submit their information. Under the proposals, the data hub will open to e-commerce shipments in 2028 and (on a voluntary basis) to other importers in 2032, which should bring immediate benefits and simplifications.
· ‘Supply Chain Supervision’
The European data hub not only strengthens customs supervision, it also provides traders with greater security. Indeed, the hub also provides information as part of a completely revised risk approach to global trade. Through verifiable supply chain information, anomalies in trade patterns can be carefully and effectively detected.
· Trust and Check Trader
When traders meet certain reliability requirements, they can be considered a ''trust and check trader.'' This more advanced AEO status allows the trader to take advantage of the future Customs One-Stop-Shop (''COSS''). In this case, traders can release goods without active intervention from customs.
· Important role of online platforms
Online platforms such as Amazon will play a more important role than they do now. This is an important difference. Whereas under the current system, compliance with many customs obligations still lies with the consumer and/or the carrier, this responsibility will now fall to online platforms. For example, Amazon will be responsible for remitting customs duties and VAT, so consumers will no longer face unexpected costs. With online platforms as official importers, EU consumers can rest assured that all duties have been paid and that their purchases are safe and meet EU environmental, safety and ethical standards.
In addition, the current €150 threshold, where goods below that are exempt from customs duties, will be scrapped.
The reform also simplifies the calculation of customs duties for the most common low-value goods purchased from outside the EU by reducing the thousands of possible categories of customs duties to just four categories. This makes the classification of goods much easier.
· Harmonized crisis and sanctions policy
Whereas each member state currently has its own sanctions policy regarding customs law violations, the reform will result in a common list that includes all acts and omissions that are flagged as violations.
The European Customs Authority will also coordinate crisis management. It will develop and enforce protocols and procedures for various crisis scenarios, such as public health emergencies, disrupted or blocked supply chains or the enforcement of EU sanctions.
When can we expect the reforms?
The proposals are scheduled to be implemented over the next 10 to 15 years. According to the Commission, the new rules for the European Customs Authority, the European Customs Data Hub and the new rules for e-commerce will come into effect in mid-2028. At first, the EU Customs Data Hub will be available only for e-commerce transactions. From 2032, all traders will be able to use it. A review of the new rules will then take place in 2035, after which the use of the EU Customs Data Hub could become mandatory for all traders in 2038.
Do you have questions about customs law or other questions related to international trade? Feel free to contact one of our attorneys.