Background

The European Union is advancing an initiative to update its customs union by 2030 to better respond to forthcoming challenges. The EU’s effort parallels steps under consideration as part of U.S. Customs and Border Protection’s 21st Century Customs Framework.

A new report from a group of individuals from politics, industry, trade, and academia finds that the EU customs union needs urgent structural change in light of significant increases in trade volumes, the rapid expansion of e-commerce, shifts in the role of customs from simply revenue collection to enforcing EU values (e.g., bans on imports made with forced labor), and a lack of unity in applying customs-related rules and procedures both within and among EU member states.

In response, the report proposes that the EU implement the following sets of measures by 2030.

- a new approach to data aiming to diminish reliance on customs declarations, obtain better quality data from commercial sources, and provide businesses with a single data entry point for customs formalities

- a new European Customs Agency to complement the role of the European Commission and support the work of EU member states

- reforming and expanding the authorized economic operator scheme

- a new framework in which businesses would seek AEO status to gain commercial access to the EU market (small non-commercial consignments would continue to be sent through the usual processes but without priority and subject to a level of control that reflects their “non-trusted” status)

- no more customs duty exemption threshold of €150 for e-commerce, together with simplified rates for low-value shipments

- a comprehensive framework for cooperation, enabling better data sharing across the customs union, with the involvement of market surveillance authorities, law enforcement bodies, and tax authorities

- a package of measures to green EU customs, digitize procedures, and ensure that prohibitions and restrictions related to sustainability are properly implemented on imported products

- possibly reform the Harmonized System nomenclature to allow for the proper classification of environmentally friendly products that the EU wants to promote in international trade

- properly resourcing, upskilling, and equipping customs administrations to ensure their full capacity to fulfil their missions

- an annual estimate of the customs revenue gap to better manage customs revenue collection

- a package of reforms relating to processes, responsibilities, liabilities, and governance of the customs union

These recommendations will next be discussed with the European Parliament and EU member states, and the European Commission will set up a group to debate and operationalize them. Based on this input, and on broader consultations with stakeholders, the Commission will table a customs reform package by the end of the year.

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