The European Union is stepping up its scrutiny of Chinese e-commerce as it moves to eliminate a tax break that has allowed small-value shipments to flood the region. The European Commission has proposed removing duty-free access for packages valued under €150 (US$156) in an effort to curb the influx of low-cost goods—many of which are deemed unsafe.
Why Is the EU Scrapping the Duty-Free Rule?
Currently, low-value packages entering the EU enjoy tariff-free access. But with 12 million such parcels arriving daily, and a staggering 91% originating from China, European customs authorities are struggling to cope. The total volume of small parcels entering the EU has more than doubled in just a year, soaring from 1.9 billion to 4.2 billion between 2023 and 2024.
The EU believes that eliminating this tax loophole could generate over €1 billion in annual revenue by 2027. Given the recent surge in shipments, officials now expect the financial impact to be even greater.
Who Will Pay the Price?
Under the new proposal, customs authorities will charge a handling fee, which could be paid by:
- The online platform (e.g., Shein, Temu, AliExpress)
- Individual sellers using the platform
- An intermediary company set up in Europe
The EU had initially planned to implement these changes by 2028 but has now moved up the timeline to 2026 to tackle the growing issue sooner.
Concerns Over Product Safety
Beyond taxation, the EU is also holding online marketplaces accountable for product safety and environmental standards. Authorities have flagged numerous non-compliant products sold through Chinese platforms:
- A recent European Consumer Organisation study found that 43% of tested toys on Temu violated safety standards, including slime toys with illegal levels of toxic borates.
- In another test, 100% of electrical products screened failed EU regulations, with mislabeled items posing electrocution risks.
The EU’s consumer protection agency has already launched an investigation into Shein’s business practices, following a similar probe into Temu last year.
A Global Crackdown on Chinese E-Commerce
The EU’s move follows the United States’ decision to close a similar loophole under former President Donald Trump. Previously, Chinese goods under US$800 entered the U.S. tax-free. Now, with increased tariffs and scrutiny, Chinese e-commerce giants are facing mounting regulatory challenges worldwide.
What’s Next?
The EU’s proposal requires approval by member states, but with a qualified-majority vote, officials expect minimal resistance. If passed, Chinese online retailers will need to adjust their business models and comply with stricter EU rules—or face hefty fees and potential bans.
For European consumers, this could mean higher prices on platforms like Shein and Temu but also safer, more regulated products.
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