What: EU plans to make Temu, Shein, and Amazon liable for unsafe or illegal goods whilst abolishing duty exemptions for low-value imports.

Why it is important: By making platforms directly responsible for compliance and duty collection, the EU is closing crucial regulatory loopholes that have enabled the rapid growth of ultra-fast fashion retailers at the expense of traditional businesses.

The European Union is implementing significant customs reforms targeting major e-commerce platforms, shifting responsibility for dangerous or illegal products from individual consumers to the platforms themselves. This regulatory overhaul comes in response to an unprecedented surge in lower-value parcels, which increased fourfold since 2022 to 4.6 billion items, with over 90% originating from China. The reforms will require platforms to provide pre-arrival data, collect duties and VAT, and ensure compliance with EU requirements. The current EUR 150 duty exemption will be abolished, and a new central EU customs authority will be established to oversee operations. The economic impact of non-compliant goods is substantial, with counterfeiting alone costing the clothing industry EUR 12 billion annually, the cosmetics sector EUR 3 billion, and the toy industry EUR 1 billion. The proposal also addresses environmental concerns, requiring sellers to contribute to disposal costs for unwanted products, particularly in the fashion sector.

IADS Notes: The EU's proposed customs reforms targeting Temu, Shein, and Amazon represent a culmination of escalating regulatory pressure throughout 2024. In June 2024, the EU first demonstrated its commitment to stricter oversight by imposing Digital Services Act regulations on Temu, while December 2024 saw Vietnam taking similar protective measures. The timing is particularly significant as market dynamics shift, with Amazon's launch of "Haul" in November 2024 signaling intensifying competition in the budget e-commerce sector. This regulatory evolution comes amid broader industry challenges, as Forrester's October 2024 report predicted declining growth rates for major platforms, citing quality concerns and unethical production processes. The reforms align with a global trend toward enhanced supply chain scrutiny, exemplified by January 2025's UK parliamentary investigation into employment rights.

Temu, Shein and Amazon to be liable in EU for ‘unsafe’ or ‘illegal’ goods