EU to crack down on Asian online retailers Temu and Shein

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The EU is preparing a crackdown on the growing flood of packages from Asian online retailers such as Temu and Shein, following a big increase in ecommerce that largely evades EU custom checks.

Measures under consideration include a new tax on ecommerce platforms’ revenue and an administrative handling fee per item that would make most shipments less competitive, according to five people familiar with the discussions.

European trade commissioner Maroš Šefčovič has said about 4bn lower-value parcels will be flown to the EU this year, almost triple the number in 2022. The sheer volume and the fact that they are under the €150 threshold for custom duties means most are not checked, driving a rise in imports of dangerous goods such as toxic toys.

While the EU executive is targeting the business model of popular online platforms such as China’s Temu and Shein, which was founded in China but is now based in Singapore, no decisions had been taken and any action was complicated by international law, the people said. 

EU officials are worried about the undercutting of European competitors that face higher production costs to adhere to EU standards and the negative impact of cheap imports on high street retailers.

The bloc’s safety authorities have detected a growing number of dangerous and counterfeit goods, many of which are dispatched direct to consumers.

China also benefits from subsidised postage costs, meaning it is cost-effective to send cheap goods by air. The EU executive has already proposed to scrap a €150 value threshold underneath which packages are exempt from custom duties, a step the US is also taking. 

But that would only increase the workload of already overwhelmed custom officers. Amsterdam’s Schiphol airport and Rotterdam port handle a combined 3.5mn packages a day — or 40 per second.

“There is no way you can check it all,” said an EU diplomat.

Pricing levels have not been set for a handling levy, but such a fee would apply to any online retailer shipping to EU customers directly from outside the bloc. US-based Amazon typically uses sellers based in Europe.

EuroCommerce, which represents EU retailers, welcomed the planned crackdown but said a handling fee would be difficult to justify under WTO rules that limited the amount of fees and charges for customs processing to the approximate cost of the service rendered.

“For now we urge the European Commission and member states to step up enforcement at national and EU level, and break down silos between different enforcement domains,” it said. “New rules will take years to kick in.”

The number of dangerous products reported by EU countries increased by more than half to over 3,400 in 2023 from a year earlier. Cosmetics, toys, electrical appliances and clothes were among the products with the biggest safety issues.

The bloc is also investigating Temu in a bid to reduce the flow of unsafe products such as toys and cosmetics that do not meet EU standards. Under Brussels’ digital services laws, potential penalties include heavy fines and even the banning of platforms from operating in a particular country. 

A tax on the revenue of ecommerce platforms, which would be applied to EU as well as foreign businesses, would require approval from the bloc’s 27 member states, and could hurt European businesses at a time when Europe was trying is to encourage digitisation, the people said.

The incoming commission. which started work on December 1, is hoping to draw up a proposal by February, according to an internal document seen by the Financial Times.

“E-commerce will be a key priority of the new commission’s mandate, specifically strengthening measures to prevent non-compliant products from entering the EU market,” a commission spokesperson said.

Temu said: “We support policy changes that benefit consumers. We believe that fair policies will not affect competitive business dynamics.”

Shein said: “We fully support reforms that benefit European consumers and ensure transparent competition on a level playing field.”

Additional reporting by Eleanor Olcott in Beijing and Alice Hancock in Brussels