"Fighting Cheap Imports" | EU Duties on Third Country Goods: A German Crusade
The Government of the U.S. is pushing for tariffs on affordable goods imported from the EU.
Enjoy a friendly chat as we dive into the German government's quest to combat unfair competition from cheap imports, particularly from China.
Finance Minister Lars Klingbeil's Plea for Fair Competition
At a meeting with his EU counterparts in Luxembourg, Financial Minister Lars Klingbeil passionately advocated for duties on cheap goods from third countries. He shared, "We must ensure fair competition conditions and thus also protect jobs. Those who pay decent wages and comply with the rules should not be the losers in the end."
Brussels' Proposed Customs Union Reform
The issue of reviewing and reforming the customs union is on the agenda for the finance ministers' meeting. The reform, spearheaded by Brussels, aims to make previously duty-free, cheap goods from third countries subject to duty.[1]
Targeting "Trash Products"
The German government is making it clear that their prime concern is "trash products" from China, dumping prices, and overcapacity. Klingbeil emphasized, "Such trade practices harm Germany, they harm companies in Germany, and they harm companies in Europe."[1]
EU's Two-Year-Old Reform Proposal
Back in 20xx, the EU Commission proposed a similar reform, which would have numerous goods under 150 euros subject to duty.[1] Currently, no duty is required for items valued below 150 euros - with exceptions, such as tobacco or perfume.
Accountability for Online Retailers
With the reform, online shopping platforms like Amazon or Etsy would be held responsible for collecting customs duties and VAT when making purchases.[1] The surging number of small, low-value packages delivered to the EU has made this a necessary adjustment.
A Flat Rate On the Horizon
In light of the increasing number of packages arriving from third countries, the EU Commission is considering a flat rate of up to two euros on small orders.[1] Companies like Temu and Shein could potentially be affected by this surcharge.
China's Brilliantly Priced Offerings
Temu is an online marketplace that has gained popularity with its exceptionally affordable products. Founded in China and now based in Singapore, Shein is both a manufacturer, retailer, and marketplace that boasts a rapid response to fashion trends.[1] By bypassing brick-and-mortar stores and keeping inventory to a minimum, Shein can maintain exceptionally competitive prices.
The Potential Impact on EU-China Trade
This tariff reform could tighten trade conditions for Chinese exporters. Leveling the playing field regarding customs duties may help EU domestic producers face less unfair competition from underpriced foreign imports. Chinese sellers on online marketplaces could see increased costs or reduced demand, potentially leading to adjustments in their pricing strategies.[1]
Broader Context
This initiative aligns with Germany’s broader economic approach under its current government coalition, which focuses on protecting local jobs and ensuring fair wage and regulatory conditions for businesses.[1] However, it comes amid larger trade tensions such as the US threat to impose high tariffs on EU goods, which could impact German exports and the broader EU trade environment.[4]
[1] Source: ntv.de, mbr/dpa[4] Additional Context: https://www.bloombergquint.com/global-economics/europe-us-trade-resolve-disputes-to-avoid-a-era-of-tariffs
- The German government's push against cheap imports, as discussed in the context of EU duties on third country goods, encompasses not only community policy but also employment policy, aiming to ensure fair competition conditions and thereby protect jobs.
- The ongoing trade tensions, such as the German government's plan to impose duties on cheap goods from third countries and the US threat to impose high tariffs on EU goods, are significant issues within the larger context of finance, business, and politics.
- The proposed EU customs union reform, which aims to subject previously duty-free, cheap goods from third countries to duty, is a significant step in the industry, especially in the realm of online retail, where platforms like Amazon or Etsy are expected to play a role in the collection of customs duties and VAT.
