US E-Tailers Face European Customs Issues

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BRUSSELS, Belgium -- The European Commission needs to harmonize the duties and taxes that member states charge European consumers who buy goods from US Web sites that do not have warehouses in Europe, said Harald Schoenfelder, managing director at Federal Express and chairman of the Customs Committee of the European Express Association, at the annual Federation of European Direct Marketing forum here last month.

He acknowledged that the 1992 decision to create a single market had led to simplification of customs clearance within the European Union and that a European customs code was in place.

But what Europeans call "subsidiarity" has allowed the 15 member states leeway in interpreting the code so that national codes still differ slightly from one another. As a result, express carriers pay duties and taxes for importers of record in individual countries.

Carriers have no problem collecting those fees from businesses and 80 percent of shipments are business-to-business. But Schoenfelder noted that consumer purchases from US Web sites were rising and, with it, collecting duties and taxes.

Amazon and Viking have warehouses within the EU so they pay only once when they bring in goods, and can then send them across the EU without having to worry.

"What we're seeing," he said, "are consumers ordering a book or a CD and suddenly having to pay other charges they didn't know about that can double the price."

He estimated that 90 percent of US Web companies do not know that consumers must pay duties and taxes.

"We expect consumer purchases to be a problem for us and for national customs authorities," he said. "Billing would be costly for us both and a high volume of customs clearance would mean a lot of work for very little income.

"When a company imports 20,000 sneakers from Nike, that requires one customs clearance declaration. But imagine when 20,000 individuals order one pair each and we're faced with 20,000 pieces of paper."

Schoenfelder hopes FEDMA will help raise awareness of the problem among its members and help EEA in its lobbying efforts for uniform tax and duty codes, especially in the value-added area.

He said that today 20 percent of all manufactured goods cross national borders, but that 80 percent will do so by 2015.

"This is not a problem for Europeans now," he said, "but once global trade takes off it could become a major problem. Customs clearance is still a major bottleneck to global trade. Look, people invest heavily in fast shipment so goods can reach overseas destinations in 14 hours, and then they can sit on the ground for another 15 hours without proper documentation."
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