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EU finds UK ‘failed to fulfill’ obligations to combat undervalued Chinese imports

By Rachel Douglass

Mar 10, 2022

Business

Image: Rocco Dipoppa via Unsplash

The EU Court of Justice is set to enforce a hefty fine against the UK after it found negligence in the imposing of EU obligations to combat fraud and enter the correct amount of customs duties and VAT.

Following an investigation by the court, it was ruled that the UK had “failed to fulfill” related EU laws, resulting in an import overflow of undervalued and fraudulent textiles and footwear from China.

Recorded failures by the UK have been dated from 2011 to 2017, during which the UK was a member of the EU.

In a court ruling, the Grand Chamber of the Court of Justice said the UK failed “to apply effective customs control measures or to enter in the accounts the correct amounts of customs duties” in respect to certain Chinese imports, as well as failing to provide the necessary information to calculate duty and own resources.

An overflow of undervalued Chinese textiles and footwear

A complaint filed by the European Anti-Fraud Office (OLAF) in 2017, which brought the ruling about, stated the UK had not followed its recommendations to reduce the amount of undervalued products from China to subsequently be sold on the European market.

OLAF introduced a risk assessment tool after it asked EU member states, in 2007, 2009 and 2015, to begin monitoring imports and carrying out customs checks on textile and footwear goods from China by shell companies. However, OLAF stated the UK was carrying out inadequate checks and releasing products into the market without conducting appropriate customs controls, resulting in a proportion of customs duties not being collected or made available to the European Commission.

To cover the EU’s loss, the commission had claimed almost 2.7 billion euros in payment from the UK government - a sum that has been rejected by the court due to inconsistencies, with EU officials asked to recalculate the losses.

The UK will not have the right to appeal the final verdict, but it can challenge the commission on how much money should be paid once the bill is revised.

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