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"A loophole that should never have existed:" Why China's Temu and Shein are a big regulatory headache

www.dw.com Why China's Temu and Shein are a big regulatory headache – DW – 02/28/2025

The US and EU want to clamp down on online Chinese retailers Shein and Temu. They stand accused of exploiting a legal loophole to ship cheap products directly to overseas consumers from Asia.

[...]

The Chinese platforms are taking advantage of a little-known trade rule called de minimis, which allows products worth less than $800 (€764) in the United States or €150 ($157) in the EU to be shipped duty-free with minimal customs checks.

"All these products arrive from China as individual parcels, so it's impossible for customs authorities to open and check them all," Agustin Reyna, director general of the European Consumer Organisation (BEUC), told DW.

The rise of Temu and Shein has Western regulators concerned on many fronts. First, the Chinese platforms are exploiting a loophole that was not designed for large-scale e-commerce. De minimis was created so as not to burden customs agencies with the handling of small gifts and personal items sent across borders.

Second, many of the products for sale on Chinese platforms don't meet safety or environmental standards. Toy Industries of Europe (TIE), a Brussels-based industry body, tested 19 toys bought from Temu at the end of 2023 and found that none were fully compliant with EU safety rules on toys. All but one was found to pose a real risk to children.

[...]

Brussels also wants to make the likes of Temu and Shein — rather than individual sellers — liable for the sale of dangerous products on their platforms and has suggested that checks could be made before products are shipped from China to ensure compliance.

Christoph Busch says this is necessary because "from a contract law perspective, Temu is currently not the seller, it's just an intermediary."

"The seller sits somewhere in China, and the buyer is a consumer in the US or EU," the director of the European Legal Studies Institute at Germany's University of Osnabrück, told DW.

Busch also said the Commission wants the platform operator to become the importer, so they would be obliged to pay the customs duty, which would also cut much of the new red tape facing European customs authorities.

Instead of dealing with tens of thousands of individual Chinese sellers, he added, EU customs bodies would need to liaise with just a handful of e-commerce platforms that are frankly making billions from a loophole that should never have existed.

3 comments

Except that this isn't a loophole but a feature explicitly introduced only a few years back to lower the customs burden and annoyance of small senders, which was highly welcome at the time.
I guess they didn't expect it to be used commercially at this scale, but I don't think this is a problem that should be solved at the customs office but rather through regulation of the online platform.

Is it a loop hole, is it a trade rule, we’ll never find out. What’s certain is:
"You are going to have to hire thousands and thousands of more customs officers if you want to scrap the exemption," Riedenstein warned. "It's going to cost the US and the EU to punish Beijing for taking advantage of these legal loopholes."
The future is just one huge contradiction. Buckle up.

De minimis is a loophole that's really easy to close: declare it unapplicable to companies. And if a company is found trying to overwhelm customs with a lot of small individual low-cost items, send them the administrative bill.