Temu and Shein: German Economy Minister Plans to Eliminate Duty Exemption

German Minister of Economy Against Temu and Shein

• "eCommerce Action Plan" by Minister Habeck: The plan proposes three main steps to regulate the influx of products from third-country online shops into the European Union (EU). This includes eliminating the duty exemption for packages under €150, which particularly benefits low-cost platforms Temu and Shein.

• The Contents of the Plan: In addition to abolishing the tax exemption, the Ministry of Economy proposes to strengthen market supervision and customs responsibilities, as well as to conduct test purchases and strictly punish any violations that occur.

The German Ministry of Economics, led by Minister Robert Habeck, recently published its "E-Commerce Action Plan". The plan outlines steps to reduce unregulated mass imports of low-value products from non-EU countries. 

The document specifically refers to Temu and Shein, the two Asian companies that circumvent EU regulations on product safety, consumer protection, environmental and health standards, and intellectual property of designs. These providers take advantage of an existing duty-free import threshold of €150 (US$165.7) in the EU, which allows them to ship a large number of packages under this threshold to consumers without additional taxes.

Shein and Temu Benefit from Duty Exemption

Because Temu and Shein are known for their low prices, their shipments tend to fall under the duty-free regulations. Certainly, this strategy has helped them gain success and notoriety in recent years. 

ECDB data shows how fast Shein’s net sales were growing even before the pandemic:

Temu’s development is no less amazing. Although it was only launched recently, in 2022, it is projected to reach a GMV of US$29 billion by 2024. 

The Content of the German Action Plan

The E-Commerce Action Plan consists of three main measures:

• Strengthening Customs Capacity and Market Supervision 

• More Consistent Implementation of the EU Digital Services Act (DSA) 

• Acting in Accordance With Environmental and Consumer Protection

The measures include increased control of imported products and the elimination of the duty-free threshold. The planned reform is to be implemented on a European scale, i.e. throughout the European Union and not just in Germany.

Implementing the DSA means that decision-makers will build up resources and instruct agencies to systematically scan third-country eCommerce websites for possible data breaches. The measures also include regular mystery shopping to check for product breaches of any kind. Test purchases have been conducted by independent researchers in the past, but not on the same scale by a regulatory agency as is planned here. Consequently, strict sanctions are meant to deter from future violations. 

The safeguards come at a time when the larger economies as a whole are grappling with the influx of low-cost products that threaten to erode the market share of domestic players. The U.S. is currently discussing a similar strategy for its de minimis rule.

Sources: BMWK – Handelsblatt