The current European Union (EU) quality chain is insufficiently effective for (non-food) e-commerce products from outside Europe that are placed on the EU market, particularly through Asian platforms. The EU quality chain is described in section 1.2.3 of the Blue Guide. Meanwhile, the flow of these products is increasing exponentially.
As a result, citizens, residents and businesses in the Netherlands are increasingly receiving unsafe and non-sustainable products. Consumers and businesses within the EU cannot sufficiently rely on these products being safe, sustainable and free of health risks. This leads to unfair competition for businesses in the Netherlands.
Increased, coordinated and alternative oversight by the Human Environment and Transport Inspectorate (ILT), the Nederlandse Voedsel- en Warenautoriteit, NVWA (Netherlands Food and Consumer Product Safety Authority), the Inspectie Gezondheidszorg en Jeugd, IGJ (Health and Youth Care Inspectorate), the Rijksinspectie Digitale Infrastructuur, RDI (Dutch Authority for Digital Infrastructure) and the Nederlandse Arbeidsinspectie (Netherlands Labour Authority) helps but is not a solution.
An approach is now required to activate all parties involved in the production, trade and transport of e-commerce products from outside the EU to the Netherlands. Hence this signal report.
Protecting consumers and businesses
Legislation has been introduced at the EU level to protect consumers and businesses in the EU against ineffective, unsafe, unhealthy and non-sustainable products. Additionally, the legislation provides businesses with level playing field. Consumers, end users and businesses can be confident that these protections and the level playing field are safeguarded.
The EU quality chain requires that any company placing a product on the EU market proves that the product is effective, safe and sustainable and does not pose health risks. The company must also provide a representative in the EU who is accountable for compliance with EU product standards. The EU quality chain also ensures that all players in the supply chain (such as manufacturers, importers and distributors) have a role in guaranteeing and controlling compliance.
Unmanageable parcel flow
In recent years, manufacturers from Asia in particular have increasingly delivered products directly to users in the EU. Currently, more than 1 billion parcels are imported into the EU annually via the Netherlands. This accounts for approximately 40% of the total e-commerce imports into the EU. The number of products originating from Asian e-commerce platforms, such as SHEIN, Temu and AliExpress/Alibaba, continues to rise. These parcels are typically shipped directly from manufacturers to consumers and users in the EU.
Compliance with EU standards among these providers is seriously lacking. An increasing number of unsafe and non-sustainable products are entering the market in the Netherlands, putting pressure on consumer protection, the environment, health, sustainability and safety. This also undermines the confidence in a level playing field amongst entrepreneurs in the Netherlands.
The Douane (Customs Administration of the Netherlands) 2023 annual report states that the e-commerce parcel flow grew from 172 million parcels in 2021 to 341 million in 2022 and 718 million in 2023. This growth is expected to continue, reaching 1.4 billion parcels in 2024.
Customs has noted an enormous volume growth, combined with the industry's mobility, a increase in the flow of imported prohibited goods and often the absence of a responsible party in the EU. The flow of products from outside the EU entering the EU market through e-commerce has now become unmanageable.
Risks for consumers
Inspection results in ICSMS (a European registration system where market surveillance authorities across EU Member States record their oversight findings) show that compliance with EU standards among Asian e-commerce providers is severely lacking.
Between 85% and 95% of products inspected by EU market surveillance authorities do not comply with EU product legislation. This also means that some products do not function correctly and can pose risks to consumers. For example, small detachable parts in toys that can cause choking hazards for young children, or electronic devices that cause interference with digital infrastructure or catch fire due to overheating.
Many products from Asia also contain banned substances such as lead. Market surveillance authorities in the Netherlands have now launched their own investigations into these e-commerce products. The initial findings confirm the broader EU research results, indicating a significant societal issue.
ILT case study
A pilot study into e-commerce products found that 80% of the examined products contained excessive lead levels, posing a health risk.
RDI case study
A limited sample of smart light sockets and plugs revealed that only 1 out of 24 products met EU product standards. Additionally, 60% of the products posed an electrocution risk.
Joint inspections by market surveillance authorities from multiple EU Member States found that 85% of the inspected e-commerce products lacked an EU-based representative, or the provided representative was non-existent or unresponsive. The RDI and ILT participated in this study and observed the same trends. Other market surveillance authorities in the Netherlands, including IGJ, NVWA and the Netherlands Labour Authority, corroborated these findings. As a result, authorities in the Netherlands are unable to enforce action against defective products on the EU market, such as issuing recalls.
Concerns among organisations
The increasing influx of e-commerce products from platforms outside the EU, poor compliance with EU product standards and the absence of EU-based representatives have raised concerns among business and consumer organisations involved in the e-commerce sector in the Netherlands.
‘These players' trade practices raise questions about their compliance with EU regulations, particularly concerning consumer protection, product safety, privacy and sustainability requirements. Ensuring a level playing field for our entrepreneurs is essential,’ the organisations stated.
The organisations also highlighted issues such as the inability to return products and misleading tactics to make purchases. Formal requirements on technical files, labelling and the presence of an EU point of contact are also not being complied with, the organisations concerned said.
Causes of non-compliance
The ILT, IGJ, RDI, NVWA and Netherlands Labour Authority have identified several causes of non-compliance. Online trade is characterised by speed, anonymity, volatility and global transactions. There is a lack of knowledge of EU legislation and regulations among companies trading products through e-commerce platforms. The complexity of these regulations, which is only increasing, plays an important role in this.
Additionally, platforms are not sufficiently held responsible for ensuring that products sold through their channels meet EU product requirements. The Digital Services Act has improved the situation but does not yet provide a complete solution. One reason is the absence of a monitoring obligation for platforms regarding products that fail to meet EU standards.
Furthermore, the explosive growth in product volumes has made effective and efficient border control in cooperation with Customs impossible. Instead of sampling from large shipments, individual parcels now need to be inspected, which is an unfeasible task.
Citizens and residents are often insufficiently aware of EU rules, leading them to buy an unworkable, unsafe or unsustainable product.
Consumer organisations share this concern (in Dutch). The citizens and residents of the Netherlands need to be well informed to be able to make a conscious purchase of an effective, safe and sustainable product. EU consumer regulators also see a lot of manipulation on commercial websites to make consumers make choices that may not be in their best interest, referred to as “dark patterns”.
Conclusion
It is first and foremost the responsibility of the market party entering the EU market to comply with EU product regulations. However, public and private entities in the EU quality chain also play a role in ensuring compliance. Consumers also bear some responsibility for purchasing and using safe and sustainable products.
It is therefore critical that the minister from Economische Zaken, EZ (Economic Affairs) who is responsible for these concerns must take the lead in addressing this compliance issue, both nationally and on an EU level. This approach should ultimately ensure that all stakeholders in and beyond the EU quality chain take responsibility and contribute to solving this societal issue.
Consumers must also be made aware of the risks of purchasing products online from outside the EU. The government should inform consumers that it cannot guarantee compliance with regulations and highlight the potential risks.
Signal
Market surveillance authorities are strengthening collaboration with each other and with Customs to improve oversight. They also aim to cooperate with EU market surveillance authorities and conduct joint inspection projects with these partners where possible.
In addition, they are jointly committed to developing and deploying digital techniques (including scanning technology) and for further improving the exchange of data and inspection results through ICSMS.
The European Commission has reached agreements with 11 platforms (including some outside the EU) under the Product Safety Pledge+ regarding the active monitoring of product listings on these platforms and the establishment of notice and takedown procedures. Market surveillance authorities use these agreements to request the removal of products that do not comply with the rules and regulations.
However, these agreements do not apply to all e-commerce platforms outside the EU. Market surveillance authorities are working with consumer protection regulators to ensure that platforms comply with the Digital Services Act. Improving oversight and cooperation with EU regulatory partners alone is not enough to resolve the compliance gap.
Policy must now focus on better controlling the flow of products entering the European market via platforms outside the EU, improving the quality of these products, and ensuring that a EU representative can be held accountable for them. To achieve this, all relevant stakeholders must be mobilised. This can only be accomplished through an integrated approach in which all parties take responsibility.
With a clear policy vision, market surveillance authorities can carry out their oversight as effectively as possible. The market surveillance authorities and Customs would welcome discussions with the Minister of Economic Affairs on this matter.