European Parliament Calls for Action with Regard to Publication of Economic Operators’ Customs Data and Product Origin Labelling

On 12 September 2017, the European Parliament adopted a resolution which examines the impact of international trade and the EU’s trade policies on global value chains. The communication aims at increasing transparency and accountability of companies for human rights abuses in the context of global value chains.

Of note to non-EU sellers, the resolution of the European Parliament reiterates its call for the Commission and the Member States to adopt “reinforced trade defence instruments to combat unfair commercial practices, taking into account social and environmental dumping”.

The resolution also addresses the topics of rules of origin and intellectual property rights.

The European Parliament furthermore calls on the Commission to consider introducing legislation for labelling rules regarding the origin of products entering the EU market, or to propose rules that “guarantee effective traceability”. It also expresses a need to work towards adequate and efficient solutions for the introduction of a transparent and functioning mandatory labelling system. Such a system for social and environmental traceability should be established “along the entire production chain”, according to the European Parliament.

According to the communication, origin labels would allow European consumers to gain confidence in the products they are purchasing and to make fact-based choices.

In this regard, Hong Kong’s exporting community may recall that the European Commission has already put forth, on 13 February 2013, a proposed Regulation on consumer product safety to replace the existing law (from 2001) on this topic, so as to improve product safety in the European Union. The proposed Regulation on consumer product safety lays down a mandatory origin marking requirement for consumer products manufactured in or imported into the EU. Accordingly, Hong Kong traders would be required to ensure that all products sold in the EU bear an indication of their country of origin, e.g. “made in Hong Kong” or “made in China”. However, the proposed mandatory origin labelling of consumer products has created great division among the Member States. The proposed Regulation is therefore stuck within the EU’s legislative procedure. There is currently an impasse among the Member States and the EU institutions due to this provision.

With regard to corporate responsibility, the European Parliament, in its resolution of 12 September 2017, “calls on companies, whether European or not, to apply human rights due diligence and to integrate their findings into internal policies and procedures”. It stresses the importance of gender equality and children’s rights and focuses on abusive labour conditions and child labour.

The European Parliament calls on the Commission and encourages Member States “to seek ways to enable parties having a public interest stake to access […] the customs data collected from parties trading in products or goods imported into the EU”.

The communication seeks to create uniform competitive conditions for companies already voluntarily disclosing supply chain information to the public and for those which do not. Access to customs data would enable NGOs, human rights defenders and victims of corporate abuse to identify European companies trading with companies in third countries which are involved in human rights violations.

While the EU has a common customs legislation and policy, and customs law is highly harmonised by the Union Customs Code (UCC), the customs administration is decentralised: implementation and application of EU customs law is the prerogative of the national customs authorities of the Member States. Hong Kong traders will be familiar with the fact that goods imported to the EU must be declared only to the national customs authorities of the Member State which is the first point of entry to the EU single market.

The relevant provision of the UCC on communication of information and data protection stipulates that “all information acquired by the customs authorities in the course of performing their duty which is by its nature confidential or which is provided on a confidential basis shall be covered by the obligation of professional secrecy. […] Such information shall not be disclosed by the competent authorities without the express permission of the person or authority that provided it. Such information may, however, be disclosed without permission where the customs authorities are obliged or authorised to do so pursuant to the provisions in force, particularly in respect of data protection, or in connection with legal proceedings.”

This provision does not, however, define which customs data shall be considered confidential. Confidentiality is therefore determined on the grounds of other EU legislation and/or Member States’ national legislation.

Customs authorities in different Member States in general refuse to release company-specific data based on data requests by NGOs. The requested data has been mostly regarded as trade, professional or tax secrets pursuant to rules in national customs laws, tax laws or publicity laws.

The newly adopted resolution which is in itself not binding shows a political desire to bring about further harmonisation in the area.