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2 November 2026

EU Customs reform: Modernising border controls or creating new barriers to international trade?

By Florette Peter, Paolo Vergano, and Tobias Dolle

On 19 September 2026, the EU published Regulation (EU) 2026/2108 of the European Parliament and of the Council of 16 September 2026 establishing the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) No 952/2013 (hereinafter, new Union Customs Code), in the EU’s Official Journal and which will apply from 21 September 2027. Together with Council Regulation (EU) 2026/382 of 11 February 2026 amending Regulation (EC) No 1186/2009 as regards the elimination of the threshold-based customs duty relief and Council Directive (EU) 2025/1539 of 18 July 2025 amending Directive 2006/112/EC as regards VAT rules relating to taxable persons who facilitate distance sales of imported goods and the application of the special scheme for distance sales of goods imported from third territories or third countries and special arrangements for declaration and payment of import VAT, these legal instruments update the EU’s Customs framework.

This legislative package delivering the ‘EU Customs Reform’, aims at modernising EU Customs administration through digitalisation, stronger risk management, and increased responsibilities for e-commerce operators, in response to the growing challenges faced by Customs authorities, including the rapid expansion of cross-border e-commerce, increasing volumes of low-value consignments, and Customs fraud.

This article examines the reform’s key novelties and related commercial implications and assesses their compatibility with the EU’s obligations under the World Trade Organization (hereinafter, WTO) and the international Customs standards promoted by the World Customs Organization (hereinafter, WCO).

A reform in three acts

In May 2023, the European Commission had proposed a comprehensive reform of the EU’s Customs framework, comprising three legislative proposals, subsequently adopted in stages: 1) Council Directive (EU) 2025/1539, adopted in July 2025, strengthening VAT collection for imported goods; 2) Council Regulation (EU) 2026/382 followed in February 2026, removing the EUR 150 Customs duty exemption and introducing a temporary EUR 3 duty to address low-value imports pending the development of new Customs infrastructure; and 3) After extensive negotiations between the European Parliament and the Council of the EU (see Trade Perspective, Issue No. 14 of 14 July 2025), the new Union Customs Code, adopted in September 2026. This staggered adoption reflects the distinct legal bases and legislative procedures of these legal instruments, as well as the urgency of addressing certain challenges before the broader reform becomes operational.

The new Union Customs Code and related instruments govern goods entering and leaving the EU Customs territory, including Customs procedures, duty collection, and Customs controls. The reform affects all economic operators involved in international trade, such as importers and exporters, carriers, Customs representatives, as well as e-commerce platforms.

New costs and controls on e-commerce

One of the most significant changes brought by the reform concerns the Customs treatment of so-called low-value imports. Council Regulation (EU) 2026/382 abolished the Customs duty exemption previously granted to consignments valued at EUR 150 or less. As of 1 July 2026, items purchased online and postal consignments below this threshold are subject to a temporary duty of EUR 3 per distinct category of goods within a consignment. This simplified flat-rate duty will apply until July 2028, pending the deployment of the EU Customs Data Hub, the centralised EU platform for Customs management and risk analysis, which will, inter alia, enable more precise tariff calculations of low-value imports.

Separately, Article 20(2) of the new Union Customs Codeprovides that “customs authorities shall collect a Union handling fee of a fixed amount per item” for processing requests for the release for free circulation of goods sold through distance sales. Article 20(10) empowers the Commission to establish the amount of the Union handling fee. Commission Delegated Regulation (EU) 2026/2152 of 21 September 2026 supplementing Regulation (EU) 2026/2108 of the European Parliament and of the Council by establishing the amount of the Union handling fee fixes the handling fee at EUR 2 per item and sets 1 November 2026 as the application date. Unlike Customs duties, the handling fee is intended to offset the rising costs of Customs processing, risk analysis, and controls resulting from the rapid growth of e-commerce imports. The handling fee applies to all goods sold remotely and shipped to the EU, regardless of their value.

These financial measures are complemented by greater responsibility for online platforms involved in cross-border transactions. Under Article 1(1) of Council Directive (EU) 2025/1539, from July 2028, online sellers or online marketplaces acting as suppliers, rather than consumers, will be responsible for paying import VAT on qualifying distance sales. In addition, Article 5(14) of the new Union Customs Code introduces the concept of ‘importer for distance sales’, which refers to “the person supplying goods in distance sales or the person facilitating distance sales”. From 21 September 2027, Article 27(2) will require all ‘importers for distance sales’ to provide the necessary Customs information, ensure the payment of applicable duties and charges, and comply with relevant EU regulatory requirements, including product safety standards. These provisions further shift responsibility for Customs compliance from consumers to e-commerce businesses and also aim at improving product safety.

Beyond financial obligations, thenew Union Customs Code establishes the EU Customs Authority (EUCA), which will begin operating in 2027 to coordinate risk management and strengthen cooperation between EU Member States’ national Customs administrations. It will be supported by the EU Customs Data Hub, whose use will become mandatory for e-commerce operators in July 2028 and for all traders in March 2034.

International rules at the border: WTO obligations and WCO standards

The EU’s Customs reform raises important questions in light of the EU’s international trade obligations. With regard to fees, under Article VIII:1(a) of the General Agreement on Tariffs and Trade (GATT) 1994 and Article 6.2.i of the WTO Agreement on Trade Facilitation, Customs-processing fees are to reflect the approximate cost of services rendered and must not constitute disguised protectionism or fiscal taxation. Accordingly, the EUR 2 Union handling fee must be justified by actual Customs-processing costs. Transparency and proportionality in applying the fee remain essential for the fee’s compliance with the EU’s WTO commitments.

The temporary EUR 3 Customs duty, by contrast, may raise questions under Article II:1(b) of the GATT, which prohibits Customs duties exceeding the tariff ceilings agreed by WTO Members ans inscribed in their Schedules of Concessions. As the flat-rate duty can represent a substantial percentage of the value of inexpensive goods, its compatibility with the EU’s WTO tariff commitments may warrant closer examination. For example, a cotton T-shirt valued at EUR 10, normally subject to an EU ad valorem Customs tariff of 12%, would incur a duty equivalent to 30% of its value under the temporary EUR 3 regime. While this illustrates a potential tension with the EU’s WTO-bound tariff rates, further legal assessment would be necessary to determine whether the measure is indeed inconsistent with the EU’s WTO obligations, noting that its temporary nature and administrative objectives do not, in themselves, exempt it from those commitments.

From the WCO perspective, the reform broadly aligns with the WCO’s 2022 Framework of Standards on Cross-Border E-Commerce, which promotes simplified Customs procedures, effective revenue collection, and risk-based controls. Going forward, the EU Customs Authority is tasked with coordinating risk assessments across EU Member States, while the EU Customs Data Hub will centralise Customs information, assisting authorities in identifying high-risk shipments, and facilitating the clearance of goods complying with Customs requirements.

The way forward

The EU Customs Reform marks a significant step towards a more modern, coordinated, and efficient Customs system. Although the new Union Customs Code will generally apply from 21 September 2027, the broader reform is already being progressively implemented. Economic operators should, therefore, assess how the new rules affect their activities, monitor the relevant application dates, and seek legal advice, where necessary to ensure compliance. While enhanced controls and digitalisation may facilitate international trade and promote alignment with WCO standards, the new Customs charges increase trade costs and are disproportionately distortive, particularly for low-value imports, thereby raising questions as to the EU’s compliance with its WTO commitments.

For any additional information or legal advice on this matter, please contact Tobias Dolle

Indonesia’s National Public Procurement Agency enacts new regulation on electronic purchasing in government procurement

By Alya Mahira, Imelda Jo Anastasya, and Paolo R. Vergano

On 1 September 2026, Indonesia’s National Public Procurement Agency (i.e., Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah, hereinafter, LKPP) enacted Head of LKPP Regulation No. 2 of 2026 on Electronic Catalogues in Government Procurement of Goods or Services (hereinafter, Head of LKPP Regulation No. 2/2026), replacing LKPP Regulation No. 9 of 2021 on Online Stores and Electronic Catalogues in Government Procurement of Goods or Services (hereinafter, LKPP Regulation No. 9/2021). Head of LKPP Regulation No. 2/2026 aims at establishing “a simple, efficient, and accountable governance framework for the operation of electronic catalogues” by integrating the previous Electronic Catalogue and Online Store into a single system, expanding access to the Electronic Catalogue to non-governmental entities and prioritising certain local products and suppliers within the Electronic Catalogue.

This article provides an overview of Indonesia’s framework on government procurement, examines Head of LKPP Regulation No. 2/2026, assesses its consistency with World Trade Organization (hereinafter, WTO) rules, and discusses its implications for businesses.

Indonesia’s government procurement framework

In Indonesia, government procurement refers to the procurement of goods and services by Ministries and other Government entities, financed by the State Budget or Regional Budgets, and is governed by Presidential Regulation No. 16 of 2018 on Government Procurement of Goods and Services, as most recently amended in 2025 (hereinafter, PR No. 16/2018) (see Trade Perspectives, Issue No. 12 of 16 June 2025). Under Article 35 of PR No. 16/2018, government procurement in Indonesia may be conducted electronically through two means: 1) An Online Store, which operates through an online retail platform; or 2) An Electronic Catalogue, an electronic procurement platform managed and overseen by the LKPP. For the Electronic Catalogue, it is specified that it must include information on goods and services, including, inter alia, product categories, specifications, and domestic component levels.

Both procurement channels were previously governed by LKPP Regulation No. 9/2021, which prescribed distinct participants and purchasing methods for each channel. The Online Store involved electronic marketplace operators and merchants, with purchases conducted through, inter alia, direct purchases, price negotiations, or requests for quotations, whereas the Electronic Catalogue involved catalogue providers, with purchases conducted through price negotiations, mini-competitions, and/or the Competitive Catalogue method (i.e., an electronic competitive pricing mechanism for basic construction components).

LKPP Regulation No. 9/2021 was considered insufficient to accommodate the operational requirements of the newer Electronic Catalogue Version 6, an end-to-end integrated digital platform for electronic procurement that was introduced in 2024, which is directly connected to the national financial and budgeting systems. Accordingly, Head of LKPP Regulation No. 2/2026 was enacted to simplify the administration of the Electronic Catalogue and to expand access to electronic purchasing to non-governmental entities.

Key provisions in Head of LKPP Regulation No. 2/2026

Head of LKPP Regulation No. 2/2026 introduces a number of changes to Indonesia’s electronic government procurement framework. Most notably, the Regulationprovides for the following: 1) The integration of the Online Store and the Electronic Catalogue into a single system; 2) The expansion of access to the Electronic Catalogue to non-governmental entities; and 3) The prioritisation of certain local products and suppliers within the Electronic Catalogue. Further novelties concern price benchmarking requirements and a performance security requirement, which refers to a financial guarantee provided by a contractor to ensure the proper fulfilment of its contractual obligations, for procurement contracts valued above IDR 200 million (i.e., around EUR 9,900).

First, Article 1(24) of Head of LKPP Regulation No. 2/2026 defines the “Online Store” as a module or component of the Electronic Catalogue system through which electronic purchasing is conducted. This departs from LKPP Regulation No. 9/2021, under which the Online Store and the Electronic Catalogue operated as distinct procurement channels.

Second, Article 12(9) allows private business operators, community groups, and individuals outside of Ministries and other Government entities to purchase goods and services for governmental purposes (e.g., construction projects under public-private partnerships) via the Electronic Catalogue following approval from the Electronic Catalogue administrator. This expands access beyond the scope of LKPP Regulation No. 9/2021 under which the Electronic Catalogue was intended for Ministries and other Government entities, in line with the Government’s efforts to promote electronic purchasing and to develop a larger, more inclusive marketplace.

Third, Article 18 requires the electronic purchasing for government construction projects to prioritise local business operators. Such prioritisation must be implemented in accordance with the Guidelines for the Preparation and Implementation of Government Procurement of Goods and Services through Suppliers, as most recently amended in 2024, which require procurement planning to consider, inter alia, the domestic content level of the product.

The integration of the Online Store and the Electronic Catalogue into a single system would streamline electronic purchasing, while expanding access to non-governmental entities purchasing goods and services for governmental purposes would broaden opportunities for suppliers. However, prioritising local business operators in government construction procurement may place foreign suppliers at a competitive disadvantage and, depending on how the preferences are implemented and the procurement concerned, it may raise concerns under Indonesia’s international commitments. For example, Chapter 11 of the EU-Indonesia Comprehensive Economic Partnership Agreement establishes non-discrimination obligations for covered government procurement, subject to the scope and conditions set out in the Parties’ market access Schedules.

(In)consistency with WTO rules?

Under WTO rules, the prioritisation of local business operators over foreign business operators raises questions as to its consistency with the non-discrimination principle. In particular, Article III:4 of the General Agreement on Tariffs and Trade 1994 (hereinafter, GATT) requires WTO Members to accord to products of any other WTO Member treatment “no less favourable” than that it accords to its own “like” products. However, Article III:8(a) of the GATT excludes from the scope of Article III:4 laws, regulations, or requirements governing the procurement by governmental agencies of products purchased for governmental purposes and not with a view to commercial resale or with a view to use in the production of goods for commercial sale.

The expanded access to the Electronic Catalogue to non-governmental entities may raise questions as to whether procurement conducted by such entities falls within the scope of “government agencies”. The dispute settlement panel in the dispute Turkey – Pharmaceutical Products found that a private entity may qualify as a governmental agency where it is “instructed or directed by the government to purchase certain products” for governmental purposes.

Accordingly, procurement by non-governmental entities may fall within the scope of Article III:8(a) of the GATT where the relevant entities act on behalf of the government and the products are purchased for the fulfilment of government functions. Ultimately, the applicability of Article III:8(a) of the GATT to measures under Head of LKPP Regulation No. 2/2026 must be assessed on a case-by-case basis, taking into account the nature of the purchasing entity, the relationship between that entity and the Government, the purpose of the procurement, and the specific measures at issue.

Implications for businesses

Businesses seeking to participate in electronic procurement in Indonesia should familiarise themselves with the Electronic Catalogue system. Foreign businesses seeking to participate in government construction procurement should monitor the implementation of Head of LKPP Regulation No. 2/2026, particularly the requirements governing the prioritisation of local business operators, to assess whether these requirements may affect their ability to compete with local suppliers.

Businesses should also consider raising any concerns regarding the potential trade implications of these requirements with their respective Governments, which may assess whether the issue warrants discussion in the WTO or under bilateral agreements.

For any additional information or legal advice on this matter, please contact Paolo R. Vergano

When is fish “unfit for human consumption”? The Court of Justice of the EU clarifies the relevance of EU food law for the tariff classification

By Alya Mahira, Pattranit Chantaplaboon, and Paolo R. Vergano

On 10 September 2026, the Court of Justice of the European Union (hereinafter, CJEU) delivered its judgment in Case C‑406/25, Skatteministeriet v FF Skagen A/S, clarifying how the concept of fish “unfit for human consumption” should be interpreted when classifying goods under the EU Customs tariff. The CJEU held that the national court must take into account “all the relevant factors relating to the objective characteristics and properties inherent in the product”, including considerations arising under EU food law, such as compliance with food hygiene requirements, spoilage indicators, and assessments of competent food safety authorities.

This article provides a brief summary of the case, discusses the CJEU’s approach to interpreting the concept of fish “unfit for human consumption” and the relevance of EU food law to that assessment, and highlights implications for businesses.

The dispute over the Customs tariff classification of certain fish

The case arose after the Danish Customs Agency (Toldstyrelsen) inspected imports by FF Skagen A/S, a Danish company that processes fish and fish scraps for the production of fishmeal, fish oil, and other products intended for animal feed. FF Skagen A/S had declared the imported fish and fish scraps under heading 0511 of Chapter 5 of the EU’s Combined Nomenclature (hereinafter, CN), set out in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, which covers “products of animal origin not elsewhere specified or included and dead animals of Chapter 1 or Chapter 3 that are unfit for human consumption”.

Following its inspection and assessment, the Danish Customs Agency decided that the fish and fish scraps should be classified under CN Chapter 3, which provides the Customs codes for ‘Fish, crustaceans, molluscs and other aquatic invertebrates’. The assessment found three of the four catches fit for human consumption in light of their total volatile basic nitrogen (hereinafter, TVB-N) levels. Under Point 1 of Chapter I of Section II of Annex II to Commission Regulation (EC) No 2074/2005 laying down implementing measures for certain products under Regulation (EC) No 853/2004 of the European Parliament and of the Council, products are considered unfit for human consumption where a freshness assessment raises doubts and the applicable species-specific TVB-N limit of 25, 30, or 35 mg/100 g, respectively, is exceeded. For three of the four catches, the assessment determined TVB-N levels between 14 and 30 mg/100 g and below the applicable thresholds.

FF Skagen A/S challenged this decision before the Danish National Tax Tribunal (Landsskatterette), seeking to retain the classification under Chapter 5, whose relevant subheadings provided for duty-free treatment, rather than under potentially dutiable Chapter 3 subheadings. The Danish food safety authorities stated, at the company’s request, that “the use of acetic acid as a preservative for the catches at issue in the main proceedings had rendered them unfit for human consumption, irrespective of their TVB-N content”.

Articles 5 and 15 of Regulation (EC) No 1333/2008 on food additives, read together with Annex II thereto, prohibit the use of food additives in unprocessed foods unless expressly permitted. The acid-treated catches at issue could, therefore, not be marketed for human consumption. The issue reached the Western High Court (Vestre Landsret), which referred questions to the CJEU on the interpretation of Note 1(c) to Chapter 3 of the CN, which excludes fish “unfit for human consumption by reason of either their nature or their condition” from that chapter, and on the relevance of EU food law to that determination.

Determining whether fish are “unfit for human consumption”

The CJEU began with the established principle that tariff classification is determined by the wording of the relevant CN headings and notes, with the decisive criterion generally found in the goods’ “objective characteristics and properties”. Under Note 1(c) to Chapter 3 of the CN, the key question was whether the fish were intrinsically fit for human consumption at the time of Customs clearance. This required consideration of “all the relevant factors relating to the objective characteristics and properties inherent in the product”.

Although the CJEU did not establish an exhaustive checklist, its reasoning identified eight relevant factors: 1) Acid treatment; 2) Storage time and temperature; 3) TVB-N levels and signs of decomposition; 4) Bulk storage contamination risks; (5) Compliance with EU food-hygiene requirements; 6) Assessments by food safety authorities; 7) Commercial documentation and intended use; and 8) Animal by-product classification and documentation. The CJEU held that these factors must be assessed together, with none being conclusive on its own. The intended use of the goods, including their use in animal feed production, is relevant only insofar as it is reflected in the products’ objective characteristics.

The CJEU distinguished compliance with EU food law from Customs tariff classification, which requires an independent assessment of the goods’ objective characteristics and condition at the time of Customs clearance. According to the Court, EU food and food-hygiene legislation, therefore, could not, “in itself, be decisive for the purposes of classifying goods under a particular heading of the CN”, but remains “one of the factors to be taken into consideration”. Accordingly, non-compliance with food law may indicate contamination, deterioration, decomposition, or risks to human health, but does not automatically mean that fish are unfit for human consumption.

The CJEU then applied this approach to the question posed by the Danish Court. The restrictions on food additives under Regulation (EC) No 1333/2008 made the acid treatment and the Danish food safety authority’s assessment relevant to the condition of the fish. Similarly, under Commission Regulation (EC) No 2074/2005, doubts about freshness, combined with the exceedance of the applicable TVB-N limit, could indicate “an advanced state of decomposition” and, therefore, a risk to human health.

The CJEU also considered bulk storage relevant, as decomposing fish could contaminate the remainder of the consignment. Finally, non-compliance with the hygiene, handling, storage, and temperature requirements under Regulation (EC) No 852/2004 of the European Parliament and of the Council of 29 April 2004 on the hygiene of foodstuffs and Regulation (EC) No 853/2004 of the European Parliament and of the Council of 29 April 2004 laying down specific hygiene rules for food of animal origin was “liable to have an impact” on whether the fish presented a health risk because of contamination or decomposition.

Taken together, these factors may indicate that the fish had become contaminated, decomposed, or otherwise deteriorated to the point of being unfit for human consumption. The CJEU concluded that Customs authorities must assess all relevant elements together.

Implications for businesses

The Customs tariff classification may have significant implications for the applicable tariff and the eligibility for duty-free treatment. Under the EU’s CN, subheadings 0511 91 10, covering fish offal, and 0511 91 90, covering other qualifying fish products, enter the EU duty-free. By contrast, heading 0302, covering fresh or chilled fish, includes species-specific subheadings subject to different duty rates, such as 7.5% for blue whiting and 12% for cod. Therefore, the reclassification from duty-free to dutiable subheadings may have significant commercial consequences.

The CJEU’s judgment may affect future tariff classification disputes, requiring Customs authorities and national courts to consider relevant food law standards without treating any individual breach or assessment by food safety authorities as conclusive. In Case C‑406/25, Denmark’s Western High Court must now apply the CJEU’s criteria to determine whether the concerned fish and fish scraps were indeed “unfit for human consumption” and, therefore, should be classified under CN Chapter 5.

Stakeholders in the fisheries, animal-feed, and animal by-products sectors should monitor developments and ensure that their Customs declarations are consistent with records concerning food-law compliance, storage and handling conditions, laboratory results, intended use, and animal by-product status.

For any additional information or legal advice on this matter, please contact Paolo R. Vergano

Recently adopted EU legislation

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Alya Mahira, Florette Peter, Imelda Jo Anastasya, Joanna Christy, Paolo R. Vergano, Pattranit Chantaplaboon, and Tobias Dolle contributed to this issue.

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