EU crackdown on malpractice won’t stop China-Europe cargo trains

Release Time:2018-12-29 11:12 Article Source:Global Times

Customs-clearance issues involving some cargo carried by China-Europe express trains, also known as China Railway Express, signal the need for reforms that will, in the long run, make these services more efficient and attractive, experts said on Thursday.

Some traders are evading import duties and value-added taxes by diverting routes and customs-clearing posts to Eastern European countries, raising worries that an EU crackdown could affect shipment volumes and drive up costs.

"Some of our shipments sent via the China-Europe cargo trains had to submit more documentation to local customs offices in Hungary," a manager of a Dutch logistics company told the Global Times.

The manager, speaking on condition of anonymity, admitted that the company had given small gifts to Hungarian customs staff to reach "some secret deals," like agreed fixed duties on certain products like socks, or  shorter customs-clearing periods.

"But now customs officers are verifying more items for declaration … For example, the duties are now charged on the actual sales prices of imported products rather than the 'agreed price'."

Hungarian customs did not respond to an interview request by the Global Times as of press time.

"A lot of shipments have been re-routed from main hubs such as London and Amsterdam to Eastern Europe, mainly the Czech Republic and Hungary, to avoid paying import duties and value-added taxes" because of legal loopholes [within the EU], Bram Jan Streefland, CEO of Netherlands-based logistics firm ViaEurope, told the Global Times on Wednesday.

Streefland said that many Chinese trade agencies who have made a profit through non-compliant channels in Eastern Europe have been struggling to survive under the crackdown.

"We are seeing long delays or even seizures in the Eastern European countries, and some shippers face higher costs as a result."

He also expressed worries that the crackdown could affect the volume of shipments.

But regulated customs-clearance procedures will decrease the uncertainty of these shipments and improve the service level, so that in the long run it will be beneficial for Chinese exporters and logistics companies, Jack Yan, vice president and head of Europe & Mediterranean Business Unit at Chinatrans Intl, an international logistics enterprise with head office in Shenzhen, South China's Guangdong Province.

Some of China's cargos to Europe transported by trains were through non-compliant channels, Yan and another source said.

Zhao Junjie, a research fellow at the Chinese Academy of Social Sciences' Institute of European Studies, told the Global Times on Thursday that China is the primary force behind these routes, and other countries like Portugal and Spain have been eager to participate.

"The increase in the volume of cargo is bound to attract the attention of European regulators, who will step up supervision. Chinese enterprises should actively adapt to standardized operations," Zhao said.

China does not dump or evade taxes, and it conducts customs-clearing operations according to laws and regulations. Although costs will rise in the short term, the changes will be conducive to development in the long run, Zhao said.

The trains have been hailed as a calling card for the China-proposed Belt and Road Initiative (BRI), which aims to boost trade between China, Europe, Southeast Asia, Africa and the Middle East.

However, the dramatic growth has prompted stricter Europe supervision on shipments from China, which has caused delivery delays and backlogs, industry insiders told the Global Times.

The customs issues also reflect the EU's need to cut tariffs, avoid protectionism and promote trade facilitation with China, experts pointed out.

New railway services between China and Europe have emerged rapidly in recent years.

As of August, the China-Europe freight rail service network, a crucial part of the BRI, had made 10,000 trips - half of them in 2018, according to a Xinhua News Agency report in August.

A study commissioned by the International Union of Railways estimated that China-Europe rail services could double their share of trade by volume over the next decade.

Editor: 曹家宁