ECJ Orders UK to Pay Billions Over Failure to Collect Duties on Fake Chinese Textile Imports

The U.K. must pay billions of euros in tariffs it failed to collect on knock-off Chinese clothes and shoes imports, the European Court of Justice said in a March 8 decision. The ECJ found that from 2011 to 2017, the U.K. failed to live up to its obligations under EU law to enter the correct amounts of customs duties and to make available the correct amount of "traditional own resources" and own resources accruing from value-added tax for the fraudulent textiles and footwear imports from China. The ECJ identified hundreds of millions of euros' worth of these lost duties every year that the U.K. must pay.

A European Anti-Fraud Office report detailed the scale of the unpaid duties, identifying several traders who skirted their payments via the fraudulent goods. In response, the U.K. refused the requests made by OLAF to crack down on the customs avoidance. The European Commission then stepped in to request action, ultimately leading to the matter at the EU's highest court.

That "the United Kingdom ... did not adopt the necessary customs control measures to counter the undervaluation fraud at issue effectively, contrary to Article 325 TFEU and EU customs law, has resulted in losses of customs duty and thus of traditional own resources, and therefore, by failing to establish and make available to the Commission the resources due, amounting to the customs duties which should have been entered in the accounts if the customs value of the relevant imports had been correctly determined, the United Kingdom has failed to fulfil its obligations under EU law on EU own resources," the opinion said.