Every day, twelve million parcels with goods worth less than EUR 150 reach Europe’s borders. According to the Commission, this is twice as many as in 2023 and three times as many as in 2022. Last year, a total of 4.6 billion shipments entered the EU duty-free. The enormous growth in imports brings with it a number of challenges.
These challenges include illegal and unsafe products that do not comply with EU standards, the considerable carbon footprint for production, transportation and waste as well as distortions of competition when retailers from third countries avoid costs. The EU Commission now wants to tackle these challenges and has presented a package of measures on e-commerce.
The Commission wants to ensure that consumers and businesses can continue to enjoy the benefits of online shopping while minimizing the risks of dangerous products that threaten consumer health and safety, said Executive Vice-President Henna Virkkunen. “We want to see a competitive e-commerce sector that protects consumers, offers attractive products, and respects the environment.”
According to the Commission, the huge increase in cheap imports is largely due to the enormous sales success of Chinese online marketplaces such as Shein and Temu. At the same time, these two platforms have repeatedly attracted attention due to problems with consumer protection and safety standards.
For example, the Commission accuses Temu of using manipulative patterns (dark patterns), exerting increased pressure to buy, and using addictive designs. On Oct. 31, 2024, the Commission initiated formal proceedings to investigate whether Temu had violated the Digital Services Act (DSA).
The Commission is now also launching an investigation into Shein to examine possible breaches of European consumer protection law. Among other things, this involves allegedly unfair contract terms and unfair business practices.
In total, the Commission has identified seven areas of action to better organize e-commerce:
The Commission has been planning comprehensive reforms for some time, particularly in the area of customs. As the volume of parcels delivered directly to consumers has risen sharply, the current customs processes and resources are no longer sufficient. However, the Commission is dependent on the support of the European Parliament and the Council for the reforms. It already presented a proposal for a comprehensive reform of the EU customs union on May 17, 2023. The Parliament reached its position in March 2024, but the Council has not yet done so. It is now up to the Polish Council Presidency to drive the issue forward.
Among other things, the Commission has provided for
The European consumer organization Beuc welcomed the plans presented by the EU Commission and is calling for swift action to enforce existing laws. “Testing by consumer groups shows that many products sold online, such as toys and textiles, are unsafe,” said Beuc Director General Agustín Reyna. “If the EU is serious about protecting consumers and embarking on the path to decarbonization, it must ensure that everyone plays by the same rules.”
Among other things, Beuc called for consumer law to be updated with the upcoming Digital Fairness Act. This should ease the burden of proof for misconduct and better protect consumers from harmful business practices such as dark patterns, addictive design, influencer marketing, and unfair personalization.
Unfortunately, the European economic zone does not currently have protective measures against e-commerce business models from outside the EU that exploit the single market, do not comply with EU standards, and do not pay customs duties on their products, said Robert Gentz. The co-founder and CEO of Berlin-based Shein and Temu competitor Zalando therefore welcomed the fact that the Commission is “considering some pragmatic solutions”. Gentz called for the “rapid abolition of the duty-free limit and the consistent enforcement of EU regulations for all market participants”.
The figure has been around since Ursula von der Leyen launched it: Europe must invest an additional EUR 500 billion in defense over the next ten years, according to the Commission President. Defense Commissioner Andrius Kubilius, on the other hand, considers investments in bridges, railroads and roads amounting to EUR 200 billion to be necessary with regard to military mobility alone.
The Lithuanian will list the options for financing in his White Paper, which he is due to present on March 19. In April, the finance ministers will discuss the topic at their informal meeting in Warsaw. At the EU summit in June, the heads of state and government want to decide on possible European defense projects and which financing options should be pursued.
The status quo is the option currently preferred by Germany and the Netherlands in particular. Supplemented by reallocations within the framework of the upcoming MFF, although the scope here is likely to be small in view of foreseeable distribution battles. German Chancellor Olaf Scholz once again made it clear that defense is a matter for the member states. Accordingly, defense spending should be financed via the national budget.
The pressure on national budgets is increasing, especially in larger EU states such as Spain and Italy, which have not yet reached the two percent target set by NATO. Significantly more money will be needed if, as expected, NATO raises the lower limit to three or 3.5% at its June summit.
The question is how France or Italy, with high debts and budget deficits, are supposed to cope with the additional national spending. “We are living in extraordinary times,” said Ursula von der Leyen after the informal summit: The Commission will look at how the flexibility of the Stability and Growth Pact can be used even more.
Without a change to the EU fiscal rules, however, the options are limited. The fiscal rules do not allow defense spending to be excluded from the deficit calculation. However, the Commission can take increased defense spending into account when deciding whether to open an excessive deficit procedure against a member state.
At first glance, financing via the European Stability Mechanism (ESM) seems like an attractive option. After all, EUR 500 billion seems to be more or less lying idle there. During the euro crisis, the fund was set up to support member states with cheap loans in an emergency. The problem is that any use of the ESM would also have to include its complex governance, which is not designed for the problem of defense financing, explains Lucas Guttenberg, Senior Advisor for European Economic Policy at the Bertelsmann Stiftung.
In addition, the ESM would only grant more favorable loans. This would not circumvent the limitations imposed by the European fiscal rules. The additional financial leeway of this option would be limited to the difference in interest costs between normal loans and the more favorable ESM loans. Even if the entire EUR 500 billion capacity of the ESM were to be utilized, this would only result in additional financial leeway of a few billion euros. “The chaos is great, the benefit is small,” Guttenberg summarizes the ESM option. What’s more, the ESM funds would be missing if they were needed for their actual purpose in the event of another euro crisis.
The governance problem of the ESM could be circumvented with a SURE-like program, for example. SURE was the EU’s first response to the Covid pandemic. The EU borrowed on the market and granted these loans to the member states at the same interest rate. Like the ESM construct, however, this only reduces interest costs and hardly creates any relevant financial leeway. In addition, it would be a redistribution from countries with low interest costs to countries with high interest costs, which does not necessarily correspond to the distribution of the need for higher defense spending.
The Baltic states and Poland want defense bonds, while Denmark and Finland have recently become open to the idea: In contrast to the other options, financing via common European debt would create new financial leeway. However, it is unclear how the money would be used. The Next Generation EU Covid recovery program distributed grants to member states based on their exposure to the pandemic.
In a similar program for defense, it would not be clear whether the money should be distributed on the basis of current financial leeway, economic strength, geographical proximity to Russia, or other criteria. It is unlikely that member states would want to finance each other’s armies. “Anyone who wants to communitize defense funding is taking a major step towards integration and must also integrate defense policy decision-making structures,” says Guttenberg from the Bertelsmann Foundation.
Joint financing is likely to have somewhat greater chances for projects where there is clear European added value. One example would be a European missile defense system, as proposed by Poland’s Prime Minister Donald Tusk together with his Greek counterpart Kyriakos Mitsotakis. Poland and the Baltic states are also calling for European funding for the military fortification of the eastern flank. With regard to defense in space or cyberspace, there are other projects that cannot be financed nationally. However, Germany is pursuing its own project to protect against missiles with the “European Sky Shield Initiative”, which is to be financed nationally.
The European Investment Bank (EIB) has also recently come into focus as a possible option. However, the EIB cannot create financial leeway in state budgets. It can only support the private sector in ramping up production capacities. And only when it comes to dual-use financing. In view of its credit rating, the EIB does not want to become a defense bank anyway. However, in January, 19 EU states asked the EIB to explore possibilities for an even more flexible interpretation of the rules.
Yet the EIB is not lacking in money at all. Eight billion euros have been made available for dual use, of which only one billion has been used so far, said EIB President Nadia Calviño last week at the annual press conference. The limiting factor is not the EIB’s reluctance, but the lack of demand from the industry. This highlights the dilemma: Europe should be investing more in its defense, the industry is waiting for orders, of which too few come because funds are scarce in the member states or other issues take priority.
First, the USA is making a splash with the USD 500 billion Stargate program. Then China shakes up the stock markets with its sophisticated AI model DeepSeek – and where is Europe? At the AI Action Summit, which will take place in Paris at the beginning of next week, experts from politics, business, science, and civil society will discuss the European course in an increasingly bipolar AI world.
“We should not be discouraged, but hold on to our values and look for allies,” says legal scholar Sandra Wachter. She will be attending the Paris AI Summit as an expert in data ethics and has played a key role in shaping the European AI Act in recent years. Anyone who pays no attention to sustainability or fairness in AI products is harming themselves in the medium term, says Wachter.
The lawyer works at the Oxford Internet Institute at Oxford University. On March 1, she will take up her Humboldt Professorship for Artificial Intelligence at the joint Digital Engineering Faculty of the Hasso Plattner Institute (HPI) and the University of Potsdam. This is the last of a total of 20 additional Humboldt Professorships for AI, each endowed with EUR 3.5 million by the BMBF and awarded by the Alexander von Humboldt Foundation. The official award ceremony will take place in Berlin on May 5. “I am overwhelmed to receive this great research award”, says the young scientist, “the appointment is a great honor”.
Sandra Wachter was born and raised in Vienna. She originally wanted to study medical technology, she explains, but then decided to study law and gain a doctorate at the University of Vienna. Her penchant for technology remained. “When I realized how much our society is influenced by new technologies, I went to Oxford to do a master’s degree in sociology.” After a research stay at Harvard Law School, Wachter joined the faculty of the Oxford Internet Institute in 2017. Since then, she has advised many governments, companies, and NGOs on ethical and regulatory issues surrounding new technologies.
For most people, AI is a powerful black box with completely opaque mechanics, says Wachter. She wants to change that. “Anyone affected by an AI decision should have the right to understand why the artificial intelligence made this or that decision.” For example, bank customers whose loan application was rejected without giving reasons. Behind this is often an AI that requires a certain minimum income. “In this case, the bank would have to say that the loan is only available from an annual income of, say, EUR 50,000,” says Wachter.
Explainable AI is the name of a new field of research that Wachter co-founded and which she intends to develop further as a Humboldt Professor at the HPI Data and AI Cluster. There, she is expected to provide a strong impetus for transparent and fair AI, as well as ideas for practicable regulatory and control procedures that do not stifle innovation. In addition, standards for the ethical design of AI systems for medical applications are to be developed in collaboration with the HPI Digital Health Cluster.
In the coming months, Wachter wants to build up an interdisciplinary team with computer scientists, social scientists, lawyers, psychologists, and ethicists. Networking with the “huge scene in the AI hotspot Berlin”, the universities, the Weizenbaum Institute, and NGOs such as Algorithm Watch is important. Wachter wants to use her connections in Great Britain and the USA which have grown over the years for new collaborations.
The new Humboldt Professor is convinced that the economy will soon benefit from trustworthy AI. Labels to identify technically and ethically sound products that consumers can use as a guide would be helpful. “I see a great opportunity for European industry here,” says Wachter. And an opportunity for consumers to prove their market power. Lilo Berg
Every day, twelve million parcels with goods worth less than EUR 150 reach Europe’s borders. According to the Commission, this is twice as many as in 2023 and three times as many as in 2022. Last year, a total of 4.6 billion shipments entered the EU duty-free. The enormous growth in imports brings with it a number of challenges.
These challenges include illegal and unsafe products that do not comply with EU standards, the considerable carbon footprint for production, transportation and waste as well as distortions of competition when retailers from third countries avoid costs. The EU Commission now wants to tackle these challenges and has presented a package of measures on e-commerce.
The Commission wants to ensure that consumers and businesses can continue to enjoy the benefits of online shopping while minimizing the risks of dangerous products that threaten consumer health and safety, said Executive Vice-President Henna Virkkunen. “We want to see a competitive e-commerce sector that protects consumers, offers attractive products, and respects the environment.”
According to the Commission, the huge increase in cheap imports is largely due to the enormous sales success of Chinese online marketplaces such as Shein and Temu. At the same time, these two platforms have repeatedly attracted attention due to problems with consumer protection and safety standards.
For example, the Commission accuses Temu of using manipulative patterns (dark patterns), exerting increased pressure to buy, and using addictive designs. On Oct. 31, 2024, the Commission initiated formal proceedings to investigate whether Temu had violated the Digital Services Act (DSA).
The Commission is now also launching an investigation into Shein to examine possible breaches of European consumer protection law. Among other things, this involves allegedly unfair contract terms and unfair business practices.
In total, the Commission has identified seven areas of action to better organize e-commerce:
The Commission has been planning comprehensive reforms for some time, particularly in the area of customs. As the volume of parcels delivered directly to consumers has risen sharply, the current customs processes and resources are no longer sufficient. However, the Commission is dependent on the support of the European Parliament and the Council for the reforms. It already presented a proposal for a comprehensive reform of the EU customs union on May 17, 2023. The Parliament reached its position in March 2024, but the Council has not yet done so. It is now up to the Polish Council Presidency to drive the issue forward.
Among other things, the Commission has provided for
The European consumer organization Beuc welcomed the plans presented by the EU Commission and is calling for swift action to enforce existing laws. “Testing by consumer groups shows that many products sold online, such as toys and textiles, are unsafe,” said Beuc Director General Agustín Reyna. “If the EU is serious about protecting consumers and embarking on the path to decarbonization, it must ensure that everyone plays by the same rules.”
Among other things, Beuc called for consumer law to be updated with the upcoming Digital Fairness Act. This should ease the burden of proof for misconduct and better protect consumers from harmful business practices such as dark patterns, addictive design, influencer marketing, and unfair personalization.
Unfortunately, the European economic zone does not currently have protective measures against e-commerce business models from outside the EU that exploit the single market, do not comply with EU standards, and do not pay customs duties on their products, said Robert Gentz. The co-founder and CEO of Berlin-based Shein and Temu competitor Zalando therefore welcomed the fact that the Commission is “considering some pragmatic solutions”. Gentz called for the “rapid abolition of the duty-free limit and the consistent enforcement of EU regulations for all market participants”.
The figure has been around since Ursula von der Leyen launched it: Europe must invest an additional EUR 500 billion in defense over the next ten years, according to the Commission President. Defense Commissioner Andrius Kubilius, on the other hand, considers investments in bridges, railroads and roads amounting to EUR 200 billion to be necessary with regard to military mobility alone.
The Lithuanian will list the options for financing in his White Paper, which he is due to present on March 19. In April, the finance ministers will discuss the topic at their informal meeting in Warsaw. At the EU summit in June, the heads of state and government want to decide on possible European defense projects and which financing options should be pursued.
The status quo is the option currently preferred by Germany and the Netherlands in particular. Supplemented by reallocations within the framework of the upcoming MFF, although the scope here is likely to be small in view of foreseeable distribution battles. German Chancellor Olaf Scholz once again made it clear that defense is a matter for the member states. Accordingly, defense spending should be financed via the national budget.
The pressure on national budgets is increasing, especially in larger EU states such as Spain and Italy, which have not yet reached the two percent target set by NATO. Significantly more money will be needed if, as expected, NATO raises the lower limit to three or 3.5% at its June summit.
The question is how France or Italy, with high debts and budget deficits, are supposed to cope with the additional national spending. “We are living in extraordinary times,” said Ursula von der Leyen after the informal summit: The Commission will look at how the flexibility of the Stability and Growth Pact can be used even more.
Without a change to the EU fiscal rules, however, the options are limited. The fiscal rules do not allow defense spending to be excluded from the deficit calculation. However, the Commission can take increased defense spending into account when deciding whether to open an excessive deficit procedure against a member state.
At first glance, financing via the European Stability Mechanism (ESM) seems like an attractive option. After all, EUR 500 billion seems to be more or less lying idle there. During the euro crisis, the fund was set up to support member states with cheap loans in an emergency. The problem is that any use of the ESM would also have to include its complex governance, which is not designed for the problem of defense financing, explains Lucas Guttenberg, Senior Advisor for European Economic Policy at the Bertelsmann Stiftung.
In addition, the ESM would only grant more favorable loans. This would not circumvent the limitations imposed by the European fiscal rules. The additional financial leeway of this option would be limited to the difference in interest costs between normal loans and the more favorable ESM loans. Even if the entire EUR 500 billion capacity of the ESM were to be utilized, this would only result in additional financial leeway of a few billion euros. “The chaos is great, the benefit is small,” Guttenberg summarizes the ESM option. What’s more, the ESM funds would be missing if they were needed for their actual purpose in the event of another euro crisis.
The governance problem of the ESM could be circumvented with a SURE-like program, for example. SURE was the EU’s first response to the Covid pandemic. The EU borrowed on the market and granted these loans to the member states at the same interest rate. Like the ESM construct, however, this only reduces interest costs and hardly creates any relevant financial leeway. In addition, it would be a redistribution from countries with low interest costs to countries with high interest costs, which does not necessarily correspond to the distribution of the need for higher defense spending.
The Baltic states and Poland want defense bonds, while Denmark and Finland have recently become open to the idea: In contrast to the other options, financing via common European debt would create new financial leeway. However, it is unclear how the money would be used. The Next Generation EU Covid recovery program distributed grants to member states based on their exposure to the pandemic.
In a similar program for defense, it would not be clear whether the money should be distributed on the basis of current financial leeway, economic strength, geographical proximity to Russia, or other criteria. It is unlikely that member states would want to finance each other’s armies. “Anyone who wants to communitize defense funding is taking a major step towards integration and must also integrate defense policy decision-making structures,” says Guttenberg from the Bertelsmann Foundation.
Joint financing is likely to have somewhat greater chances for projects where there is clear European added value. One example would be a European missile defense system, as proposed by Poland’s Prime Minister Donald Tusk together with his Greek counterpart Kyriakos Mitsotakis. Poland and the Baltic states are also calling for European funding for the military fortification of the eastern flank. With regard to defense in space or cyberspace, there are other projects that cannot be financed nationally. However, Germany is pursuing its own project to protect against missiles with the “European Sky Shield Initiative”, which is to be financed nationally.
The European Investment Bank (EIB) has also recently come into focus as a possible option. However, the EIB cannot create financial leeway in state budgets. It can only support the private sector in ramping up production capacities. And only when it comes to dual-use financing. In view of its credit rating, the EIB does not want to become a defense bank anyway. However, in January, 19 EU states asked the EIB to explore possibilities for an even more flexible interpretation of the rules.
Yet the EIB is not lacking in money at all. Eight billion euros have been made available for dual use, of which only one billion has been used so far, said EIB President Nadia Calviño last week at the annual press conference. The limiting factor is not the EIB’s reluctance, but the lack of demand from the industry. This highlights the dilemma: Europe should be investing more in its defense, the industry is waiting for orders, of which too few come because funds are scarce in the member states or other issues take priority.
First, the USA is making a splash with the USD 500 billion Stargate program. Then China shakes up the stock markets with its sophisticated AI model DeepSeek – and where is Europe? At the AI Action Summit, which will take place in Paris at the beginning of next week, experts from politics, business, science, and civil society will discuss the European course in an increasingly bipolar AI world.
“We should not be discouraged, but hold on to our values and look for allies,” says legal scholar Sandra Wachter. She will be attending the Paris AI Summit as an expert in data ethics and has played a key role in shaping the European AI Act in recent years. Anyone who pays no attention to sustainability or fairness in AI products is harming themselves in the medium term, says Wachter.
The lawyer works at the Oxford Internet Institute at Oxford University. On March 1, she will take up her Humboldt Professorship for Artificial Intelligence at the joint Digital Engineering Faculty of the Hasso Plattner Institute (HPI) and the University of Potsdam. This is the last of a total of 20 additional Humboldt Professorships for AI, each endowed with EUR 3.5 million by the BMBF and awarded by the Alexander von Humboldt Foundation. The official award ceremony will take place in Berlin on May 5. “I am overwhelmed to receive this great research award”, says the young scientist, “the appointment is a great honor”.
Sandra Wachter was born and raised in Vienna. She originally wanted to study medical technology, she explains, but then decided to study law and gain a doctorate at the University of Vienna. Her penchant for technology remained. “When I realized how much our society is influenced by new technologies, I went to Oxford to do a master’s degree in sociology.” After a research stay at Harvard Law School, Wachter joined the faculty of the Oxford Internet Institute in 2017. Since then, she has advised many governments, companies, and NGOs on ethical and regulatory issues surrounding new technologies.
For most people, AI is a powerful black box with completely opaque mechanics, says Wachter. She wants to change that. “Anyone affected by an AI decision should have the right to understand why the artificial intelligence made this or that decision.” For example, bank customers whose loan application was rejected without giving reasons. Behind this is often an AI that requires a certain minimum income. “In this case, the bank would have to say that the loan is only available from an annual income of, say, EUR 50,000,” says Wachter.
Explainable AI is the name of a new field of research that Wachter co-founded and which she intends to develop further as a Humboldt Professor at the HPI Data and AI Cluster. There, she is expected to provide a strong impetus for transparent and fair AI, as well as ideas for practicable regulatory and control procedures that do not stifle innovation. In addition, standards for the ethical design of AI systems for medical applications are to be developed in collaboration with the HPI Digital Health Cluster.
In the coming months, Wachter wants to build up an interdisciplinary team with computer scientists, social scientists, lawyers, psychologists, and ethicists. Networking with the “huge scene in the AI hotspot Berlin”, the universities, the Weizenbaum Institute, and NGOs such as Algorithm Watch is important. Wachter wants to use her connections in Great Britain and the USA which have grown over the years for new collaborations.
The new Humboldt Professor is convinced that the economy will soon benefit from trustworthy AI. Labels to identify technically and ethically sound products that consumers can use as a guide would be helpful. “I see a great opportunity for European industry here,” says Wachter. And an opportunity for consumers to prove their market power. Lilo Berg
