PEN-CP Observatory on Green Customs, Circular Economy, and Sustainability Developments

Governments at the international, EU and national level are making ambitious plans - such as the Paris Agreement, the European Green Deal, and Circular Economy Action Plan - to address circular economy and sustainability challenges. Developments such as the Carbon Border Adjustment Mechanism, the new Battery Regulation, the Regulation on deforestation-free supply chains, the proposal for the Eco-design for sustainable products regulation, and the Critical Raw Materials Act are just a few of the many examples where monitoring for circularity and sustainability is enhanced. All this is expected to introduce new regulatory requirements, for example regarding the percentage of recycled materials in new products or the requirement that products brought to the EU market must not cause deforestation. These regulations also define the role of digital infrastructures and digital product passports that can contribute to better availability of information about products and materials.

Customs already has some responsibility regarding sustainability and the environment, e.g. the Regulation on FLEGT licensing scheme for imports of timber; the Regulation aimed at establishing a community system to prevent, deter and eliminate illegal, unreported and unregulated fishing; the Regulation on substances that deplete the ozone layer; and the CITES, Convention on International Trade in Endangered Species of Wild Fauna and Flora. It is not yet entirely clear how customs will be affected by the new regulatory developments related to circular economy and sustainability. But customs will certainly continue to play an important role when goods are moved across borders. From the customs risk management standpoint, these new regulatory developments will affect a wide array of products and require data sources and detection technologies and innovations that can allow analysis, not only at a product level, but at the level of the material composition and the provenance of these materials.

How can customs cope with such new challenges? Customs is already investing in innovations including the use of external business data sources for customs risk management, and the development of advanced detection technologies. Investing in customs' current innovative solutions for addressing safety, security, and revenue collection challenges in traditional and eCommerce streams will establish a strong foundation for customs to effectively tackle future challenges related to the Circular Economy monitoring. A good understanding of the regulatory, business, and technology developments that happen outside of customs now in the area of circular economy and sustainability, will certainly help customs prepare for the future. And from a policy perspective, the EU Customs reform proposal sets an ambitious vision about the role that customs can play with respect to Circular economy and sustainability and about new approaches that will enable truly data-driven customs.