7 new regulations impacting European supply chains in 2024

As we enter 2024, a wave of new regulations and directives in international trade and customs are set to take effect and businesses must brace themselves for changes in compliance requirements. In the rapidly evolving landscape of international trade, a seamless flow of goods across borders depends on a comprehensive understanding of customs compliance, leading to a number of benefits from time-saving and financial gains to supporting your sustainability goals.

In this article, we outline crucial changes in customs and international trade going into effect throughout 2024, and offer insights into what these changes mean for European businesses and how organisations can prepare to navigate the new regulatory waters. In 2024, understanding and adapting to the regulatory changes is not just a matter of staying compliant – it is a strategic imperative for ensuring resilience and success of operations in the international trade environment.

EU Emissions Trading System

In an effort to make Europe the first climate neutral continent, the European Union is including shipping into the EU Emissions Trading System (ETS) as of 1 January 2024. The EU ETS directive sets an annual absolute limit on emissions of certain greenhouse gases (GHG) and requires the purchase of allowances for emissions. The directive will be introduced in a phase-in approach where 40% of the emissions will be subject to price from 2024, increasing to 70% in 2025, and eventually 100% of emissions will be subject to price from 2026 onwards.

The geographical scope of the directive will cover all voyages with ports of loading and/or discharge in the EU/EEA. Find out more about EU ETS and its implementation.

Carbon Border Adjustment Mechanism

In another effort to reduce greenhouse gas emissions, the EU is looking into the impact that activities beyond its borders have on its emissions. With Carbon Border Adjustment Mechanism (CBAM), the EU places a price on carbon intensive products, such as cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen, imported into the EU. The aim of CBAM is to prevent carbon leakage, which occurs when companies move their production to countries with less stringent climate policies or when EU products are replaced by more carbon-intensive imports.

Earlier this year, EU member states have entered a transitional period of CBAM, which requires quarterly reporting of emissions, with the first report to be submitted on 31 January 2024. Find out more about CBAM and how you can ensure compliance for your business.

European Union Combined Nomenclature

A new version of the EU Combined Nomenclature (CN) takes effect on 1 January 2024. The Combined Nomenclature is updated every year, and compared to last year, the tariff's changes are relatively minor. The Combined Nomenclature forms the basis for the declaration of goods at importation or exportation, or when subject to intra-Union trade statistics. This determines which rate of customs duty applies and how the goods are treated for statistical purposes. Businesses trading products with updated or new CN codes, need to ensure they're reflected in customs declarations to avoid errors, potential fines, and delays due to goods stuck in customs. Businesses need to take action to ensure accuracy by checking and updating master data and templates. Find out more about the latest version of Combined Nomenclature.

Border Target Operating Model in the UK

In April, the UK announced the final Border Target Operating Model (BTOM), the first phase of which will go into effect on 31 January 2024. While the model was initially announced for October 2023, the release was postponed to give businesses sufficient time to prepare. According to the model, customers will need to check the risk levels of their commodities to ensure they are prepared for upcoming changes in the border process.

The first phase, starting on 31 January, will mean the introduction of health certification on imports of medium risk animal products, plants, plant products and high-risk food and feed of nonanimal origin from the EU, as well as the removal of pre notification requirements for low-risk plant and plant products from the EU. Find out more about BTOM and the second and third phase going into effect in April and October 2024 here.

Import Control System 2

On 1 March 2024, the third update of the European Union’s customs pre-arrival safety and security system – Import Control System 2 – will be released. Under the third release, all goods transported to or through the EU will be subject to new requirements, requiring businesses to take steps to ensure compliance. The first step is to ensure you have an Economic Operators Registration and Identification (EORI) number from one of the EU Member States’ customs authorities. Businesses must also take part in self-conformance testing to ensure their systems are ready to send and receive technical messages. Businesses already connected to ICS2, only need to test the new business processes for the third release. If you’re new to ICS2, you must test all core processes. Find out the steps you need to take for the third release of ICS2 in our customer advisory, and read the full document from the European Commission.

Northern Ireland Retail Movement Scheme

Under the Northern Ireland Retail Movement Scheme, some food products will need individual product labels with the words ‘Not for EU’. The labelling requirements will be implemented in three phases, the first of which went into effect on 1 October 2023. In the first phase, only products moving into Northern Ireland under the Northern Ireland Retail Movement Scheme will need to meet the labelling requirements.

The second phase of the Retail Movement Scheme will go into effect on 1 October 2024, and in addition to the phase 1 products, all milk and dairy products moving to Northern Ireland under the Northern Ireland Retail Movement Scheme will need to be individually labelled. At this stage, all meat and dairy products in Great Britain (England, Scotland and Wales) will also need to be individually labelled.

If individual labelling is not used, the box or crate must be labelled under the Windsor Framework starting 1 October 2023. Find out more about the Retail Movement Scheme and its labelling requirements here.

EU-Japan Economic Partnership Agreement

The EU and Japan initiated talks in October 2022 to include cross-border data flow rules in the EU-Japan Economic Partnership Agreement (EPA), aligning with the EU's commitment to modern digital trade regulations. In October, a landmark deal has been made, easing online business, promoting digital trade, and enabling cross-border data flow. Companies across sectors like finance, transport, machinery, and e-commerce, will benefit from streamlining data handling, offering a stable legal environment, and, crucially, eliminating costly data storage requirements. This will ensure companies are not required to physically store their data locally, reducing expenses and security risks. On 1 December 2023, the European Commission sent the outcome of the negotiations to the Council for authorising its signature, after which the EU will sign the amendment of the Economic Partnership Agreement with Japan and then pass it to the European Parliament for consent.

Working with a trusted customs partner can help take the burden of staying on top of new regulations away from the business. Our customs consultants have a deep understanding of European regulations and can help you leverage free trade agreements, identify opportunities to optimise your customs process, and enable you to move from transactional to strategic customs. To find out more about Maersk Customs Services, click here or get in touch with our team.