Vulcan View: The latest EU developments 3 February – 7 February

EU to tighten controls on imports from sites such as Shein and Temu 

The European Commission is taking a stand against low-value imports offered by non-EU online retailers and facilitated by marketplaces like Shein and Temu, which host non-EU traders. This is part of the Communication on E-Commerce, ‘A comprehensive EU Toolbox for Safe and Sustainable E-commerce’ proposed on Wednesday, 5 February.

A total of around 4.6 billion low-value consignments (goods not exceeding the value of €150) entered the EU market last year – equalling 12 million parcels per day. Many goods have been found to be non-compliant with European legislation. European sellers are also facing risks from unfair practices and the sale of counterfeit goods through online marketplaces. There has also been concerns raised regarding environmental and climate footprint.

In the Communication, the Commission has proposed new joint actions to address concerns of these non-compliant products entering the market. These are as follows:

• Customs reform: A call for co-legislators to quickly adopt the proposed Customs Union Reform Package to allow for rapid implementation of new rules to level the playing field of e-commerce.
• Targeted measures for imported goods: To include the launching of coordinated controls between customs and market surveillance authorities and coordinated actions on product safety. Future controls may also be intensified for certain operators.
• Protecting consumers on online marketplaces: Highlighting e-commerce practices as a clear enforcement priority under the Digital Services Act and leveraging tools like the Digital Markets Act.
• Using digital tools: This will help facilitate the supervision of the e-commerce landscape through the Digital Product Passport and new AI tools for the detection of potentially non-compliant products.
• Environmental protection: Adopting the first action plan on the Ecodesign for Sustainable Products Regulation and the swift adoption of the targeted amendment for the Waste Framework Directive.
• Empowering consumers and traders: This will be done through awareness-raising campaigns concerning consumer rights risks and redress mechanisms.
• International cooperation and trade: Providing training activities on EU product safety rules and assessing evidence relating to dumping and subsidisation.

The Commission is calling for strong unity between Member States on these issues to improve the effectiveness of the actions taken. Shein has also been informed about the launch of a coordinated action. The announced actions will be assessed within a year, and a report on the findings of the increased controls will be published.

Eurozone inflation climbs to 2.5% in January amid energy price surge

According to a flash estimate from Eurostat, inflation in the eurozone climbed to 2.5% in January 2025 from 2.4% in December 2024. This rise in inflation marks the fifth consecutive monthly increase, keeping inflation above the European Central Bank’s (ECB) 2% target and highlighting ongoing challenges in stabilising price growth.

The services sector maintained the highest inflation rate at 3.9%, though slightly lower than December’s 4.0%. Inflation for food, alcohol, and tobacco eased to 2.3% from 2.6% in the previous month, while energy prices surged to 1.8%—a sharp rise from just 0.1% in December—driven by geopolitical tensions and supply constraints. Meanwhile, non-energy industrial goods remained stable at 0.5%, reflecting subdued demand for manufactured products. Core inflation, which excludes volatile food and energy prices, held steady at 2.7%, exceeding analysts’ forecasts.

Despite the increase, the ECB maintains confidence in its disinflation trajectory, cutting interest rates five times since June 2024 to 2.75%. ECB President Christine Lagarde reassured markets that “the disinflation process is well on track,” suggesting further rate reductions could be on the horizon. Bank officials attribute the recent volatility to temporary factors, including the base effect from 2024’s energy price collapse and the gradual withdrawal of government subsidies.

ECB forecasts expect wage pressures to ease later in 2025, potentially cooling services inflation, a key driver of domestic price growth. However, inflation disparities persist across the eurozone: Spain and Germany recorded rates close to 3%, while Belgium and Croatia exceeded 4%. In contrast, France and Italy remained below 2%, reflecting uneven economic recoveries across the bloc.

As the ECB balances the need to support growth while managing inflation risks, analysts remain divided on how aggressively rates should decrease. ING commented that although the ECB sees a slowing economy and believes inflation is under control, the pace of rate cuts remains a subject of debate.

NIS2 Directive implementation remains “in progress” for Ireland 

The Irish government has confirmed that the introduction of the NIS2 cyber security directive, which was supposed to be implemented in October 2024, remains “in progress”. The directive aims to establish a unified legal framework to uphold cybersecurity in 18 critical sectors across the EU, enhancing both resilience and enforcement mechanisms.

As the 17 October deadline for the transposition of Network and Information Security Directive (NIS2) passed, Ireland missed out due to the late publication of the necessary legislative bill. Only Belgium and Croatia notified the European Commission of their compliance with the transposition of the NIS2 cybersecurity rules in October 2024, which includes supervisory and enforcement measures.

However, the Department could not provide confirmation on when the directive will be transposed. The directive will be integrated into the National Cyber Security Bill, currently at the general scheme stage in the legislative process.

Back in October, The Department of the Environment, Climate and Communications stated that it will probably “be 2025 before national legislation is in place”, with the NIS Directive remaining in full effect until then.

The government is expected to publish its legislative priority list in February, which will likely provide more clarity on the anticipated timeline for enactment.

Compliments of Vulcan Consulting – a member of the EACCNY