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Cross-border Trade: the Fine Print

Cross-border Trade: the Fine Print

Cross-border Trade: the Fine Print

Andrew McClelland , Chief Operations & Policy Officer, IMRG examines the latest legislation affecting European e-retail.

There can be little doubt that cross-border trade is the future of retail and the opportunity is expanding all the time. In the lead-up to Christmas last year, Royal Mail announced impressive growth for the number of parcels going overseas to Australia (31%), Greece (21%), Finland (20%), Netherlands (20%) and France (19%) to name a few.

Entering a new market requires a lot of careful research and planning. Here I focus purely on some of the legislation that you need to know about when looking cross-border. Some are already in force and some are still being debated.


The e-Privacy Directive was first passed into law in 2010 and put forward a range of amendments to the laws governing electronic communications and data privacy. The section that had the most coverage was that which applies to the use of data stored by websites. For the most part, that means the requirement to obtain consent for the use of certain cookies.

This requirement is being dealt with in varying ways by each member state. For example, Germany has yet to actually take a decision on how it will implement the changes, while the Netherlands have introduced a full opt-in requirement for websites.

Following the UK implementation into law in May 2011, the requirement now is that websites need to obtain consent from visitors in order to use cookies for their session. While no actual fines have yet been levied, the Information Commissioners Office (ICO) has recently written to a number of organisations across multiple sectors asking what action has been taken to comply with the directive.

At present, we are still waiting to see what action the ICO will take but, in the meantime, all organisations should ensure that they follow these three steps:

  • Undertake an audit of your web estate to determine which cookies are being used;
  • Categorise all the cookies found by the audit;
  • Display the results of the audit in a prominent position on the website and include information for users on how to block different types of cookies.

This model is often referred to as ‘informed consent’ and has been the most common solution seen on UK sites.


The Consumer Rights Directive (CRD) is intended to support the development of the single digital market by updating consumer protection to match the modern way the internet works. When initially considered, the aim of the CRD was to completely harmonise ecommerce across the full EU27, but this proved to be too difficult due to the wide variety of the existing markets in terms of how they operate.

The amendments to the CRD were the big news policy development in 2011. It actually went through multiple drafts due to concerns raised by many in the industry. The two most contentious of these, the obligation to sell into all countries in the EU27 and the retailer liability for covering return costs of orders over €40, were removed in the final version.

The two most notable amendments that did make the final version were the reduction of the cooling-off period and the linking of product returns to the refund:

  • Cooling-off period – the period that a consumer has to change their mind about purchases (the ‘cooling-off’ period) was extended from 7 to 14 days. This amendment has potential ramifications for stock management, such as lengthier processing of returns.
  • Product returns – a positive amendment for retailers was the linking of the return of a product to the refund. By contrast with the extended cooling-off period, this can serve to aid stock management by encouraging the consumer to return a product swiftly.

The Directive was agreed by member states in October 2011 with its implementation into UK law currently being consulted upon by BIS.


In January 2012, the EC proposed a comprehensive reform of its 1995 data protection rules to strengthen online privacy rights and boost the digital economy in Europe. Differences between EU member states over the balance between privacy and transparency have been a stumbling block to adopting new EU-wide standards, with member states like Germany aiming to maximise privacy and northern states such as Finland and Sweden seeking as much openness as possible.

Key changes in this reform include a single set of rules on data protection, valid across the EU, and increased responsibility and accountability for those processing personal data. For example, a new requirement would be for companies and organisations to notify the national supervisory authority of serious data breaches as soon as possible (if feasible within 24 hours).

The EC proposes introducing a proposal for a new ‘right to be forgotten’, under which, in certain circumstances, individuals can request the erasure of personal data which an organisation stores on them.

IMRG support the Regulation’s stated intentions and believe that making trade across EU borders easier is an important step for ecommerce. However, we also believe that the responsible use of data can bring significant benefits to both consumers and businesses. A more restrictive and prescriptive regime for the use of this data, as per the current proposals, potentially present a barrier for small retailers who greatly rely upon data for building their businesses and securing return customers.

The EC’s Impact Assessment Board itself called for the impact on SMEs to be clarified and for deeper analysis of the proposals on competitiveness. We believe that further research and analysis is required in order to ensure that the balance between safeguarding individual rights and enabling a business-friendly playing field is achieved with this Regulation.

IMRG was a co-signatory of a letter sent to Government on 30th April 2012 outlining these concerns and submitted a response to the Ministry of Justice consultation.


The introduction of a Common European Sales Law (CESL) is intended to increase cross-border trade and boost the development of the single European digital market. CESL is still in draft form at present and is being put forward as an optional instrument for member states to adhere to.

IMRG are broadly supportive of the idea of CESL, but submitted a consultation response in May 2012 outlining some of our concerns about the current drafting. Three of our key concerns are as follows:

  • Definition of cross-border: while the definition for many businesses is obvious, a number of challenges arise as a business develops trade into other territories. Businesses must register for sales tax, many will look at consolidating shipments or even set up their own fulfilment operation, and a marketing and customer support function may become necessary within the territory. The main challenge for a business using CESL then comes from not being able to use it for domestic transactions as, once registered for sales tax, the business could see themselves as being described as a domestic business.
  • Over-complication: a key benefit of CESL is purported to be an increase in consumer confidence in shopping cross-border. However, there are a number of other Commission initiatives which aim to fulfil these objectives, including: CRD; Alternative Dispute Resolution Directive; Online Dispute Resolution Regulation; A study on the use of trust marks in the EU27. The introduction of CESL threatens to overcomplicate and duplicate these other initiatives without significant additional benefit.
  • Legal certainty: there is some doubt among the online community as to how CESL fits in with existing legislation such as Rome 1, especially around the country of origin principle, in addition to other directives such as the CRD, the e-Commerce Directive and a view that a lack of jurisprudence would actively impede the adoption of CESL.

The legal landscape for online trading is going through a significant period of regulatory evolution at present, with the debate centring on how to define the parameters of privacy and consumer protection in the digital space. IMRG are committed to ensuring that the interests of the industry are well represented in those debates.

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