EU4Digital – The European Commission is supporting an eCommerce pilot between Armenia, Azerbaijan, Georgia and Germany

EU4Digital, an initiative to extend the European Digital Single Market to Eastern Europe, has launched an ecommerce pilot between Armenia, Azerbaijan, Georgia, and Germany. Its goal is to harmonise ecommerce between the European Union and the Eastern partner countries and to increase ecommerce volumes.

Businesses and customers are moving online to buy and sell goods and services, a trend accelerated and increasingly critical in the face of the COVID-19 pandemic. When businesses move online, they face two major challenges: the additional investments required to introduce goods online and lack of know-how and skills to operate online.

At the same time, the EU is introducing the eCommerce VAT package in 2021, which changes eCommerce processes of which businesses and governments have limited awareness. In this new reality, the Eastern partner countries need support to move and adapt to electronic commerce.

The EU, currently the second biggest cross-border buyer of goods, has established its own eCommerce rules, processes, know-how and ways of engaging stakeholders. Naturally, the member states expect these rules to be considered and followed by all their trading partners, including non-EU businesses. Otherwise, different rules create various obstacles and barriers that complicate eCommerce transactions.

To avoid such complications, there is a need to harmonise the digital environments between the Eastern partner countries and the EU.

EU4Digital is an initiative that wants to harmonise digital markets and help to eliminate barriers to online services. Last year, it started activities to further harmonise ecommerce between the European Union and the Eastern partner countries. And now it’s launching a pilot between Armenia, Azerbaijan, Georgia, and Germany to increase online retail volumes.

With the pilot, EU4Digital wants to strengthen the ecommerce ecosystem and increase volumes. The pilot solution is to establish national virtual warehouses / databases of local goods to connect eCommerce actors so they can automatically exchange information about sales, customs and delivery (see figure below). 

Figure 1: The eCommerce solution – virtual warehouse

An additional goal of the pilot activity is to prepare eCommerce actors in the Eastern partner countries for the 2021 eCommerce VAT package introduced in the EU. The pilot countries will learn more about the upcoming changes (see figure below) and will get support to prepare for the following changes: 

1. Mandatory electronic customs declaration; 
2. Available reduced customs data set to all parcel operators from July 2021;
3. Harmonised ID linking all assigned IDs on a parcel to items stored inside.

Figure 2: Overview of the 2021 changes in eCommerce area

The eCommerce pilot activity started In January 2021 with a meeting with the pilot countries. Following the proposed eCommerce pilot idea, the European Commission has confirmed Armenia, Azerbaijan and Georgia as the pilot countries. The first working meeting between the pilot countries was organised after receiving the official confirmation letters from the pilot countries, confirming their willingness and readiness to participate.

To increase the volume of eCommerce between the Eastern countries and the EU, EU4Digital suggested Germany as the EU member state to list products from Eastern partner retailers on the German marketplace(s). EU4Digital is cooperating with the German association, which is a member of Ecommerce Europe and is supported by more than 30,000 German SMEs.

As the scope of the pilot includes applying the EU standards for product listing in a virtual warehouse, once the pilot is completed, the solution can be adapted for cross-border eCommerce with other members of the EU and the Eastern partner countries, as well as up to 192 countries within the Universal Postal Union that use the same standards. 

The completed pilot activity will result in two major outputs for the Eastern partner countries: 1) Transfer of virtual warehouse that was used (developed) during the pilot activity and 2) Recommendations for full scale solution (virtual warehouse) implementation in the Eastern partner countries to boost eCommerce among the partner countries and with the EU.