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Meeting with 
 BASF and 
Ref. Ares(2020)7729037 - 18/12/2020
Online, 5 November 2020, 10h30-11h15 
Illegal HFC imports 
The chemical industry is concerned about illegal imports of hydrofluorocarbons (HFCs), 
i.e. imports without quota under the EU HFC phase-down measures. Such imports risk 
undermining their competitiveness. In June 2020, CEFIC announced that HFC illegal 
imports in 2018 could be up to 30% on top of the amounts allowed under the HFC phase-
down. This number is often referred to as a ‘precise estimate’, as it represents a ‘worst-
case scenario’, where all data discrepancies between Eurostat data, Chinese export data 
and increasing imports into neighbouring countries are assumed to be illegal trade into the 
EU. It is highly unlikely that this worst-case scenario is a reality. Since 2019, the 
Commission has stepped up action to prevent illegal HFC imports and new data from 
2019 (not yet published) indicate much smaller discrepancies  

According to OLAF, the biggest loophole regarding illegal imports is the abuse of the 
customs transit procedure1 by rogue traders and it constitutes a systemic customs issue. 
While TAXUD is looking into the general transit aspects, it may be legally feasible to 
impose stricter transit rules specifically for HFCs in the F-gas Regulation review proposal 
planned for Q4 2021.  

The Commission is currently consulting stakeholders on the review of the F-gas 
Regulation. One of the key objectives is to improve implementation and enforcement, and 
strengthening obligations of economic operators to prevent illegal trade.  

Industry is very active on this issue, and activities to this extent include the engagement of 
private investigators and the establishment of a whistle-blower hotline by CEFIC. In 
addition, CEFIC has started a campaign where companies publicly pledge that they are 
not buying illegally imported HFCs. CEFIC further provides training to interested customs 
authorities to combat illegal trade. 

Main messages  
  The Commission fully recognises that an effective enforcement of EU rules is key. It 
remains a political priority, as any tonne of HFC imported illegally is one too much. 
 Since 2019, targeted actions to prevent illegal imports have been taken. The 
Commission has in particular focused on: 
  Rapidly building the IT system ‘EU Single Window for Customs’, which ensures 
controls become more effective.  
  Insisting clearly with Member States at all levels that good implementation is 
needed, including though dissuasive penalties for illegal activities;  
 Developing 
exchanging best practices on how to step up enforcement and 
ensure dissuasive penalties for illegal activities. 
  To tackle this issue it is essential that the Commission, in particular, DGs CLIMA, 
TAXUD, GROW and OLAF work together with Member States and industry. 
  It is also clear that your efforts to stop illegal imports are playing a significant role
The Commission is supporting and will continue to support these activities as 
complementary to what is done on the authority’s side. 
  Our concerted actions appear to have been successful, as we see more and more 
illegal imports stopped at EU borders.  
1 This procedure is employed for goods that are not intended for the EU market but will pass the 
EU territory to be exported elsewhere, e.g. a good from China arriving in Rotterdam that is intended 
for the Serbian market. The circumvention happens when ‘transit goods’ are nevertheless being 
sold in the EU.  
Topics for discussion 

Meeting with 
 BASF and 
Online, 5 November 2020, 10h30-11h15 
  However, we will not stop here. I am sure you have seen the stakeholder consultation 
documents for the F-gas Regulation review, which highlight that one of the key 
objectives is to improve enforcement.  
  In particular, we are looking at options that can strengthen customs and surveillance 
authorities, and close existing loopholes as much as possible. We will also explore the 
possibility of harmonised minimum penalties, yet it remains to be seen if that is 
legally possible. We must keep in mind that Member States have different penalty 
systems. At the same time, it should be possible to at least require that certain 
infringements of the F-gas Regulation (including illegal imports) are also covered under 
national criminal legislation.  
  Finally, I am happy to note that while some illegal trade is clearly happening, there are 
clear signs that the F-gas Regulation’s quota system – the “EU HFC phase-
down” - is working and has significant impacts.  

  The most obvious sign is a rapid shift towards more climate-friendly technologies in all 
sectors using HFCs with high global warming potential in the EU. HFC prices also 
continue to increase in the EU compared to the world market, thus promoting green 
What actions has the Commission taken to prevent illegal imports? 
Among the actions taken, the Commission: 
  alerted ministers in the Council in 2019 to step up their enforcement and 
completed pilot cases against two Member States regarding their obligation to 
have penalties;  
 funded 

customs/F-gas expert group, which has developed best practice 
guidelines for customs on how to better control import of HFCs; 
 made 

priority action in the Commission’s antifraud office, OLAF, to focus 
on preventing illegal HFC imports; 
  is building an IT system that will connect customs all over the EU to DG 
CLIMA’s “F-gas Portal & Licensing System” and enable automatic, instead of 
manual, customs controls. The first countries will connect in 2021 and the 
Commission will propose to make this “Single Window Environment for Customs” 
mandatory for Member States this autumn.  
The impact of the “EU phase-down”  
The EU HFC quota system creates scarcity by restricting the amounts of HFCs (measured 
as CO2eq) that can be placed on the market. This led to very high prices during 2018 
(up to 10 times higher than world market). Prices have declined and are now relatively 
stable at ca. 3-4 times higher for highly warming HFCs (at gas distributor levels). As price 
increases are passed on to the end user, this is still a very significant increase that 
promotes a more climate-friendly choice. As a result, highly warming HFCs have been 
replaced in equipment where possible.
 Furthermore, higher HFC prices also provide an 
incentive for users of existing equipment to minimize leakage and recover gases from 
Extent of illegal activities 
Unfortunately, the higher prices also incentivise illegal imports. This mainly means 
imports without quota, often supplied in prohibited non-refillable containers. Illegal imports 
are evident, as shown by an increasing number of illegal shipments stopped at customs 
and by work done by OLAF as well as a detective agency hired by the chemical industry.  
Topics for discussion