UK pays £2.3bn to EU to settle Chinese import fraud dispute

The Government has paid £2.3 billion to the EU as part of a long-standing dispute over textiles and footwear imported into the UK from China.

The final payment of £1.1 billion, made this week, brings the case to a close.

Chief Secretary to the Treasury John Glen confirmed the payment in a written statement to the Commons.

“Whilst the UK has now left the European Union and this is a legacy matter from before our departure, the Government is keen to resolve this long-running case once and for all and is committed to fulfilling its international obligations,” he told MPs.

Mr Glen said the final bill represented the interest due on the “principal amounts paid” and would “draw a line” under the issue.

The case dates back to 2017 when the EU’s anti-fraud office said British authorities had allowed criminals to evade customs duties by making false claims about clothes and shoes imported from China.

It found that more than half of all textiles and footwear imported into the UK from China were below “the lowest acceptable prices”.

The UK made a payment of more than £600 million in June 2022, with another payment of £620 million on January 13 this year.

Mr Glen said: “The UK has argued throughout the case that it took appropriate steps to counter the fraud in question. However, since these infringement proceedings were raised, the UK has taken proportionate and increased steps to combat this fraud without impacting legitimate trade, including by liquidating suspect traders through enforcement action.

“The UK takes a comprehensive and dynamic approach to tackling customs fraud risk and evolves its responses as any new potential threats emerge.”

He told MPs that “throughout this process the Government has also been conscious of the risk of further protracted legal proceedings, which could open UK taxpayers to not only a larger principal bill but also continued substantial interest accrual”.