The e-commerce struggle: when governments stifle trade instead of enabling it 

Digital innovation is driving economies forward – it’s undeniable.

Digital trade exports from the UK have grown three times faster than other exports, representing more than half of total exports, which is twice the OECD and EU averages. This allows cross-border e-commerce between the UK and EU to flourish. UK online retailers are seeing a 57% increase in sales to EU countries in 2023, and over 80% of UK consumers have made online purchases from EU-based retailers, highlighting the strong demand for cross-border e-commerce.

So why are governments continuing to create unnecessary barriers that suffocate global e-commerce instead of making it easier?

Despite digital technologies enabling companies to reach more customers, trade more efficiently and grow their workforces, the dream of a seamless, unified trade environment remains just that – a dream – because of archaic systems, lack of coordination, and policy fragmentation. 

The 3 ways governments are failing e-commerce 

From VAT registration to environmental compliance, bureaucratic inefficiencies have made international e-commerce a nightmare. Rather than fostering cross-border trade, authorities seem to be actively working against it, layering complexity upon complexity. 

1. VAT registration is treated like a credit card application

What should be a straightforward process has become an exercise in frustration, akin to applying for a high-risk credit card.  

Businesses looking to expand internationally are met with excessive scrutiny, endless paperwork, and long wait times ranging from three months to over a year – or worse, resulting in outright rejections with no clear explanation. 

Some countries, like Spain, still demand Power of Attorney (POA) documents in an era of digital identification, slowing down processes that should be automated. 

 Inconsistent requirements across EU member states make VAT compliance a logistical nightmare, leaving businesses in limbo as they navigate the endless red tape. 

2. The circular economy and EPR are a compliance quagmire 

The push for sustainability is critical, but the way governments implement Extended Producer Responsibility (EPR) laws has turned it into a compliance minefield.

Instead of creating harmonised, business-friendly frameworks, different countries have developed convoluted rules, burdening e-commerce businesses with costly and inefficient compliance measures. Spain, again for example, has country-specific rules for product labelling.

Adding to the complexity, the circular economy has been outsourced to private bodies through Public-Private Partnerships (PPPs), making the system even more opaque.

These private entities now hold the power to enforce compliance, often adding excessive fees and further layers of bureaucracy without clear oversight. Rather than simplifying the process, this model has created another administrative nightmare, disproportionately affecting SMEs and stifling innovation in global trade. 

For example, some EPR registration processes require multiple local agents, while others are plagued by unclear requirements and a lack of enforcement transparency. Instead of streamlining the process, governments have added another layer of complexity that disproportionately affects small and medium-sized enterprises (SMEs) trying to operate across borders. 

Our ongoing ‘EPR Made Easy’ series on YouTube helps cut through some of this noise as the legislation develops.

3. They’ve created a fragmented digital trade environment 

Governments talk about building a single digital trade framework, yet their actions show a complete lack of coordination:

• VAT systems remain inconsistent and slow

• EPR compliance is a bureaucratic mess

• The circular economy is controlled by private bodies with no clear oversight

• Legacy processes like POA requirements hinder efficiency

• Tariffs and trade barriers are increasing instead of decreasing

• Enterprise-level policies are being forced upon smaller entities, making compliance an insurmountable challenge

The regulators are not demonstrating any level of strategic intelligence in streamlining these processes. Instead, they seem to be keeping themselves in jobs by creating more convoluted and impractical policies with little connection to real-world business operations. 

Do we need an ‘Elon Musk’ for European trade? 

With so much red tape and bureaucracy stifling innovation and expansion, one has to wonder: Does Europe need a disruptor to cut through the inefficiency and finally modernise international trade? 

Rather than fostering growth, current policies force businesses to waste valuable resources on compliance rather than investing in new markets, products, and services. 

The real cost of compliance complexity: missed opportunities and slower growth 

Every additional compliance burden hurts global competitiveness, delays market entry, and reduces profitability. The situation is even worse for SMEs – many simply give up on international expansion due to the excessive costs and unpredictable bureaucracy. 

Consumers suffer, too. Slower VAT registrations mean fewer products available in certain markets. Overcomplicated EPR rules drive up costs, which are then passed down to the buyer. Instead of a thriving digital marketplace, we end up with higher prices, longer delivery times, and fewer choices. 

The solution? A unified, digital-first approach 

The only way forward is for governments to embrace digital efficiency, harmonise regulations, and eliminate redundant processes:

• VAT registration should be automated, fast, and uniform across jurisdictions

• EPR rules should be simplified and standardised at an EU level

• Outdated requirements like POAs should be abolished in favour of digital verification

• The circular economy framework should be managed transparently with government oversight, not outsourced to private entities that add unnecessary complexity

• Trade policies should support businesses instead of creating additional barriers

• Regulators should focus on smart, streamlined solutions rather than perpetuating outdated compliance structures

Without these changes, global e-commerce will continue to struggle under the weight of unnecessary red tape. If governments truly want to support economic growth, they need to stop talking about digital transformation and actually implement it.

Until then, businesses will continue to face an uphill battle against inefficiency, fragmentation, and suffocating bureaucracy. 

How AVASK can help you navigate all these aspects of global expansion

We take care of the tricky parts of VAT compliance, from registration and invoices to tax returns – so you can focus on expanding your business.

But we do more than just VAT – we can guide you through environmental regulations like plastic packaging tax, EPR, WEEE, and battery compliance, so you’re eco-compliant wherever you’re selling. Efficient customs clearance wraps up your e-commerce journey in a neatly delivered package – no red tape in sight.