E-Commerce Creates New Challenges That May Require Updated Trade Policies
E-commerce's growth is requiring some new considerations as individual sellers are increasingly involved in international transactions, said panelists during a U.S. Chamber of Commerce event. While the new challenges may point to the need for some revised policies, it's difficult to "inject the interests of the multitude" of stakeholders involved at the border, said Brenda Smith, Customs and Border Protection assistant commissioner in the Office of International Trade.
While Customs and Border Protection has improved its risk management approach, other agencies can slow things down, which is one reason the work toward a single window is so important, Smith said Tuesday. It's difficult to figure out "how to go after the bad actors" that "do harm" through the same networks used by compliant trade, she said. In developing enforcement policies, "we struggle, as a government, with that interaction with small business," she said. Bigger companies are generally easy, "because there's fewer of them." Smaller businesses don't always have the time to engage in the regulatory issues, but those interests need to be represented, said Smith.
There's much opportunity with "open data" for e-commerce sellers to automate information on international trade transactions, said Althea Erickson, Etsy policy director. Integration of customs duty information and other import/export regulation "into these platforms" would be a helpful tool, she said. There may be opportunity for programs similar to "trusted trader" customs programs, in which Etsy identifies the sellers that "can be relied upon," said Erickson. Etsy has over 1.4 million sellers who sold $1.93 billion worth of goods in 2014, she said.
Many of those sellers don't consider themselves exporters or have "huge compliance departments," which adds some challenges when dealing with goods that cross the border, said Erickson. Harmonized regulations through trade agreements would make international transactions easier for individuals, she said. Value-added taxes abroad are one major source of "friction" between buyers and Etsy users who often aren't aware of the collections, Erickson said. "Anything to move that collection off the border would be extremely helpful" and any type of "de minimis exemption would be even better," she said.
Rules have largely been developed within a "retail" environment, said Edward Steiner, senior director-international trade for Sandler Travis. With e-commerce, "you need a different paradigm because it's a different relationship between the consumer and the product," he said. There may need to be some "rethinking" of policy and enforcement to adjust to the e-commerce model, he said. But the "big data" approach may not be as useful, because that approach is based on deciphering patterns and anomalies, and e-commerce is "all anomalies," he said. The "tax issue" will continue to be another big issue for "retailers who suspect that e-commerce is getting around the structures of taxations," said Steiner.
The International Trade Data System will be a major step forward in improving e-commerce policies so there's "one solution," rather than 10, at the border, said Jamin Dick, senior vice president-global supply chain at Borderfree, which offers international market expansion services. Customs reauthorization legislation being considered in Congress would be another important stride because "a lot of it just feels like we're 10 years, 12 years in the past," he said.