E-Commerce Creates New Challenges that May Require Updated Policy Paradigm

The emergence of e-commerce is requiring some new considerations as individual sellers are increasingly involved in internationals transactions, said panelists during a May 12 U.S. Chamber of Commerce event on supply chains. 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, CBP assistant commissioner in the Office of International Trade.

While CBP has improved it's risk management approach, other agencies can still slow things down, which is one reason the work toward a single window is so important, said Smith. It's also 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 a lot of opportunity with "open data" for e-commerce sellers to automate information on international trade transactions, said Althea Erickson, policy director at Etsy. For example, integration of customs duty information and other import/export regulation right "into these platforms" would be a helpful tool, she said. There may also 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 ever consider themselves to be exporters or have "huge compliance departments," which adds some challenges when dealing with goods that cross the border, she said. Harmonized regulations through trade agreements would also make international transactions easier for individuals, she said. Value-added taxes abroad are one major source of "friction" between buyers and Etsy users that 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.

Government regulations have largely been developed within a "retail" environment, said Edward Steiner, senior director of international trade for Sandler Travis. But 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 in order 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 that there's "one solution," rather than ten, at the border, said Jamin Dick, senior vice president of global supply chain at Borderfree, a company that offers international market expansion services. Customs reauthorization legislation that's 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.

Particularly important within the customs legislation is the linking of "goods returned to export as opposed to previous importation" because "currently there's a lot of sellers that are exporting a good that they have no knowledge if it was in fact imported or manufactured in the United States, said Steiner. "If you're able to link it to the export instead of the previous importation, then that allows a lot more actors to get involved."