At a Glance
eBay believes global trade rules should be modernized to ensure small business participation in technology-enabled global commerce.
The Internet is fueling a transformative revolution in global trade for small businesses. Global platform-based marketplaces, online payment services, and affordable and efficient delivery solutions have all dramatically reduced the cost of distance and have made global trade a reality for businesses traditionally excluded from such activity. This model of trade is highly inclusive, and is empowering small businesses – both rural and urban -- to connect with customers all over the world. eBay research has discovered that in the United States:
- 97% of eBay-enabled small businesses export compared to only 1% of traditional businesses
- eBay-enabled small businesses reach an average of 17 different foreign destination markets
- 61% of eBay-enabled small businesses reach customers four or more continents
Unfortunately, the global policies governing trade were crafted prior to the current era of platform-enabled trade. These policies need to be modernized to support small businesses that are using the Internet and platforms to access the global marketplace. Facilitating the expansion of platform-enabled small business trade promotes growth that is balanced and makes trade more inclusive, ensuring that the benefits of trade reach businesses of all sizes.
Issue in Detail
Historically, the global trading system and institutions have focused on large enterprises, as they were the only entities with the capacity and resources to utilize global supply chains and markets. However, in recent years, barriers to accessing larger and more robust markets are receding and small businesses and entrepreneurs are beginning to leverage technology and global marketplace platforms to reach consumers in new ways. Platforms like eBay are allowing small businesses, and even micro businesses, to open with minimal start-up costs and compete in global markets. This is possible because technology, and specifically platforms, have dramatically reduced the cost of distance. What is perhaps most significant is that this ability to access global market opportunities is available to small and micro businesses in advanced AND emerging economies, thus making it a more inclusive model of trade than the Global Value Chain or other more traditional models of trade.
We have coined the term “Global Empowerment Network” to describe this new model by which small businesses are able to create a storefront presence online and compete directly in global markets through e-commerce platforms with vibrant customer bases. The Global Empowerment Network combines a set of services and conditions enabling small businesses to transcend borders, reach customers on a global scale, and facilitate business transactions. The key building blocks that fuel the Global Empowerment Network are: (1) Connectivity to the global Internet at low cost and without gatekeepers; (2) Global platform-based marketplaces; (3) Global payment services; and (3) Efficient, modern and “connected” package-level logistics and delivery services.
According to eBay’s Small Online Business Growth Report, 96% of eBay-enabled US small businesses are exporters. This dwarfs the 1% of traditional US businesses that are exporters. Additionally, these eBay-enabled US small businesses reach an average of 17 different foreign markets and 58% reach customers on four or more continents.
This data for the US as well as other advanced and emerging economies is very promising, but could be even more robust if we address existing barriers to the Global Empowerment Network. When examining barriers, it is necessary that we think of them in the context of the micro and small enterprise - independent, small, global, and unchained in a new way from the limits of their small size or remoteness. The impediments they face are largely the result of a global trading system that was designed for a smaller number of giant enterprises sending large volumes of goods across oceans via containership, which are then distributed throughout networks. This is vastly different from a microbusiness selling an item on an ecommerce platform like eBay, accepting payment via PayPal, shipping an individual package through the Postal Service, and navigating the customs process for delivery and returns.
Small Business Owners Discuss Exporting and Trade
eBay's Global Trade Policy Recommendations
eBay believes that global trade rules should be modernized to ensure small businesses can participate in technology-enabled global commerce. The following general policy recommendations would enhance the ability of technology-enabled small businesses to access the global market regardless of where they are emerging as small business traders globally:
Expand Access to the Internet
Promote the continued expansion of access to the open, global Internet, as well as global commerce platforms and intermediaries that connect entrepreneurs and technology-enabled small businesses with consumers globally.
Increase Customs Import Duty and Tax Exemption Thresholds
Expanding de minimis thresholds promotes trade and economic opportunities for small businesses by reducing the time, cost, and uncertainty of shipping packages across borders. In addition, most taxes imposed on, and collected by, domestic retailer service providers are not appropriate for application to small, remote retail services providers as they receive no benefits from operations in the domestic market, nor do they impose any burdens on the domestic infrastructure. Finally, higher de minimis levels counter excessive per transaction costs for customs authorities.
Digital Single Windows
Multiple governmental agencies touching cross border shipments is inefficient for all traders, but for small businesses the negative impacts are especially profound. National “Digital Single Window” efforts are a step forward, but for micro and small enterprises, national-level simplification is a step short. Interoperable Digital Single Window (IDSW) efforts between countries would promote greater regional small business commerce and would further reduce barriers at the border. The use of open Application Program Interfaces (APIs) in IDSW projects would allow for the development of technology tools could be tailored to all types of technology-enabled small businesses.
Eliminate Duties on Cross-Border Returns
Small business traders should not be burdened with paying import duties when they accept a returned item that they sold to a customer in another market.
Treat Postal Systems as Small Business Trade Facilitators
Postal systems and policies should be the subject of discussion in trade forums as they are increasingly valuable as an economic and trade facilitator for small business traders. Simplification, modernization, harmonization and integration of national postal services will promote greater and more broad-based small business commerce opportunities.
Promote Balanced Internet Intermediary Policies
Balanced regimes governing intermediary liability are central to fostering the Internet-based services that enable small businesses to engage in global commerce. Trade agreements can be used to harmonize liability regimes in a manner that encourages countries to adopt policies that support small business-based commerce and opportunity.
Open Trusted Trader Programs to Platform-Enabled Small Businesses
Cooperative risk assessment methodologies should be developed to better facilitate technology-enabled small business trade.
Explore Flexible International Regulatory Cooperation Solutions
The emergence of micro and small businesses as global traders is a highly inclusive economic development that should not be undermined by outdated national regulatory models. Policymakers should explore non-national legal instruments to promote consumer protection in a manner that welcomes small business traders into the global commerce regime side-by-side with established global companies.
eBay Small Online Business Growth Reports
Global Digital Trade 1: Market Opportunities and Key Foreign Trade Restrictions [United States International Trade Commission]
2020 National Trade Estimate Report on Foreign Trade Barriers [United States Trade Representative]
Information Economy Report 2017: Digitization, Trade and Development [United Nations Conference on Trade and Development]
World Trade Report 2016: Levelling the Trading Field for SMEs [World Trade Organization]
Bringing SMEs onto the E-Commerce Highway [International Trade Centre]
Digital Globalization: The New Era of Global Flows [McKinsey Global Institute]
Maximizing the Opportunities of the Internet for International Trade [World Economic Forum]