Today, Brian Bieron, eBay’s Executive Director, Global Public Policy, testified at a United States International Trade Commission (USITC) public hearing focused on global digital trade. Brian’s testimony will help shape a report the USITC is writing titled, Global Digital Trade 3: The Business-to-Consumer Market, Key Foreign Trade Restrictions, and U.S. Competitiveness. The report, which will be finished in March 2019, will help inform U.S. officials in charge of negotiating trade agreements of barriers that U.S. businesses face in key foreign markets. This will help lead to better global market conditions for eBay-enabled micro, small, and medium-sized businesses.
Brian focused his remarks on foreign trade restrictions in the business to consumer market, and specifically, the rapid emergence of efforts to expand local retail sales tax burdens by imposing them on small Internet-enabled foreign retail enterprises. These unprecedented sales and VAT tax collection burdens are completely inappropriate given the total lack of business presence in foreign markets of the small, Internet-enabled, U.S. retailers. He explained that these sales taxes are intended to be a trade barrier aimed at reducing export sales of U.S. small businesses using the Internet.
One manifestation of this retail sales tax-based protectionism is the maintenance of low customs and tax de Minimis thresholds - the value below which goods can be shipped into a country before duties and taxes are assessed. Brian detailed how Australia, which currently has a $1000 de Minimis, is completely eliminating this threshold in July, and this action is certain to negatively impact Internet-enabled small business exporters in the U.S., as well as reducing choices and raising prices for Australian consumers. Brian noted that if other countries follow the Australian model and tax foreign small businesses as if they were local, Australian businesses will be harmed as well.
Brian detailed how this retail sales tax protectionism is spreading as Europe is also proposing to apply their VAT-style sales taxes – which are appropriately applied to local merchants who gain meaningful benefits from their local business operations – to small, independent, remote retailers. This is not a pathway to small business growth and success anywhere. This trend threatens to set back technology-enabled, inclusive trade and growth that has taken root in recent years and return us to a time when only the largest businesses, with established foreign market presence, could successfully export.
Brian concluded by pointing out that we can see and measure how technology can enable far more open and inclusive global trade. Millions of independent small businesses from across the United States can participate in their local economy and experience growth by reaching customers around the world via platforms like eBay. He highlighted how the U.S. has proven to be a leader in supporting small businesses by raising its de Minimis from $200 to $800 in 2016, and now needs to lead an international effort to reject anti-small business sales tax protectionism and build international consensus that small business-based trade is a win-win.
We will continue to look for opportunities to advocate on behalf of our sellers for the removal of barriers to platform-enabled trade and greater access to global markets.