E-commerce made our 2014 Access 25 list, thanks to its rapid growth in countries such as China. In fact, Asia-Pacific e-commerce sales are growing at more than twice the rate they are in North America, reports eMarketer Worldwide. But according to a new study by Brookings Institution, the full potential of e-commerce as a growth driver for small and medium-sized enterprises (SMEs) won’t be reached without significant trade reforms.
The study, Supporting the Internet as a Platform for International Trade, which was led by Joshua Meltzer, Fellow, Global Economy and Development Program, Brookings Institution, cites a host of global barriers hampering the movement of goods and services transacted online. International regulatory barriers, to take one example, are creating transaction costs for trading online — costs that “can quickly overwhelm the economics” of doing business online, says the study.
The result, according to the study: “Trade frictions such as delays in customs, while costly for all forms of international trade, can become complete barriers to online international trade.” The impact of new Russian e-commerce duties in the news are a real-world illustration of this effect.
The Brookings study offers key recommendations for policymakers and trade advocates, including:
- Reforming customs procedures
- Raising the monetary value below which shipments crossing borders are free from tariffs
- Allowing the free flow of data across borders
- Securing an international payment system and method for dispute settlement
- Ensuring a level playing field to allow for competitive international delivery services
Notably, the study found that a key to both the movement of intermediate goods and the ability for SMEs to become part of the global supply chain is an efficient and cost-effective logistics network. As the study puts it: “Inefficient and costly transportation systems and administrative costs associated with customs are particularly significant barriers to SME exports.”
Commenting on the study, FedEx Express President Michael Ducker said, “Simplified customs clearance procedures for lower-value goods and the elimination of bureaucratic red tape is essential for today’s internet-based economy and future economic growth.”
To download the complete study, which was funded by FedEx and Ebay, Inc., go to http://www.brookings.edu/research/papers/2014/02/internet-international-trade-meltzer.