Not surprisingly, the 成人VR视频 Institute鈥檚 recent 2024 Global Trade Report found that more than 75% of respondents said their top concerns were supply chain, regulations, and international policies. In the podcast, Britton asked Rowden to elaborate on the importance of trade 鈥� especially e-commerce and digital trade 鈥� since those have been and continue to be the largest areas of growth across the globe.

E-commerce in the US and internationally

Over the past decade, e-commerce has seen exponential growth, with the pandemic pushing it into overdrive and resulting in a significant change in consumers鈥� behaviors as more people began shopping online as compared to in-person. , more than 40% of consumers in the United States said they preferred shopping online. As a result, e-commerce shipments hit a staggering 1 billion which resulted in overwhelmed customs administrations and prompted legislative responses in fiscal year 2023, explained Rowden.

In the US

For example, the de minimis rule in the US that allows duty-free shipments on all imports under $800 has led to some entities using the $800 or less threshold to export products to the US duty-free. Over the years, the US government has taken notice and this de minimis rule is under scrutiny. Today, there are with several bills in Congress that proposes changes in the rule, including the announced in September.

These potential changes along with other proposed changes to tariffs and trade by the incoming Trump administration could significantly impact e-commerce businesses, particularly small sellers operating on thin margins, as the prospect of increased costs due to regulatory changes poses a threat to their competitiveness in the global market.

The WTO E-commerce agreement

Internationally, 76 World Trade Organization (WTO) members, including the United States, came up with an e-commerce agreement, known as the , that aims to level the playing field for e-commerce trade. The initiative establishes a set of common rules across a range of electronic commerce issues, including enabling e-commerce; promoting openness and trust in e-commerce; cross-cutting issues; telecommunications, and market access for e-commerce firms. However, the future of this initiative faces uncertainty as the withdrawal of the US from key digital trade policies has created uncertainty that could impact international e-commerce and digital trade, Rowan said.

While the fate of the agreement remains in doubt, there are ongoing discussions to revive it even with the looming expiration of the WTO moratorium on customs duties for electronic transmissions. This instability adds another layer of complexity for e-commerce businesses navigating international trade.

Talent, technology, tariffs and tax

Of the other top concerns and strategic priorities cited in the Global Trade Report, the challenge of finding the right talent with the right skills was noted by survey respondents. Historically, the path to a career in international trade compliance has been unconventional, with many professionals stumbling into the field, Rowan said; however, over the years and especially since the pandemic, the trade compliance industry has gained visibility. For those working in trade, there is not a systemized approach to the required skills needed, and therefore a more ad hoc approach has evolved.

Today, with the increased complexities in trade and supply coupled with the need for people who have specific trade-related skills, there is a growing need for standardized education and certification programs. For example, the e-Merchants Trade Council has introduced a program that would not only introduce continuing education requirements for customs brokers but also create a curriculum for standards-based certification program for trade professionals to fill the gap and standardize the professional education needed to work global trade, Rowan explained. These initiatives aim to provide a clear pathway for individuals entering the field and ensure that businesses have access to skilled professionals.

The recent “2024 Global Trade Report” found that more than 75% of respondents said their top concerns were supply chain, regulations, and international policies.

Interestingly, technology did not emerge as a top concern in the report, as it was overshadowed by the pressing issue of talent. While technology offers potential solutions for trade compliance and efficiency, the complexity of trade regulations and the need for human expertise remain much more critical. The development of AI and machine learning tools for tasks like tariff classification is underway, but progress has been slower than anticipated. The unique intricacies of trade regulations pose challenges for automation, highlighting the continued importance of skilled professionals in the field.

Finally, the return of President Trump to the Oval Office brings with it a renewed focus on tariffs and taxation. The proposed 60% tariffs on Chinese goods and a 10% across-the-board tariffs that have been suggested may represent a significant departure from the current average duty rate of 2%. Such measures could certainly have inflationary effects, impacting consumers and businesses alike. However, other suggested proposals, such as eliminating income tax, presents a more radical shift in economic policy and raises questions about the sustainability of government funding and the overall impact on the economy.

This balance between protecting domestic industries and maintaining consumer affordability will be a critical consideration in the coming years.

Conclusion

As we move from an era of a more managed trade approach to the one proposed by the Trump Administration, businesses must brace for increased complexity and uncertainty. As reflected in our Global Trade Report, the interplay of e-commerce growth, regulatory changes, talent shortages, and evolving trade policies creates a challenging environment for global trade professionals. To thrive in this new era, businesses must stay informed, adapt to changing regulations, and invest in developing the skills of their workforce.

The road ahead may be fraught with challenges, but with strategic planning and a proactive approach, businesses can navigate the complexities of global trade.

You can download a full copy of the 成人VR视频 Institute鈥檚 new 2024 Global Trade Report, here.

From data privacy and consumer protection to issues of forced labor, counterfeiting, intellectual property theft, taxation, and more, e-commerce challenges many of the rules that govern traditional commerce. Consequently, those who are responsible for crafting the rules of governance for e-commerce are quite literally making it up as they 鈥� and we 鈥� go along.

The latest front in this ongoing effort to harness the power of the internet without strangling it is an attempt 鈥� by such global institutions as the World Trade Organization (WTO) and the World Commerce Organization (WCO), along with lawmakers from the United States, the European Union, and many other countries 鈥� to devise a binding set of rules for e-commerce that everyone can agree upon, or at least accept to try, for now, until some better ideas come along.

One of the more problematic issues in the debate about how to regulate global e-commerce is the fact that the traditional rules governing international trade were devised with large multinational corporations in mind, not small businesses. Until the internet came along, after all, international trade was dominated by large companies that shipped equally large quantities of goods through ports (by air, sea, and land), where customs agents catalogued shipments and governments used that information to collect tax revenue, enforce compliance, formulate economic policy, and monitor trade balances, among other activities.

E-commerce upended the traditional trade model by giving small businesses and even individual people the means to sell almost anything, to anyone, anywhere in the world. Now, people everywhere sell an unimaginable variety of goods through marketplaces such as Amazon, Alibaba, eBay, and Etsy 鈥� and small businesses can have a global reach through websites they manage from home.

E-commerce: a mixed blessing

All of which has been great as far as expanding the global economy is concerned. But for governments trying to capture tax revenue and exert some measure of control over cross-border business transactions, including transactions that are purely digital in nature (for example, cloud-based software, music downloads, e-books, etc.), e-commerce has been somewhat of a mixed blessing. Certainly, it has given people all over the world the tools to start and expand their own businesses, but smaller countries outside the US, EU, and China have also seen e-commerce drain their cities and municipalities of much-needed tax revenue.

Efforts are currently underway to give governments more control over e-commerce regulation and taxation, but there are concerns that some of the proposed solutions may saddle small businesses with extra costs, restrictions, and rules that could stifle the very dynamism that made e-commerce such a successful economic juggernaut in the first place.

One of people most concerned about this issue is Marianne Rowden, who was for years the Private Sector Co-Chair of the Work Group on E-commerce for the WCO, which represents customs administrations around the world. In that role, she helped develop a framework of standards for e-commerce, but grew increasingly concerned that the world was developing two separate trading rules: one for e-commerce and one for traditional trade.

鈥淏ased on my experience, I knew that nobody was representing the sellers in e-commerce, who tend to be micro and small companies, let alone the other service providers who serve the e-commerce community,鈥� Rowden recalls.

To address this inequity, she and some of her fellow committee members at the WCO started the E-merchants Trade Council (EMTC). 鈥淥ur goal was to launch a global trade association that represents the entire ecosystem of e-commerce, which is comprised of e-sellers, marketplaces, logistics companies, and the various service providers that serve the e-sellers and make e-commerce happen,鈥� Rowden explains.

Simplification and democratization

In her role as CEO of the EMTC, Rowden has worked with the WCO, WTO, and the EU, and has advocated before the U.S. Congress about the importance of crafting trade policies that are fair to the small businesses that have helped make e-commerce a $6.5 trillion mainstay of modern business.

鈥淥ur mission is to simplify and democratize e-commerce globally,鈥� Rowden says, adding that now that e-commerce has grown to the point where it is expected to make up 24% of all retail sales by 2026, 鈥渆-commerce is coming under increased scrutiny.鈥�

The problem, she says, is that 鈥渆-commerce does not fit comfortably within the existing statutory and regulatory regime for international trade, or just commerce in general.鈥� Indeed, there are scores of issues to address, she explains, but the common denominator in many of them is scale. 鈥淓-commerce has a scale problem on both the front- and back-end.鈥�

On the front-end are the small-business e-sellers that, if they were suddenly required to adhere to proposed rules for customs reporting, could incur so many extra costs that their businesses might struggle or even fail. On the back end is the sheer volume of low-cost goods traveling across borders that, if they were subject to traditional trade rules and customs duties, most governments 鈥� including the US 鈥� would not have the technology or personnel to process them.

The result, Rowden says, would likely be 鈥渉igher costs, fewer choices, and slower service.鈥�

Common ground is hard to find

In her role at the EMTC, Rowden advocates on behalf of internet-based small businesses to committees and delegations all over the world. Often, that means balancing the interests of the US, the EU, and the rest of the globe in a whack-a-mole attempt to find common ground.

鈥淩epresenting business can be a challenge, but the biggest challenge is that we just want a common set of rules,鈥� Rowden says.

In the US, for instance, there鈥檚 often a debate about whether to follow one standard 鈥� a federal standard 鈥� or 50 separate state standards, plus standards from the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

鈥淚鈥檓 still watching the chaos caused by the U.S. Supreme Court鈥檚 Wayfair decision,鈥� Rowden laments 鈥� a decision that gave individual states the right to set their own rules for collecting sales tax on interstate internet sales.

As the world鈥檚 second-largest market behind China, the US is also not in the habit of following the rest of the world when it comes to trade. For example, the WTO will meet in late-February to discuss ratification of a set of digital trade provisions that the US helped develop. In October, however, the Biden Administration pulled its support for the WTO鈥檚 proposed digital trade rules and the Indo-Pacific Economic Framework, an initiative that the US itself launched as recently as 2022.

鈥淚t鈥檚 ironic, because the US has always been in favor of trade liberalization,鈥� Rowden says of the Biden Administration鈥檚 WTO decision 鈥� but the politics are different now.

鈥淭he WTO, WCO, and our organization 鈥� what we鈥檙e trying to do is come up with a global trading system with equal standards for everyone,鈥� Rowden says. 鈥淯nfortunately, we鈥檙e now in a period of de-globalization, and I don鈥檛 think these international agreements are going to make it across the finish line in time.

鈥淚t would be a tragedy if e-commerce was a victim of deglobalization, but that鈥檚 what may happen,鈥� she adds, although she says she will do everything in her power to make sure that doesn鈥檛 happen.

Retail e-commerce sales rose to $6.3 trillion in 2023, from $1.8 trillion in 2016, and are expected to grow to $8.1 trillion by 2026, with 4.5 billion users worldwide 鈥� or roughly half the population of the planet, according to data tracking site Statista. What鈥檚 more, by 2026, e-commerce is expected to make up 24% of all retail sales, up from 18.8% in 2021.

Though retail giants like Amazon and China鈥檚 Alibaba dominate the e-commerce market, most of this explosive growth can be attributed to small- and medium-sized businesses selling their goods and services online. Of course, the pandemic only juiced the machine even more. In 2021 alone, the number of e-commerce websites grew from 9.7 million to 19.8 million, and there are now 26.5 million e-commerce sites operating worldwide.

The economics of global e-commerce may soon be changing, however, possibly making goods more expensive and forcing small business owners to pay much closer attention to international trade laws. That鈥檚 because, until now, the growth of e-commerce has been helped along by simplified laws and processes, allowing small online sellers to flourish and the economy to expand. Now, however, lawmakers and regulators, spurred on by governments in search of increased revenues, are targeting online sellers and consumers by seeking to impose duties and taxation that will increase costs and reduce the speed of e-commerce 鈥� both of which are hallmarks of e-commerce鈥檚 exponential growth.

New legislation and digital customs duties

In the United States, for example, lawmakers have proposed legislation that would lower the de minimis dollar amount (currently $800) under which e-commerce retailers can import goods duty-free and restrict certain non-market-economy countries (China, mostly, but also Russia, Vietnam, and Belarus) from taking advantage of simplified trade processes under de minimis. And in late-February, members of the World Trade Organization (WTO) will consider whether to lift a long-standing moratorium on customs duties and tariffs for electronic transmissions 鈥� those products and services that are purely digital in nature, such as cloud-based software, e-books, music, educational materials, and art.

In both cases, governments see dollar signs, but according to trade experts, the extra costs these measures could impose are likely to fall disproportionately on small businesses and consumers. In addition to paying duties on goods they have previously imported for free, small businesses would likely have to adhere to formal international trade requirements and hire customs brokers to facilitate their import/export transactions, which would increase their business costs. These additional costs could also impede the ability of US e-sellers to compete in the global marketplace, in which foreign sellers frequently undercut the price of US goods. Extra costs could also restrict or prohibit certain micro-sellers in impoverished countries from doing business online 鈥� a segment of business that is crucial to their survival.

Marianne Rowden was co-chair of the World Customs Organization鈥檚 Work Group on E-commerce and founded the E-Merchants Trade Council to help simplify global trade policy for micro-, small-, and medium-sized businesses. She also works with the WTO, and has concerns about the impact these proposed trade-policy changes could have on small businesses if they are enacted.

鈥淓-sellers are very low-margin businesses, so if you add $25 let鈥檚 say, to the cost for filing an entry, even if it鈥檚 duty-free, that comes right out of their bottom line,鈥� Rowden says. If e-sellers are suddenly made responsible for customs duties, brokerage fees, and other costs they are not shouldering now, 鈥渆-sellers are going to have to recalculate whether it鈥檚 even profitable to sell certain items online.鈥�

The China problem

In the US, however, the stated purpose of much of the new trade legislation being proposed (such as the Import Security and Fairness Act, the De Minimis Reciprocity Act of 2023, and the Customs Modernization Act of 2023) is to prevent China and other non-market countries from exporting low-cost goods to the US duty free; expand data transparency to give U.S. Customs and Border Protection more visibility into international supply chains; halt the flow of fentanyl and other illegal drugs into the country; and weed out products produced with slave labor.

These are all noble goals, but achieving them isn鈥檛 likely to simplify e-trade for US businesses, where complexity is already a trade barrier. Further, the measures targeting China seem to invite another round of tit-for-tat sparring over international trade rules. It鈥檚 also unclear whether the proposed measures would even work.

鈥淲hen I talk to American e-sellers, their primary concern is that as soon as they put a product up for sale on their site or on a marketplace, they must compete with Chinese companies that immediately undercut their price,鈥� Rowden says. 鈥淚n some cases, that鈥檚 an intellectual property issue鈥� such as when a Chinese company steals a product idea and replicates it at a lower cost. But the real question, she says, is 鈥渨ould any of these bills change the calculus with regard to Chinese competition? I think we just don鈥檛 know yet.鈥�

A similar cloud of not-knowing hangs over the WTO鈥檚 upcoming Ministerial Conference in February, at which many experts, including Rowden, expect the organization鈥檚 164 member countries to vote down a moratorium on customs duties and tariffs for digital transmissions (such as digital products and services) that has been in effect since 1998.

Again, fear of losing out on potential tax revenue is the primary reason the moratorium is under fire. As more products and services are delivered digitally via the cloud, many countries are concerned about losing revenue they used to get from taxing the cross-border movement of physical items such as CDs, books, and other tangible goods.

鈥淲hat we鈥檙e really talking about here is the dance between direct taxes and indirect taxes, and how we tax goods versus services,鈥� Rowden explains. Customs officials worldwide know how to process physical goods that cross their borders, she adds, but digital transmissions are a different story.

鈥淭here鈥檚 no infrastructure set up for this,鈥� Rowden says. 鈥淭o my knowledge, no one has figured out how customs officials would collect duties from electronic transmissions. This is a real sea change 鈥� we鈥檝e never really done this before.鈥�

At this point it鈥檚 not clear which bills the U.S. Congress might pass or what the final form of that legislation might look like, and it鈥檚 not 100% certain that the WTO will lift its digital moratorium. In fact, the only thing that seems certain in the emerging world of e-commerce is that in order to provide all the additional information governments want 鈥� for duties, tariffs, logistics, certificates of origin, and more 鈥� businesses involved in e-commerce should be prepared to process a lot more paperwork.

Digitally, of course.