WASHINGTON - Booming online shopping is turning more small businesses into exporters and pushing issues like duty-free limits and customs duties higher up the wish lists for upcoming free-trade deals.
Retailer Colleen Rast, who sells new brand-name apparel and vintage collectibles through eBay and Amazon, was hit with a US$150 (S$198) customs bill when a New Zealand boutique returned a shipment with a retail value of US$1,000.
The duty represented 40 per cent of the original cost of the goods, and Rast's Great Sky Gifts paid for the shipping too. "It ended up almost not worth it," said Rast, who makes 20 per cent to 25 per cent of sales overseas. "That's the one thing that directly affects us right now, that we have to pay duties on our own merchandise to get large shipments back." A Nielsen survey for online payment system Paypal predicts international online shopping will top US$300 billion by 2018, nearly three times more than in 2013 - a lucrative market.
For many small firms, online sales are an easy entry into exporting, without the need for overseas offices or distribution networks. "If you have an express delivery system and a reliable payment system, you can do a lot of trade that was not possible before," said Ed Gresser, director of trade policy research programme Progressive Economy.
Small firms accounted for more than half of eBay's US, British and German cross-border holiday transactions in 2013. This year, 27 per cent of global transactions over the long weekend after Thanksgiving were international.
Small businesses rate their own chapters in two upcoming trade deals, the US-European Transatlantic Trade and Investment Partnership (TTIP) and the 12-nation Trans-Pacific Partnership, linking the Americas with Asia.
Deputy Assistant US Trade Representative Christina Sevilla says for small businesses exporting via e-commerce, issues like duty-free limits and maintaining an open Internet are "hugely important." An Atlantic Council report, commissioned by FedEx, recommended raising the duty-free threshold for packages under TTIP to US$800, to match that of air travelers, from current levels around $200. Cutting down customs red tape and streamlining processes would also be a boon for small exporters.
Nick Martin, whose eBay store The Pro's Closet specializes in used cycling gear, says he has stopped shipping goods over $250 to countries like Brazil and Russia because past shipments went missing in customs. "There's a lack of accountability in the process," he said.