According to a study released today by Brookings Institution, significant trade reforms are needed to help small and medium-sized enterprises (SMEs) benefit from the Internet as a platform for e-commerce and international trade.  

The study* by Joshua Meltzer, Fellow, Global Economy and Development Program, Brookings Institution,  cites a host of global barriers critical to the movement of goods and services transacted online.  Key recommendations include:   

  • Reforming customs procedures
  • Raising the de minimis level on goods of low value
  • 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

The research study states international regulatory barriers create transactions costs for trading online which  “can quickly overwhelm the economics “ of the transaction itself, and as a result, “ trade frictions such as delays in customs, while costly for all forms of international trade, can become complete barriers to online international trade.”

The study found that the 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, saying:  “Inefficient and costly transportation systems and administrative costs associated with customs are particularly significant barriers to SME exports.”

“We see firsthand everyday how international trade rules need to be modernized for online e-commerce for our global SME customers and consumers,” said Michael Ducker, President, International,  FedEx Express.  “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.”

 * “Supporting the Internet as a Platform for International Trade.”  J. Meltzer, Fellow, Global Economy and Development Program, Brookings Institution.  To download the study: http://www.brookings.edu/research/papers/2014/02/internet-international-trade-meltzer

Funding for the Brookings Institution study was provided by FedEx and Ebay. Inc.