E-commerce has helped to drive growth in global trade despite a host of challenges in recent years, but more can be done to face those challenges – so said Marco Forgione, director general of the Chartered Institute of Export & International Trade, at yesterday’s (18 September) E-commerce Expo in London.
The core challenges identified by Forgione included those highlighted in a recent paper by the Social Market Foundation and commissioned by the E-Commerce Trade Commission. Chief among them was financing, which almost 40% of surveyed SMEs said was the most pressing barrier to expanding their existing export businesses.
Industrial strategy
Among the solutions proposed by Forgione included calibrating government industrial strategy around e-commerce, prioritising SME export readiness “as a central focus of its industrial strategy and any aligned trade strategy”.
That builds on the message of the recent report, which said:
“The government should integrate the planned industrial strategy, with the similarly expected trade strategy, into a single effort, to reflect the complementarities between general business competitiveness and exporting success.
“It is crucial that e-commerce exporting policies are interwoven into broader economic framework policies, ensuring a cohesive and supportive environment for SMEs.”
Forgione also emphasised the value of digital trade, which he said could cut trade costs if properly supported, noting that “studies have shown this to be successful in countries across Asia”. He urged governments to “pursue the digitalisation and automation of trade processes at the border through initiatives such as the Single Trade Window” and to “educate businesses about the benefits of these developments”.
Tariffs and duties
Second among the challenges identified by surveyed SMEs, Forgione noted, were restrictions on imports – meaning tariffs, duties and quantitative restrictions.
He also noted that firms cite the complexity surrounding customs, which can be burdensome. One considerer business – an SME not currently exporting but open to the idea – speaking to the Emerging Markets Working Group led by the Department of Business and Trade (DBT), said:
“I’ve sent parcels abroad to family members, and just sending anything, you have to fill out the biggest form…and I’m thinking – if I export, if I’ve got to do that every time, it’s so labour intensive. It seems ridiculous for small items.”
“There are complexities, but they’re easily dealt with when you understand them,” Forgione said. “The challenge in this comment highlighted that personal experience has then impacted behaviour in business.”
He suggested it needed to be made clearer to small businesses that e-commerce trade is “possible, feasible and [that] there is demand”. Forgione also noted that the Working Group found “customs concerns were a barrier for businesses exporting into emerging markets particularly”.
In proposing solutions, he drew attention to the World Trade Organization (WTO) Trade Facilitation Agreement (TFA), which entered into force in 2017.
It is crucial, to help developing countries “implement the terms of the WTO’s TFA, supporting efforts to boost customs capacity and capabilities”.
Broader issues
There was a need for “collaboration”, Forgione said, to address the problems raised in the recent Social Market Foundation report, as well as those posed by measures being imposed by some nations.
“We have to do so in partnership and collaboration – the difficulties and complexities of trade will only be addressed with business, government, regulators and the e-commerce platforms and marketplaces working together.”
At a point when the WTO is “slightly dysfunctional”, he said he was “delighted to see” that the UK and 90 other nations have signed up to a Joint Statement Initiative on E-Commerce.
However, he said, it’s clear that “the trading environment is too often being used for partisan benefit”, with nations “leveraging the power of their market to disrupt the global trading environment”.
“The marketplaces can be key to addressing these issues. The work of the E-Commerce Trade Commission is helping to redefine the way in which trade takes place, and also to provide a simple system and process by which businesses – wherever they may be – can take advantage of healthy and compliant cross-border trade.”