Why the TPP is the right direction for e-commerce
| January 7, 2016 10:38 AM ET
Deal promises to improve SME access to global markets
International Trade Minister Chrystia Freeland this week launched a $50-million fund designed to help Canadian small and medium businesses (SMEs) export their products and compete in a global marketplace. As the leading ecommerce platform for businesses of all sizes, eBay Canada applauds the government’s support of SMEs and recognition of their capacity for international trade. SMEs are the engine of the Canadian economy – and the numbers bear it out. According to Industry Canada, SMEs employ 90 per cent of the total private labour force, and small businesses alone (up to 99 employees) generate 27 per cent of Canada’s gross domestic product (GDP).
Growth can be a particular challenge for SMEs with a lack of capital and tight margins standing in the way of expansion. However, we are witnessing a new wave of SMEs that are taking advantage of the Internet to access new markets cost-effectively. While 10.4 per cent of “traditional” SMEs export, those who engage in e-commerce export significantly more. On eBay, for example, 99.8 per cent of Canadian commercial sellers exported in 2014 with 99.5 per cent of those sellers exporting to Trans-Pacific Partnership (TPP) countries. Exports have a meaningful impact on SMEs’ bottom line: eBay commercial sellers who export find that a majority of their sales can come from outside of Canada. Clearly, tapping into global demand is a key driver of SME growth.
The TPP is the first major trade deal that tackles e-commerce as we know it today. It not only updates much of the North-American Free Trade Agreement (NAFTA), it also promises to improve access to global markets for small and medium-sized businesses (SMEs).
While the TPP will not do away with all barriers to SME trade, I am encouraged that policymakers took small and medium businesses into consideration as they drafted the agreement’s language. The TPP includes the first-ever chapter aimed at helping small business owners to better navigate the complex global trading system. Through the creation of a Committee on Small and Medium-Sized Enterprises, I am encouraged that member countries will actively review commitments throughout the life of the TPP to make sure that all aspects of the agreement are working to enhance business practices for SMEs.
Notably, the agreement seeks to simplify global customs systems, preserve an open Internet and reduce barriers to trade for small businesses. This is an important step forward. Though only 10.4 per cent of Canadian SMEs exported goods in 2011, they were responsible for $150 billion, or approximately 40 per cent, of Canada’s total value of exports. By streamlining customs procedures with digitized forms and the release of goods without unnecessary delay, small businesses can better predict deliveries to customers and manage their supply chain.
At the border, the deminimis threshold — the amount under which shipments can enter a country duty-free — remains a key barrier to Canadian consumer and small business participation in the global economy. I am encouraged that the TPP parties – including Canada – recognize the need to periodically review de minimis thresholds, taking into account such important factors as small business impact and inflation. This is particularly relevant in Canada, given that our threshold of $20 was originally set in the early 1980’s and would be more than $40 today had it been indexed to inflation alone.
Minister Freeland’s announcement yesterday is a positive step in support of SME exports, but further work is required if small businesses are to realize the full value of the global marketplace. As the government considers the TPP and other trade agreements, eBay will continue to work with policymakers as we advocate for our small business community in Canada and around the globe.
Andrea Stairs, managing director, eBay Canada