Free Trade Boosts Small Business, Too

According to big media, the debate over “free trade” – including such proposed agreements as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) is a simplistic battle between “Big Business” and “the little guy,” with one winning at the expense of the other. In doing so, the media’s narrative could hardly be more wrong.

In fact, some of the smallest businesses – mom and pop retailers that use the Internet to reach their customers – will be among the biggest winners if these trade agreements are enacted.

Already, the vast majority of these small business owners are exporters. For example, a recent survey of the roughly 15,000 small member companies in the We R Here Coalition found that nearly 90% of them serve customers around the world; the average exporter has customers in 16 other countries!

But due to their small size and limited resources, existing global customs regulations present an outsized and frequently byzantine burden for these retailers. Any effort to reform those regulations would enable small e-retailers to expand – and create more jobs – here in the U.S.

Consider this example: a small e-retailer here in the United States exports a widget worth $250 to a customer in Canada. Currently, anything imported into Canada is assessed a customs fee, and if it’s worth more than $20 that imported widget needs to be accompanied by proper paperwork. Meanwhile, the threshold for imports to the U.S. is currently set at $200. So, to send the widget to his customer, our e-retailer has to fill out Canadian paperwork and pay customs fees; but if the customer wants to return the widget, the U.S. e-retailer would have to then be required to fill out the American customs paperwork and perhaps pay the fees – just to get his own product back!

That’s just an example, but it’s an issue that countless small e-retailers face every day. The survey of our 15,000 member companies elicited similar complaints – tales of items being held by customs for extended periods of time; lost or stolen packages; extra paperwork; government officials failing to notify a consumer that their product was on hold; and excessive duty charges. In some cases, as one company noted, the taxes end up being more expensive than the item being bought!

Clearly, any initiative to ease exports to other countries would benefit these small American companies; unfortunately, Congress’s power in this area is limited. In an effort to help expand trade, 10 U.S. Senators recently sent a letter to Canada’s ambassador to the United States, encouraging Canada to raise that $20 limit to something more reasonable and more in line with the US level.

While these small steps are a good start. But to achieve real reform – namely that many of our largest trade partners reform their policies and open their markets to U.S. sellers – we need something bigger. The best reform would be full-fledged trade agreements like the proposed Trans Pacific Partnership. Currently being negotiated by the U.S. Trade Representative, this agreement would give U.S. businesses greater access to 11 countries around the Pacific Rim. But given the complexity of these ongoing negotiations, the U.S. Trade Representative’s office needs Congress to authorize what is called Trade Promotion Authority. Under this approach, Congress authorizes USTR to negotiate deals and reserves the right to an up-or-down vote only – meaning a deal can’t be torn apart by special or factional interests on the floor of the House or Senate. Unfortunately, many of those same special interests are trying to stop the process before it even gets started, and are lobbying members aggressively against granting Trade Promotion Authority.

Think about that for a moment: people in Washington are actively working to prevent small U.S. companies from reaching new customers around the globe. Thankfully, many Americans think those special interests are wrong, and are encouraging their legislators to support Trade Promotion Authority so that small American companies, including e-retailers, are able to grow their business – and create good jobs here at home.

 

As read on Inside Sources

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