The Opportunity

  • Thanks to the Internet, small and micro-businesses have more access to global markets than ever. Google founder Eric Schmidt estimates that the entire world population (7 billion people) will be online by 2020, just five years from now.
  • This will mean billions more people shopping online, creating a huge opportunity for small- and micro-businesses, and for the world economy.
  • There is no reason why large corporations offering cheap, mass-produced products should be the only ones to benefit from this massive opportunity.
  • Trade agreements could reduce the export barriers small businesses face, creating opportunities for makers to expand globally, create jobs, and make the world a better place by increasing market share of products that represent universal human ideals: e.g. creativity, joy, freedom of expression, quality, human rights, environmental name a few. 

The Problem

  • Exporting overseas is extremely challenging for small- and medium-sized business owners. Their goods are often subjected to restrictive import rules, get stuck at the border, or incur unexpected fees. Many small business owners are too time- or resource-constrained to navigate these challenges. 
  • While some countries have taken steps to reduce trade barriers, many have high tariffs (over 100% on some products!) that shut small businesses out.  Some countries are also considering protectionist e-commerce laws that would require companies trading in their countries to have physical servers on the ground -- a non-starter for small businesses.
  • Critics of trade agreements fail to consider the opportunities they could create for small business owners who have more access to global markets than ever, but still face outdated laws that prevent them from exporting their goods.

The Solution

  • Above all else, small businesses would benefit from every country raising their de minimis customs exemptions. That’s the value under which imported goods are not subject to customs or duties.  So for example, the US de minimis customs exemption is currently $200, which means any item shipped into the US under $200 isn’t subject to customs or duties.
  • Some countries have high de minimis exemptions, like Australia (~$1000), while others like Canada and the United Kingdom have very low ones (~$20). For small businesses, that means it’s much easier to export to Australia than Canada or the UK.
  • The best possible outcome for small businesses would be for all countries to increase and harmonize their de minimis thresholds, eliminating many of the challenges small businesses face shipping goods across borders. 
  • Trade agreements offer a great opportunity to accomplish that goal. Congress is debating several bills related to trade, including something called Trade Promotion Authority, or TPA, which authorizes the Obama Administration to negotiate trade agreements, and the Trade Facilitation and Trade Enforcement Act, which takes steps to reduce bureaucracy at the US border, setting a strong example for our trading partners.
  • Given what a hot issue this is (the trade bills are being negotiated in April), there’s  an opportunity to encourage lawmakers to prioritize small business issues when negotiating these larger trade agreements.
  • Trade agreements are not the only thing we need to seize the opportunities of the global market. Far from it.  We also need: lower international shipping costs, better global market data, and removal of logistical hurdles to export.  However, this is an important starting point and a highly visible opportunity to make the views of consumers and small and medium-sized business owners heard.