More small retailers in the United States are trying to market and sell their products to customers around the globe. But in the process, they’re sometimes facing the high-cost realities of international trade—like low duty-free limits and high customs bills.
Colleen Rast, a Montana-based retailer whose company Great Sky Gifts sells her products through eBay and other online marketplaces, recently got hit with a $150 customs bill after a boutique in New Zealand returned a shipment with $1,000 worth of merchandise. The customs bill was 40 percent of the original cost of what Rast paid for the goods.
“It ended up [being] almost not worth it,” Rast, who does about 25 percent of her sales internationally, told Reuters. “That’s the one thing that directly affects us right now, that we have to pay duties on our merchandise to get large shipments back."
Situations like Rast’s are increasingly common as more U.S. businesses try to grow an international customer base online. Many small exporters would like to see the U.S. government streamline its trade rules and increase duty-free limits to facilitate online international retail. They hope this will happen in two upcoming trade deals: the Transatlantic Trade and Investment Partnership (TTIP) between the U.S. and the European Union and the 12-nation Trans-Pacific Partnership between the U.S. and Asia.
For example, a recent Atlantic Council report (commissioned by FedEx) recommended that TTIP raise the duty-free limit for packages to $800—which would match the limits paid by air travelers—up from $200. It also recommended eliminating transatlantic tariffs and simplifying product-testing rules.
“As two highly-regulated, highly-competitive, and highly-integrated markets, it only makes sense the United States and European Union endeavor to remove some of the unnecessary barriers that still exist between them,” Garrett Workman, author of the study, said in a news release.
Easing the rules and fees on online retailers could help spur growth among U.S.-based online retailers who currently see international sales as too much of a burden. A recent Nielsen study for online payment provider PayPal found that international shopping will top $300 billion by 2018—nearly triple its 2013 level.
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