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Countries have argued for years about the wisdom of raising the monetary value of low-value imported goods for duty-free treatment. These are the kinds of products that consumers individually buy via e-commerce. These arguments are about to be turned up a notch.
The reason is that more and more consumers around the world are buying these kinds of items and getting them shipped to their home or business addresses. According to a study sponsored by FedEx, 84 percent of respondents reported making an online purchase from a seller in a foreign country. The folks were selected because they live in urban areas and have a telephone to be bothered by interviewers.
Think about this for a moment. Eighty-four percent of the survey sample which included about 9000 people from every major region in the world. That's huge, even accounting for whatever limitations there might be in the study's methodology. The borderless world has arrived, at least as far as shopping is concerned. (Disclosure: Your WPG blogger has never made a cross border e-commerce purchase. But then he hasn't made many e-commerce purchases of any kind and felt inadequate when learning that his 85-year-old neighbor makes such purchases nearly every day, waiting impatiently for the sound of the mail truck in his driveway.)
The FedEx study found, not surprisingly, that shoppers would buy more if they didn't have to pay import duties on cross-border purchases. That’s the case now in the EU and between other countries that have free trade agreements, which doesn't mean there's free stuff to be had but that the stuff is duty free. Duties average around five percent of the purchase price plus freight but can go considerably higher depending on the product and the destination country.
The study concluded that worldwide 26 percent of consumers would buy more if the duty was free. Latin Americans would seek a shopper's high with 91 percent saying they'd buy more.
Let's pause for a learnable moment. If I were looking to target regions of the world with an e-commerce strategy, I'd start with Latin America. I’d also flag Canada, 90 percent of whose shoppers reported making a cross-border e-commerce purchase last year. Just say ‘in.
How likely is it that countries will give up duty revenue on what we've just pointed out is a growing source of it? Before now it was as likely as decreeing a permanent sales tax holiday. But the thinking may be changing.
Delivering the goods sooner than later
One factor is these one-off purchases of low-value items have hidden costs like paper work generation by the seller and processing at the borders. You'd need fewer customs officers and less computer storage if these packages could whiz through. It would also address another consumer pain point which is slow delivery time. If you buy that bauble from Bangladesh, you want it sooner than later.
The U.S. seems ready to lead the way in hiking the dollar value of duty-free goods. Currently, the limit is $200, with legislation pending in the Senate that would increase the amount to $800. What are the chances of passing? Good, even after languishing for more than a year in committee. Suddenly, the bill has gathered that magic mojo known in Washington, D.C. as “bi-partisan support.” Naturally, the big logistics companies are lobbying heavily, as are the e-commerce platforms.
The legislation also directs the U.S. Trade Representative, the lead agency negotiating trade agreements, to persuade trading partners to raise their limits, if not to the $800 limit then perhaps progressively getting there over time.
If you believe as we do that raising these de minimus limits is a good thing, drop a note to your elected representative.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| HMK1715 NTN | 17 | 24 | 15 |
| BK1712 NTN | 17 | 23 | 12 |