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Updated July 23, 2020
International Trade and E-commerce
Overview
China has the largest market (see Figure 1), with gross
U.S. retail e-commerce sales are forecasted to grow to $599
merchandise value of e-commerce sales expected to grow
billion in 2024, up 64% from $365 billion in 2019,
by 11.2% from 2019 to 2024, faster than the expected 6.6%
according to the research firm Statista. The U.S. share of
U.S. growth over the same time period. Different platforms
global retail e-sales is projected to decline from 10% to 9%
dominate each market. In 2019, Alibaba’s Taobao dwarfed
over the same time period. In 2018, 1.8 billion people
Amazon, with the former having gross merchandise
globally purchased goods online. The McKinsey Global
revenue of $538 billion, compared to Amazon’s $339
Institute estimates that e-commerce accounts for 12% of
billion. PayPal is the most widely accepted digital payment
global trade of physical goods, both business-to-business
method for North American sellers, with cross-border
(B2B) and business-to-consumer (B2C or retail) sales.
transactions accounting for 18% of its 2019 payments. In
Nevertheless, certain foreign trade policies, infrastructure
China, Alibaba’s Alipay is the preferred payment method.
inconsistencies, and the lack of globally enforceable rules
Although a higher portion of Chinese internet users
potentially hinder further e-commerce growth.
purchase online, 34% of U.S. online shoppers made cross-
border purchases, while only 7% of Chinese did.
E-commerce allows customers to research and purchase
goods without leaving their home or office, increasing
Potential Barriers to Growth
access and convenience. Through online sales, businesses
The U.S. Trade Representative’s annual National Trade
are able to scale efficiently and reach customers in new
Estimate Report on Foreign Trade Barriers highlights
markets both domestically and abroad, especially small and
various policy restrictions on e-commerce in other
mid-sized enterprises (SMEs). Some online purchases
countries. Trade barriers, poor infrastructure, and
replace what may have been traditional (e.g., in-store)
discriminatory trade practices to international e-commerce
purchases, while other purchases are new sales. One study
may occur at different points in the process, limiting
shows the U.S. B2B e-commerce market is one of the
businesses’ ability to sell or customers’ ability to purchase
largest and most mature, representing 12% of B2B global
online or receive goods. Because e-commerce in goods
sales in 2018. McKinsey estimates that global e-commerce
involves the online and offline worlds, trade barriers span
could add $1.3-$2.1 trillion in international trade by 2030,
both spheres. Examples include:
boosting trade in manufactured goods by 6%-10%.
Market Access: Investment restrictions in e-commerce
Figure 1. Global Revenue Forecast, 2020 ($ in billions)
website ownership, or limits on the ability for platforms to
operate, impede market access. Similarly, limits or
constraints on what goods a firm may sell or technical
regulations on how it must label specific products (e.g.,
medicines) may vary by jurisdiction.
Example: India prohibits foreign investment in business-to-
consumer (or “inventory-based”) e-commerce.
Localization: Impediments include requiring firms to have
a physical presence, local internet domain name, or local
representative in a country, and add costs to online selling
to customers abroad.
Example: Indonesia’s draft regulation would require online
merchants, platforms, and intermediaries to register with
the government. Algeria requires e-commerce operators to
register and use local data centers.
Source: Statista.com, July 13, 2020.
Data Localization: Restricting the flow of data beyond a
country's borders may limit what websites and platforms are
E-commerce platforms provide a way for SMEs to grow by
available, how they can operate, and also what goods and
reaching customers across the country and the world.
services, such as online payments or shipment tracking, can
Platforms offer online services to match shoppers to
be offered online. Consumer privacy rules may restrict how
suppliers, facilitate ordering, accept payments, and
e-commerce firms can process customer data, often limiting
coordinate the physical logistics and delivery of goods.
companies from sending the data across borders.
Many of these platforms and online marketplaces are
household names in the United States such as Amazon,
Example: China broadly restricts cross-border data transfer.
Facebook, eBay or Etsy; others specialize in niche markets.
The EU imposes extensive data protection requirements for
Competition from foreign platforms is growing.
all entities that process or offer goods or services online to
individuals in the EU. Draft e-commerce legislation in India
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International Trade and E-commerce
would require certain data be stored domestically and other
WTO members have agreed to a temporary moratorium on
data processed only in India.
customs duties on e-commerce since 1998. The WTO
Information Technology Agreement, with 54 WTO
E-payments: Limiting access to electronic payment
members including the United States, eliminates tariffs on
services, such as credit cards, restricts how buyers are able
many information technology products that underlie
to purchase and finance goods.
e-commerce.
Example: Turkey requires electronic payment services to
TFA. The TFA aims to reduce trade costs by streamlining,
store data in Turkey and India also imposes a domestic
modernizing, and speeding up customs processes for cross
storage mandate. U.S. firms selling in the South Korean
border trade. By increasing transparency and eliminating or
online market cannot accept payment through local Korean-
reducing inefficiencies at the border, the TFA facilitates
branded credit cards. Tunisians generally cannot open
and lowers the cost of cross border e-commerce.
foreign currency bank accounts, limiting access to online
purchases of U.S. products.
E-commerce Plurilateral. A group of more than 80 WTO
members are negotiating a plurilateral agreement on digital
Tariffs, Duties, and Digital Taxes: Tariffs or customs
trade, aiming to set new international trade rules. The
duties on international shipments, raise prices for customers
United States seeks a broad digital trade agreement to make
as do taxes on online purchases, though the latter may apply
the WTO moratorium permanent and address barriers and
to both domestic and foreign purchases. Some countries
discriminatory practices, such as data localization. Some
establish a de minimis level below which duties do not
parties propose addressing digital trade facilitation barriers
apply; Congress set the U.S. de minimis at $800.
(e.g., use of technology for customs documentation and
Example: Some countries, such as Brazil, set a low de
inspection) to further promote e-commerce, building on the
minimis, effectively broadening the scope of traded
TFA. Though developed and developing countries,
products subject to duties. France and several other
including China, are participating, some members, such as
countries have a proposed digital tax on intermediation and
India, have opted out. The parties aim to have a final draft
advertising services, including online marketplaces.
in 2020 but would need to overcome contentious issues.
COVID-19 and E-commerce
U.S. FTAs: Since the Singapore FTA in 2003, U.S. FTAs
have included an e-commerce chapter, containing
B2B and B2C e-commerce sales surged during the
provisions such as nondiscrimination, prohibition of
COVID-19 pandemic. Thirty-seven percent of U.S.
customs duties, transparency, and consumer protection, and
consumers stated they planned to increase online
have evolved to prohibit limits on cross-border data flows.
spending due to the virus. Over 90% surveyed said they
The United States-Mexico-Canada Agreement (USMCA)
were likely to buy grocery items online during lockdown.
contains a digital trade chapter that sets new rules and
In contrast, in 2019, 3% of total grocery sales were online.
advances U.S. objectives such as requiring privacy and
Overall, Amazon was the most popular U.S. online retail
consumer protection legal frameworks. USMCA chapters
website in March 2020 at the start of most lockdowns.
on customs administration and trade facilitation and on
cross border trade in services also address e-commerce. The
Trade Facilitation: Inefficient customs procedures or
2019 U.S.-Japan Digital Trade Agreement aligns with the
delayed clearance of goods, especially for express or
standards set in the USMCA and U.S. WTO proposal.
perishable deliveries, may deter buyers and sellers.
Congressional Interest
Shipments valued below a de minimis level may be eligible
As Congress considers addressing e-commerce, it may
for less stringent customs procedures. The newest
consider a number of issues, including the following:
multilateral trade agreement, the 2017 World Trade
Organization (WTO) Trade Facilitation Agreement (TFA),
What are U.S. priorities for the WTO plurilateral
aims to improve trade facilitation globally (see below).
negotiations that will address digital trade barriers? How
can the United States ensure the agreement sets high
Example: According to U.S. express delivery firms, China
standards when countries such as China seek a more
applies overly burdensome rules, such as inspections, for
limited agreement?
domestic package delivery. Argentina does not allow the
What are the implications of USMCA provisions on
use of electronically produced documents, hindering the
digital trade and e-commerce for the future of U.S. trade
customs processing of e-commerce delivery.
policy?
Trade Rules
Are countries complying with the obligations of the
Existing multilateral trade rules cover some issues related to
WTO TFA? Is the United States fulfilling its
e-commerce but are not comprehensive and are generally
commitments to trade assistance and capacity building
viewed as outdated. Some more recent free trade
for developing countries, as required in the agreement?
agreements (FTAs) include more robust e-commerce
How can the U.S. government best support SMEs
commitments, but are limited to a select number of
seeking to grow through e-commerce exports?
countries. There is no single set of global rules or
disciplines that govern many key e-commerce issues. For
Rachel F. Fefer, Analyst in International Trade and
example:
Finance
WTO. WTO rules include obligations on nondiscrimination
IF11194
and transparency that apply to e-commerce transactions.
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International Trade and E-commerce
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https://crsreports.congress.gov | IF11194 · VERSION 3 · UPDATED