Friday, March 14, 2008

The impact of customs procedures

The paper ‘The impact of customs procedures on business to consumer e-commerce in food products ’ is done by Boyd L. S., Hobbs E. J. and Kerr A. W., from Saskatoon, Canada.

To the authors, this paper aims is to :
Showed the potential benefits of e-commerce
discusses barriers to the expansion of international e-commerce , and also
to demonstrates the need of new trade policies.

In this paper, the authors realized that trade in the 21st century will be driven by e-commerce. E-commerce or electronic commerce to the authors are define as a marketing and distribution of products via telecommunications devices (internet). However, the authors found that there are many barriers to the expansioan of international e-commerce ( included customs fees), and due to this, researcher has used the comparisons of customs fees for regular and e-commerce sized shipment of four food products from Canada to the USA as the methodology. Lastly, researcher also found the need of new trade policies.

These is what the researchers has been discuss and found . It is can be separated to :
· E-commerce
· The barriers to expansion of international e-commerce
· Why we need the new trade policies

According to the researchers, e-commerce is changing the way business transactions occur . Due to that, researchers also found that e-commerce technologies provide the basis for allowing acces to global markets for both consumers and firms.

Other than that, by this e-commerce technologies researcher also found that by e-commerce :
· Product delivery become easy
· in term of ordering and paying for products by online is convenient
· Businesses can accessing a broader range without extra cost (reduce marketing cost)
· It create the closer supply chain relationship between producers and consumers
· Customer service will be better through the efficiency of information flow , and also
· More timely matching of product characteristics with consumer requirements.
So, due to the research appears that e-commerce could be the key to unlocking and expanding international business.
The barriers to expansion of international e-commerce
By past research, the authors has identified , generally the global percentage of businesses selling products internationally using online system are very small. This contrary to the benefits of e-commerce.

Due to that, what is impeding the development of e-commerce into international market has become a question mark to the researcher and by the research, they found that :
Different languages
Different currencies, and
Customs procedures and fees
have direct implications for international e-business marketing channel.

Different languages
Even though e-commerce has an advantage over conventional systems, but a transaction cannot occur if the language uses among customer and Web site , are not compatible. However by e-commerce , it is more easier and less costly to design a Web site to include many different language rather than to label products in several languages.

Different currencies
The researcher also found that different currencies can also present obstacles for international e-business marketing channel . Different currencies can effect the number and profitability of firm’s international orders . Researcher also identified that fees must be paid when currency is exchange; and these fees usually have a fixed cost and are reflected in the transactions charges they impose on firms.

Customs procedures and inspections fees
Based on research, researcher found that customs procedures and fees have direct implications for e-commerce. Customs procedures and inspections fees that researcher has been identified as like a:
National import regulations;
There are complex legalities affecting consumers when ordering items online from foreign companies. Meaning that, consumer are accountable and responsible in order to fulfill national import regulations of country they occupy. If not, they can incur the fines and penalties .
Approval licenses (AP);
Some items require a license before importation (called as AP) can take place. In fact, researcher also found that obtaining licenses and permit can represent a considerable transaction cost for individual consumers.

Fees or customs duties;
Lastly, researcher found that the fees that incurred in getting products across national borders is the foremost barrier to online sales into other countries. Mean while, in international trade law, since e-commerce allows consumers to order products internationally, the products must be subjected to full customs duties, and these duties are based on volume of shipping, value of shipments and some cases, special requirements. However, the current customs systems is designed to accommodate these system, where as fee calculation and inspection processes are geared toward large lots but with the emergence of e-commerce, researcher found that the customs and inspection system cannot readily accommodate small package.

Moreover, in order to showed that the lack of international sales , in many cases, was due to customs complications, researcher has make a detailed survey and has found that even though in theory, e-commerce should enable consumers to purchases a multitude of products from anywhere in the world over the internet and have them delivery directly, but the fact is , in the e-commerce case the customs and inspections fees are approximately ten times larger than the product’s value. That’s why new trade policies needed.

New Trade Policies
Based on literature review that has been done by research, they also found that there is no agreement stated that customs duties would be addressed. This lack of an aggrement is a factor preventing the expansion of e-commerce into international markets. Means that, without an agreement , customs fees remain geared towards large shipments and are based on a flat rate per shipment. It’s also means that customs procedures , while not totally ignored in trade negotiations, have received only scant attention.
Due to literature review, researcher clarified that the trade policies need to changed , because the changes would be advantageous for developed as well as developing countries. Developed countries would see further penetration of e-commerce into existing markets, bringing lower prices and more choice to consumers, as well as greater access to potentially lucrative export markets for suppliers.

As a reader , I’m agreed with the authors. I’m agreed that e-commerce could have lasting beneficial effects in terms of economic growth. In fact, to fully maximize the benefits from e-commerce, access must be available at a worldwide level, and in order to reach this level, trade policies will have to undergo revisions , even though there are most barriers to the expand of international e-commerce, and we know that the foremost barrier is the costoms and inspections fees. But with appropriate revisions to trade policies , customs fees will reflect the realities of international e-commerce.

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