BORDERFREE INC In Washington, a rare moment of bipartisan agreement is building in support of Trade Promotion Authority (TPA), a bill that would help to "fast track" trade agreements by granting them an up-or-down Congressional vote. On the long list of reasons that Congress should quickly approve TPA is the Customs Reauthorization bill and specifically its amendment concerning the Harmonized Tariff Schedule (HTS) 9801. The complex approach that this existing regulation currently takes to the re-importation of goods into our country is outdated, unfairly burdensome and creates unnecessary headwinds for our economic growth. It creates an uneven playing field that hurts online retailers at the exact moment we should be helping them to lead our economy into the future-and it should be amended.
Current customs regulation requires that importers who pay duty on items crossing our borders keep an extensive paper trail of records on those items, in case they need to reimport any that international consumers find to be defective, or the wrong size or color. Let's say a large retailer imports pants from China, paying duty on the import, then ships the pants to a consumer in Europe through a partner like Borderfree. The customer decides to return the pants to the U.S. retailer, and the retailer hopes to avoid repaying a duty on the pants when they reenter the country. It should be easy enough to avoid the second duty, but the burden of proof the retailer must show on the original paid duty is incredibly high-especially so for e-retailers, which are often missing the critical link back to the original importation.
The record-keeping burden creates a ripple effect, as the online retailer, which often sees repaying the duty upon reentry as the lesser of two evils, must either absorb the cost or pass on those additional duty charges to the consumer. These high costs of doing business create a disincentive for international consumers to place orders with U.S. e-retailers. The U.S. company then loses those customers, who click over to global competitors with less onerous duty policies.
Amending HTS 9801 to reduce this record-keeping burden on goods returned to the United States is critical to our retailers' ability to compete on the world stage. It will create clarity for companies and deliver confidence to international consumers, who will be more willing to place orders with the possibility of easy and inexpensive returns. Retailers who buy merchandise from distributors or through third parties' drop shipments will benefit from streamlined paperwork and import processes, creating faster inventory turnaround. In turn, the U.S. e-commerce industry-poised to source more customers abroad as international borders continue to blur-can capitalize on the faster turnaround and increased consumer growth opportunities with further expansion into those markets. The Peterson Institute for International Economics estimates the world economic growth opportunity from this policy change alone could be as high as $1 trillion.
As our economy continues to recover, we must give it the fuel it needs to engage with the rest of the world. This includes setting new, forward-looking policies that help our e-commerce companies to embrace international opportunities by removing such bureaucratic barriers . When the House of Representatives takes up TPA as planned next week, making customs clearance easier and faster for our international e-retailers is one of the many reasons they should pass the bill without delay.
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