By Megan Doyle
To address these e-commerce growing pains, the WCO issued its Cross-Border E-Commerce Framework of Standards in July 2018. The framework aims to expedite cross-border e-commerce in a way that meets the diverse perspectives of all stakeholders in the global e-commerce supply chain, all while maintaining safe, secure, and efficient practices.1
The unprecedented growth of cross-border e-commerce has surpassed the development and implementation of relevant trade standards and laws. In order to keep up with the large number of time-sensitive small packages being shipped daily, customs workers often face a dilemma: impede the flow of trade by delaying trucks to inspect thousands of small packages, or forgo lengthy inspections to stay on schedule but risk safety and security in the process.2
In addition to safety and security risks, inability to keep up with the influx of small parcels can make it difficult to collect relevant duties and taxes. What’s more, product descriptions can be inaccurate or incomplete since many small e-commerce packages don’t require formal entry documents.3
To address these issues, the WCO teamed up with experts from customs agencies, governments, civil society, and academia to develop its cross-border e-commerce standards. The framework is intended to help customs and other agencies enhance existing guidelines to meet the requirements of a fast-evolving trade environment. Specifically, the WCO focuses on using transformative modern technologies to mitigate risks, accurately collect duties and taxes, and keep cross-border e-commerce trade as efficient as possible. The WCO also recommends all stakeholders form strong global partnerships to ensure effective international collaboration and standards implementation without sacrificing safety or speed.4
Many customs agencies are struggling to keep up with cross-border e-commerce security standards and regulations because of pressure to quickly clear time-sensitive shipments.5 Without detailed information about packages, agencies are less likely to be able to target suspicious shipments. According to the WCO, “the key to the effective and efficient management of cross-border e-commerce is the use of timely and accurate information, ideally from its source, to allow the early risk assessment and clearance of legitimate transactions in an automated environment with the minimum need for physical interventions.”6
Thus, the WCO suggests stakeholders take advantage of the data-rich e-commerce environment. This data can be analyzed and exchanged between parties along the e-commerce supply chain to efficiently share information and promote risk management.
Further complicating cross-border e-commerce trade is the fact that many customs and government agencies around the world have different ideas of what constitutes a high-risk shipment. The WCO recommends relevant administrations work together to determine a harmonized definition of what types of shipments pose safety, security, or other illicit threats.7
The large numbers of relatively low-value and small parcels can make it difficult for customs to accurately collect duties and taxes. What’s more, for many countries, even if a truckload of thousands of individual small parcels is well over the de minimis threshold (the point at which goods can be shipped into a country without incurring duties and taxes), payment isn’t required since each discrete item is below the minimum.
In response, the WCO’s framework recommends customs administrations work closely with tax authorities to identify effective alternative tax and duty collection procedures. The WCO also suggests government agencies carefully review or adjust de minimis thresholds in order to combat misuse or abuse of de minimis value.8
Increasing consumer demand for faster shipping led to secure clearance of time-sensitive goods becoming a major component of the WCO’s cross-border e-commerce standards. The WCO recommends customs administrations use modern, efficient solutions in order to meet consumers’ and government expectations in terms of speed and security. For example, the WCO suggests using non-intrusive inspection (NII) technologies and data analytics solutions to screen shipments without having to open thousands of packages a day. In addition, simplified clearance procedures that utilize pre-arrival processing and risk-assessment techniques could further help agencies quickly release low-risk shipments.9
According to the WCO, it is imperative that all e-commerce stakeholders work together to develop solutions that will improve cross-border trade for all.10 This way, administrations can effectively implement standards while taking each other’s national priorities and internal procedures into consideration.11 Customs agencies, in particular, are expected to play a major role in the cross-border management of e-commerce due to their unique roles as gatekeepers of goods going into and out of a country.
Going forward, the WCO says its cross-border e-commerce standards will be supplemented with technical specifications, implementation strategies, and other mechanisms to support a safe, secure, and fast globally harmonized cross-border e-commerce landscape.12
For SMEs and other participants in the industry, some experts predict sellers will be required to provide more shipping information to enhance safety and help governments collect duties when necessary. Otherwise, to further expedite cross-border e-commerce, carriers and logistics service providers may end up required to help enforce laws and collect taxes on the behalf of customs agencies.13
New buying patterns and trade models, improved shipping, and more efficient payment options have made it easy for anyone to engage in cross-border transactions, but unprecedented growth in this fast-evolving environment requires equally innovative global standards and guidelines. The WCO’s Cross-Border E-Commerce Framework of Standards intends to help the industry collaboratively adopt innovative solutions from a perspective that enforces policies without sacrificing speed.
Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.
1. WCO Cross-Border E-Commerce Framework of Standards, World Customs Organization; http://www.wcoomd.org/-/media/wco/public/global/pdf/topics/facilitation/activities-and-programmes/ecommerce/wco-framework-of-standards-on-crossborder-ecommerce_en.pdf?la=en
2. “Flood of cross-border e-commerce packages challenges customs authorities to keep up, ensure security,” DC Velocity; https://www.dcvelocity.com/articles/20180416-flood-of-cross-border-e-commerce-packages-challenges-customs-authorities-to-keep-up-ensure-security/
4. “WCO publishes global standards on e-commerce,” World Customs Organization; http://www.wcoomd.org/en/media/newsroom/2018/july/wco-publishes-global-standards-on-ecommerce.aspx
5. “Flood of cross-border e-commerce packages challenges customs authorities to keep up, ensure security,” DC Velocity; https://www.dcvelocity.com/articles/20180416-flood-of-cross-border-e-commerce-packages-challenges-customs-authorities-to-keep-up-ensure-security/
6. WCO Cross-Border E-Commerce Framework of Standards, World Customs Organization; http://www.wcoomd.org/-/media/wco/public/global/pdf/topics/facilitation/activities-and-programmes/ecommerce/wco-framework-of-standards-on-crossborder-ecommerce_en.pdf?la=en
11. “WCO publishes global standards on e-commerce,” World Customs Organization; http://www.wcoomd.org/en/media/newsroom/2018/july/wco-publishes-global-standards-on-ecommerce.aspx
13. “Curse of the Internet: E-commerce creates new challenges for customs,” DC Velocity; https://www.dcvelocity.com/articles/20180808-curse-of-the-internet--e-commerce-creates-new-challenges-for-customs/