This week, Hanne Melin, eBay Director of Global Public Policy, participated in a conference organized by the International Centre for Trade and Sustainable Development (ICTSD) and the Inter-American Development Bank (IDB) titled, “Regulatory coherence and the multilateral trade system: Lessons from RTAs and options to promote convergence”. The objective of the discussions was to analyze the role of trade agreements, particularly modern regional trade agreements (RTAs), in facilitating the various approaches to international regulatory cooperation and examine the tensions arising between RTAs and the multilateral trade system, and potentially amongst RTAs themselves. Hanne presented in a session specifically focused on cross-border externalities and stakeholder perspectives. She focused her remarks on the cost of distance as it relates to trade, externalities in this context affecting trade flows, and offered policy recommendations. 

eBay has conducted significant research examining how the online commerce platform model of trade has empowered micro, small and medium-sized enterprises (MSMEs) to reach international markets at unprecedented levels. Hanne pointed out that the distinguishing factor of this model is how it significantly reduces the negative effect of distance on trade. For example, using traditional trade data, we found that a 10% increase in distance leads to a drop of 18% in international transactions. In contrast, for transactions over the eBay marketplace the drop was six times lower (3%). This opens up long-distance commerce to the smallest enterprise. With regard to externalities, Hanne explained that trade agreements and common legal systems matter a great deal more to traditional trade than to platform-enabled trade. She noted however, that the closer-knit economic and political cooperation resulting from common market projects yield greater benefits for platform-enabled trade. We have found that EU membership increases cross border flows over eBay (almost seven times more) within the EU than it does offline. To accommodate how these MSMEs serve a global customer base, supportive regulatory and legal mechanisms need to offer concrete tools for retailers and consumers that are not bound to particular countries or country pairs. Hanne concluded by suggesting that the WTO take the lead in developing a non-national, optional legal instrument in the consumer rights / contract area, using the framework of European Commission’s (discarded) Common European Sales Law proposal as a starting point. 

This is extremely important to our customers as it would reduce friction for retailers in making cross-border sales and aid consumers in understanding their rights and obligations when making international purchases.