This article originally appeared on BIPAC's blog. Written by BIPAC Political Analyst Jim Ellis.
Andrea Stairs, Managing Director of eBay Canada, testified before the Canadian House of Commons Standing Committee on Government Operations during a budget consultation hearing on October 31.
Last week, Representative Barbara Comstock (R-VA/10) hosted two eBay sellers – Chris Hansen (C2 Management) and Jeff Bollettino (Metro DC Music) – at her district office for a roundtable policy discussion on Internet sales tax (IST). Since Congress may address the IST issue before the end of the year, it is critical that Members of Congress hear from their constituents about the negative implications of the proposals under consideration.
Globalization has no doubt resulted in tremendous economic benefit for the world, but there is an underlying tension that not everyone has fully benefited from the integration of the global economy. This tension is magnified in the US where some feel that globalization only helps large companies and harms local small and medium sized businesses [SMB]. Traditionally, large businesses have been able to take advantage of having access to the world’s customers because of the tremendous capital investments and infrastructure required to directly engage in global commerce. Technology is changing all of this.
Small businesses, for the first time in history, are utilizing the Internet and the services built on top of the Internet to go beyond their local consumer base and reach out to the world. These micro-multinationals are able to compete in the global market, while maintaining a local physical presence. The economic and social benefits that are being created as a result of this new trend are astounding.
Technology, particularly the Internet, is causing a significant shift in the way that international trade is conducted. Working with external economists, our team at eBay Inc. has spent the last four years researching this phenomenon.
Our research has uncovered a new segment of traders that is significantly different from traditional traders. The Internet and technology-based services are enabling these businesses, typically small businesses that we will call Technology-Enabled Small Businesses, to directly reach consumers in many global markets, without large scale physical operations or necessarily integrating into larger supply chains. The Internet provides instant access to over 2.6 billion people around the world; the services that sit on top of the Internet allow for low cost development, marketing, and financial services; and global logistics providers enable delivery of physical products directly to consumers in any country. These developments are transforming the face of the global trading regime.
This white paper will describe the tremendous shift that technology is causing in the international arena by focusing in on Canadian small business entrepreneurs that are using eBay Marketplaces to expand their businesses globally. This article also discusses the unique trade issues those entrepreneurs face. The economic analysis of eBay data was conducted in collaboration with economists Simon Schropp and Andreas Lendle of Sidley Austin LLP. The research findings are complemented with an assessment of the macro and micro-level trade policy implications.