Analysis

GUEST COMMENT The Electronic World Trade Platform – is ecommerce without borders a good idea?

As the CEO of a global ecommerce platform that shipped 3.6m items in 2015 to over 180 countries, I have experienced up close the benefits, but also the pitfalls that can come from trading internationally. Recent calls for a global platform that aims to make trading across borders easier are, therefore, music to my ears. But what is the Electronic World Trade Platform (eWTP)? And is ecommerce without borders really likely to happen in the current climate?

The concept of an eWTP is the latest open-border initiative being discussed in ecommerce circles. It was introduced by Jack Ma (founder of Alibaba) at the Boao Forum, in March 2016. In Ma’s vision, businesses would create hubs for ecommerce and governments would create virtual free trade zones for SMEs. The eWTP would essentially allow businesses in one country to sell to consumers in another, with low or no import duties, speedy customs clearances and better access to logistics making trading easier for internet retailers, in particular, SMEs looking to scale-up.

The eWTP idea also comes at an interesting time for online retailers in the UK. The outcome of the referendum last June, and the current uncertainty surrounding access to the single market post-Brexit, means the introduction of an eWTP would, in theory, minimise the trading issues that leaving the EU might bring about. A global trading platform would make it easier for companies to continue doing business as usual and for them to expand internationally.

So for a free trade Friedrich Hayek economist and open border idealist like me, the eWTP sounds like a brilliant idea. After all, my vision of a perfect world would be one with no borders for goods or skills and no barriers for people. That a product or person is defined and restricted to its point of creation is frankly a ridiculous idea. So what’s not to like? We should be looking to help the little guy deal with border issues, open choice for consumers and bring countries closer together. Correct? Yes, but as with everything, there is a catch.

The good, the bad and the ugly
My many years in business have taught me that everything has a Newtonian tax. That is to say, there is always an equal and opposite reaction. If you or your goods can get out, others and their goods can get in. This can be good, it is an open border after all, but it can also be bad and ugly. Herein lies the problem for the eWTP. Products coming into a local market can raise competition, but also tension. And there is always the possibility that poor quality, sub-standard products, counterfeits, or goods made by people paid very low wages, can also enter the market.

Added to this, we are living in an age where populism sells in both media and politics. The current climate means open border initiatives are doomed to failure by the same negativity and issues that hamper most free trade or movement agreements. It is the same sentiment that has seen the Brexit vote and the election of President Trump. The eWTP is, therefore, likely to walk straight into the same political hype and negative news coverage that most other open border agreements proposed before have suffered from. You only have to look at the UK news coverage on Europe to see that bad and ugly sells faster than good news. There will be groups and businesses motivated to push the bad news agenda, because while not all bad, there will be genuine issues that do negatively impact certain groups.

The weather effect
Then there is what is known at Spreadshirt, as the weather effect. While there might be good, or even great news about open borders, it might not necessarily be seen. For example, we sell T-shirts and when the weather is bad we quickly blame the weather for slow sales, but when the weather is better and our sales go up we feel it is down to our hard work and strategies driving business. Nobody mentions the weather. The same is true of trade agreements. They often get the bad press, but economic and social uplifts are only credited to local political or social changes, very often forgetting the benefits that any such trade agreements might have had in turning things around. This is what is currently happening with the EU, NAFTA, and TTIP, and unfortunately, the eWTP is likely to become just another great idea that might not survive the current climate.

I truly do believe that ecommerce without borders is a good idea, but I suspect there are currently forces more motivated to prevent it than working to make it happen. Bad press and populist movements mean that localised deals are hard enough at the moment, and fighting for a truly global open border deal, is still, sadly, a generation or two away.

Philip Rooke is chief executive of Spreadshirt [IRDX RSRD]. Follow him on Twitter at @PhilipRooke.

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