June 15, 2016
by Nando Cesarone, President, UPS Europe.
Almost three years ago, Will Green set out on a mission to fulfill his dream of bridging the gap between everyday people and ethically produced vegan shoes. His vision was to provide customers with the latest fashions at fair prices, all without hurting animals or people in the process. Will soon set up shop in London and located the best materials and factories to make his fashionable, yet ethical shoe designs come to life. From there, Wills London (formerly known as Wills Vegan Shoes) was born.
Will’s dream of bringing his high quality, affordable vegan shoes to the world quickly became a reality as his shoes gained international popularity. He now ships dozens of varieties of vegan shoes, belts and wallets to customers around the world.
For European small business owners like Will, doing international business can be a complicated and time-consuming endeavor, especially when shipments are going to non-EU countries like the United States.
Fortunately, the U.S. recently made a change in their trade rules that positively impacts the way entrepreneurs like Will will do business.
More Trade, Less Headaches
The recently implemented Trade Facilitation and Trade Enforcement Act is a law that helps businesses – even small ones – in Europe, Asia and the rest of the world tap into the robust U.S. market. The opportunity comes from a change regarding the threshold for de minimis—the maximum dollar value of imports that are exempt from customs duties.
Previously, goods sent into the U.S. that exceeded a $200 value were subject to customs duties and something that no business loves: headache-inducing paperwork. That threshold just jumped to $800.
While it may seem like a small change, the new de minimis threshold represents a significant step in making it easier to trade across borders.
Businesses in Europe are especially well-positioned to seize this opportunity. The economic relationship between the United States and the European Union is already one of the strongest in the world, with approximately $2.7 billion in trade being conducted every day.
Entrepreneurs on the Rise
Historically, many European small businesses have hesitated to take advantage of opportunities beyond EU borders. My company recently surveyed more than 10,000 small and medium sized businesses with fewer than 250 employees in Italy, Poland, France, Belgium, Germany, The Netherlands and the UK about exporting. We learned that smaller businesses are hesitant to export outside of Europe – largely because of the barriers posed by the onerous trade regulations and procedures. Customs and regulatory differences are the biggest obstacles to overcome.
With the new de minimis threshold, many pain points are relieved, giving small businesses the ability to get their products to the U.S. with more speed and efficiency.
But don’t just take it from me, take it from Will himself, who is already seeing a brighter future for his business.
Although Will was already selling his products in the U.S., the new de minimis increase makes it easier and more affordable for him to expand his customer base across the country. Will has always made a point of keeping his U.S. sales easy and convenient for customers. He does this by offering free shipping and returns to customers, regardless of where they live.
With many of his shipments falling below the de minimis cost threshold, Will estimates that he will save up to 10% on his exports to the United States; money that he plans to spend on a larger-scale marketing effort across the country.
“The de minimis threshold drops barriers that stood in the way of shipping to the U.S.,” said Will. “By taking away some restrictions to free trade, we are able to grow our U.S. business faster and easier than ever.”
The Road Ahead
Raising the de minimis is just the start. There is still more to be done to open trade lanes, modernize customs and break down regulatory barriers. At UPS, we believe trade agreements such as Transatlantic Trade and Investment Partnership (TTIP) have the potential to open up a world of opportunities for small and medium sized businesses in both the EU and the U.S.
If enacted, TTIP would eliminate tariffs, allow for the release of goods at the first point of arrival at the U.S. or EU, and enable importers and exporters to deal with a single customs authority. In two of the most heavily regulated economies in the world, TTIP can serve as a framework for the kind of long-term cooperative regulatory structure that not only opens markets, but brings an end to the conflicts, duplications and inefficiencies that have slowed trade and frustrated importers and exporters for decades.
Such agreements take time, but the EU has never been short on ambition nor have I ever been short on optimism, especially when it comes to connecting businesses to the world.
Nando Cesarone is President of UPS Europe. UPS is a member of the American Chamber of Commerce to the EU.
AmCham EU Trade