The importance of SMEs and access to e-commerce in the global supply chain
- News Feed
- Monday, 18 December 2017
EVEN as the world’s attention is drawn to events including the Eleventh WTO Ministerial Conference (MC11) in Buenos Aires, Argentina and the announcement of a proposed free trade agreement (FTA) between the EU and Japan, there also is growing acceptance of the importance of small and medium enterprises (SMEs) globally.
It is generally accepted that large companies secure the most significant benefits from trade, even though SMEs represent the largest proportion of businesses in the economy and are often described as the real contributors to growth and innovation. This is especially the case in our region, where there are specific initiatives that could advance the interests of the SMEs in the supply chain.
And given the lack of resources and expertise readily available to SMEs, there is a real need for government (at its various levels) to provide assistance.
The importance can be seen by the inclusion of Chapters supporting SMEs in recent FTAs. Certain government initiatives do provide support in Australia, where we have a Federal minister for small business with a specific remit to advance their interests. There has also been legislated recognition of the ‘exposed’ position of SMEs (such as Competition legislation making certain terms and conditions unacceptable).
Possibly the best global example of comprehensive government support for SMEs is in the United States Small Business Administration (www.sba.gov), which represents a significant investment by the US government to support SMEs including provision of funding, local assistance, technical advice and mentoring by others. Of particular importance is the advocacy role of the SBA, which has ensured the interests of small business impact and influence government policy.
The need to facilitate the interests of SMEs featured strongly in presentations I delivered on behalf of the Food and Beverage Importers Association (FBIA).
In them, we called for the creation of specific mechanisms for SMEs to resolve disputes with each other and with government through the adoption of alternative (or appropriate) dispute resolution mechanisms.
More recently, there have been calls for the New Zealand government to establish an Institute for Small Business to advance the interests of SMEs.
I am also a member of the board of directors of the Export Council of Australia (ECA) with specific obligations in relation to trade policy. In previous years, we have developed and published trade policy recommendations, many of which have been incorporated into the wider trade agenda. This year, our focus returns to SMEs and we are developing a number of recommendations specifically aimed at advancing their interests. That will cover such issues as access to finance, access to e-commerce solutions, advocacy, access to infrastructure, business mentoring and an overdue review of the paperwork and costs imposed on SMEs, which seem to bear a disproportionate cost for the services they require in the supply chain.
The disadvantaged position of SMEs is highlighted in the current industrial action at Melbourne ports, where SMEs struggle to exercise rights to secure goods even though they pay the same high fees as others in the supply chain.
E-commerce access
One of the key resources for SMEs is the use of e-commerce in business. Again, most FTAs have chapters on trade facilitation or e-commerce which emphasise the importance of these issues and the ability to access them to facilitate trade. The importance of e-commerce has been recognised elsewhere, including the WCO Revised Kyoto Convention, the WCO Agreement on Trade Facilitation, the WCO SAFE Framework of Standards, Annexes 9 and 17 of the ICAO Chicago Convention, the UPU Convention (specifically Article 8), Security Standards 58 and 59 and other relevant international standards. These set a significant framework as to the importance and nature of e-commerce, ranging from local agencies through national agencies through to international agencies including the WCO and WTO.
In consideration of the importance, the WCO Policy Commission has recently initiated and arranged the adoption of the Luxor Resolution on cross-border e-commerce and for which a communique has been by issued by the WCO to the WTO MC11, emphasising the development of an e-commerce framework of standards and associated operational and implementation plans to support the development of cross-border e-commerce.
The Resolution referred to in the communique includes eight critical aspects such as advanced electronic data and risk management, facilitation and simplification, safety and security, revenue collection, measurement analysis, partnerships, public awareness, outreach and capacity building and legislative frameworks. While at the time of writing, the MC11 is still being conducted, the work of adoption of e-commerce into a ‘trade modernisation’ agenda continues around the world pursuant to the WTO Trade Facilitation Agreement and associated national committees on trade facilitation (NCTF).
It has recently been recognised here with the creation of a Trade Modernisation Sub-Committee within our NCTF which will address such issues as the creation of a single-window, streamlining cargo reporting and the increased use of the Australian Trusted Trader Program and its recognition in other countries (including the recent Mutual Recognition Agreement with China).
Legal support
However, there remains a need for SMEs to recognise the importance of securing appropriate legal support.
In many ways, this is often more important for SMEs, given their lack of expertise in business and lack of exposure to the law relating to their trade or the laws in other countries.
Some of the areas where legal services are important include:
• Undertaking due diligence of trading partners to establish their credibility and their financial situation.
• Ensuring compliance with regulatory requirements of border agencies in Australia and overseas markets to ensure that goods are conveyed properly, without undue interruption and without attracting penalties or other actions by local or overseas agencies.
• Contracts that are appropriate to the business and the parties to that business being undertaken.
• Ensuring intellectual property is protected both locally and overseas.
• Ensuring that interests in respect of goods sent overseas are appropriately recognised and registered under the personal property securities regime (or equivalent provisions overseas).
• Ensuring that contracts or trading terms and conditions include specific and appropriate dispute resolution clauses allowing for alternative means of resolutions of disputes without litigation in the courts.
• Engagement with industry associations representing goods and services being traded to learn from the experiences of other traders and to benefit from the advocacy of such associations.
As a member of directors of both the ECA and the FBIA, I can assure you that the interests of SMEs are top of mind.
Not only do they dictate the Policy we issue, they also underline much of our advocacy towards government. I am fortunate that RCL also places significant importance on those issues and a number of my partners assist me in this area including Julia Cameron and Ian Rosenfeld.
As always, if pain persists, please contact your lawyer.
Note: This article was written before the developments at the WTO MC11 which included initiatives to support Micro, Small and Medium - Sized Enterprises (MSME) and future negotiations on e - commerce.