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A SMALL BUSINESS SURGE IN DIGITAL TRADE

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Archives, Global Logistics, Global Trade Daily

A SMALL BUSINESS SURGE IN DIGITAL TRADE

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Global entrepreneurs are going online. Here’s how governments can help.

With many storefronts and offices around the world shuttered by the COVID-19 pandemic, small business owners are adopting new digital strategies and tools to keep their businesses alive.

“It’s a real challenge as companies and clients cannot buy physically from us,” observes Sasibai Kimis, Founder and CEO of Earth Heir, a Malaysian ethical lifestyle brand, which sells handcrafted heritage pieces made by women, refugees and indigenous people. She added that, “a lot of events have been canceled, including speaking engagements.”

Although the Earth Heir team can no longer build revenue and relationships from their studio, a shift to creative, online strategies is helping fill the gap. “We are focusing a lot more on increasing our digital marketing and social media reach.”

As businesses such as Earth Heir increasingly adopt a life online, governments have a critical role in enabling a robust e-commerce ecosystem that allows small businesses to keep their businesses running, their employees connected and their customers engaged. The right set of digital trade policies will be the key.

Digital lifelines for small business

Economic shutdowns have exponentially increased the need for online marketing, communication and team-building. Small businesses are using digital tools to update the public about changes in business, maintain relationships and communicate to customers how they can continue providing support.

The Elly Store, a boutique children’s bricks-and-clicks business in Singapore, experienced a significant spike in online sales immediately after the country ordered a shutdown of all non-essential businesses. Although online businesses are permitted to continue operations, founder Audrey Ng decided to stop all deliveries until the workplace measures are lifted.

While shipments are on pause, the team’s concentration is on website improvements, digital marketing and connecting with customers. “We are continuing with regular social media posts and using the month for people to get to know our wide range of products again,” said Audrey. “We have also designed marketing campaigns for when we re-open based on what we think people will be looking to buy” when they begin venturing out.

Small businesses are also using digital channels and strategies to stay connected to their own employees.

SHE Investments, a social enterprise delivering business development programs for women in Cambodia, has introduced an array of new technology tools to keep their team connected and productive. This includes Microsoft Teams for working remotely; Zoom for team meetings, webinars and online classes; and Clockify for team time sheets.

“We are using tools to create video tutorials on our laptops to help our team and our participants to learn [how to work from home],” said Celia Boyd, the Managing Director of SHE Investments.

Earth Heir shopping site

Image: Earthheir.com e-commerce site

How digital trade policies can help

Public policy can help businesses like SHE Investments, Earth Heir and the Elly Store by facilitating the flow of digital trade.

For example, Earth Heir’s digital strategy relies fundamentally on access to global services and data flows. Sasi and her team utilize social media platforms like Instagram to spread the word about the face masks they are making, YouTube videos to spotlight their refugee artisans, WhatsApp to communicate internally (and with us), payment and express delivery services to ship out their products, and Google Forms and PayPal to enable donations of PPE.

As the World Trade Organization (WTO) engages in an exercise to write new rules aimed at facilitating the use of e-commerce, stakeholders have the opportunity to emphasize the importance of clarity and improvements to the existing framework of trade rules and commitments.

Successful efforts by governments would empower businesses to sell their own products and services internationally using global online platforms, payments, communication tools and other e-commerce channels, and to improve the ability of businesses of all sizes to benefit from digital technologies.

Recognizing the particular opportunities and challenges faced by developing countries, WTO members should explore mechanisms to maximize the ability of developing countries to implement high-quality digital trade and e-commerce commitments.

Small businesses adjust to a post-pandemic world

Emerging technology startups are also stepping up to help other businesses combat the hardships presented by the COVID-19 crisis and adapt to the digital world.

Based in Nigeria, Transboxx Technologies utilizes a large network of software engineers to create digital platforms, from web portals to online payment platforms, for businesses throughout Africa.

“Many [businesses] recognize the need for digitized systems, but they don’t know how to build out their technologies,” says co-founder Obinna Ekezie. “We can create platforms that allow them to quickly automate, streamline and electronically improve their operations.”

Some companies are pivoting their focus during the pandemic. ArtGirlRising, a t-shirt business based in Malaysia with a mission to raise awareness of the under-representation of female artists through cause marketing, has transitioned from a sales focus to prioritizing community building.

The founder of ArtGirlRising, Liezel Strauss, said that the team launched paid, online classes using Zoom. The classes are “presented by industry leaders, for artists to help them move their art practice online through tips on social media, the business side of art, community building and homeschooling tips.”

Caribu, a Florida-based interactive video-calling app, is seeing demand for their services grow from individuals and families trying to cope with this new reality. To help bridge the gap created by social distancing, the business is offering free access and unlimited usage of the service.

“Kids are feeling the effects of the outbreak, but don’t always understand why grandma can’t come to visit, why the special family spring break trip may have been canceled, or why they’re out of school for weeks,” said Caribu CEO and Co-Founder Max Tuchman.

Dorsu

Image: Dorsu.org / Dorsu has suspected retail sales, selling only online, and is now making masks for wholesale orders to keep their workers employed.

Other businesses are witnessing unprecedented demands and are stepping up to fill the gap. Ordinarily, Dorsu, a Cambodia-based ethical clothing brand, crafts men’s and women’s apparel. After witnessing the gap in the market, they shifted to include the production of masks that help protect the community and keep their team employed.

“We’re servicing existing wholesale clients where possible and have temporarily re-tooled to produce face masks,” explained Hanna Guy, Co-Founder and Director of Dorsu. The team is utilizing social platforms to promote the new items, sharing on Facebook, “As the story unfolds and we begin to see advice to wear masks while leaving the house (briefly) we’ve designed, tested and released fabric face masks that are reusable, washable, fit like a glove and above all – ensure comfort.”

Sasi, of Earth Heir, similarly pivoted her business to enable her network of refugee artisans to produce and distribute “Fair Trade Personal Protective Equipment” for use by Malaysian frontline medical personnel, social workers and others, in collaboration with the World Fair Trade Organization Asia.

What governments can do

For years, small businesses have relied on an ecosystem of digital tools to operate globally. More than ever, these businesses need the right policy framework to enable their ability to access digital productivity, payments, shipping and logistics, communications, marketing and e-commerce platforms and navigate the new normal of social distancing and physical closures.

With the right set of digital trade and e-commerce policies, governments have the opportunity to not only help more small businesses move online, but also support a new era of global digital entrepreneurs.

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Jake Colvin

Jake Colvin is the Executive Director and Jamaica Gayle is Deputy Director of the National Foreign Trade Council’s Global Innovation Forum.

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Archives, Global Trade Daily, Software

The World’s First Digital Trade Database to Increase Trade Data Visibility

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The world’s first digital trade database will soon be the product of a recently announced partnership between Coriolis Technologies and
Global Trade Professionals Alliance (GTPA). The goal of this new platform will help solve issues related to global trade visibility, risk assessment, and critical information on the growth and pace of international trade.

“We are delighted to be working with the GTPA to improve the availability of good quality trade data, through the development of a digital trade database,” added Dr. Rebecca Harding, CEO of Coriolis Technologies. “Collecting and collating data has historically proved difficult, and this problem has been further compounded by the growth in digital trade, which is far harder to track than the movement of physical goods. The Coriolis-GTPA database will allow trade originators to understand precisely where the risks and the opportunities are around the world in politics, in economics and in reputation.”

The innovative database will provide visibility into the flow of global goods, services and strategic trade for banks, governments and investment communities, ultimately enabling them for strategic decision making. The companies confirmed the database will provide insight for the
Asia-Pacific region during the first stage of development.

“The benefits of international trade are currently the subject of debate in various contexts, however, it has long been demonstrated that, even with its systemic imperfections which must be acknowledged, trade has been a powerful driver for economic value creation, inclusion and poverty reduction, as well as peace and security,” commented Lisa McAuley, CEO of Global Trade Professionals Alliance. “The GTPA is pleased to partner with Coriolis Technologies as trade and investment data collection is imperative to drive robust trade policy decisions, analysis on the implementation and success of Free Trade Agreements and more importantly data that can be used to communicate the role of trade in a countries best economic interests to the general public.”

Archives, Global Trade Daily, International Trade

The USMCA: State of Play on Internet Intermediary Liability

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Two important elements of U.S. law that protect internet intermediaries are reflected in the United States-Mexico-Canada Agreement (USMCA, signed November 30, 2018).  Under the first element, section 230 of the Communications Decency Act, online service providers are not considered “publishers” of third-party content that is posted or shared through their sites.  Under the second, the “safe harbor” provisions of the Digital Millennium Copyright Act, online service providers can take certain specified actions to protect themselves from monetary liability for copyright infringement arising from the actions of their users.  Because the USMCA reflects these principles and is likely to be used as a template for future trade agreements, it is reasonable to suppose that current U.S. law on intermediary liability is poised to make inroads around the world.

There will, however, be pushback, and it is possible that the agreement might be modified or that U.S. implementing legislation will introduce refinements.  Organizations dedicated to protecting potential victims of indecent online communication, for example, will seek to limit and/or clarify the section 230-type immunity built into the USMCA.  Similarly, digital content industries consider the incorporation of existing safe harbor provisions to be a missed opportunity to reinforce the effort against online piracy, and they will press for requiring internet intermediaries to be more proactive in policing such theft.

One cannot know at this juncture how these issues will ultimately be resolved, especially given the changeover in the leadership of the U.S. House of Representatives resulting from the 2018 elections.  Nevertheless, the dynamics of the debate – explained below – are important to potentially affected companies.

The Digital Trade section of the USMCA closely tracks Section 230 of the Communications Decency Act.  It provides in Article 19.17(2) that the member states shall not “adopt or maintain measures” that create civil liability for suppliers or users of “an interactive computer service as an information content provider … except to the extent the supplier or user has, in whole or in part, created, or developed the information.”  Note, however, that the agreement also grants immunity for good faith actions taken to limit access to “harmful or objectionable” content, and – in any event – the restriction on imposing liability for indecent content merely confers immunity from civil liability “as an information content provider.”  In other words, the internet service provider cannot be treated as if it supplied the content, but there remains the question of whether it can be held liable for damages under a theory of secondary liability.

Consequently, one can expect organizations dedicated to protecting potential victims of indecent online communication to seek clarification of the extent to which internet providers can be held liable for harms resulting from “knowing” or “reckless” failures to act to prevent abuses on their platforms.

Turning to digital piracy, back when the internet was in its infancy, in 1998, Congress passed the Digital Millennium Copyright Act, which established what is known as “notice-and-takedown.”  Under that approach, if someone uploads a work to a website, the owner of the work may send a notice of copyright infringement to the relevant internet intermediary, pointing to a specific violation and identifying the internet address of the allegedly infringing material.  Once the intermediary receives the notice, it must “expeditiously” disable access to, or remove, the material and inform the entity that posted the material of its action.  If the entity that posted the material believes it has a legal right not to be subject to takedown, it may file a counter-notification.

Upon receipt of the counter-notification, the intermediary must inform the copyright holder that it will restore the status quo ante after ten days unless the intermediary is notified that the copyright holder has “filed an action seeking a court order to restrain the [entity] from engaging in infringing activity.”  By following these and other procedures, the intermediary is shielded from copyright infringement liability for unknowingly posting infringing content.

The USMCA embraces the notice-and-takedown concept and generally requires internet service providers who have not already done so to implement such a system.  There is an exception, however, that preserves Canada’s current “notice-and-notice” system – under that approach, internet service providers are merely required to forward notice of infringement to the host of the pirated material.

Content industries have been seeking greater protection from the USMCA.  They tend to favor what is known as “notice and stay-down,” which requires a more proactive approach from the intermediary than notice-and-takedown.  Under notice and stay-down, when the intermediary receives a notice of copyright infringement, it would be required to search out and delete all copies of the material in question and block that material from being uploaded again.

Content industries believe this is necessary to address the fact that copyright-infringing material can be transferred easily from website to website, thereby putting the content producer in the position of trying to “whack-a-mole” and being forever a step behind the infringer.  As one might expect, however, internet service providers argue that notice and stay-down is overly onerous and would, if legally required, cripple the commercial exploitation of cyberspace.

The debate will go on regarding limitations on the liability of online service providers for indecent or infringing content posted on their platforms, and stakeholders are advised to pay close attention as the relevant provisions of the USMCA are debated and implementing legislation is formulated.  If those provisions are implemented as is, the USMCA would represent a move in the direction of international adoption of current U.S. principles governing the liability of intermediaries for online content.

 

Dean A. Pinkert is a partner in Hughes Hubbard’s International Trade practice. He is a former Commissioner of the U.S. International Trade Commission. Dean was nominated by President Bush and confirmed by the U.S. Senate in 2007,and was designated Vice Chairman by President Obama in 2014.