International Trade and its Impacts on Online Shopping

Within Australia, there is an increase in online purchasing every day. Online shopping has increased by almost 10% in Australia over the past year (1). Shoppers that are engaging in online shopping are a part of a process where doing trade becomes a lot easier, faster, and less expensive (2).

Online Shopping Isn’t Just Costing You…

Although online shopping offers a lot of opportunity to both developing and developed countries, it comes with a lot of challenges too. One of the main challenges being costs. The process of acquiring information across national borders becomes costly and exists as a substantial barrier to trade.

What does International Trade Mean?

International trade incorporates policy, theory, and business strategy. It is viewed by consumers as a way of receiving goods and services, as they believe they benefit from the exchange.

According to the Australian Bureau of Statistics, wholesale trade was the largest industry making up 25% of all merchandise exporters, in comparison to retail trade at 9%.

Analysing Online Shopping Within Domestic Trade and International Trade

A peak into the world of Tariff’s

Babu John Mariadoss mentions that tariffs raise the cost of importing products from abroad but not from domestic firms. Tariffs are in charge of protecting domestic firms that are in competitions with imported products(3).

A specific tariff is levied as a fixed charge per unit of imports (3). For example, the U.S. government levies a $0.51 specific tariff on every handbag imported into the United States (3). Thus, if one thousand handbags are imported, the U.S. government collects $510 in tariff revenue (3). In this case, $510 is collected whether the handbag is a $40 handbag or a $5,000 Gucci handbag(3). According to Babu John Mariadoss, different tariffs are generally applied to different commodities, as Governments rarely apply the same tariff to all goods and services imported into the country.

Although Tariff’s can offer protection over infant industries and developing economies, it is agreed that free trade policies within a global market are considered more ideal, as it leads to increased choice and reduced prices(4).

Policy Intervention Could Easily Lead to Reduced Costs

In order of challenging and reducing trade costs, formulating policy intervention will help in reducing costs. Programs that are put in place in order to reduce costs, will require tailoring to particular needs and situations, as well as development objectives. Individual country circumstances also need to be largely considered. Policies that are designed to address trade costs, should be based off comprehensive assessment and specific facts and data.

It can be recommended for the sake of reducing trade costs, that policymakers start reviewing existing regulations in order to identify and address any inconsistencies within domestic markets (5). Following on from this, international cooperation’s working together can help improve regulatory processes between countries to ensure unnecessary costs are avoided (5).

Thank You for Reading!

References

(1)Transdirect, 2020. 4 Australian online shopping statistics you need to know. [Online] Available at: https://www.transdirect.com.au/blog/aus-ecommerce-stats [Accessed 03 2021].

(2)Terzia Nuray, 2011. The impact of e-commerce on international trade and. Procedia Social and Behavioral Sciences, Volume 24, pp. 745-753.

(3)Mariadoss John Babu, 2017. CORE PRINCIPLES OF INTERNATIONAL MARKETING. s.l.:PB PressBooks.

(4) Radcliffe Brent, 2019. The Basics of Tariffs and Trade Barriers. [Online] Available at: https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp [Accessed 03 2021].

(5)OECD, 2019. Trade Policy and the Global Economy. 3 ed. s.l.:Ken Ash.

Markusen James R & Melvin James R et al, 1995. International trade: theory and evidence, Boulder: McGraw Hill, Inc..

Australian Bureau of Statistics, 2018-2019. Characteristics of Australian Exporters. [Online] Available at: https://www.abs.gov.au/statistics/economy/international-trade/characteristics-australian-exporters/2018-19 [Accessed 03 2021].