OPINION

Conformity assessment challenges in e-commerce trade

One of the challenges in the trade is the difficulty in implementing compliance with technical regulations

In Summary
  • This development has revolutionized how consumers and businesses, purchase and sell goods, avail wider choices, shipping, delivery, and payment methods.
  • It has also opened up world economic opportunities to medium-sized and small -sized enterprises through broader access to foreign markets.
A man looks at mobile phones on Jumia site.
A man looks at mobile phones on Jumia site.
Image: FILE

The increase in cross-border electronic commerce trade has generated tremendous opportunities in the global economy, coming up with new growth engines, developing new growth models, generating new consumption treads, and opening new job opportunities.

This unprecedented development has revolutionized how consumers and businesses, purchase and sell goods, avail wider choices, shipping, delivery, and payment methods. This phenomenon has also opened up world economic opportunities to medium-sized and small -sized enterprises through broader access to foreign markets by reducing entry barriers and operational costs.

At the same time, cross-border e-commerce, mainly business-to-consumer and third-party vendors to consumer transactions, has presented some challenges as well as new opportunities to the governments.

Implementing Compliance

One of the challenges of the proliferation of e-commerce is the difficulty in implementing compliance with technical regulations. This is due to the nature of the transaction as the consumer purchases products online directly from manufacturers located anywhere in the world.

 

The products are shipped directly from foreign countries to the customer's address. Products entering the country in this manner have high chances of bypassing the existing system for verification of compliance with local technical regulations. In addition, the traditional post-market surveillance method for conformity assessment is less effective since the products cannot be found on the shelf.

 

Health and Safety

It is also important to note that many goods are purchased through third-party vendors. It is not always clear whether certification information is accurate, verified, or available, leaving the consumer in danger of buying a product that may not be safe and posing a risk to health and safety. Furthermore, e-commerce trade challenges the established chain of liability since it may not be clear who is responsible in case of a safety incident.

This fast-evolving business environment needs compressive and well-researched solutions from all stakeholders and custom authorities to manage the already growing trade volumes to overcome the lack of global standard guidelines and address the associated risks.

As such, the world customs organization is working through a multi-stakeholder working group comprising representatives from the private sector, e-commerce stakeholders, international organization, and academia to come up with collaborative solutions to support the needs and expectation of the stakeholders in the e-commerce industry.

Facilitation and Controls

Through the spirit of collaboration, the world customs organization has in detail explored the key drivers in the e-commerce industry and looked into all existing business models, examined current and likely future treads, and set out fundamental principles that support the facilitation and controls. They have come up with scalable solutions from extensive research and consultation.

The working group has also come up with a set of global standards, recommendations, and guidelines to facilitate international e-commerce trade in a manner that meets the needs of e-commerce stakeholders, custom departments, consumers, and other relevant government bodies.

Risk Assessment

The key to successful and efficient management of international e-commerce trade is the use of timely and accurate information from reliable sources to enable early risk assessment and clearance of the legitimate transactions in the e-commerce platform with minimum need for physical interventions.

The increase in trade volumes and customers' expectations for quick clearance and delivery also requires the development of new models of collecting revenues and border intervention by customs and other relevant government agencies.

The nature of international e-commerce trade needs a holistic and harmonized approach. The e-commerce stakeholders and governments must continue to collaborate and work to develop pragmatic, fair, and innovative solutions that contribute to the global economy while taking care of the security and safety of the consumer and the economies.

The key pillar of this approach is developing a standards framework that articulates a set of fundamental standards along the key principles identified and adopted in the world custom Luxor resolution on cross border e-commerce.

Harmonization and Standardization

The framework depends on the comprehensive experience and knowledge from custom experts, government agencies, academia, civil societies, and industries while keeping with the mandate of the world customs organization to contribute to the harmonization and standardization of the border regulatory process.

WCO cross border regulatory E-commerce framework of standards implementation will require supplemented technical specifications, robust capacity building process, and efficient implementation strategy to support the management of international E-commerce trade.in addition, guidance based on the lessons learned from the early implementation and the outcomes of pilots will build the necessary momentum for further improvement in border management and enhance trade facilitation.

The writer, Lt Col (Rtd) Benard Njiraini is the Managing Director of the Kenya Bureau of Standards (KEBS)