NCPA - National Center for Policy Analysis

Government Regulations Dim Prospects For Internet Sales

April 17, 2000

It seemed like an idea whose time had come: using the Internet to facilitate international sales. A steel company in Cleveland could sell its wares to another company in Malaysia, for example, with a minimum of hassle.

But now those rosy prospects have dimmed due to complicated trade laws, taxes, tariffs, quotas -- and the need to satisfy regulators in two countries. Moreover, some products are bought and sold many times in transactions involving more than two countries -- further complicating the process.

Take international sales of steel for example:

  • One result has been that executives of two of the earliest Internet supply networks -- MetalSite Inc. and e-STEEL Corp. -- are backing away from their project.
  • Stockholm's Steelscreen operates a similar site to serve several European countries, but has no immediate plans to expand to the U.S. market -- largely to avoid foreign trade laws and quota systems.
  • The largest U.S. steel-makers have backed taxes, tariffs and quotas to limit imports of lower-priced foreign steel -- yet all have invested in the Internet sites, which would make their operations more successful if those same taxes, tariffs and quotas were eliminated.
  • The steel-sales portals may eventually flourish, experts say, because customers are going to demand them -- whether steel-makers like it or not.

Domestic steel-makers have always negotiated privately, charging different prices for the same steel product. With the advent of the Internet exchanges, all buyers could get the same price and go after the best deal.

Source: Robert Guy Matthews, "Tariffs Impede Trade Via Web on Global Scale," Wall Street Journal, April 17, 2000.


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