The Global Innovation Forum (“GIF”) respectfully submits our comments to the Office of the United States Trade Representative (“USTR”) in response to its request for input on the Trade Track of the Americas Partnership for Economic Prosperity (“APEP” or “Americas Partnership”), (89 FR 51935, June 20, 2024).
GIF is a nonprofit dedicated to elevating small business voices with an aim to foster an inclusive policy landscape that enables companies of all sizes to innovate, trade and engage in the global economy. By connecting entrepreneurs with our global network of government officials, civil society, and private sector leaders, GIF delivers actionable insights and impactful programs to emphasize how technology and trade policies can advance resilience and inclusive growth.
At the 2022 Summit of the Americas, President Biden introduced the Americas Partnership, an initiative designed to promote high standards of cooperation throughout the Hemisphere. GIF shares this vision and is committed to supporting a partnership that advances trade, digital connectivity and economic integration across the Americas, thereby creating a more resilient and prosperous Hemisphere. As a champion of innovation and digital trade, GIF advocates for policies that help small businesses access new markets, ensure cross-border data flows, and promote inclusive digital economies. We believe that building on existing free trade agreements with concrete commitments in digital trade will drive growth, foster innovation, and strengthen economic ties throughout the region.
GIF has consistently championed trade policies that open new markets for small and medium-sized enterprises (SMEs), enhance their competitiveness and drive economic growth. We believe that binding and enforceable trade agreements are vital for achieving sustainable results and shared prosperity. By promoting policies that support digital trade, facilitate the use of digital technologies, and streamline access to global markets, GIF is dedicated to empowering SMEs to thrive in the global economy. Our mission is to ensure that these businesses can leverage digital tools to expand their reach, create jobs, and elevate labor, environmental, and commercial standards across the region.
GIF recently launched a joint statement signed by 107 US SMEs from 30 states, emphasizing the need for policy support to enhance their participation in the global digital economy. These entrepreneurs and business owners emphasize that policymakers can assist small businesses by establishing trade rules that facilitate digitally enabled international trade and by providing the digital skills and tools necessary to navigate the global marketplace.
Small businesses, which constitute nearly half of the nation’s workforce, are poised to benefit immensely from policies that lower export barriers and expand their global reach. However, SMEs still face significant challenges such as red tape, taxes and tariffs. Addressing these barriers could substantially boost U.S. economic output and job creation. GIF urges policymakers to prioritize clear regulations that support cross-border data flows and improve access to digital tools, ensuring SMEs can thrive in the global digital economy.
Following the APEP Leaders’ Summit and the East Room Declaration, GIF supports the collective commitment of Leaders to drive meaningful outcomes. It is crucial for the United States to create a robust governance framework that coordinates across the three APEP tracks – Foreign Affairs, Finance and Trade. This framework should ensure a cohesive agenda and provide a unified access point for SMEs. By streamlining access to investment opportunities, accelerator resources, and trade facilitation, we can empower SMEs to innovate, grow, and succeed in the global marketplace.
GIF applauds USTR for this consultation and advancing stakeholder engagement under the APEP Trade Track. We are committed to supporting efforts that enhance cooperation and create tangible benefits for small businesses. GIF is optimistic that this collaborative approach will establish a strong foundation for a more ambitious future trade agenda, featuring binding commitments that benefit the entire Hemisphere. Our dedication lies in ensuring that SMEs are equipped to thrive in this evolving landscape, fostering innovation, growth and shared economic prosperity across the Americas.
COMMENTS
I. Customs and Trade Facilitation:
Enhanced trade facilitation, including commercially meaningful de minimis thresholds free of artificial limitations, is vital in supporting the growth and efficiency of SMEs. By developing a robust customs and trade facilitation framework through APEP, SMEs can benefit from streamlined processes that reduce the complexity and costs associated with international trade.
APEP should prioritize the modernization of customs to enhance digitization and non-intrusive inspections, ultimately making it quicker and less expensive to clear goods across borders. In several countries, customs offices still require physical documents for products entering via express delivery, even when this information has already been shared electronically. This inefficiency causes shipping delays and generates unnecessary waste, discouraging small business exports.
The goal is to fully digitalize the customs clearance process in APEP countries through a single, centralized policy and regulatory framework managed by one agency at the border, eliminating the need for duplicate paper-based processes.
De minimis, which allows low-value shipments to enter a country under a streamlined clearance process free of taxes and customs duties, significantly reduces the administrative burden and costs for SMEs. This treatment encourages more frequent and lower-value shipments, enabling SMEs to participate more actively in cross-border e-commerce under a less complex, more streamlined border procedures.
By prioritizing these measures, APEP can help SMEs expand their market reach, enhance supply chain resilience and contribute to economic growth across the region.
II. Transparency and Good Regulatory Practices:
By building on the Good Regulatory Practices chapter of USMCA and the WTO Agreement on Domestic Regulation, APEP can help create a more predictable and fairer regulatory environment. Ensuring that all APEP countries commit to these agreements can streamline and accelerate the implementation of fair business licensing regimes and effective regulations. This will reduce the complexity SMEs face when navigating diverse regulatory landscapes.
Moreover, as digital tools and technologies become more pervasive across industries, it is vital to harmonize regulatory standards to avoid fragmented and burdensome compliance requirements. For example, allowing mutual recognition of testing and certifications where harmonization is not possible, can facilitate smoother operations and greater interoperability for SMEs. This, in turn, supports efficiency and supply chain resilience. Furthermore, harmonizing AI legislation across APEP countries based on risk-based and use-case-specific approaches will prevent a disjointed regulatory patchwork that could stifle
innovation and deployment. By adopting such frameworks, APEP can ensure that regulations protect privacy, security, and intellectual property without hindering technological advancement.
Finally, establishing good governance procedures that promote transparency and accountability in regulatory development will provide SMEs with a clearer and more stable operating environment. Such practices include timely publication of draft regulations, reasonable comment periods, and the incorporation of stakeholder feedback. These measures will help SMEs to better understand and comply with regulations, thereby fostering a more conducive environment for growth and innovation across the region.
III. SME formalization:
According to the World Bank, it takes a small business on average nearly one month to formalize their operations in Latin America at a cost of more than $2,700. These high costs and complex bureaucratic requirements are key to the region’s high level of informality and small tax bases.
APEP should focus on making it easier for small businesses to formalize. For example, governments should digitize the process to register for tax IDs. This process is frequently complicated and costly, both for local SMEs and in many cases for U.S. SMEs that simply want to export from the U.S. and store their inventory abroad in local fulfillment networks. In Mexico, for example, the entire process is in-person and can take over five months, costing over $5,000, in addition to the already high costs of complying with complicated tax requirements once you have the ID. The registration process for a tax ID in all APEP countries should be entirely digitalized and take less than one week.
IV. Other matters related to trade and investment in the Americas that are consistent with the mission and scope of the Partnership, including inclusive trade:
Targeted training and capacity building: APEP can organize training programs and workshops focused on building digital skills, business management, e-commerce adoption, and understanding international trade regulations, thereby helping SMEs to better participate in the global economy. By providing training and resources on effectively using e-commerce platforms, APEP can empower SMEs to reach a wider audience and increase their sales.
Access to finance: Establishing dedicated funding streams and financial products that cater to the unique needs of SMEs can enhance their ability to start and grow businesses. Programs such as the U.S. SBA’s State Trade Expansion Program grants help SMEs secure the financing they
need to grow and export their products and services. APEP can work with regional financial institutions such as IDB and USAID to develop micro-loans, grants, and other financial instruments.
Mentorship and networking: APEP can facilitate networking events and platforms where SMEs can share experiences and resources. This includes initiatives like the Americas Partnership Accelerator, which provides specific support for e-commerce and export activities.
Inclusive policy frameworks: APEP can advocate for policies that specifically address the barriers faced by underrepresented groups in trade. This includes promoting gender-responsive trade policies, protecting Indigenous rights in trade agreements, and ensuring that regulations do
not disproportionately affect these groups. Moreover, ensuring that women, Indigenous Peoples, and other underrepresented groups are represented in trade negotiations and policy-making processes can help create more equitable trade policies. APEP can advocate for their inclusion
and support capacity-building to enable their effective participation.
Public-Private Partnerships: APEP can encourage collaboration between governments, private sector companies, and non-profit organizations to develop initiatives that support inclusive trade and empower SMEs to engage fully in the global economy.
We appreciate the opportunity to present our comments. If you have any questions, please contact Hua C. Wang, Executive Director at Global Innovation Forum (hua@globalinnovationforum.com).