The development of the internet has opened up many e-commerce opportunities. However many consumers and businesses have engaged in cross border online trading.

For businesses, uncertainty about costs such as IT and practical skills, and building and maintaining a website together with the fear of fraud and lack trust of consumers in the on-line environment are a barrier to online trading.

Considering these more in detail, as the recent study has done, they can be explained as follows:

1) Operational costs of developing and maintaining multilingual websites.

2) Costs associated with the provision of good quality after sales services to consumers in different countries.

3) Increased transaction costs for receiving payments from different countries.

4) Additional delivery costs to send physical goods and services to different countries.

5) Compliance costs inevitably to be incurred as a result of the legal fragmentation across the EU that range from consumer rights, advertising laws, product labelling requirements to fiscal regulations, technical regulations (for example, different plugs) and environmental regulations.

6) For cross-border sales of digital information products, the fragmentation of the collection societies for collecting copyright licence fees and royalties is identified as a further obstacle to trade.

As far as consumers are concerned, they may decide not to shop online for the following reasons:

1)  Lack of internet access or IT skills and confidence to buy online.

2) Concerns about fraud (including counterfeit), payment security and privacy.

3) Worries about delivery problems, the ability to be able to return unsatisfactory goods and being able to communicate with traders to resolve complaints.

4) Uncertainty about their rights as consumers and consumer protection laws.

5) Language and cultural barriers.

The report recommends a number of actions in order to reduce the barriers  to online trading but warns that these must be accompanied by a comprehensive impact assessment study to minimise unintended negative consequences for consumers, businesses and stakeholders. It also important to remember that barriers  to  promote on-line trading can only be reduced and not removed as some goods and services are not appropriate for e-commerce and certain consumers prefer to shop in person.

The recommendations are:

1) Harmonising European intellectual property law further, in particular, copyright law. So, we must keep an eye out for further changes in this regard.

2) Improving legal access to digital content to reduce consumers’ incentives to acquire illegal content.

3) Harmonising the legal framework for e-commerce further to reduce compliance costs for businesses and increase consumers’ and businesses’ confidence in cross-border transactions, including:

-  Harmonising the legal fragmentation across the EU in the areas such as consumer rights, taxation, advertising laws, product liability, guarantees and warranties and product labelling;

-  Updating the definition of ‘consumer’ in consumer protection legislation.

4) Improving consumer awareness of current consumer protection in place.

5) Enhancing dispute resolution processes by building online dispute resolution systems that allow for remote out-of-court settlements.

6) Enhancing the level of trust in online traders,  by establishing regulated (pan- European) trustmarks for online traderrs.

7) Strengthening the support provided to businesses and individuals wishing to develop the skills necessary to use the internet confidently and to participate more fully in e-commerce.

8) Reducing practical barriers to cross-border online orders within the EU, for example, by adopting new laws limiting businesses’ ability to refuse non-domestic orders from EU consumers at the point of registration, shipment or payment.

9) Enhancing the level of trust in the search results generated by search engines and price comparison sites, by either:

- adopting regulations prohibiting payments to search engines and price comparisons sites by suppliers to influence the order in which the search results are presented; or

- ensuring that users of price comparison sites are clearly and transparently informed by the sites that the order in which the search results are presented may have been influenced by special arrangements between the sites and suppliers.

10) Supporting and strengthening pan-European payment systems to reduce transaction costs and improve trust in online payments.

11) Supporting initiatives to improve the operation of national postal markets, as a well-functioning postal and parcel service is essential for e-commerce.

12) Providing multilingual, national level, legal and technical guidance to help businesses overcome language barriers and reduce compliance costs.

However we feel that suggested strategies such as reducing practical barriers to cross-border online orders within the EU by adopting new laws limiting businesses’ ability to refuse non-domestic orders from EU consumers at the point of registration, shipment or payment may have the contrary effect especially if the cost of operating over a number of different countries is not tackled and addressed.

All articles are for general purposes and guidance only and do not constitute legal or professional advice.

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