Stakeholders and regulators discuss the benefits and challenges posed by the rapid expansion of e-commerce. Discussion of industry processes and best practices. How can regulators help platforms help their sellers and consumers? Presenters: Doug Hyland, Compliance Program Manager, zulily; Stuart Schmidt, Manager, Trade Compliance, UPS; Carlos Ponce Beltran, Deputy Attorney for Telecommunications, PROFECO.

1. North American
Consumer
Product Safety
Summit
May 2018

2. 2017 ZULILY
zulily is retailer obsessed with
bringing our customers special
finds every day
We feature a fresh, curated
collection including apparel,
shoes, home décor, toys, health
& beauty, gifts and more.

3. we dared to be different…
“This can’t be near a billion-dollar business.
How many people really want to shop this way?
How many small brands really want to
sell this way?”
- Forrester Research Analyst, Oct 2011

4. 2017 ZULILY
risk based
direct import
small package
category by jurisdiction
United States
Canada
Australia
EU
Mexico

5. how can regulators help?
clarity
small parcel rules
incident reporting
parity
3rd party testing
documentation
labeling & marking

6. final thoughts

7. Trade Facilitation in the World of eCommerce
May 4, 2018
Stuart Schmidt
Manager, Trade Compliance

8. About UPS
World’s largest package delivery company
and a global leader in supply chain
services.
19+ million packages and documents
per day.
3% of global GDP and 6% of the U.S.’s
GDP moves around world in UPS trucks
and planes.
Serves more than 220 countries and
territories around the world.
8

9. 9
E-Commerce Macro Overview

10. E-Commerce
An Undeniable Growth
Opportunity
 It is expected that Internet
sales in Latin America will
grow to $ 75 billion in
2017.*
 Internet users in the region
are expected to grow to
37% this year, from 28%
in 2011.*
 Governments depend on
electronic commerce for
export growth, consumption
growth and innovation.
 Trade facilitation plays an
even bigger role in success in
the region.
10
(*Source: IDB INTAL Interactivo)

11. From Seller to Buyer, powered by e-retailers, e-
Payments, and delivery services.
Buyers want:
Ease and seamlessness
Track and trace
Reliability
Affordable Shipping and competitive lead
times
Sellers need:
Localized Checkout: Duty & Tax displayed
in cart
International order fulfilment: delivery
options balancing speed with cost,
international shipment processing, customs
clearance documentation, door to door
tracking and proof of delivery.
Customer Service: International returns
and refunds solutions
Border clearance, delivery, returns and
refunds a critical part of the customer
experience.
Supply Chain: Market Demands
E-Platform
Shopping Cart
Seller
Buyer
Transportation
Information
Payments
Goods & Services
E-Payment
Logistics/Consolidator
Express or Post
Delivery
11

12. 12
E-Commerce:
The Eco-System Within

13. The Trade Facilitation Policy Infrastructure
Pre-arrival Processing
Single Window and Border Agency
Coordination
Disciplines on Fees & Charges
Separation of Release from Accounting
Process
Authorized Economic Operators (AEO)
Post-Clearance Audit
 Transparency, Consultation, and Opportunity
to Comment
 Risk Management: WCO Immediate Release Guidelines
 Cat 1: Correspondence and Documents
 Cat 2: Consignments below a duty/tax de
minimis threshold
 Cat 3: Consignments below a formal declaration
threshold.
 Cat 4: Consignments requiring formal entry.
• Submission of
documents
• Processing by destination
governments
Pre-Arrival
Processing
• Risk Management based on
value and other criteria,
distinguishing informal from
formal declarations
• Immediate Release for Low
Value Goods (Green Channel)
• High Value Clearance and
Inspections (Red Channel)
Risk
Management
and Release
Post Entry
Payment &
Audit
• Post clearance
payment of duties
and taxes or payment
through security
bonds
• Post-entry audit
“Express Clearance - What Good Looks Like”
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14. What’s the Problem Then?
Surge in import volume /
Impacting Service Levels
Surge of New Competition For
Domestic Retailers / Potential
Advantages in Taxation
Democratization of International
Trade
Low Understanding of Rules of
Trade
Inexperienced traders with no
compliance programs
New Risk Profiles
Tax evasion
Illegitimate trade / illicit goods
Other security threats
New Challenges for Governments
14

15. 15
Recommendations
Going Forward

16. Recommended Action: Simplify Trade for Low-Value
Shipments
As it is not feasible to discriminate among like goods
based on how they are distributed, simplification could
be developed based on key characteristics of e-
Commerce trade such as the generally low-value of such
shipments.
Governments to consider:
A coordinated simplified approach for entries
and clearance based on WCO Immediate Release
Guidelines.
 Establish common simplified entry
threshold under which shipments are still
dutiable or taxable but informal clearance is
permitted.
 Common data elements e.g. no need for
HS Code for Cat 2 as non-dutiable anyway.
Establish returns procedure or extending
temporary import procedures to include e-
Commerce returns. Returns should not require
formal declaration if they can be matched with
outbound invoice details.
16

17. Recommended Action: Closing Loopholes to Address Risks
 Governments still need to address increased risk of illegal and illicit shipments, dangerous
goods, and other threats that are now entering the supply chain, on vessels, and crossing
borders.
 Global integrators and cargo airlines have invested in technology, screening, advanced data,
security and compliance programs but loopholes still exist.
 A large proportion of e-Commerce trade occurs via other channels, and take on innovative
distribution modes such as drop-shipping, consolidators, virtual addresses, complicating the
traditional import/exporter structure. Many do not provide the same levels of scrutiny for
themselves or for their customers.
 For example, postal services are often exempt from advanced data submissions which air
carriers, freight forwarders, and their customers need to provide to target and screen high risk
shipments.
 Identifying all players involved in cross-border delivery/distribution and ensuring they abide by the
same rules of trade.
17
Consolidators
Postal service / EMS
Traveler
Express Delivery

18. Recommended Action: Educating the New Participants of Trade
 e-Commerce has resulted in the democratization of international trade where anyone, sitting anywhere can transact in
trade. Today there are many more small businesses exporting, new importers-of-record, many of whom are unfamiliar
with the rules of trade, and don’t have compliance programs.
 Supporting private-public capacity building efforts to educate new participants of international trade and support trade
compliance programs for APEC MSMEs.
1812

19. ¨NACPSSUMMIT”
Panel2:E-commerce
“Consumer Protection in New Business
Models”
The Challenges of Shipping PackagesAcross Borders intheAge
of E-commerce
Carlos Ponce Beltrán
DeputyOmbudsmanforTelecommunications
Washington,D.C.May3,2018

20. OVERVIEW:
I.- E-commerce in Mexico
II.- Challenges and ideas for protecting
digital consumers in new business models

21. I
E-COMMERCE AND PACKAGE
SHIPPING SERVICES IN MEXICO

22. 1. Mexico ranks 17th among the most attractive countries in the world for e-
commerce. Source: The 2015 Global Retail E-Commerce Index
2. We currently have 97.2 million Internet subscribers, 17.18% are fixed
connections (home and office), and 82.81% are mobile connections (mobile
equipment).
3. 3 out of every 4 Internet users (a total of 65.5. million users) made an online
purchase in 2017.
4. The total value of e-commerce transactions in Mexico in 2016 was 17.63 billion
dollars, with 28.3% annual growth.
5. Online buyers in Mexico had an 86% satisfaction rate. They also stated wanting
to make another purchase in the following three months.
22

23. 6. PROFECO receives an average of 1,500 complaints each year
about online sellers and reviews 2,000 online sellers per month. It
has not detected any product safety issues, but it does advise on
miracle products.
7. 67% of Mexican Internet users made online purchases through
foreign platforms.
8. 52% of these purchases were made through U.S. platforms; 29% were
through sites located in China; and 6% were Japanese online sellers.
9. What new business models are becoming popular in Mexico?
CONSUMER CENTRIC MODELS: C2B (Consumer to Business), C2C,
Social Commerce (Ex. F-commerce) or We Commerce.
B2C continues to grow at a rate of more than 25% per year.
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24. 24
10. The parcel industry in Mexico handles more than 180 million
shipments per month (ranging from letters to large packages);12
million packages.
11. 30% growth per year translates into a total value of 200,000 million
pesos (nearly 11 million dollars).
12. E-commerce accounts for 20% of these shipments.
13. Correos de México (government postal service) is the leader (28.7%).
Followed by Fedex (12.2%); DHL (8.5%); Estafeta (7.1%). The
remaining 43.4% is distributed between UPS and 2 thousand other
companies.
14. DHL states that by 2020, 50% of its operations will be e-commerce
based. In 2016, this figure was only 10%.
15. In the second quarter of 2017, UPS increased its consolidated
revenue in México, by expanding its e-commerce-based deliveries.
16. According to the WTO, Mexico ranks 15th among exporting countries,
and 14th among importing countries.

25. 25
II
CHALLENGES OF PROTECTING DIGITAL
CONSUMERS IN NEW BUSINESS MODELS

26. ONE. Determine whether regulatory efforts are lagging or up to date.
In terms of third-party platforms and market places, we offer the example of Mercado Libre,
the leader in these types of sales in Mexico, which has a larger presence than Amazon in our
country, moving 1.6 million packages per month..
Proposals:
• Work in conjunction with platforms to make sellers aware of the safety regulations, that
apply to them, such as not selling dangerous products.
• Given increased C2C and third-party platforms, we need to consider how consumer-sellers
respond as providers. How? By measuring their sales volume and educating them on the
safety requirements for selling products.
• Promote a cross-border product-safety code of ethics.
26

27. TWO. Innovate how e-commerce risks are communicated
Proposals:
• Create a system of guarantees to ensure the safety, quality, and security of new and
second-hand products, to be jointly embraced by sellers and platforms (consumer
protection policy and coverage).
• Promote specific self-regulation.
• Expand the scope of safety stamps for existing trademarks and brands (separate from or in
conjunction with security and privacy stamps)
THREE. Establish the geographic boundaries for new digital markets and modernize
international cooperation in these markets by signing conventions or agreements between
associations or groups with various e-commerce companies as members
Proposals:
• Harmonize and share good cross-border e-commerce practices (C2C, B2C y Market
Places). For example: Return guarantees (money, products, or services).
• Canadian, Mexican, and U.S. regulatory bodies can draft a proposed Terms and
Conditions to be used as reference for these models of e-commerce sellers and platforms.
• Recognize virtual communities (VCs) that assist regulatory agencies in providing
information about risks and consumption/sales good practices.
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28. 28
Thank you very much!
@cponcebeltran
@profeco