Thank you, Mr. Chair, and good afternoon.
On behalf of eBay Canada, thank you for the opportunity to present before the Standing Committee on International Trade. Before I dive in, I'd like to provide some background about eBay in Canada. Enabling small business to get online and participate in international trade is at the heart of our business model.
eBay is one of the world's largest online marketplaces. Launched 17 years ago in Canada, eBay remains the top e-commerce destination, enabling more than $1.5 billion of trade by Canadians annually. Each month our platform receives nine million unique Canadian visitors, nearly one-third of the Canadian online population.
In addition to changing how consumers buy, e-commerce has also changed the ways in which we sell. In fact, Canadians on eBay sell more than one million items each month. E-commerce is also levelling the playing field for rural retailers. By leveraging part of the Internet, platforms like eBay have effectively decoupled entrepreneurial success from the need to locate in population centres. Take for instance, Christine Deslauriers, who has been able to create a thriving sports apparel business in the tiny town of Blezard Valley, Ontario. This is due largely to the sales her eBay store receives.
eBay's platform is also one in which even the smallest business can engage in international trade. In fact, 99% of Canadian commercial sellers on eBay export internationally, which stands in stark contrast to the export rate of traditional SMEs at less than 15%, and these businesses reach vastly more markets than their traditional peers—18 countries for eBay sellers versus 2.5 countries on average per year for traditional SMEs. Finally, our data finds that, for eBay commercial sellers who export, more than half of their sales come from international buyers. These sellers are in fact micro-multinationals.
It's important to note that Internet-enabled trade differs significantly from traditional trade. Exporters don't forward deploy inventory or enter into foreign distribution agreements; rather, platforms like eBay drive demand in foreign markets and create the connection and the trust between consumers and retailers. Unlike traditional export, this trade occurs via individual orders criss-crossing the globe, with shipments clearing borders via consumer channels rather than commercial ones.
Given eBay's role in working with these micro-multinationals, my team and I are acutely aware of the frictions associated with this trade and the federal actions that could address them. Specifically, I'd like to recommend a change to the Canadian de minimis threshold to empower Canadian small and medium-sized businesses to thrive in the global economy. As you're aware, the de minimis threshold is the value above which goods shipped into the country can be assessed for duties and taxes. The $20 threshold was originally set in 1985, prior to the birth of e-commerce. In fact, had it simply been increased with inflation, Canada's de minimis threshold would now stand at almost $45. Instead, Canada's de minimis is the lowest in the industrialized world and among the lowest globally.
This low de minimis level causes major friction for Canadian small business. It negatively impacts their ability to access low-value international supply chains and creates red tape when purchases are returned from foreign buyers. In fact, a report from the C.D. Howe Institute found that an increase in the de minimis level from $20 to $80 would benefit Canadian businesses by more than $100 million in reduced red tape and other costs.
Furthermore, Canada's low de minimis threshold does not support what the Canadian consumer wants: fairness and choice. E-commerce gives rural Canadians or Canadians with physical limitations access to goods that are otherwise hard to find. It's not hard to understand why a poll conducted by Nanos research found that 76% of Canadians were supportive of a modest increase in the de minimis threshold.
Finally, an increase in the de minimis threshold would improve government efficiencies. The same C.D. Howe Institute report found that the Government of Canada is spending $166 million to collect just $39 million in duty and taxes on goods valued between $20 and $80. As taxpayers, we should all be concerned that the cost of enforcing the de minimis threshold dramatically exceeds the revenues collected on low-value purchases.
As a platform for small business, eBay respectfully requests that the committee consider an increase to Canada's outdated de minimis threshold through its review of ways to support progressive Canadian enterprise through electronic commerce.
I look forward to your questions.