US trade deal expected to boost Mexican e-commerce

By Daina Beth Solomon

MEXICO CITY (Reuters) – Mexico’s nascent e-commerce market could get a boost from a trade deal with the Trump administration that will double the value of goods that can be imported from the United States duty-free, online entrepreneurs and experts said.

Mexico and Washington reached an agreement on Monday to revamp the North American Free Trade Agreement, but talks with Canada, the other country party to the 1994 pact, are ongoing and could lead to a change in terms.

A bilateral agreement between the United States and its southern neighbor calls for Mexico to double the minimum threshold for duty-free shipments, known as the de minimis value, to $100, a move that should benefit both express delivery companies and online retailers such as Amazon.com Inc.

“This is great news for us as Internet leaders,” said Enrique Culebro, head of the Mexican Internet Association, which represents Amazon, Wal Mart de Mexico and various online services.

“We are really optimistic about what this will mean for the country, especially the digital economy,” he said.

The online market in Mexico, Latin America’s second-largest economy, was expected to be worth about $7 billion in 2018, according to research firm Euromonitor International, although that figure is only a small fraction of total retail sales.

Months before the deal, the company predicted the market would be worth $14 billion by 2022.

The $100 threshold is significantly lower than the $800 target the United States originally set as part of President Donald Trump’s broader initiative to overhaul NAFTA.

Still, it will make it easier for Amazon and other online marketplaces to offer a wider range of products to Mexican consumers, and could also boost sales of U.S. specialty goods priced below $100, said Carlos Hermosillo, a retail analyst at Mexican brokerage Actinver.

“This would most likely increase the attractiveness of the international market,” he said.

E-commerce giant eBay Inc. celebrated the decision.

“Lowering trade barriers is key to… creating greater access to goods for shoppers around the world,” Mike Dabbs, eBay’s senior director of Americas government relations, said in a statement.

E-commerce company MercadoLibre said in a statement that it was waiting for the deal to be finalized, but expected the higher limit to help smaller businesses enter the e-commerce market.

“We hope that these new regulations … will allow Mexican entrepreneurs to join digital trade,” he told MercadoLibre.

The United States said the deal was “critical” and would help smaller companies ship goods to Mexico.

Amazon, which began selling non-perishable food and drinks in Mexico on Thursday, declined to comment.

Mexican retailers association ANTAD declined to comment while trade talks continue.

(Reporting by Daina Beth Solomon; Editing by Dave Graham and Paul Simao)