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Hot topics - International

Published on 10 January 2019

Below is a selection of recent key international developments and relevant trends affecting Retail.

Taxation on e-commerce vendors out of state (USA)

In the landmark decision of South Dakota v Wayfair, the US Supreme Court ruled that a retailer does not need to have a physical presence in a state in order to have a sales or use tax collection obligation. This means that states can require retailers to collect tax on online (and other) sales, in accordance with the laws of the state where the customer is located. Eyes now turn to Congress to determine if an alternative federal solution will be introduced. Previous efforts, such as the Remote Transactions Parity Bill 2017 and the Marketplace Fairness Bill 2017, have been thwarted.

United States-Mexico-Canada Agreement (USMCA)

On 30 November, 2018, the USA, Canada and Mexico signed a new trade deal known as USMCA. If Congress approves it in 2019, it will replace the North American Free Trade Agreement (NAFTA). USMCA includes major changes on automobile manufacturing, labour policies and environmental standards. For retailers, it includes new provisions to deal with the digital economy, which have some significant implications for emerging technologies. Duties on digital products (like music and e-books) are prohibited. Also the terms of copyright are extended to 70 years beyond the life of the author (up from 50 years). Finally, across the countries which are a party to the agreement, data localisation restrictions are banned.

Tech companies team together to pursue a federal level privacy legal framework (USA)

In a drastic change of direction, tech companies are now leading a campaign to introduce federal-level privacy regulation. Taking a proactive approach, these companies are aiming to move away from the increasingly fragmented regulatory framework, which differs from state-to-state. Also, it is clear that they are seeking to pre-empt the tougher privacy standards recently set by the California Consumer Privacy Act and the EU General Data Protection Regulation.

Modern Slavery Bill proposed by the Australian Federal Government (Australia)

Combatting Modern Slavery continues to be a global focus point. Following a discussion paper in 2017, the Australian Government has introduced a Modern Slavery Bill that will affect approximately 3,000 companies.

Large businesses and other entities that have revenues exceeding AUD$100m, will be required to evidence any strategies that they have implemented and any progress they have made in relation to eliminating modern slavery. Despite being a key recommendation of the Modern Slavery Inquiry, the Bill includes no proposals for breach penalties.

Proposed Reform to the Measures for the Administration of Strategic Investments in Listed Companies by Foreign Investors (China)

China’s capital markets are continuing to open up for foreign investors. The Chinese Ministry of Commerce released draft amendments to the current foreign investment regulations on 30 July 2018 and now is soliciting public comments. If introduced, the amendments would be a breakthrough in terms of approval and filing management, streamlining investment approval, foreign investor qualifications, and strategic investment requirements. The current amendments would substantially align the regulations with the latest policy approach. In addition, further amendments might be made before the reform is enacted.

Cashless retail (China/Hong Kong)

Retailers in Asia are pioneering autonomous technologies, such as facial recognition, heat mapping and RFID (Radio-Frequency Identification), to introduce cashless stores in China and the wider Asian marketplace. This shift to cashless retail aims to meet consumers’ growing expectations of a seamless and convenient shopping experience. Many retailers, including Alibaba and 7-Eleven, have launched these types of stores, similar to Amazon Go in the UK and USA, with great success. However, in New Jersey (USA) lawmakers are seeking to advance a bill that would ban cashless stores on the basis that it discriminates against people who do not have bank accounts or people who cannot afford the technology. Even with these concerns however, the Asian market is pushing forward with the implementation of the technology.