Government officials the world over are drafting new laws to regulate-and tax-internet sales or e-commerce. While many of these rules remain unclear or unenforceable, there are plenty of tariffs and taxes now on the books that must be paid by importers and exporters.

And though the internet may not bring businesses tax relief, it can provide easy access to information about special charges associated with international trade like never before. That data, coupled with expanding logistics and trading options, often means lower costs for companies and consumers shopping on the internet.

According to the US Customs Service, there's quite a need for this information. The government body recently urged buyers to beware of "hidden costs" often associated with imports being purchased on the internet. Purchase prices quoted on the web may not include duties, and these duties can often exceed an item's retail price.

That seems to be what happened to cigarette smokers in the United Kingdom. Many of them recently bought "discounted" cigarettes from foreign sources on the internet.

But when UK customs officials slapped on excise taxes to the tune of 100%, the smokers took their habit elsewhere, leaving large quantities of cigarette cartons in government hands.

If only the cigarette merchants had employed some of the latest technology. It can "take the pain away from showing and pre-collecting all landed costs," says Joe Mislinksi, senior vice president of business development and marketing for Global Commerce Zone, which provides landed-cost information for websites. "If there's any error in the process, we eat the difference."

How (Some of) the

New Stuff Works

Global Commerce Zone (www.gczone.com) of Chicago is part of the emerging high-tech field that blends global logistics, fulfillment, and trade information with internet-based software tools and services. Other players include New York-based ClearCross (www.ClearCross.com) and From2 (www.From2.com) of Miami Lakes, Florida.

The role of such firms isn't to move goods from one country to another, it's to give on-line shoppers a breakdown of all the costs involved in moving products around the globe. In some cases, they also connect buyers with brick-and-mortar shippers, banks, customs agents, and others.

"We do the tasks that make moving products across borders simpler," says Paro Anthos, executive vice president and co-founder of ClearCross. The company's landed-cost "engine," or software application, calculates the total cost of shipping a good before a purchase is made. Costs such as duties, taxes, and tariffs are all included in the final price quoted on the web.

The technology created by ClearCross is sold as part of software applications being marketed by Ariba Inc. of Mountain View, California. "People use Ariba [internet software] applications to buy across borders in B2B e-commerce," Anthos explains. "These tools let buyers see the total costs and compare their possible choices."

At the Shopping Cart

Many businesses and consumers are confronted with landed costs when they get ready to order with an electronic shipping cart at a website. And with some technology, like that offered by ClearCross, Ariba, and others, they also may be given information on how to make a transaction less expensive.

"Landed cost is an issue that has caught fire over the past few months," says Kombiz Eghdami, CEO of San Francisco-based vLinx Inc. (www.vlinx.com), which links makers of consumer products in Asia with US buyers such as wholesalers and retailers, and provides access to related global trading information and services.

"Providing an exchange [website] is not enough, since trade is fraught with all kinds of hurdles like insurance, tariffs, duties, customs, shipping, and freight," Eghdami adds. You have to provide some real value-such as accurate and real-time landed-cost data-to potential clients.

Tariffs? What Tariffs?

Take the hypothetical case of a CD player being shipped into Australia from Hong Kong. There will be standard duties and taxes of around 20% imposed on the imported consumer electronics item, says ClearCross' Anthos. But if the value of a shipment is under A$50 and a courier service provides the transportation, the product can be brought into Australia duty free.

Armed with this web-based information, an Australian importer might want to bring in multiple orders instead of one large order to take advantage of the low-value threshold.

Other typical-if there is such a thing in the convoluted world of global tariffs-examples include taxes imposed on telecommunications equipment going, say, from the US into Taiwan. There's a commodity tax of anywhere from zero to 60%, says Elizabeth Colvin, content director for ClearCross. Add to that an import duty of 5% to 15%, a value-added tax of roughly 5% and a commodity tax of 10%. In addition, there are taxes that depend on the mode and value of a shipment.

In Chile, taxes on such imports range from around 15% to 18%, Colvin says. "These are common VAT rates and are separate from customs duties," she explains.

For importers or buyers who can have this type of data up front, there are different scenarios concerning sourcing to consider. And this information can make this sourcing and planning process more efficient and cost effective than ever, experts stress.

Shopping-and Shipping-Around

When bulk buyers of consumer products made in Asia, for instance, turn to vLinx for landed costs, they get a clean breakdown of all the details. The demonstration purchase at the website shows that an order of 1,300 Chinese-made trash cans would, with inspection and insurance charges, come to $7,159.36.

The shipping costs on the order are $100; the duty is $39.65; taxes are $1,339.64; and a letter of credit charge costs $300. This brings the cost of each garbage can to $5.11-up from an initial cost of $3 a unit. Optional inspection charges are estimated at $500, while insurance is priced at $15.06-bringing the total cost per can to $5.51 for a 24-day shipment.

Buyers using vLinx can request similar quotes on a wide range of items made in China, Malaysia, and Thailand. They can also order product samples for immediate shipment from vLinx's warehouse in Blaine, Washington.

At On-lineAssetExchange.com, where used machinery, metal-working tools, printing presses, and the like are sold, buyers purchase assets through a bid-and-ask process. When details about a shipment are being arranged, the website gives users three different quotes from its pool of logistics-service providers.

Used assets generally are bought by dealers and brokers for 20 to 30 cents on the dollar, says Norm Bastin, executive vice president for On-lineAssetExchange.com in San Diego, California. Companies in Mexico, India, Korea, and elsewhere are asked by the dealers to fork up roughly 90 cents on the dollar plus the value-added tax for this equipment. In many cases, the VAT runs from 10% to 15%.

"Intermediaries make a huge amount of money," on sales of used assets, Bastin explains. Through On-lineAssetExchange, companies can buy equipment at 30 to 90 cents on the dollar, including the value-added tax.

More and more B2B internet sites are bringing lower prices and better, more clear-cut information on landed costs and logistics options to users. This is also true at B2C, or business-to-consumer, sites.

ShipToCanada.com, for example, sells technology that lets US retailers selling on the web show potential customers in Canada what their total costs are for a purchase. The company, still in the launch phase, also gives shoppers the option of using its logistics services in to save money. Price quotes (in US dollars) are given with the duty, provincial/government sales tax, delivery charges, and shipping and handling fees. On a $65 piece of clothing, duty is $13.49 (about 20.75%). Other taxes come to $11.90 (or 18.3%).

Delivery and other handling fees with ShipToCanada total $9, bringing the final price to $99.39. Using traditional shipping methods, the full price would be $110.74.

ShipToCanada has set up a warehouse in Niagara Falls, New York, to facilitate these shipments-which it aims to start in the spring-and plans to open another facility in western Canada soon, says David Lowe, executive vice president of business development in the company's Hermosa Beach, California, office.

Currency Conundrums

Most major US retailers selling in Canada on the Net don't show figures in Canadian dollars, Lowe says, though there are a few exceptions. "And Canadians would like to see [prices] this way," he stresses. "It would boost sales there."

To date, technological and service providers like ClearCross and others have worked only in US dollars. But many intend to roll out web-based service in other currencies-such as the British pound and the euro-in 2001.

web-based market exchanges, likewise, are considering future work in currencies other than the dollar and in languages other than English. But they don't see a need to move too quickly. Likewise, many of these industry-specific sites don't include specific data on taxes, tariffs, quotas, and the like, because such information is generally known by most industry participants.

"All of this [trade activity] happens in dollars because it's the established global currency," says Patrick Murphy, an executive for FoodMarketExchange.com, which puts US buyers in contact with Southeast Asian suppliers of non-perishable food products. "It's how larger, more established companies operate."

Still, a handful of companies are pushing hard to give buyers worldwide information on prices in a variety of currencies using real-time exchange rates. For example, E4X-which has offices in New York and Tel Aviv-gives websites the ability to sell on-line in any currency.

"We allow buyers to see the final price in their currency," says Yuval Tal, CEO of E4X. "And we operate like a foreign-exchange dealing room for on-line merchants." E4X can pass on real-time information about prices in different currencies and vary prices by the country of origin. It also accepts payments in more than 22 currencies.

In the broadest sense, the company aims to be a global internet bank-not just a provider of up-to-the-minute currency data and conversions. It offers interbank exchange rates at the point of sale, hedging, and other services. This means final costs are lower than they would be if a buyer had to pay credit-card fees, Tal says. Merchants also save by being able to fix prices in different currencies with less risk.

One of E4X's clients is KasparovChessOn-line, which sells multimedia lessons to chess fans world wide. As sales of such internet-based services expand across the globe, E4X says it plans to do more in order to facilitate tax and tariff payments for these services as merchants request it.

Behind the Scenes

Making new types of information and services available to traders and shoppers on-line is not an easy task, experts insist. For its part, ClearCross relies on more than 200 people. As many as 40 work on the company's database, which tracks tariffs, taxes, and the like.

The key to the success of such firms and the client base they serve is making the internet an easy place to do business globally. "Everyone wants to use the internet," explains ClearCross's Anthos. "But the challenge is moving all the functionality and specifics of the [brick-and-mortar] environment to the internet from client-server and other older computer systems."

This means developing a highly efficient web of strategic relationships with technology, fulfillment, and other partners.

Businesses operating on-line need to be able to easily integrate information and operations, he says. They also must provide easy-to-use on-line access to the goods and services they sell, price, and related data, and information related to the movement of these products worldwide.

By providing users with such transparent operations, the internet may be paving the way for the end of importers and other middlemen.

Sure, that's a way off. But in the meantime, shipping and other costs will fall and the quality of global-trading services should improve. "Ultimately the producer and the consumer benefit," says Howard Feldman, CEO of CoreMarkets.com in New York, a B2B trading site for the metals industry. "There's greater efficiency bringing greater savings," he says, and such change could even make tariff and tax payments much easier over time.