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WTO members are working towards an agreement on simplifying e-commerce for international business.

Global Trade Agreement to Simplify E-commerce for International Business Shows Signs of ProgressARTICLE

By Bill Camarda

E-commerce offers major opportunities to grow international business, especially for smaller companies that face greater relative challenges when it comes to serving foreign markets. Until now, however, cross-border e-commerce has been hobbled by complex 20th century trade rules – or, in many cases, the complete absence of rules that buyers and sellers can rely upon. But, this may soon change: the World Trade Organization (WTO) has prioritized and accelerated work to reduce the friction involved in global trade via e-commerce.

As one commentator has noted, "global rules for e-commerce are [still] almost non-existent, except for a temporary moratorium on imposing customs duties on electronic transmissions."1 Where rules do exist, the International Chamber of Commerce (ICC) says, they don’t reflect "Internet-led changes to the composition, nature and speed of global trade."2 This means, for example, that it is often costly and difficult for many businesses to clear small e-commerce shipments through customs, and buyers can’t rely on international standards for customer service and dispute resolution.

A Powerful Opportunity to Supercharge Global Trade

The payoff from a successful global trade agreement could be sizable. As ICC notes, Micro, Small and Medium-sized Enterprises (MSMEs) "that use online platforms are around five times more likely to export" than companies that don’t. So too, international businesses "connected to the global economy are more productive and [help develop] more prosperous communities."3

If WTO can develop consistent multilateral rules, says WTO Director-General General Roberto Azevêdo, international MSMEs could operate faster, become more price-competitive, and provide more reliable customer support – and consumers would be far more confident about purchasing from them.4 Finally, as WTO e-commerce trade negotiator Lee Tuthill said in a presentation at a July 2016 WTO forum on e-commerce, expanded global e-commerce could “help reduce the extent of restrictive business practices… by facilitating market entry for smaller service suppliers” – potentially promoting the “inclusive trade” that WTO has prioritized.5

What ICC Recommends a Business-Friendly WTO e-Commerce Agreement Might Contain

To maximize international business benefits, the ICC recommends that a global e-commerce agreement include provisions to:6

  • Encourage better access to high-speed Internet infrastructure, hybrid cloud services, secure virtual private networks and wireless networks by eliminating regulatory barriers that deter service providers from building them. (ICC also recommends including “capacity building resources for developing economies—including targeted assistance to ensure that MSMEs can get online...”)
  • Help MSMEs deliver goods to distant consumers more efficiently by simplifying the processing of low-value shipments, promoting electronic customs payments and documentation and ensuring privacy of customs data. For example, ICC recommends completely exempting more low-cost shipments from customs duties.
  • Build consumer trust by promoting cross-border consumer protection and dispute settlement standards, enhancing online security, prohibiting customs duties on digital products and ensuring "free flow, storage, and handling of all types—in any sector—of data across borders." ICC would also limit privacy and security exceptions to "public policy objectives."

Progress in International Trade Accelerates Since July

WTO has discussed e-commerce since 1998, but the second half of 2016 saw unprecedented activity. Under WTO’s auspices, Australia, Mexico, Indonesia, South Korea, and Turkey organized a July workshop on overcoming obstacles to global e-commerce.7 Separately, Canada, China, the EU, Japan, South Korea, Switzerland and the U.S. "voiced support for stepping up work." Diplo Foundation and the American University Program on Information Justice and Intellectual Property explored informal presentations by the EU, U.S. and Brazil, finding “an overlapping consensus” for discussing several key intellectual property and privacy issues.8

Early in August, Azevêdo visited Facebook's California headquarters for a roundtable on global e-commerce with top Silicon Valley leaders and startups.9 In late September, a major WTO forum on inclusive digital trade hosted nearly two dozen sessions. By November, The Hindu Business Line reported, China and Pakistan had "submitted a detailed proposal on [negotiations]… and more than 20 members [offered input on] scope and scale." Then, in December, Azevêdo participated in an “E-commerce for Development” seminar bringing together stakeholders from Argentina, Costa Rica, Kenya, Nigeria, Pakistan, Sri Lanka and Uruguay.10

Much Work Remains

With all these recommendations in hand, negotiators hope to make significant progress before WTO's next ministerial-level conference in December 2017. Still, much needs to be resolved.

For example, some WTO representatives from developing economies worry that an agreement might not fully consider their technical and financial disadvantages. According to a summary by the Geneva Internet Platform, these countries reported “poor infrastructure and logistics, lack of or unreliable online payment mechanisms, cumbersome customs procedures, issues related to trade licensing and other regulatory aspects, and lack of digital skills.”11

According to The Hindu Business Line, China has suggested focusing on three areas where agreement might be easiest to reach: "trade facilitation for cross-border e-commerce, transparency on e-commerce policies, and assistance to improve infrastructure and technical conditions for developing country members."12 But India has opposed "cherry-picking" individual issues.13 According to the WTO, some members also “emphasized the importance of maintaining discussions on… online trade in services as well as commitments for consumer protection, data privacy, and intellectual property rights.”14

As WTO Director-General Azevêdo recently acknowledged, “Clearly there are different views among members on how to [proceed]. And there are some concerns that the digital divide and the knowledge gap would limit an inclusive conversation on e-commerce issues.”15 But, as he said in October, while “we are still at the early stages of these discussions… engagement is high – and so is ambition.”16

The Takeaway

WTO members are accelerating work towards an agreement on simplifying e-commerce for doing international business. If successful, such an agreement could help far more MSMEs enter worldwide markets and significantly increase global trade.

Bill Camarda - The Author

The Author

Bill Camarda

Bill Camarda is a professional writer with more than 30 years’ experience focusing on business and technology. He is author or co-author of 19 books on information technology and has written for clients including American Express Private Bank, Ernst & Young, Financial Times Knowledge and IBM.

Sources

1. “The WTO Bicycle Is Falling Over and Needs a New Push”, Social Europe; https://www.socialeurope.eu/2016/11/wto-bicycle-falling-needs-new-push/amp/
2. "WTO Business Focus Group 1 - MSMEs and Electronic Commerce, Preliminary Report, September 2016", International Chamber of Commerce; http://www.iccwbo.org/Advocacy-Codes-and-Rules/Document-centre/2016/WTO-Business-focus-Group-1-MSMEs-and-E-commerce/
3. Ibid.
4. "Support Expressed for Advancing WTO Work on Electronic Commerce", World Trade Organization; https://www.wto.org/english/news_e/news16_e/good_14jul16_e.htm
5. "E-commerce and the WTO", World Trade Organization; https://www.wto.org/english/forums_e/business_e/1_1_TUTHILL.pdf
6. "WTO Business Focus Group 1 - MSMEs and Electronic Commerce, Preliminary Report, September 2016", International Chamber of Commerce; http://www.iccwbo.org/Advocacy-Codes-and-Rules/Document-centre/2016/WTO-Business-focus-Group-1-MSMEs-and-E-commerce/
7. "Support Expressed for Advancing WTO Work on Electronic Commerce", World Trade Organization; https://www.wto.org/english/news_e/news16_e/good_14jul16_e.htm
8. "WTO Forum Signals Shift to e-Commerce Agenda", American University Program on Information Justice and Intellectual Property; http://infojustice.org/archives/37071
9. "DG Azevêdo Urges Tech Companies: Make E-commerce a Force for Inclusion", World Trade Organization; https://www.wto.org/english/news_e/news16_e/dgra_05aug16_e.htm
10. "Azevêdo: Opportunities of E-commerce Must be Available to All", World Trade Organization; https://www.wto.org/english/news_e/spra_e/spra151_e.htm
11. Report from WTO Public Forum 2016, Geneva Internet Platform; http://digitalwatch.giplatform.org/sites/default/files/WTO Public Forum 2016 - GIP Final Report.pdf
12. "China keen on e-comm deal at next WTO meet", Hindu Business Line; http://www.thehindubusinessline.com/economy/china-keen-on-ecomm-deal-at-next-wto-meet/article9371017.ece
13. Ibid.
14. "Proposal for e-commerce discussions draws interest", World Trade Organization; https://www.wto.org/english/news_e/news16_e/good_17nov16_e.htm
15. "Azevêdo: Opportunities of e-commerce must be available to all", World Trade Organization; https://www.wto.org/english/news_e/spra_e/spra151_e.htm
16. "Roberto Azevêdo, World Trade Organization Outlook, Speech to National Press Club, Washington, DC", C-Span; https://www.c-span.org/video/?416324-1/wto-directorgeneral-roberto-azevedo-addresses-national-press-club

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