Updating the multilateral rulebook to foster development: Digital trade and beyond

Event report

[Read more session reports and live updates from the 2016 WTO Public Forum.]

This session, organised by the European Commission, discussed the gaps that current WTO norms may present on issues related to e-commerce. Denis Redonnet, Director for WTO, Legal Affairs and Trade in Goods, at DG TRADE, European Commission, presented some initial remarks. He mentioned that the WTO work programme on e-commerce did not receive the attention it deserved over the past few years and has only recently taken off. The high number of sessions tackling the issue of e-commerce at the WTO Public Forum are a sign of this increased interest. Redonnet presented the general questions guiding the session: What is the potential of e-commerce? What are the gaps in trade rules with regard to e-commerce? Are there other development-friendly areas beyond e-commerce that are insufficiently regulated? What should the priorities be for the WTO?

E-commerce enables entrepreneurs to engage in global trade regardless of their location, as remarked by Arancha González, Executive Director of the International Trade Centre (ITC). ‘It is a topic is of interest to the developed and developing world, which cuts across North-South and East-West divides.’ Some key enablers of e-commerce are capacity to innovate, the availability of infrastructure and the presence of an enabling business and regulatory environments. With regard to trade norms, González highlighted that the agreement on trade facilitation at the WTO is important to promote e-commerce, but insufficient to meet the challenges ahead. Small and medium-sized enterprises (SMEs) are confronted with significant disparity of standards which require harmonisation, from regulatory to private standards, such as consumer protection or online payment. In addition, she noted that the provision of well-functioning services – including logistics, distribution and financial services – should be an integral part of the debate on e-commerce.

Syed Tauqir Shah, Ambassador and Permanent Representative of the Mission of Pakistan to the WTO, addressed the topic from a developing country standpoint. While Shah recognised the importance of e-commerce in fostering development, he also called attention to concrete barriers to realising its full potential, such as poor infrastructure and logistics, lack of payment solutions, and lack of digital skills. Shah noted that some members of the WTO seem to be in a hurry to develop regulation, but e-commerce rules need to be discussed together, in multilateral forums. Collecting information and providing capacity building are pre-conditions to understanding the concerns and challenges of all parties involved on the debate.

A business perspective was introduced by Omar Soudodi, Managing Director of PayFort, who remarked that the percentage of cross-border trade is still very low. Some practical issues need to be addressed, such as the amount of customs duties charged on items bought from abroad, which can be very costly to consumers. Delivery of parcels is also an issue because consumers are getting used to an ‘on-demand’ economy, with the expectation of receiving purchases as quickly as possible. On the financial side, measures of facilitation are needed. The preferred method of payment may change significantly from country to country – in China, for instance, a seller would probably need to offer the option to conduct payments through Alipay. For SMEs, adjusting to different payment methods is cumbersome, since there is no one-stop shop for contracting all payment systems. SMEs are the companies who need WTO’s help the most, and the organisation should focus on creating an enabling environment for them.

Pierre Sauvé, Director of External Programmes and Academic Partnerships and faculty member at the World Trade Institute (WTI), focused on what the role of the WTO should be.  The constitutional documents of the WTO pre-date the digital revolution and the organisation needs to adapt to this new scenario. It should be recognised, however, that the challenges of e-commerce require a multi-layered governance response. On the one hand, the WTO could play the role of an aggregator of information and a connector of policy communities that are able to address issues that the WTO could not do alone. The WTO could be the anchor for dialogue that ensures coherent responses all across the board. On the other hand, there are issues that could fall within the WTO mandate, in particular issues that are relevant to freedom of exchange in the digital sphere, such as making tax exemption permanent and discussing the consequences of the mandatory localisation of servers under a specific jurisdiction. Two important challenges need to be met: finding the conditions to promote regulatory coherence in order to avoid digital fragmentation and finding frameworks that would allow variable geometry in future negotiations. Negotiations need to include all, but there needs to be room to allow some countries to move forward, if needed.

by Marília Maciel