The business case for e-commerce and development: Towards sustainable development

Event report

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Mr Álvaro Cedeño Molinari, Ambassador and Permanent Representative of Costa Rica to the WTO, moderated the session. He started by introducing the speakers.

Mr Ricardo Lagreca, Legal and Governmental Relations Senior Director, MercadoLibre Inc., mentioned that the mission of Mercado Libre is to democratise commerce and money in Latin America. He presented an overview of the sales evolution of the company and some challenges related to logistics.  He also presented Mercado Pago, a payment solution that provides security for sellers and buyers. Mercado Pago notifies the seller when the product has been effectively paid for by the buyer and releases the payment to the seller when the product has been delivered.

Mr Mohamed Es Fih, eSolutions for Business Advisor, Division of Enterprises and Institutions, International Trade Center (ITC), highlighted that e-commerce is a fantastic opportunity for developing countries, especially for small and medium-sized enterprises (SMEs) to leap forward in terms of economic growth.  He believes there is a proliferation of micro-multinationals: small enterprises that can use the online environment to have access to the same services and have the same exposure as a multinational company. A company in a developing country can, for example, get its brand directly exposed in the American market without the need for an intermediary. This new approach has many advantages. The added value of the transaction is kept in the developing countries. At the same time, American consumers make their transactions in their own market, protected by their own laws.

Es Fih said that SMEs still face several obstacles to taking full advantage of the opportunities provided by e-commerce. One of them is that information about e-commerce is scattered across several bodies. The exporting system is cumbersome for SMEs because it was built for large exports, not for small quantities. Moreover, once the product is exported, there are obstacles in the way of getting into the importing market, for example, complying with safety, privacy, and payment norms. There are several ways in which SMEs can be supported, such as being provided with a sandbox in which they can test product placement and pricing before they get to platforms with very strict rules, such as Amazon.

Mr James Lockett, Vice-President, Head of Trade Facilitation and Market Access, Huawei Technologies, started by placing e-commerce in the context of the broader digital economy. Without infrastructure, services and platforms, there is no e-commerce. Huawei, for example, is not properly an e-commerce company, but it is present in different segments of the digital economy, and e-commerce players are among its customers. Many segments of the digital economy are interconnected.

The digital gap has been a significant concern for Huawei. The company is finalising a study on connectivity that shows that digital have-nots are falling further behind more connected countries. Investing in the infrastructure is paramount, not only because it translates into growth but because it also fosters other markets such as cloud services.

Mr Eric White, Project Lead, World Economic Forum, concurred with the previous speaker on the importance of digital inclusion. He mentioned a project called Internet for All, which aims to help close the digital divide. In his opinion, the business case for e-commerce is that it creates a virtuous cycle between trade and economic growth.

Cedeño offered some reflections on the challenges faced by actors trying to engage in e-commerce. He emphasised the need to support the “laggers”  ̵ those that are lagging behind and are excluded from the Internet  ̵ in order to help them catch up.

Es Fih emphasised the need to facilitate access to e-commerce infrastructure. He remarked that in Africa there are plans that offer easy access to entertainment, such as one free gigabyte to access Youtube. However, there is no unlimited access to e-commerce platforms. He mentioned that in Africa and Asia people are mitigating the problem of lack of access to the internet with the use of Unstructured Supplementary Service Data (USSD), which is similar to an SMS, connected to a website. Through this technology people in rural areas engage in e-commerce. He remarked that, in developing countries, e-commerce happens on WhatsApp and social networks, because sellers avoid paying the VAT. These transactions are not captured by official statistics. He wondered how these companies can be convinced to come out of the informal into the formal economy.

White responded to Es Fih’s comment on the need to facilitate access to e-commerce platforms by saying that the principle of network neutrality would probably be against this approach. Facebook tried to make agreements with telecom operators to offer unlimited access to Facebook, but many countries, such as India, had problems with this approach.

The moderator opened the floor for comments. There were questions about the negotiating positions in preparation for the next WTO Ministerial Conference, due to take place in December in Buenos Aires; the role of the Trade Facilitation Agreement and its impact on facilitating exports into other countries; the liberalisation of services and the way it could help to strengthen infrastructure in other areas that are important to e-commerce, such as warehouse management; and developing infrastructure for online payments.

Es Fih agreed on the importance of measures to facilitate exports. He gave some examples of policies such as a government initiative in Morocco whereby assistance is provided to prepare the necessary paperwork for exports.

Lockett mentioned that, when it comes to negotiating positions on e-commerce, different countries and regions hold different views on what the rules for the internet and commerce should look like. The US defends free trade and an open internet, but, at the same time, it is concerned with state security, which is defined in a very broad way and could be a barrier to trade. China also holds strong views on national security, Brazil adopts a position of economic nationalism and Europe has strong positions on rights and privacy. In his opinion, it is wrong to push one of these views to the detriment of others. There is a need to find commonalities and convergence to develop regional and multilateral agreements.

White mentioned that data localisation laws are a non-tariff barrier to trade. Countries need access if the benefits of these policies are to compensate the costs.

Cedeño Molinari provided an overview of the work of the Friends of E-commerce for Development. He remarked that e-commerce represents a convergence between the trade agenda, the digital agenda and the development agenda. There is a need to cut across these issues. In his opinion, the upcoming WTO Ministerial is an opportunity to advance conversations on e-commerce. If there is no dialogue in the WTO, the organisation will lose its relevance in this field of e-commerce. 
 

by Marilia Maciel