Trade facilitation 2.0: Enabling trade in the digital age

Event report

[Read more session reports from the UNCTAD E-Commerce Week 2018]

The session, organised by the International Centre for Trade and Sustainable Development (ICTSD), focused on the opportunities e-commerce creates for small and medium enterprises (SMEs) especially in developing countries. The session had a multidimensional approach on trade facilitation, with a specific focus on its digital component. It was introduced by Mr Felipe Sandoval (Senior Advisor for Trade Law and Negotiations, ICTSD) who moderated the discussion with the aim of introducing and helping the framing of the concept of ‘Trade Facilitation 2.0’.

The first speaker was Mr Ricardo Melendez-Ortiz (Chief Executive, ICTSD) who introduced the concept. He outlined the need to implement the existing framework and address the development dividend. Two characteristics feature in the existing framework: the architecture that has been institutionalised in the discussions at the World Trade Organization (WTO); and the way in which agreements take up development issues, particularly with regard to effective provisions in terms of capacity and support, especially for developing countries. He highlighted that urgent steps need to be taken in order to implement trade facilitation: the need to complement agreements for agricultural goods, for instance in terms of sanitary measures; and the necessity to recognise the need to facilitate trade investments as well as knowledge components. The challenge is indeed related to the identification of the new evolving business models and future trends that the digital age creates. Finally, he concluded his speech by recalling the two orders of benefits: the first focused on consumption and use, the second related to the development and management of digital technologies. This second order of benefits was stressed as a potential aspect countries should focus their attention on since it may determine possible economic opportunities.

The second expert was Ms Aviva Zhang (Trade Facilitation & Market Access Issue Management, Global Affairs Department, Huawei) who talked about challenges for business from the perspective of Trade Facilitation 2.0. She examined the multidimensional features of trade operations and expressed the need for more holistic problem-solving approaches. She stressed the importance of the Trade Facilitation Agreement (TFA), which entered into force in 2017, and of the Information Technology Agreement (ITA). Speaking about how information and communications technology infrastructure is today a key pillar of digital transformation, Zhang also noted that the intelligence revolution is driven by these new technologies and will impact the landscape of digital trade. Implementing Trade Facilitation 2.0 relies on the will and efforts of institutions to analyse the barriers and look at issues such as international taxation. Zhang concluded her speech by calling upon states to have higher ambitions for the implementation of existing commitments, especially in the context of the fourth industrial revolution, the impact artificial intelligence has on how business develops, and the way trade negotiations interact with each other.

The third expert was Ms Maria Ptashkina (Bridges Daily Graduate Fellow, ICTSD) who addressed the topic of trade facilitation and trade agreements using a more systematic approach. First, she analysed the definition, scope, and taxonomy of e-commerce: digital transformation has created new forms of trade and the related international norms and regulations have to comply with an inductive approach to the evolution of Internet governance. She analysed five different modes that conceptualise the broad scope of e-commerce:

1. Digital to real transactions, including the provisions of access to the Internet;
2. Real to real: business to human (B2H) and business to business (B2B) transactions with digital intermediaries;
3. Real to real: human to human (H2H) transactions with digital intermediaries;
4. Real to real: human to business (H2B) transactions with digital intermediaries;
5. Capitalisation of data flows.

Secondly, she identified potential barriers, both specific to the digital realm, such as frictions in the enabling environment, technical trading restrictions, and data localisation requirements, and cross-cutting issues, such as intellectual property (IP) rights, establishment restrictions, and fiscal frictions. The third aspect she covered was related to main regulatory frameworks, those used by the European Union, the United States and China. In this regard, the main divergence areas remain those related to open networks, network access, and use; data localisation and privacy; net neutrality and competition; and intellectual property rights, to cite a few. Finally, she talked about the need for the development of a forward-looking agenda meant to align the different regional incentives and promote discussion both at the WTO and at regional level for the implementation of a regulatory and unified analytical environment.

After the previous three panellists, the floor was given to the following ambassadors, who addressed the topic from a more diplomatic and multilateral perspective.

Mr Roberto Zapataz (Ambassador and Permanent Representative of Mexico to the WTO) stated that the WTO should be engaged in negotiations that look to a longer-term perspective, since several elements that ICT developments are suggesting are already part of the WTO discussions on facilitation of e-commerce. In terms of negotiations, he argued that the nature of the WTO discussion is facing a growing challenge. Indeed, he talked about the concept of topics in ‘interrelated silos’ that lead to the need to engage in a more dynamic and resource-oriented discussion.

Ms Yee Woan Tan (Ambassador and Permanent Representative of Singapore to the WTO) argued that the WTO should be able to address contemporary issues about e-commerce. She recalled the Joint Statement on Electronic Commerce as a solution that allows informal groups to close the knowledge gaps that at times feature in the negotiations. Finally, the Ambassador highlighted the new opportunities that digital transformation, when implemented according to trade facilitation rules, has created for better systems innovation and growth.

Mr Syed Tauqir Shah (Ambassador and Permanent Representative of Pakistan to the WTO) asserted that the huge growth in e-commerce is not matched in cross-border e-commerce. The borders are still very thick as far as e-commerce is concerned. Thus, there is an urgent need to close the conceptual gaps still in place. Following the line of argument of Ambassador Tan, he recalled the efforts of the initiative Friends of E-commerce for Development, meant to implement current efforts. However, he stressed that Trade Facilitation 2.0 is based on the above-mentioned agreements which some members are still struggling with. Thus, there is a need to improve the political capacity of states in order to engage effectively with the concept of Trade Facilitation 2.0.

By Stefania Grottola