Marília Maciel   16 Apr 2019   Diplo Blog

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UNCTAD eCommerce Week took place from 1-5 April in Geneva, focusing on the theme ‘From Digitalization to Development’. Discussions emphasised the need to break down silos among different groups of actors and to foster collaboration in order for e-commerce to effectively contribute to achieving the sustainable development goals (SDGs). The Geneva Internet Platform and DiploFoundation provided just-in-time reporting from most e-commerce week sessions. In this summary, we identify the main trends in the discussions.

Overview

Digitalisation is increasingly affecting the world economy. The impact of cross-border data flows on GDP growth is larger than the impact of the traditional flow of goods. Digital transformation has become a key path to economic prosperity. Yet, there is unequal access to technology and skills that would enable societies to take advantage of digitalisation. This gap is currently widening, and this threatens the achievement of the SDGs.

Against this backdrop, a large number of sessions at the UNCTAD eCommerce Week were dedicated to strengthening inclusion in the digital economy. This goal could be achieved by a combination of measures, such as assisting micro, small, and medium-sized enterprises (MSMEs); developing frameworks that would lead to seamless cross-border flows of data, services, and goods; identifying opportunities for cross-sector collaboration among different actors; and, placing emphasis in regions that show untapped potential and significant challenges. 

In this regard, many sessions were dedicated to leveraging the development of the digital economy on the African continent. The challenges faced by young African entrepreneurs, women, and MSMEs were discussed, as well as the importance of legal frameworks such as the African Continental Free Trade Area (AfCFTA), and the importance of monetising big data in order for digital business models to flourish in the region.

Significant attention was also dedicated to the start of e-commerce negotiations at the World Trade Organization (WTO), announced in January, on the occasion of the 2019 World Economic Forum (WEF) meeting in Davos. The views on these plurilateral negotiations were polarised, reproducing the divisional lines at the WTO. While some welcomed the negotiations, others have called attention to their potentially negative impact on national policies geared at promoting digital development.

Exploratory discussions on the interplay between emerging technologies and trade also took place during eCommerce Week. This time, the focus of sessions gravitated from blockchain – which received more attention in previous years – towards machine learning and the introduction of artificial intelligence (AI).

E-commerce and digital business models

Although the number of MSMEs in the digital economy is rising, their participation in international trade is still low. On the one hand, they often lack knowledge about cross-border trade and do not have the skills to provide services on online platforms. On the other hand, MSMEs face strong competition from overseas. The wave of backlash against the concentration of power in the hands of big platforms echoed in some sessions during eCommerce Week, and the role of platforms as ‘extractive apparatus for data’ was highlighted, as well as the need to support start-ups and improve legal frameworks on competition.

For MSMEs to prosper, there is a need to boost accessibility to capital, and more specifically, to trade finance, working capital, and early-stage funding. Moreover, examples of the use of technology to help MSMEs in areas such as access to legal information, trade promotion, and taxation were showcased.          

Regulatory frameworks

Consumer trust is key for e-commerce; however, consumers continue to be hesitant towards the Internet and e-commerce services. Some ways to increase consumer trust include putting the necessary legal frameworks in place, such as on consumer protection, privacy and data protection, and cybersecurity.

Effective consumer protection requires harmonised legal approaches and international co-operation, including cross-border enforcement. It is also key to include consumer protection clauses when negotiating international trade deals. Data protection is key to boosting consumer trust in digital services. At the same time, the lack of harmonisation on data protection may hinder information exchange, as not every country would currently be able to adequately conform to high standards. In the absence of regulation, it was suggested that codes of practice developed among countries that are economic partners could be a potential positive solution to upholding data protection, without hindering e-commerce. It is also important to make a distinction between different types of data flows, because personal data and non-personal or anonymised data flows enjoy different types of legal protection.

In the field of cybercrime, there is a need for stronger public-private partnerships in order to find adequate and scalable solutions. It is also important to provide cyber capacity building for actors who are part of the digital economy, such as MSMEs. Policymakers often look at cybersecurity challenges through the lens of national security, whereas cybersecurity breaches have grave implications for trade and economies.                

Data localisation and taxation were additional areas of potential regulation discussed during the eCommerce Week. The flow of data helps to enhance productivity and competitiveness. Seamless data flows require the harmonisation of standards and interoperability as a means of facilitating access to data, data sharing, and the implementation of mechanisms such as the Single Window. Exceptions to data flow provisions are also important to guarantee that some public policy objectives are met, such as protecting privacy and enabling effective law enforcement. Nevertheless, data localisation measures should not be used as a form of national protectionism.

Discussions on taxation included, on the one hand, proposals to tax digital companies and the role that tax havens play on influencing investment, and, on the other hand, the taxation of e-commerce transactions. While a permanent waiver on customs duties on electronic transmissions could boost e-commerce, governments need the revenue from taxes to be able to create a fertile environment for companies and to provide services for their populations.

Several sessions were dedicated to trade negotiations, in particular to the plurilateral e-commerce negotiations that will start at the WTO in May. While there is an expectation that these negotiations will contribute to addressing issues related to, for example, consumer protection and privacy, others believe that human-rights-related issues should not be discussed at trade forums. There is a large number of issues that are currently interconnected with trade, such as net neutrality, cross-border data flows, and privacy, but do not have to be discussed within WTO structures.

Participants acknowledged that trade negotiations are moving much faster on regional trade agreements (RTAs). The Association of Southeast Asian Nations (ASEAN) agreement on e-commerce and AfCFTA Phase 2 negotiations will likely deal with many of the issues that have been put forward at the global level, but did not effectively advance. It remains to be seen if this patchwork of RTAs will eventually fit together, contributing to achieving a global trade order, or if they will entail further fragmentation within the trade system.

Emerging technologies

Machine learning, blockchain, quantum computing, and 5G were some of the technologies discussed during the eCommerce Week. AI applications were tackled in many sessions, from their introduction in intelligent transportation systems to overcoming difficulties in understanding different regulations when engaging in cross-border trade.

Some applications of new technologies may require further regulation from a trade perspective. Algorithmic decision-making, for example, raises issues related to algorithmic collusion that may create cartels that are more durable and harder to detect. Nevertheless, regulation alone is not sufficient. Innovative solutions, such as creating an algorithmic collusion incubator that would mirror the industry’s algorithms were suggested, with the aim to monitor the industry, and to test and identify collusion practices.

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