Technology has significantly transformed the world’s economy. The ability to make data flow worldwide, and the digitisation of information have enabled digital business models and spurred the growth of e-commerce. The impact of cross-border data flows on gross domestic product (GDP) growth is now larger than the impact of the traditional flow of goods.
Digitalisation of Trade
On the one hand, digitisation is leading to the dematerialisation of products that were previously commercialised as physical objects (such as books, films, games, and recorded music), while on the other, digital flows underpin and enable every other kind of traditional cross-border flow.
For example, parcel tracking is very important for the management and logistics of goods crossing the border. Packages have ‘digital wrappers’, a strain of digital information that is paired to a product, including information on the product, the exporter, the importer, and other information required for global tracking. In addition, even when ships carry physical products, customers increasingly retrieve, order, and pay for them online, generating a significant stream of cross-border data, which includes personal data
The COVID-19 pandemic led to an expansion of e-commerce towards new firms, customers, and types of products, accelerating the uptake of e-commerce by five years. The COVID-19 and E-commerce: A Global Review report found that, in Latin America, online marketplace Mercado Libre sold twice as many articles per day in the second quarter of 2020 as during the same period the previous year, while African e-commerce platform Jumia reported a 50% increase in the first six months of 2020.
The pandemic also showed the importance of enhancing investment on e-commerce enablers, since the ability to benefit from e-commerce growth varied significantly due to the gaps in access to the internet and connectivity, digital skills, and developed postal infrastructure.
The growth of e-commerce has brought innumerous benefits, but it also created significant challenges for policymakers and regulators, leading to a sense of urgency in developing legal frameworks that take into account the impact of digitisation on the trade of goods and services.
Against this backdrop, trade discussions have captured the growing interplay between data governance and the digital economy. E-commerce negotiations started to encompass provisions on a vast number of digital policy issues, many of them related to data governance, such as data flows and data protection.
Current situation: E-commerce negotiations
The growing relevance of e-commerce to the global economy enhances the importance of policy discussions at the national level, regional trade agreements (RTAs), and at the World Trade Organization (WTO).
RTAs have mushroomed in all parts of the world, serving as focal points of interstate cooperation, as well as incubators and testing grounds for new trade rules. At the WTO, discussions on e-commerce are taking place in two parallel tracks: the WTO Work Program on Electronic Commerce, launched in 1998, and the Joint Statement Initiative (JSI) on E-commerce which aims to produce a binding agreement among its members.
E-commerce negotiations have not only increased in number, but also in complexity. The digital trade agenda now encompasses both traditional trade topics (e.g. trade facilitation) and several digital policy issues, such as:
- cross-border data flows and data localisation
- e-signatures and authentication
- network neutrality
- online consumer protection and privacy
- unsolicited commercial electronic messages (spam)
- open government data
- customs duties on electronic transmissions
- access to the source code of computer programs
E-commerce at the World Trade Organization (WTO)
Under the WTO Work Program on Electronic Commerce, issues are examined in four bodies: the Council for Trade in Services, the Council for Trade in Goods, the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS), and the Committee on Trade and Development. The programme currently has no negotiating mandate, but provides a platform for WTO members to discuss and exchange clarifications and official communications.
Because of the increasingly important role that e-commerce plays in the digital economy, some members argued that the WTO could more strongly incorporate e-commerce in its agenda. Accordingly, the 2017 Joint Statement on Electronic Commerce was launched aimed at starting exploratory talks on the potential negotiation of trade rules on e-commerce. The members of the JSI announced their intention to start the e-commerce negotiating process in the second Joint Statement of January 2019, launched in Davos.
Although the JSI has made significant progress on some topics, notably on spam and electronic signatures and authentication, issues related to data flows, privacy and data protection, and cybersecurity have revealed diverging views among members.
While JSI members committed to intensify work in order to narrow differences before the 12th Ministerial Conference, scheduled to take place from 30 November to 3 December 2021, in Geneva, the final outcome remains unclear, including when it comes to the renewal of the current moratorium on customs duties on electronic transmissions. At the same time, many developing country members are pushing to reinvigorate the WTO Work Program on Electronic Commerce.
Watch the recording below of the GIP’s ‘Trade and Finance Tour’ which discussed trade negotiations taking place in Geneva.
E-commerce in Regional Trade Agreements (RTAs)
RTAs are a key mechanism to produce norms on digital commerce. More than half of WTO members have signed RTAs that encompass e-commerce provisions, including many developing countries.
Governments’ efforts to conclude RTAs with e-commerce specific chapters recently increased significantly. On June 2020, Chile, New Zealand, and Singapore signed the Digital Economy Partnership Agreement (DEPA), while the Regional Comprehensive Economic Partnership (RCEP), a mega-regional agreement with a chapter on e-commerce, was signed in November 2020. In December 2020, the Assembly of the African Union decided to fast-track e-commerce negotiations under the African Continental Free Trade Area (AfCFTA).
Countries that take part in RTAs seek legal coherence by aligning their regional and international obligations. Committing themselves to international obligations that are in tune with their obligations in RTAs would facilitate overall compliance. Nevertheless, specific digital commerce chapters and provisions vary from one RTA to another in terms of their specificity, depth, and breadth. A patchwork of regulation is emerging with the proliferation of RTAs, creating challenges from the standpoints of legal coherence and inclusion.
The conclusion of some RTAs has also raised geopolitical considerations, especially when it comes to the membership of e-commerce powerhouses, such as the United States and China. For example, there have been assessments that the conclusion of the RCEP – which encompasses the ten countries of the Association of Southeast Asian Nations (ASEAN) plus Australia, China, Japan, New Zealand, and South Korea – strengthens China politically and economically and reinforces its stance in digital commerce regulation. This happened at the same time as the USA retreated from large trade agreements, particularly from negotiations on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) , concluded without the USA.
E-commerce capacity development
The growing interplay between trade and digital policy calls for a multidisciplinary approach to capacity development which provides the technical knowledge necessary to grasp the implications of policy proposals.
Diplo’s comprehensive Digital Commerce online course is designed to assist governmental and non-governmental actors to better understand what digitisation and the internet bring to trade discussions, and help them reap the benefits of the digital economy.
Graduation ceremony of the Digital commerce course May–June 2021
The specialised training helps both practitioners and policymakers to:
- Understand the global implications of digitalisation in trade discussions
- Access a vast array of good practices and case studies
- Participate more meaningfully in trade-related international forums
- Learn how global rules can facilitate development and leverage them for national benefits
Course participants benefit from:
- The multidisciplinary knowledge of course partners and faculty, with extensive experience in the fields of international trade, digital policies, and Internet governance.
- A thematic approach that covers the increasing interplay between trade and digital policy issues.
- An innovative and highly interactive methodology, which allows them to immediately apply new knowledge in the daily routines.
- The just-in-time nature of the course: with the discussions and analyses also covering breaking news and the most recent developments.
The courses are conducted either entirely online or follow a blended learning approach, which mixes online learning and face-to-face meetings. For information on the next editions of the digital commerce course, visit Diplo’s course catalogue.
Feedback from Digital Commerce course participants can be found in the video below.
Reporting from e-commerce events
Diplo and the GIP provide just-in-time reporting from key digital commerce-related events, such as the UNCTAD E-commerce Week and the WTO Public Forum. Just-in-time reporting enhances the accessibility of discussions, benefiting those that cannot physically attend meetings in Geneva. This includes small organisations and country delegations that struggle to allocate staff to follow multiple sessions that may take place simultaneously during large events. The reporting initiative also helps the wider community of interested stakeholders to stay up to date with e-commerce policy discussions by providing concise summaries which focus on key policy issues raised during events.
Just-in-time reporting contributes with achieving sustainable development goal (SDG) number 16 on peace, justice and strong institutions, supporting the following targets, in particular:
- Develop effective, accountable and transparent institutions at all levels
- Ensure responsive, inclusive, participatory and representative decision-making at all levels
- Broaden and strengthen the participation of developing countries in the institutions of global governance
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Addressing the Digital Divide in the Joint Statement Initiative on E-Commerce: from enabling issues to data and source code provisions
This paper examines the evolution of the ‘digital divide’, especially in the context of the WTO Joint Statement Initiative on Electronic Commerce. As an integral part of its analysis, the paper examines textual proposals raised under the current Joint Statement Ini... Read more...
This publication presents the thematic approach, methodology, achievements and lessons learned from a capacity development initiative on e-commerce jointly offered in 2017/2018 by DiploFoundation, CUTS International Geneva, the International Trade Centre (ITC), the Gen... Read more...
This study examines the advantages and possibilities for the use of digital signatures to carry out electronic transactions. It focuses on developing and transition countries that have not fully implemented the use of digital signatures in their economic, commercial an... Read more...
This research paper focuses on the taxation of electronic commerce (or e-commerce) in Madagascar. The objectives of this project are to offer insight and help the fiscal administration for future governmental programmes focusing on the taxation of e-commerce in Madagas... Read more...