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Global e-commerce needs a boost. The WTO can help.
February 28, 2020

Global e-commerce needs a boost. The WTO can help.

At the next major world trade summit in June, countries have an opportunity to advance a policy framework that would spur global e-commerce and entrepreneurship. It's critical that world leaders not let the opportunity pass them by.

In January 2019, more than 70 countries launched discussions to develop a new policy framework to support global e-commerce at the World Trade Organization (WTO).

From the outset, the effort was refreshing, as countries as diverse as Australia, Costa Rica, the European Union, Nigeria and the United States emphasized their shared interests in supporting a non-discriminatory, rules-based system to encourage global e-commerce. A constellation of business and NGO groups from developed and developing countries expressed support for an ambitious outcome.

More than a year later, the negotiations are approaching an inflection point. In June, the WTO will hold its next Ministerial Conference, a biennial exercise to engage high-level officials and make progress on important issues. It will be critical for participants to show substantial progress on an e-commerce initiative at that time.

Since January 2019, under the leadership of Australia, Japan and Singapore, a great deal of progress has been made in creating a shared understanding of the importance of an updated rule-book and of new commitments to ensure non-discriminatory access to global services and technology. Now it's time for participants to get more specific.

Any deal worth pursuing must be commercially meaningful for businesses and entrepreneurs in developed and developing countries. An outcome at the WTO must support the entire e-commerce ecosystem that companies, particularly small businesses, rely on to access global markets and run their business on a global basis.

Commitments on key digital trade rules including on data flows and server requirements, customs and trade facilitation, and market access for services sectors that are critical for e-commerce to function, such as financial, distribution and computer and related services, are table stakes in these negotiations to support a vibrant e-commerce ecosystem.

A high standard, commercially-meaningful deal is particularly important to support small businesses and development, as Sasi Kimis, the founder of Earth Heir, which sells handcrafted Malaysian heritage pieces made by women, refugees and indigenous people, emphasized to WTO negotiators during a July 2019 workshop in Geneva.

Sasi noted her small business, with employees and partners scattered around the country and the world, relies fundamentally on access to global digital tools, from payments, e-commerce and social media platforms to shipping, accounting and cloud storage services.

This effort has never been more urgent. In the absence of new and robust initiatives to craft public policy frameworks that enable access to international markets and technologies, digital protectionism is likely to continue to rise.

To give just one example, countries including Indonesia and India have begun to question the value of the WTO customs duty moratorium on electronic transmissions. Indonesia has taken concrete steps to classify digital transmissions as "intangible goods" and subject them to customs administration and inspection.

These efforts could force small businesses to fill out a customs declaration every single time an electronic transaction of a covered good takes place, which could include everything from digital movie downloads to R&D transactions. This effort has troubling implications for small businesses, who would face an impossible compliance burden.

Advancing a commercially-meaningful agreement on e-commerce is also important for the WTO as an institution. With members bogged down over disagreements about how the organization functions, a new plurilateral deal among innovative economies would send a welcome signal that the institution can deliver for business and development and could be an early deliverable towards a broader reform effort to strengthen the WTO.

While nobody expects a deal to be fully completed by the upcoming WTO ministerial conference, like-minded countries should commit to show substantial progress by June as well as a path forward to completing a deal in a timely manner.

-- Jake Colvin, Vice President for Global Trade and Innovation, NFTC and Executive Director, GIF