MIKTA Countries Encourage WTO E-Commerce Discussions

7 July 2016

How to advance WTO discussions on e-commerce was in the spotlight in Geneva this week, as the permanent missions of Mexico, Indonesia, Korea, Turkey, and Australia (MIKTA) held a workshop on the subject on Tuesday at the organisation’s headquarters, with the support of the International Trade Centre (ITC).

The MIKTA group was set up nearly three years ago during a ministerial-level meeting in Seoul, with the group outlining a series of shared objectives where, they argued, they could make a contribution in “protecting public goods and strengthening global governance.”

The objective of last week’s workshop in Geneva was two-fold, said Korean Ambassador to the WTO Choi Kyonglim during his opening remarks. One was to raise the visibility of the MIKTA group both within the WTO and in the trade context in general, while the other was to build awareness on digital trade and e-commerce.

The Korean ambassador also noted that WTO members at the last meeting of the General Council had been highly receptive to the idea of the workshop. The General Council is the organisation’s highest decision-making body outside of the ministerial conference, and is next scheduled to meet from 27-28 July.

Azevêdo: Internet access key, but other barriers remain

Speaking to attendees, WTO Director-General Roberto Azevêdo congratulated MIKTA countries for the initiative, given that e-commerce “provides… huge opportunities for growth, development, and job creation.”

Azevêdo told the audience that internet penetration increased from 6.5 percent to 43 percent at the global level between 2000 and 2015. Furthermore, in 2013 global business-to-consumer (B2C) e-trade was estimated at US$1.2 trillion, while business-to-business (B2B) e-trade exceeded US$15 trillion.

The WTO chief called upon the international community to ensure that these opportunities are made available to all, particularly given that four billion people across various developing countries remain offline. Moreover, 850 million out of the one billion people living in least developed countries (LDCs) are not internet users.

Azevêdo also called for participants to work beyond just ensuring that people have internet access. “Being connected is essential — but we can’t just assume that people will automatically benefit from greater opportunities once they are online. It is a necessary condition, but it is not sufficient,” he explained.

For example, some regions that have access still struggle to engage in e-commerce, with Africa and the Middle-East accounting for less than two percent of the global e-commerce market.

The Director-General added that barriers remain in areas such as low levels of consumer trust, along with noting room for improvement in related laws and regulations, among others.

Cutting costs, boosting engagement

Some recurrent concerns were raised during the different interventions from public sector representatives acting in their personal capacity, private sector speakers, and experts from non-governmental and international organisations.

Among those concerns was the need to reduce the costs of digital infrastructure, as well as those for logistics and customs. Other issues raised included the lack of compliance with legal and fiscal requirements on foreign e-market, along with the need for coherence, or at least recognition, of other countries’ laws dealing with consumer protection online.

Streamlining cross border transit of low value goods trade – an area of growth enabled by online platforms – was also a topic of discussion. Raising and harmonising “de minimis” limits, below which shipments would not be subject to tariffs, and resolving related and differing approaches taxation among countries were areas identified for potential gains. Such developments could also seek to shift the current item-by-item approach for such charges on small shipments – which are very burdensome for smaller companies – to consolidated systems that could reduce transaction costs for small shippers.

Data privacy, MSMEs

One of the sessions was dedicated to data flows, privacy, and consumer protection – a hot-button topic in this field, particularly given the proliferation of new trade deals and the efforts to adopt a new US-EU Data Privacy Shield following the invalidation of the Safe Harbour Framework.

During that session, participants discussed the need to find the right balance between data protection and data flows at the national level, as well as to improve global compatibility so as not to hinder trade.

Participants also reviewed how progress on these areas would facilitate the engagement of micro, small, and medium-sized enterprises (MSMEs) in e-commerce, given that such companies cannot afford high compliance costs and uncertainty, unlike larger businesses. This will contribute to boost consumers’ trust in buying from MSMES in the digital environment, and not to rely only on bigger, well-known suppliers.

WTO options?

Attendees also discussed additional ways in which the WTO may be able to further support e-commerce in the future.

The organisation has had a work programme on the subject since 1998, with discussions taking place under the Council for Trade in Services, Council for Trade in Goods, the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Council, and the Committee on Trade and Development. These then report to the General Council.

Although progress on the e-commerce work programme has been slow, the issue received some new impetus recently in the TRIPS Council agenda this past June, for the first time since 2003. Meanwhile, negotiators meeting informally under the Services Council’s “Special Session” this week reportedly saw interest in holding more talks on the services dimension of the issue. (See Bridges Weekly, 16 June 2016)

At the workshop, participants suggested enhancing transparency and non-discrimination in this area; harmonising e-commerce practices and procedures; fostering consumer protection; and ensuring enforcement through the WTO dispute settlement mechanism to enhance predictability.

Other areas raised included efforts to provide better measurements on e-trade; apply the trade policy review mechanism to the digital economy; enhance trade facilitation around e-commerce; update the Telecommunications Services Reference Paper to guarantee more competition; revisiting market access commitments on financial and logistics services; and determining whether there is need to negotiate rules on data flows and localisation.

Some participants suggested that there was no need to “reinvent the wheel” in terms of creating new rules, suggesting that there was nothing in the WTO agreements which ruled out their applicability to e-commerce. Some cited as examples past trade disputes with an online component, such as an online gambling case between the US and Antigua and Barbuda (DS285) and a US-China row over alleged Chinese restrictions on trade in audio-visual products (DS363).

However, there was broad agreement that there remained a need to adapt the trade infrastructure to streamline e-commerce and ensure that the e-commerce agenda lived up to its potential for development and inclusion.

ICTSD reporting.

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