E-commerce and digital trade for development: Negotiations to soft launch at MC11

19 October 2017

A wide range of submissions on e-commerce has been made by WTO members over the past two years. “Awareness” has been raised. Frameworks, coverages, and approaches have been proposed surrounding e-commerce. In this article, the author discusses the current state of e-commerce and digital trade initiatives at the WTO-level and assesses the scope for advancing the e-commerce agenda towards Buenos Aires and beyond, particularly in terms of promise for a plurilateral solution.

 

Discussions in Geneva over the past 18 months have convinced all participants that e-commerce and digital trade can support economic development, especially by providing an effective way for small companies in less developed countries to engage in global trade. However, conflicting views remain on the necessity of starting a negotiation around new e-commerce related rules. In this context, members continue exploring possible ways of advancing the e-commerce agenda towards Buenos Aires and beyond.

At the E15 Dialogue on E-Commerce and Development: Sharing Commitments and Extending Benefits, we discussed existing WTO rules, papers circulated by WTO Members, and the prospects for launching negotiations at the Eleventh WTO Ministerial Conference (MC11) and beyond.

Existing Rules

Papers presented in the context of the E15Initiative and elsewhere have established that existing WTO rules in goods, services and intellectual property provide a solid base for covering e-commerce and digital trade. Clarifications would be welcome on key points such as cross-border data flows and local server requirements in order to avoid disputes, but the rules certainly apply in committed sectors. More commitments in key sectors for e-commerce services need to be made, and we need to add specific e-commerce rules to the WTO Trade Facilitation Agreement, including de minimis tariff levels on low-value imports.

Recent WTO Member Papers and Positions

A wide range of (mostly) thoughtful and helpful submissions on e-commerce has been made by WTO members in 2016-2017. “Awareness” has been raised. Frameworks, coverages, and approaches have been proposed surrounding e-commerce.

Importantly, consistent with statements made at WTO meetings, the Africa Group circulated a communication in which experts suggested that a WTO multilateral framework “could pose a serious threat for developing countries.” It remains unclear whether this view is widely shared among African countries, but the statement clearly reflects a negative view of liberal trade principles and an opposition to multilateral negotiations.

Recently though, Costa Rica submitted a proposal for a draft Ministerial Decision on a WTO E-Commerce Development Agenda, which could prove pivotal at MC11 or beyond. The document draws an explicit link between e-commerce discussions and development objectives, with a view to obtaining a ministerial mandate.

Prospects for MC11

Proposals for discussions on e-commerce and digital trade, and even suggestions to update basic research on e-commerce, have encountered strong opposition by some members. Nevertheless, discussions continue and the scenario indicates that e-commerce talks will stretch all the way into the upcoming Ministerial Conference. That said, the environment remains hostile, and we cannot be optimistic about a multilateral agreement to launch negotiations at MC11.

Although some members may want to leave the multilateral door ajar for as long as possible in hopes that a consensus can be reached, there is little doubt that we are moving toward a plurilateral Ministerial initiative at MC11 where members will decide to move ahead towards negotiations to clarify and improve rules that apply to e-commerce and digital trade.

The outcomes of the plurilateral initiative should apply on an most-favoured nation basis, so developing countries and least developed countries (LDCs) will benefit from improved conditions of trade in export markets. However, as the litany of papers and presentations has made clear over the past years, countries need to engage in domestic reforms to benefit from e-commerce, not just rely on reforms in export markets. Products from LDCs cannot be searched for, advertised, sold, transported, and paid for without an integrated chain of e-commerce and digital trade.

It would be a shame for the countries who need development most to turn away from the most promising means of access to global trade – but that is where we are heading.  Unfortunately.

But, fortunately, the plurilateral door can be left wide open. Members who move ahead plurilaterally should make every effort to provide information, assurances and technical assistance to countries that choose not to participate now.

 

Daniel C. Crosby is Managing Partner, Geneva Office at King & Spalding.

In July 2017, ICTSD organised a dialogue on e-commerce and development to contribute to discussions on possible ways forward at the WTO towards MC11 and beyond.