Prof. Biswajit Dhar Centre for Economic Studies and Planning

Jawaharlal Nehru University New Delhi

Symposium 0n Preferential Trade Agreements and Inclusive Trade , 14-15 December 2017

Electronic Commerce in the WTO

Ministerial Declaration on Global Electronic Commerce in 1998 introduced electronic commerce in the WTO, with the following mandate for WTO members To examine all trade-related issues relating to global

electronic commerce To take into account the economic, financial, and

development needs of developing countries, and recognize that work is also being undertaken in other international fora

To continue their practice of not imposing customs duties on electronic transmissions

Moratorium on imposing customs duties on e-commerce has been renewed in every Ministerial Conference held since

In the deliberations prior to MC11, there were demands for making the moratorium permanent

Proposals for Including E-Commerce in WTO

Key feature of the recent discussions on e-commerce has been the active participation by a 12-member group of developing countries, the Friends of E-Commerce for Development (FED) “Electronic commerce is a tool that brings together the

digital, social and development agendas and as an enabler of sustainable and inclusive growth for MSMEs, especially those from developing and least developed countries”

FED is the first non-negotiating group of countries To put its imprint on an issue that would expand the coverage

of the WTO To forge coalitions with a number of developed countries,

which is somewhat unusual for developing countries dealing with a new issue in the WTO

Development Context to Electronic Commerce

Friends of E-Commerce for Development (FED), a group consisting of Argentina, Chile, Colombia, Costa Rica, Kenya, Nigeria, Mexico, Pakistan, Sri Lanka, and Uruguay, came together based on “a common understanding and acceptance of the positive impact of E-Commerce and its versatility to create sustainable economic opportunities for all” The view of this group is that E-Commerce is “an

instrument that brings the digital, development and trade agendas together and as a tool for inclusive and sustainable economic growth”

Proposals for Including E-Commerce in WTO

European Union and developing countries like Côte d'Ivoire, Paraguay and Singapore proposed amending the WTO rules and the overall structure of trade policies for making them more suited to the functioning of the digital economy

The proposal offered a tentative list of all trade-related elements relevant for e-commerce that need to be discussed Regulatory frameworks Open markets Initiatives facilitating the development of e-commerce Transparency of the multilateral trading system

China - identify the elements acceptable to Members that could be reflected in the MC11 Work Programme on Electronic Commerce Moratorium of customs duties on electronic transmissions Facilitating cross-border e-commerce Promoting paperless trading Transparency Development and co-operation

The “Other” Voices on E-Commerce

African Group has tabled arguments against the inclusion of electronic commerce in WTO

Bangladesh expressed the view that the Ministers should instruct the WTO General Council to examine the effectiveness of e-commerce for development

India maintained that the work under the Work Programme on Electronic Commerce adopted in 1998 must continue to get better clarity on the issues involved

African Group’s Views

Questioned the view that e-commerce can help develop the MSMEs and eliminate “the supply-side constraints, lack of technology and lack of finance, and other non-tariff barriers that many MSMEs face

Argued that MSMEs cannot effectively compete with multinational corporations, who have

Become global digital leaders

Decimated smaller companies

Benefitted from digital industrial policies such as subsidies, R&D subsidies, development of, and have access to, and ownership of technologies, economies of scale, government-sponsored infrastructure, tax benefits

Bangladesh Proposals

General Council be instructed to examine the development of electronic commerce with a view to exploring possible ways to harness the potential of electronic commerce to benefit SMEs in developing countries, especially least developed countries, including through promoting their direct access to the consumers and ensuring fair competition in electronic commerce at the global level.

WTO to maintain close liaison with other international organizations on developments in the areas of bridging the digital divide, ensuring access to internet for all, e-payment solutions, cybersecurity, consumer policy among other issues and to report to the General Council.

Developed countries shall, and the developing country Members declaring themselves in a position to do so, should provide duty free and quota free access to all goods and services originating from all LDCs that are exported using e-commerce platform directly from LDCs suppliers.

Assessing the Proposals on E-Commerce Proposals for inclusion of electronic commerce

Have argued that this platform benefits MSMEs, and is hence favourable to developing and least developed countries

Advocated the need for “open markets”, ratcheting-up the trade liberalisation agenda

This view lacks consensus, with a few strong voices, especially the African Group, questioning the arguments of the demandeurs about MSMEs benefiting from e-commerce Inadequate digital infrastructure in most developing countries

lends weight to the African Group view

Unlike in the run-up to the Trade Facilitation Agreement, current discussions on e-commerce has ignored the substantial deficiencies in the digital infrastructure and other capacities of developing countries

At least for now, the enlarged work programme on e-commerce proposed by the FED and other proponents will have to wait MC11 ended without any decision on e-commerce

Individuals using the Internet (% of population)

Region 2000 2005 2010 2015 2016

Euro area 22.5 51.3 71.0 78.7 80.4

North America 43.9 68.3 72.5 75.9 77.5

Latin America & Caribbean 3.9 16.6 34.7 54.3 56.4

East Asia & Pacific (excluding high income) 1.9 8.3 29.0 45.2 48.4

ASEAN Members 8.2 18.4 27.8 43.9 48.2

Middle East & North Africa 1.7 9.8 24.9 44.2 47.6

South Asia 0.5 2.5 7.2 23.2 26.5

Sub-Saharan Africa 0.5 2.0 7.2 17.8 20.0

World 6.8 15.8 28.9 43.2 45.9

Individuals using the Internet (% of population)

Country Grouping 2000 2005 2010 2015 2016

OECD members 27.9 54.1 67.6 76.5 78.6

Upper middle income 2.5 11.6 33.9 52.6 55.7

Middle income 1.6 7.5 21.9 38.9 41.9

Lower middle income 0.6 3.7 11.0 26.8 29.9

Least developed countries 0.1 0.8 4.3 13.0 15.6

Low income 0.1 0.9 3.3 10.2 12.5

World 6.8 15.8 28.9 43.2 45.9

Fixed broadband subscriptions (%)

Region 2000 2005 2010 2015 2016

Euro area 0.4 13.1 27.7 33.4 34.3

North America 2.7 17.6 27.5 31.9 32.9

OECD members 1.5 13.6 24.6 29.1 30.0

East Asia & Pacific (excluding high income) 0.0 2.1 7.4 14.9 17.2

Latin America & Caribbean 0.0 1.6 6.7 10.6 11.2

Middle East & North Africa .. 0.9 2.6 7.2 7.7

South Asia .. 0.1 0.8 1.4 1.6

Sub-Saharan Africa .. 0.0 0.2 0.4 0.4

World .. 3.7 7.9 11.6 12.5

Fixed broadband subscriptions (%)

Country Grouping 2000 2005 2010 2015 2016

OECD members 1.5 13.6 24.6 29.1 30.0

Upper middle income 0.0 2.2 8.2 16.2 18.3

Middle income .. 1.1 4.5 8.6 9.7

Lower middle income .. 0.1 1.0 2.0 2.3

Least developed countries .. .. 0.1 0.8 0.9

Low income .. .. 0.1 0.3 0.3

World .. 3.7 7.9 11.6 12.5

Secure Internet servers (per 1 million people)

Region 2005 2010 2015 2016

North America 764.1 1425.8 1619.1 1586.9

Euro area 143.2 537.0 980.9 988.6

ASEAN 31.2 66.6 131.5 132.0

Latin America & Caribbean 11.0 28.4 56.8 59.3

Middle East & North Africa 6.1 17.4 28.9 32.2

East Asia & Pacific (excluding high income) 0.8 3.2 11.9 19.9

Sub-Saharan Africa 2.1 4.8 9.8 9.8

South Asia 0.5 1.8 5.8 6.7

World 64.6 154.2 208.4 215.1

Secure Internet servers (per 1 million people)

Country Grouping 2005 2010 2015 2016

OECD members 323.0 813.9 1087.9 1096.7

Upper middle income 4.0 14.3 35.4 46.8

Middle East & North Africa 6.1 17.4 28.9 32.2

Middle income 2.2 8.0 20.4 26.4

Lower middle income 0.6 2.4 7.5 8.9

Least developed countries 0.2 0.6 1.6 1.8

Low income .. 0.5 1.5 1.7

World 64.6 154.2 208.4 215.1

Top Ten Internet retail companies in the United States, Europe, Asia and Latin America, 2012-13

Source: UNCTAD

S. No. United States (2013) Europe (2012) Asia (2012) Latin America (2013)

1 Amazon.com (United States) Amazon.com (United States) Alibaba Group (China) B2W Digital (Brazil)

2 Apple (United States) Otto (Germany) Rakuten (Japan) Nova Pontocom (Brazil)

3 Staples (United States) Staples (United States) 360Buy.com (China) SACI Falabella (Chile)

4 Wal-Mart (United States) Home Retail Group (United Kingdom) Amazon.com (United States) Wal-Mart Latin America (United States)

5 Sears Holdings (United States) Tesco (United Kingdom) Suning Commerce (China) Netshoes (Brazil)

6 Liberty Interactive (United States) Apple (United States) Jia.com (China) Máquina de Vendas (Brazil)

7 Netflix (United States) CDiscount.com (France) eBay (United States) Dell (United States)

8 Macy's (United States) Tengelmann (Germany) 51Buy.com (China) Amazon.com (United States)

9 Office Depot (United States) Shop Direct Group (United Kingdom) HappiGo (China) Magazine Luiza (Brazil)

10 Dell (United States) Sainsburys (United Kingdom) Vamcl (China) Saraiva e Siciliano (Brazil)

Share in

Sales of

Top 500

Comapnies

52% 37% 86% 51%

What should be the Way Forward?

Developing countries need to strengthen their digital infrastructure

Provide enabling environment for strengthening the capacities of MSMEs

Adopt complementary policy measures China, world’s largest retail e-commerce market, provides some

directions as to what needs to be done China’s Cyber-security Law has come into effect in 2017, which,

among other things, focuses on “security of critical information infrastructure” (KPMG 2017: 11) ; two,

A draft law on e-commerce is being prepared that addresses the needs of digital trade

The State Council recently decided to promote “internet plus advanced manufacturing”, which will involve the construction and the upgrading of internet infrastructure in industrial enterprises so as to enable greater interconnectivity within enterprises

Thank you