Ecommerce Seen As Opportunity For All Countries But Hurdles Remain, WTO Panels Say

Electronic commerce was a focus of the World Trade Organization Public Forum last week, a nod to its continuing rise in global importance. Several panels looked at how to integrate developing countries and small and medium-size enterprises into the global stream of online trade. Although ecommerce is an opportunity for developing countries, many hurdles remain for them, most obviously the digital divide, speakers said.

The American Chamber of Commerce to the European Union (AmCham EU) organised a panel on 29 September on how to transform ecommerce into global etrade.

Torbjörn Fredriksson, chief, ICT Analysis Section, United Nations Conference on Trade and Development (UNCTAD), said ecommerce is growing very fast, with half of the 800 million online shoppers being Chinese.

In the world, most ecommerce is done at the domestic level, he said. For example in Canada, 80 percent of ecommerce is domestic, 15 percent are sales from the United States, and 5 percent from the rest of the world, he said.

Although ecommerce is a “tremendous opportunity,” the digital divide remains very large, he said. Only 2 percent of people buy online in Mexico, Thailand, or Bangladesh, he said. And while social media and other online platforms are accessible in developing countries, and can facilitate access to market, not all platforms are equally available in countries, he said.

For example, he said, eBay is available in most countries, and it might be easy to buy products on eBay, but not so easy for small companies in developing countries to put products for sale on eBay.

Challenges faced by developing countries are in need of urgent attention, he said. UN agencies have various activities but the work on the issue of ecommerce is too fragmented and not sufficiently transparent.

The multistakeholder initiative eTrade for All, launched in July at the UNCTAD Ministerial Conference in Nairobi, is expected to boost global cooperation to unlock the potential of ecommerce for developing countries, he said.

The initiative has attracted positive attention from global players such as Google, eBay and UPS, he said, as well as smaller ecommerce platforms in developing countries. He underlined the importance of capacity building and skill development for developing countries.

WTO can Participate in Ecommerce Development

Australian Ambassador Hamish McCormick, WTO chairperson for the Council for Trade in Goods, said the WTO is about removing barriers to trade, or make those that may not be removed more transparent.

As a trade negotiator, he said “my government is interested in global trade rules and global trade reforms,” and trade reforms delivered through trade agreements. He said Australia, as with many other countries, is interested in developing ecommerce and etrade, and “seeing other countries grow and develop because they are going to be buying and selling services and goods,” and some of it will be ecommerce.

Can the multilateral trading system help remove barriers, to build confidence in trade, and help regulatory systems to develop in positive ways? he asked.

“Yes we can… but we have not had a great track record over the past 20 years” in producing practical results, he said. There are reasons to be optimistic, he said, as countries at the WTO are now seeking to identify interests, and not be divided between the interests of developed and developing countries, he said.

“We see a cross-grouping interest in electronic commerce in particular,” McCormick said.

By the next WTO Ministerial Conference, expected to be held at the end of 2017, Australia would like to see outcomes in several areas, including ecommerce, trade and services, and agriculture, he said.

No Going Back

Uruguayan Ambassador Gustavo Miguel Vanerio Balbela, WTO Chairperson for the Council for Trade in Services, said that for developing countries, ecommerce is a question of life or death. If developing countries cannot access ecommerce they will not be integrated into the international economy.

There is no going back for ecommerce, he said, every country is concerned, and some are in a better position to take advantage of ecommerce, however it should be considered as an opportunity, not a threat. It can be an opportunity for developing countries for increased participation in global value chains, he said.

Ecommerce is discussed at the WTO and there is a moratorium under which countries do not impose customs duties on electronic transmissions, which has been renewed by succeeding WTO ministerial conferences. The last extension was agreed in Nairobi last year.

There is a need for more convergence on regulatory issues, he said, but they need to be identified and members need to agree on a specific mandate, he said. “Trust is a key word,” he said, in particular on issues such as consumer protection, data protection, customs, and tax issues.

However, ecommerce cannot be considered as an isolated topic, and is linked to other areas in WTO, such as agriculture, he said.

Huge Increase in Parcel Delivery Due to Ecommerce

Mark van der Horst, director, EU Public Affairs, UPS Europe, and chair, AmCham EU Trade and External Affairs Committee, said UPS delivers an average of 60 million parcels every day, and there has been a “huge increase” in the amount of parcel deliveries as a result of ecommerce transactions over the last 10 years.

It is important to see how the right conditions can be created, such as data flow, payment systems, and trade facilitation. He mentioned the Global Alliance for Trade Facilitation, supported by UPS, along with other global carriers, such as DHL, he said.

The Global Alliance for Trade Facilitation is a joint initiative between the World Economic Forum, the International Chamber of Commerce and the Center for International Private Enterprise together with the governments of Australia, Canada, Germany, the United Kingdom and the United States. The alliance is “a public-private platform to leverage business expertise, leadership and resources to support effective trade facilitation reforms measured by real-world business metrics,” following the 2013 WTO Trade Facilitation Agreement, according to its website.

Van der Horst called for a simplification of customs procedures and costs. If some custom resources were free up from traditional custom work, it would allow the reallocation of those resources to other issues, such as intellectual property, safety, and counterfeiting, he said.

Funding & IP Protection Needed for Start-ups

Another panel on 28 September entitled, “Enabling ’start-up’ innovation through e-commerce,” discussed challenges faced by start-ups when entering international trade and the markets.

Trade policy consultant Marta Soprano outlined the challenges for starts-ups. One of the main challenges is funding, of which start-ups are in constant need. “The difference between success and failure most of the time is funding,” she said.

Another challenge is intellectual property protection, as for many start-ups their value is in their IP, according to Soprano.

Soprano therefore advised that “it is essential to develop a sound strategy to protect intellectual capital as early as possible and this is strictly interlinked with funding, because investors want their intellectual property to be protected.”

Suhaan Mukerji, managing partner of Indian law firm PLR Chambers, explained that there lacks knowledge of IP and a policy reorientation is required in India to address IP and technology and encourage innovation, knowledge transfer and standard rules. There is also currently a project by the Indian government to foster innovation and start-up IP protection.

Alexandra Nightingale contributed to this story.

 

Image Credits: FLickr – Kip Koech