E-Commerce Needs Special Rules, WTO The Place For It, Officials Say

Electronic commerce is flourishing, but countries are not benefitting equally from this windfall. An event held this week at the World Trade Organization looked at the role of the WTO in the establishment of global rules for e-commerce, while WTO member states themselves disagree on the urgency to establish a new work programme, just weeks before the next WTO ministerial.

On 30 October, the Graduate Institute’s Centre for Trade and Economic Integration organised the event on technology, globalisation and world trade governance, in the context of the WTO’s Trade Dialogues programme. One of the focuses of the event was digital trade.

WTO Director General Roberto Azevêdo, opening the session, said the discussion on electronic commerce is very timely, as 30 October marks the 70^th anniversary of the signing of the General Agreement on Tariffs and Trade (GATT). The GATT was signed by 23 founding members, who could not have possibly foreseen how much the world economy would change and how challenging these changes would be, he said.

“New technologies are completely transforming the way in which goods, services and information are produced and exchanged,” he said in his statement.

Between 2013 and 2015, the value of online trade went from US$16 trillion to US$ 22 trillion, he said, adding that for 2017 the estimated growth is 23 percent. However, there is a need to recognise that not everyone is able to benefit and participate in that new wealth, a need to respond to this new reality, and to adapt, he said.

E-Commerce for Development

Costa Rican Amb. Alvaro Cedeño Molinari also underlined the rapid growth of ecommerce, and the creation in 2016 of the group of Friends of E-Commerce for Development (FED). The group was first established by Costa Rica and Pakistan, and now includes: Argentina, China, Colombia, Costa Rica, Kenya, Mexico, Moldova, Montenegro, Nigeria, Pakistan, Sri Lanka, Tajikistan, and Uruguay, according to a source from the group.

Molinari said there is growing interest among the WTO membership in the ability of e-commerce to be a vehicle for development. The FED group issued a roadmap in April (IPW, WTO/TRIPS, 25 April 2017).

There is a need to determine what role the WTO and other multilateral agencies should play in making sure e-commerce is predictable, fair, sustainable, and transparent, he said. At present, not all countries are participating on equal footing in the e-commerce growth, he said.

Answering a question about what the Friends are expecting from discussions at the WTO, he said that the current work programme on e-commerce is 20 years old, and conversations are going around in circles. It is important to gain some traction and ensure the conversation has development at its centre, he said.

There is a lot of reticence about a mandate to discuss a work programme at the WTO, but “some of the fears are valid, we have to listen to those fears and translate them into trade language,” and make sure they are addressed, he said.

On 10 October, Costa Rica submitted a proposed draft ministerial decision [pdf] on a “WTO e-Commerce Development Agenda,” which calls to establish an “E-Commerce for Development Agenda to assess the needs of developing countries in relation to e-commerce and to facilitate focused dialogue on the challenges and opportunities they face..”

Alibaba’s Global Vision, View on Intellectual Property

Cheng Ouyang from the Alibaba Research Institute described the evolution of the Chinese online platform Alibaba since its creation in 1999 and its spreading into other fields than strictly an e-commerce platform, such as Alipay, a payment solution, and Alimama, a marketing technology platform. The Group also launched into the music, sport and movie industries, he said.

Alibaba’s goal for the near future is to serve 2 billion consumers around the world, Ouyang said. He mentioned the Electronic World Trade Platform (eWTP) Initiative, which is part of the vision of Jack Ma, Alibaba creator and executive chairman, who foresees “the creation of digital free-trade zones where small and medium-sized enterprises..can easily plug into global trade via e-commerce,” according to Alizila, Alibaba’s news hub. A video explaining the eWTP is here.

Ouyang said a first eWTP hub was created in Malaysia. According to Alizila, the hub was created in March and is just “a first step in the move toward a more robust eWTP.” Alibaba and Malaysia expect further cooperation in several areas such as logistics, cloud computing and online finance, it said. As an example, Alizila said the “Cainiao and Lazada Group, the leading Southeast Asian e-commerce company owned by Alibaba, will work with Malaysia Airports Holdings to set up an e-commerce and logistics hub at Kuala Lumpur International Airport.”

Alibaba Cloud will also build a cloud-computing platform in Malaysia to support small and medium-sized businesses, and offer training to potential engineers in the country, it said. “Alibaba wants to establish these special trading areas in markets around the world.,” it said.

Asked by Intellectual Property Watch how Alibaba deals with intellectual property issues, Ouyang said IP is a very important question to address. Alibaba, he said, has enhanced its cooperation with brand owners and hired some 3,000 staff focusing on countering fake products. The group also employs volunteers to identify fake products or infringing goods.

Alibaba wants to use technology and big data to analyse potential violation of IP rights so that once an infringing merchant has been caught and removed from the marketplace, that merchant cannot open a new store in the Alibaba sphere, he said.

In December 2016, the Office of the United States Trade Representative put Taobao.com, Alibaba’s Chinese e-commerce platform, on its 2016 list of “notorious markets.” The list said Taobao.com is an “important concern due to the large volume of allegedly counterfeit and pirated goods available and the challenges right holders experience in removing and preventing illicit sales and offers of such goods.”

Alibaba answered [pdf] that the inclusion in the notorious markets list did not take into account efforts made by the group to curtail counterfeit goods.

EU: Time is Ripe for Negotiations

European Union Amb. Marc Vanheukelen said there is a need for some regulatory framework for e-commerce as for any new development, as “what is technically feasible is not always permissible.” Issues such as data flows, privacy protection, data localisation and cyber security have to be addressed, he said.

Since the beginning of the e-commerce discussion at the WTO in 1998, “no progress at all has been achieved,” Vanheukelen said. The 1998 work programme is established in four silos (Council for Trade in Services, Council for Trade in Goods, Committee on Trade and Development, and the Council for TRIPS [WTO Agreement on Trade-Related Aspects of Intellectual Property Rights]), he said, adding that no steps have been taken to start negotiations for WTO rules applicable to e-commerce. One of the main reasons invoked by some countries is the lack of a mandate to start negotiations, he said.

The European Union proposed a “very down to earth approach,” on consumer protection, spam, e-contracts and e-signature, he said, but added, “We did not get very far.” Given the speed of technological progress, it is more than time to start negotiating rules, he said, adding the EU hopes that after the upcoming WTO Ministerial Conference in December, there “will be more meaningful discussions on e-commerce at the WTO.”

On 27 October, Australia, Canada, Chile, the EU, South Korea, Mexico, Montenegro, Norway and Paraguay submitted a revised draft ministerial decision on e-commerce [pdf]. The draft decision calls for the establishment of a “Working Party on Electronic Commerce,” which would prepare and carry out negotiations on trade-related aspects of e-commerce “on the basis of proposals by Members.”

The Working Party would report periodically to the WTO General Council, and hold its first meeting no later than 31 March 2018, it says.

WTO Needs to Engage, Beware of Detrimental Rules

UK Amb. Julian Braithwaite asked if the absence of progress achieved at the WTO to discuss e-commerce rules could be interpreted as a massive policy failure. If rules were hastily written in 1998, what could have been prevented, he asked. The absence of rules has not prevented e-commerce from flourishing, as all statistics show.

Would policy or regulation create higher barriers for market entry in the digital marketplace, he asked, adding that regulations increase costs, which would fall on latecomers, in particular developing countries and small companies. Without rules, e-commerce is far outperforming regular trade results, he remarked.

However, he said, in reality, there is increasing regulation of the internet, mostly around privacy issues, child protection, counterterrorism, and political control, and most of e-commerce takes place within borders rather than across borders.

Trade and internet governance actors need to get together so that rules do not undermine e-commerce growth, he said, adding that the GATS provides a good foundation for e-commerce regulation.

The WTO has to have something to say and a role to play or it will be seen as unable to address a key economic trade question, said Braithwaite. WTO needs to engage in the conversation for its own sake, he added, with only the remaining question of “will we get it right?”

Pakistan Amb. Syed Tauqir Shah also agreed that discussions on e-commerce should happen at the WTO, so developing countries can have a voice. Some answers to the digital divide are embedded in e-commerce he said, as the private sector can make large investments in a country given the right environment. He cited the example of Pakistan, which opened up the 3G and 4G spectrum to private investors with as a result a large increase in broadband access for the population.

Andrew Wilson, chief of staff at the International Chamber of Commerce, said the existing international trade system already covers a lot of what is e-commerce but some areas need clarity, and some gaps need to be filled.

E-commerce is global and requires a global solution of some kind, and “we need to move and we need to move quickly,” he said.

Some Developing Countries, Civil Society Push Back

At the WTO Public Forum in September, the Indian ambassador and representatives of Rwanda and South Africa said in an event that the current WTO work programme on e-commerce is still adequate, and they are not ready to discuss a new negotiating mandate for e-commerce rules at the WTO (IPW, WTO/TRIPS, 29 September 2017).

Earlier this month, some 300 non-governmental organisations signed a letter voicing concerns about the alleged push by some countries for a new agenda on digital trade, which they described as “wrong” (IPW, WTO/TRIPS, 11 October 2017).

 

Image Credits: Catherine Saez