TWN Info Service on WTO and Trade Issues (Aug16/03)
4 August 2016
Third World Network

Concerted move by EU, US and allies to rewrite e-com work program
Published in SUNS #8291 dated 27 July 2016

Geneva, 26 Jul (D. Ravi Kanth) - The European Union, the United States, Japan, Canada along with their allies launched a concerted effort on Monday (25 July) at the World Trade Organization to re-write the work program on electronic commerce and prepare the ground for negotiated outcomes at the eleventh ministerial meeting next year in South America, several participants told the SUNS.

In an unusual alliance, Brazil, Argentina, Paraguay, Cote d'Ivoire, Nigeria, and Pakistan among others signalled their intention to pursue a mapping/scoping exercise along with the developed countries.

Brazil which championed the reform of global agriculture over these years, circulated a non-negotiating paper on electronic commerce and how to carry out the scoping exercise in joint meetings of the four councils - trade in goods, trade in services, trade-related aspects of intellectual property rights, and trade and development.

With the WTO's eleventh ministerial conference scheduled to take place in South America - either in Argentina or in Uruguay - next year, an all out effort is being made either to secure concrete outcomes in electronic commerce/digital trade or to launch a new round of negotiations after permanently burying the Doha Work Program, several participants maintained.

However, this move met with resistance from several developing countries - South Africa, China, Uganda, Tanzania, Zimbabwe, Egypt, Indonesia, India, and Bolivia among others - all of them insisting that work on electronic commerce must continue on the basis of the 1998 work program and the 2015 Nairobi ministerial declaration.

At a dedicated session on e-commerce on 25 July, the chair Ambassador Alfredo Suescum from Panama referred to several papers starting from 1994 and urged members to provide their preliminary comments on the recent slew of proposals.

Close on the heels of a recent proposal from the United States, which proposed an e-commerce work program based on the outcomes in the Trans-Pacific Partnership Agreement, nine countries - the European Union, Canada, Chile, Colombia, Cote d'Ivoire, Korea, Mexico, Paraguay and Singapore - issued a joint paper on 22 July for starting a discussion on a tentative list of all trade-related elements that are relevant for e-commerce.

In the joint proposal, the proponents have grouped elements around clusters pertaining to (a) regulatory frameworks, (b) open markets, (c) initiatives facilitating the development of e-commerce, and (d) transparency of the multilateral trading system.

The list of issues, according to the proponents, "is not a proposal for negotiations, and is presented without prejudice to which elements the co-sponsors would seek to pursue."

They, however, maintained that it is worth considering the elements of trade policy that relate to e-commerce, taking into account policy developments over the past two decades.

Although the e-commerce negotiations were started in 1998, members remain divided on a range of issues starting with the definition and the implications in different areas. Members are also unable to resolve differences over specific classification issues.

But, given the understanding that trade in the digital economy has evolved, the nine countries maintain that e-commerce would cover the production, distribution, marketing, sale or delivery of goods and services by electronic means.

"The breadth of this mandate convinced Members that the General Council should oversee the work programme, and that four WTO Committees would contribute to the programme - the Council for Trade in Services, the TRIPS Council, the Council for Trade in Goods and the Committee on Trade and Development," the proponents argued.

In a separate proposal on e-commerce and development, another group of nine countries - Colombia, Costa Rica, Hong Kong, Israel, Malaysia, Mexico, Nigeria, Qatar, and Singapore - called for kick-starting discussion on e-commerce issues that are relevant to developing countries.

These nine countries suggested issues in four areas such as trade facilitation and e-commerce, infrastructure gaps to enable e-commerce, access to payment solutions, and online security. They posed the following questions:

(i) Trade Facilitation and E-commerce: Cross-border e-commerce often involve low value shipments and/or digital transmissions over the internet. Once within the borders, logistics players also play a big part in ensuring smooth delivery of products. What can be done to further empower smaller business using e-commerce and lower their cost of conducting trade?

(ii) Infrastructure Gaps to Enable E-commerce: Infrastructure gaps in developing countries have posed challenges (e.g. access to broadband) but also provided innovative opportunities for businesses (e.g. rise of local payment solutions). Is there a way to better target technical assistance towards plugging the critical gaps?

(iii) Access to Payment Solutions: Being able to find payment solutions is key to whether a business will go online. In the absence of secure online payment services, payment via mobile phones and cash on delivery option have been used. How can we improve businesses' and consumers' access to more payment options to better enable them to conduct and access cross-border e-commerce?

(iv) Online Security: Trust is a key factor in determining whether consumers are willing to engage in e-commerce. This includes trust in online payment services, the reputation of the online merchant and even in whether there is enough legal protection to provide recourse should a transaction go awry. What can be done to build trust in online transactions and e-commerce and improve consumer protection? Is there scope for improved cooperation between countries on cyber-crime?

In yet another proposal on e-commerce work program, Brazil stressed the importance of key concepts/policy choices related to e-commerce. Brazil said, "Internet should remain free and open for all legitimate commercial and development purposes, including by allowing increased access to information, knowledge and new technologies."

"As a general rule," Brazil argued, "rights and obligations should be the same and apply equally offline and online. At the same time, it would also be necessary to discuss guarantees to the right of governments to adopt public policies with legitimate objectives, if and necessary, through exceptions to eventual new rules."

During the meeting, the proponents of e-commerce/digital trade such as Japan, Pakistan, Russia, Taipei, Singapore, Hong Kong, the European Union, Canada, Cote d'Ivoire, Chile, Paraguay, Mexico, Korea, Australia, Colombia, Costa Rica, Israel, Malaysia, New Zealand, Norway, Switzerland, the US, Brazil, Argentina, and Paraguay among others demanded sustained work in all four councils under the guidance of the General Council.

In nuanced statements, these countries emphasized issues such as permanent moratorium for not levying customs duties, open internet, development, disciplines on small and medium enterprises and other related issues.

The EU, for example, called for identifying elements of trade policy relating to e-commerce while pursuing work on "liberalization commitments and rule-making," according to participants familiar with the meeting.

The US said it is not interested in "abstract debates" while emphasizing the need to be comprehensive on electronic commerce and digital trade. The US said the e-commerce must be approached from different perspectives.

In sharp contrast to the demands for an open, liberal, and expansive mandate on e-commerce/digital trade, many developing and least developed countries maintained that they will adhere to the Nairobi ministerial declaration.

South Africa, for example, said e-commerce is a cross-cutting issue in which some countries have made extraordinary progress while other countries are grappling with several issues that are still in an infant stage.

South Africa pointed to the infrastructural deficiencies in many developing countries and cited the 2013 UNCTAD background note which spoke about the unintended consequences stemming from the expansion of e-commerce on economic development. Further, the impact of e-commerce on physical movement of goods in Africa could be significant, South Africa suggested.

China concurred with South Africa that e-commerce is a cross-cutting issue in which the development dimension should be the central theme. China demanded that rule-making in e-commerce should be based on consensus.

China also raised several questions such as what would constitute electronic means and digital means as indicated in the US proposal; scope of digital trade, digital economy and e-commerce, and the development dimension of e-commerce as suggested by Singapore.

Uganda said African countries would need time to examine all issues in e-commerce given the varying levels of development. Uganda said the developing and poorest countries cannot be burdened with same commitments as the developed countries in e-commerce. The Doha Round of issues must be addressed first before commencing work on e-commerce, Uganda maintained.

Tanzania said while it recognizes the importance of e-commerce, members must acknowledge the huge gap on e-commerce among countries. The work program on e-commerce must dedicate to closing the existing gaps.

Zimbabwe said the e-commerce is not a DDA issue and argued that the current mandate should not go beyond what was proposed in the Nairobi ministerial declaration. It argued that e-commerce is a new issue.

India said the work program on e-commerce must be as per the Nairobi ministerial declaration. The NMD decided that members will continue work "under the Work Programme on Electronic Commerce since our last session, based on the existing mandate and guidelines and on the basis of proposals submitted by Members in the relevant WTO bodies."

The NMD suggested that the General Council will hold periodic reviews in its sessions of July and December 2016 and July 2017 based on the reports that may be submitted by the WTO bodies entrusted with the implementation of the Work Programme and report to the next session of the Ministerial Conference.

Finally, the NMD maintained "that Members will maintain the current practice of not imposing customs duties on electronic transmissions until our next session which we have decided to hold in 2017."

India emphasized that the "mandate of the work program on e-commerce is a non-negotiating one and any decision to widen the mandate should be a conscious one and not be slipped in or automatically assumed."

India urged members to be cautious about the scope of issues in the work program. India said issues such as tariff eliminations, conformity assessments, development of market-driven standardization, e-procurement, and e-auctions are not discussed in the mandate. Most developing countries, India said, are still grappling with basic access and connectivity issues. Developing countries must have policy space for further regulatory development, India suggested.

In short, major developed countries are determined to pursue e-commerce/digital trade while pushing the Doha Work Programme issues under the carpet. After the summer break, they will make a renewed push towards giving life to e-commerce, participants told the SUNS.