Developing nations and LDCs reject new e-commerce work programme

The drive to negotiate new rules at the WTO on electronic commerce has met with continued opposition from many developing countries, which argue that such talks would not take account of the North-South digital divide.

by D. Ravi Kanth

GENEVA: The developing countries and least-developed countries (LDCs) on 26 July rejected proposals from major developed countries and their allies in the developing world for a new work programme for electronic commerce for addressing cross-cutting issues, trade envoys told the South-North Development Monitor (SUNS).

At a WTO General Council meeting, many developing and least-developed countries, including India, said categorically that the 1998 e-commerce work programme – “to examine all trade-related issues relating to global electronic commerce, considering the economic, financial, and development needs of developing countries” – must continue because of the ever-widening infrastructure and digital divide, according to trade envoys present at the meeting.

Ahead of the meeting, the developed countries – the European Union, Japan, Canada, Australia, Switzerland, Norway and New Zealand, among others – as well as developing countries such as South Korea, Singapore, Malaysia, Hong Kong (China), Brunei Darussalam, Colombia, Laos, Moldova, Myanmar, Nigeria and Qatar had raised the pitch for adopting a new work programme on e-commerce as opposed to the 1998 work programme.

Cross-cutting nature

In a restricted Job document circulated on 26 July, some of the proponents – Canada, Australia, New Zealand, South Korea, Singapore, Malaysia, Hong Kong (China), Brunei Darussalam, Colombia, Laos, Moldova, Myanmar, Nigeria and Qatar – argued that “the recent discussions have highlighted the inherent cross-cutting nature of e-commerce.”

While the discussions have been useful in some respects, they showed “the siloed nature of the discussions in the respective bodies”, making it difficult to have a “holistic understanding of the various e-commerce issues.”

The proponents said that “development issues often overlapped with the conversations under goods, services, and IP [intellectual property], and goods and services issues were often interlinked (e.g. enabling services for trade in goods enabled by the internet, relevance of e-signatures for trade facilitation and also cross-border supply of services).”

“Compartmentalized conversations make it hard to recognize synergies, and hence to make recommendations for a way forward,” the proponents argued.

They said that while “the General Council is currently tasked to oversee and to take up consideration of any trade-related issue of a cross-cutting nature, it is not a technical forum to discuss the inter-linkages between the issues or delve into any in-depth conversation on e-commerce.”

Further, “the current mechanism of the Dedicated Discussion also remains an informal arrangement, and makes knowledge management challenging as there are no formal records of the meeting”, the proponents said.

“The 1998 E-commerce Work Programme sets out the programme of work for the four relevant bodies, with a view towards having these bodies make recommendations to the Ministerial Conference for action,” the proponents said. “Although useful work has been done, for the reasons raised in the preceding paragraphs, there has been limited progress in making recommendations despite nearly 20 years of discussions at the WTO.”

As e-commerce “is increasingly becoming an important driver of inclusive economic development, it would be useful to have more clarity on how to advance work, how the current process can be improved, what issues to focus on, and how to facilitate Members arriving on concrete recommendations on the way forward”, the proponents argued.

Therefore, “members should embark on a discussion on how the E-commerce Work Programme could better facilitate more focused work and holistic discussions on e-commerce.”

Further, “members should reflect and build on the discussions since MC10, and identify possible (i) improvements to processes, and (ii) issues of interest, if any, that they would like to take forward. This could be done on the basis of Members’ proposals and ideas.”

“The outcome of these discussions should be captured in the MC11 Ministerial Decision on E-commerce. Ministers at MC11 should give clear direction for future work in e-commerce, with development at the core, and set out a clear, updated framework/process through which future work could be undertaken,” the proponents said.

Japan, which had presented a Job document almost on the same lines in the previous week, also called for a “holistic” discussion, while Russia pressed for WTO rules on e-commerce to be negotiated after the Buenos Aires meeting.

China is also a strong supporter for negotiating e-commerce rules at the WTO. However, it said at the informal heads-of-delegation meeting on 25 July that it respects the red lines of developing-country members on e-commerce, according to a trade envoy who asked not to be quoted.

In a separate development before the General Council meeting, the chairs of the Council for Trade in Goods, the Council for Trade in Services, the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Council, and the Committee on Trade and Development circulated their reports suggesting that many members remain favourable for considering new approaches as well as a new work programme for e-commerce.

Digital divide

India, one of the leading developing countries with a strong presence in the software and e-commerce market, reminded members at the General Council meeting that despite opportunities for economic growth and development from e-commerce, the “growth in e-commerce across the world is hugely uneven which is the result of a deep and wide global digital divide on infrastructure, skills and technology.”

Therefore the priority for members at the WTO ought to be “to expand the internet and bridge the digital divide on infrastructure and connectivity”, India argued, noting that only one in three people in India, one in four people in Africa, and one in seven people in LDCs have access to the Internet.

Without addressing “access to internet” on a war footing, “the asymmetry of information that this digital divide is creating will transform into an asymmetry of opportunity against the interests of developing countries”, India warned.

Therefore, in the current exploratory phase, according to India, “the emphasis should be laid on the need to understand the full scope and dimensions of the various issues involved and address the knowledge gap which exists in this area.”

Further, scoping of the digital divide is important for all developing countries to assess the “impact of radical, disruptive, and transformative technological changes”, India argued.

Issues such as “access to technologies, skill development, impact of automation in developing countries, particularly on employment and inequality between and within countries,” must take precedence over other issues, India said.

Members must discuss the transfer of technology arrangements and strategies to deal with the digital divide.

All in all, the need of the hour is to focus on the “development dimension and concerns of developing countries and LDCs to the discussions on e-commerce, in accordance with the letter and spirit of the WTO work programme”, India emphasized.

It is futile to identify or discuss issues for multilateral rule-making in e-commerce as “gains from e-commerce should not be confused with the likely benefits of rule-making in e-commerce”, India maintained.

More important, “negotiation on rules and disciplines in e-commerce would be highly premature at this stage especially given the highly asymmetrical nature of the existing global e-commerce space”, India argued.

India questioned the proposals made by Japan on “the transformational impact of electronic commerce on global trade and investment”, suggesting that “this changing trade pattern poses new challenges both for domestic as well as for cross border trade.”

“The need of the hour,” said India, “is therefore sufficient policy space for appropriate domestic and trade policies” by focusing on exchange of information on the policies and best practices. “Such an exchange of information must include all aspects of e-commerce and digital trade, especially on transfer of technology and support to development of digital infrastructure to reduce the digital divide.”

The Nairobi ministerial decision on e-commerce which is based on the existing mandate and guidelines must continue to provide a “bottom-up approach for productive discussions and remain open to any exploratory discussion in the relevant WTO bodies as per the existing mandate”, India maintained.

India rejected the proposals from Russia and other members for “establishment of a horizontal Working Group on Electronic Commerce” on the grounds that it will take away “the role of relevant bodies in discussing e-commerce related issues as per the Work Program which has been reiterated in successive Ministerial Decisions.”

Major challenges

On behalf of the African Group, Rwanda said Africa along with the Middle East accounted for 1% of global cross-border e-commerce sales. Several estimates prepared by the International Telecommunication Union (ITU) and other multilateral bodies suggest that the scope and depth of the digital divide in Africa have progressively widened. Further, the African countries face “major impediments and challenges, due to the lack of digital capabilities and digital industrial policy”, Rwanda maintained.

The African Group said that the proponents were not even prepared to refine their proposals to make them meaningful towards the development agenda.

The African Group, which had held a seminar on e-commerce in June to highlight the infrastructure and digital divide as well as to pursue “digital industrial policy” for all WTO members, said: “As much as a digital transformation is underway, and digital technologies and solutions are emerging, many of these will be seriously disruptive to economies around the world and we are still confronted by the reality of a deep, persistent and widening digital and technology divide.”

It maintained that “while Members’ paths towards achieving global leadership in the digital economy have all not been the same, they do require active policies and deliberate efforts to develop the necessary infrastructure and to manage digital flows for national digital catch-up.”

The lesson for the African Group from the seminar was that “global integration needs to be preceded by building national capabilities through what [is] termed digital industrial policy.”

“What has also emerged at the Panel Discussion is the importance of digital rights, and how a balance should be sought on the international agenda on issues pertaining to electronic commerce and Internet governance,” Rwanda said.

The African Group reiterated continued engagement in comprehensive discussions in the relevant bodies falling under the 1998 e-commerce work programme.

Uganda and South Africa, in their interventions, also maintained that there is no need to change the 1998 work programme as many issues raised by the African countries are yet to be addressed.

Except for Nigeria and Ghana, the African Group completely rejected the proposals by the proponents who seem determined to secure a negotiating mandate at Buenos Aires on e-commerce.

It is clear, however, that unless the developing countries remain solidly united in their stand on e-commerce at Buenos Aires, they will not be able to prevent negotiations on e-commerce rules from 2018, trade envoys said. (SUNS8512)                                           p