TWN Info Service on WTO and Trade Issues (Feb17/14)
21 February 2017
Third World Network

14 developing countries meet DG, push e-commerce
Published in SUNS #8403 dated 16 February 2017

Geneva, 15 Feb (D. Ravi Kanth) - In a coordinated effort with the World Trade Organization director-general Roberto Azevedo, 14 developing countries on Tuesday (14 February) called for urgent discussions on four issues concerning "electronic commerce and development", despite opposition from a majority of developing and least-developed countries, trade envoys told SUNS.

Trade envoys of the 14 countries who held a meeting with Azevedo on 6 February pressed for sustained discussions on "trade facilitation and e-commerce," "infrastructure gaps to enable e-commerce," "access to payment solutions," and "online security."

In a non-paper addressed to the WTO's four major bodies - General Council, Council for Trade in Goods, Council for Trade in Services, Council for Trade-Related Aspects of Intellectual Property Rights, and Committee on Trade and Development - on Tuesday, the 14 countries argued that the rapid spread of e-commerce "opened up new opportunities for businesses in developing countries, especially micro, small and medium enterprises (MSMEs), by reducing the cost of doing business, and allowing them to reach a wider market."

The sponsors of the proposal include Brunei Darussalam, Colombia, Costa Rica, Hong Kong (China), Israel, Malaysia, Mexico, Nigeria, Pakistan, Panama, Qatar, Seychelles, Singapore, and Turkey.

Citing the changes that e-commerce brought in consumer experience in areas of media and entertainment, air travel and tourism, and even taxi rides over the past few years, the sponsors said "E-commerce is the new reality for businesses today, including in developing countries."

The 14 developing countries, which currently have advanced telecommunications as well as e-commerce network providers, painted a picture that e-commerce is expanding rapidly in Asia, Latin America, Africa, and the Middle East.

The sponsors offered some isolated cases such as which introduced an online gaming company in Cambodia, SMEs such as Gojek and respectively in Indonesia and Vietnam, several online payment facilities

(JamboPay, Ozimbo, PesaPal, Yo!Payments Simple Pay) in Africa, MercadoLibre which is an equivalent of eBay and Amazon in Latin America, Flipcart and Snapchat in India, and Alibaba in China for underscoring the need to address e-commerce and development.

Further, e-commerce presents an opportunity for MSMEs to expand beyond their "own backyards" while lowering the high costs associated with penetrating foreign markets, the sponsors argued.

"This has allowed non-traditional players, such as home-makers and small handicraft suppliers, to enter the market and offer their products on the global marketplace," the sponsors maintained, citing a report by the American eBay online e-commerce provider.

Quoting a study conducted by the United Nations Conference on Trade and Development (UNCTAD), the sponsors said "the share of global business to consumer e-commerce for Asia and Oceania, and Middle East and Africa, are expected to rise from 28% to 37% and 2.2% to 2.5% respectively from 2013 to 2018. In Latin America, online retail sales are expected to grow at a compound annual growth rate of 17% between 2014 and 2019."

They urged the members at the WTO to "kick-start discussions and identify the e-commerce issues of interest and relevance to developing countries."

The sponsors suggested four possible areas for immediate discussions. The areas include:

(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 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?

Significantly, the proposal came close on the heels of a meeting Azevedo held with the 14 countries as well as other developed countries such as the United States, the European Union, Switzerland, Australia, and Canada on 6 February.

Brazil, Korea and Argentina also participated in the DG's closed-door meeting, according to people familiar with the development.

Azevedo, according to a trade envoy who was present at that meeting, had suggested that the proponents must convince other members about e-commerce and development.

The DG and the proponents particularly discussed issues such as transparency, trade facilitation in e-commerce, and consumer protection.

According to the 1998 WTO Work Programme on Electronic Commerce, members are required to examine "all trade-related issues relating to global electronic commerce."

Last year, a large majority of developing countries, including the African Group, India, Bolivia, Cuba, Venezuela and South Africa expressed sharp concern over attempts to steam-roll discussions on e-commerce without a negotiating mandate.

During the dedicated session on e-commerce on 18 October 2016, Uganda said the mandate, including the Nairobi ministerial declaration, requires members "to continue the work under the Work Programme... based on existing mandate and guidelines and on the basis of proposals submitted by Members in the relevant WTO bodies as set out in paragraphs 2-5 of the Work Programme... In addition, the General Council shall take up consideration of any trade related issue of a cross-cutting nature".

Uganda said members "also need to agree whether those themes fall within the cluster of cross-cutting; or should be considered within the regular bodies."

In its interventions during the designated meetings on e-commerce, the African Group emphasized repeatedly about "bridging not only the digital divide but also the knowledge gap that currently exists [in e-commerce]."

Uganda said three things are required in e-commerce. They include "access; affordability; and availability."

According to the ITU facts and figures for 2016, 75% of the entire population in Africa is offline, Uganda said.

"Only 20 million households in LDCs have Internet access out of 1 billion households in the world. Fixed- broadband penetration remains at below 1% in Africa and among the LDCs; and only five LDCs have achieved the Broad-band Commission target on affordability," Uganda maintained.

Uganda said "infrastructure and connectivity are another major issue", as, by early 2016, total international Internet bandwidth had reached 185,000 Gbit/s, up from 30,000 in 2008.

"Africa has the lowest international connectivity of all regions: there is twice as much bandwidth per inhabitant available in Asia and the Pacific, four times as much in the CIS region, eight times as much in the Americas and more than twenty times as much in Europe," Uganda maintained.

"Therefore, lack of international connectivity is a major bottleneck in the Internet infrastructure of LDCs," Uganda concluded.

Nevertheless, the director-general and major developed countries along with their allies in the developing world seem determined to force discussions on e-commerce regardless of lack of mandate and large opposition, said several trade envoys.