Creating the conditions for digital trade growth

wtomc11

Tirana, 1 December 2017: We are 2-3 weeks away from the 11th WTO Ministerial Conference [MC11] in Buenos Aires on 10-15 December where we have a genuine chance of making progress towards a more robust global rules framework to support digital trade. Our current trade rules were designed for a pre-digital world so businesses support the urgent need to confirm the application of a global framework that guarantees a level playing field beyond national borders.

Digital trade is worth $25 trillion a year to the global economy, with retail e-commerce growing at 1% every two weeks, and contributes 31 million jobs. Technology and growing young populations have fundamentally changed the way we do business and how consumers access goods and services within countries and across borders globally.

The existing WTO e-commerce framework dates back to 1998 before smartphones and 4G/5g internet existed. By 2030, 5.7 billion people will own smartphones. India alone has the same number of people under 25 years old as the whole population of Europe and Africa will be the center of the world’s young population by 2030 with double that number. Today less than half of the world is connected to the internet and most of that is in Europe, North America and China.

Digital trade delivers 12 UN Sustainable Development Goals and digital technology is key to achieving all of them. It’s also a G20 priority. Our governments are already committed and obliged under these international frameworks to promote digital trade. Governments know that digital trade will help them remove barriers to financial inclusion, increase access to the global economy for entrepreneurs, SMEs and women and they know that a global framework will help deliver improvements to national infrastructure by helping to galvanize private sector investment in broadband, payment systems etc…. Digital trade rules that apply among all countries and supporting regulatory environments would help unleash technology-led growth for SMEs worldwide, which is acknowledged as the next driver of significant national and global growth.

Busting the myths

Despite these obvious benefits, several arguments have been raises against global trade rules in this area. Firstly, that a global e-commerce agreement would only benefit big companies. This is untrue – the big winners will be entrepreneurs, SMEs, women, supply chains and emerging markets, particularly Africa. Secondly, that we can use the WTO 1998 E-Commerce Work Programme. Whilst there is much in the Work Programme that remains relevant, we need a focused effort to confirm how WTO rules should be clarified and improved to ensure that modern, relevant trade rules reflect the way business is done today and the way consumers use technology tomorrow, not 20 years ago. Lastly, that we can use existing national frameworks to promote digital trade – but this fails to grasp that digital trade doesn’t operate on a national basis and needs a global framework with a common, baseline set of rules flexible enough to allow countries to develop as they choose but complete enough to create the legal certainty that would bring investment and incentivise entrepreneurs worldwide, especially in SMEs, to export.

There is also resistance to a global e-commerce agreement based on a historical argument within the WTO. The argument goes something like “we won’t agree to a global framework for digital trade until we see compromise on access to heavily subsidized agricultural markets in Europe and the USA”. This reflects some legitimate concerns around fair access within the global economy but we should be able to manage both issues at the same time. One shouldn’t block the other. That also isn’t fair to the millions of SMEs creating jobs and opportunities for everyone. Nor is fair to emerging markets that desperately need foreign investment and access to global e-commerce markets.  The fact is, e-commerce is happening now, but the digital divide remains, and will grow larger unless we engage now.

 The real issues blocking progress

The real issues are far more basic and simple. Government missions in Geneva often run on limited resources so it can be difficult to keep pace with developments in the market. Similarly, entrepreneurs and SME business leaders don’t always have the time and resources to travel to Geneva to put their side of the case forward. Meanwhile, NGOs, who are critical of the WTO and any further rule-making, are highly organised and have a stronger voice. All of this leads to a gridlock.