One of the most noticeable accomplishments technology has succeeded to achieve over the past two decades is e-commerce. Although initially limited to on-line shopping, its expanse has widened to encompass an increasingly overwhelming range of business transactions. This is evident from the fact that while in 1995 the percentage of people having internet access was less than 1.0 per cent, in 2016 half of the world had access to the internet and an estimated 1.61 billion people worldwide purchased goods online.
With a value estimated at US$22 trillion globally, e-commerce is booming, but mostly escaping developing countries. According to UNCTAD, there exists a huge divide in conducting online commerce. For example, more than 70 per cent of people are shopping online in Denmark, Luxembourg and the United Kingdom, while in most developing countries, such as Bangladesh, Ghana, and Indonesia that rate is just 2.0 per cent.
Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. The methods that e-commerce employs include:
- Online shopping web sites for retail sales direct to consumers
- Providing or participating in online marketplaces, which process third-party business-to-consumer or consumer-to-consumer sales
- Business-to-business buying and selling
- Gathering and using demographic data through web contacts and social media
- Business-to-business (B2B) electronic data interchange
- Marketing to prospective and established customers by e-mail or fax (for example, with newsletters)
- Online financial exchanges for currency exchanges or trading purposes.
Curiously indeed, the growth of e-commerce has taken onboard people across continents in a myriad of transactions. In 1997, Amazon had 1.5 million customers worldwide. In 2015 it had 304 million. Over half of online consumers worldwide make purchases across country borders. Now, with cross-border transactions increasing, the World Trade Organisation (WTO) is up for setting rules in a bid to facilitate international trade, but the question that puts many observers (countries to be precise) is whether the rules are going to be complicated to comply with. There are many unresolved issues with the WTO, and there is a growing concern among many member countries, especially those less advanced, that inclusion of hard-to-implement rules and policies is sure to make the list of unresolved issues longer.
Recently, at the WTO Public Forum held in Geneva, e-commerce featured prominently where there were attempts to explore its various dimensions, including challenges, in the ever growing e-trading environment. In fact, since mid-last year, e-commerce is set to be a subject of hot debate when some proposals were initiated for the WTO to begin new work on e-commerce. By now, there are now almost a dozen proposals on the table, with some WTO members vigorously pushing for the negotiation of new global trade laws on digital commerce, and some members firmly against.
The crux of controversy lies in the interrelationship between consumers, civil society, businesses and governments. Critics of the proposals argue that introducing new rules now will be hugely detrimental to developing countries. It could monopolise the dominance of current global players, at a time when technological transformation is still in full swing and many developing countries lack their own adequate legal structures for digital trade. New rules risk exacerbating inequality between countries by extending protectionism in favour of companies based in rich countries via patents and copyrights for technologies and content. Meanwhile new rules could hinder development by preventing developing countries from requiring that companies operating within their border make use of local content or inputs. From a consumer perspective, critics argue that new rules would threaten personal privacy and data protection, since they would make it easier for companies to transfer data cross border-- potentially without consumers' knowledge or consent.
It is often advocated that facilitating trade and investment in digital infrastructure is critical if developing countries are going to participate in and benefit from e-commerce. But before thinking about the synergies between e-commerce and trade and investment facilitation, it is important to focus on some key questions:
- What are the needs and priorities of developing countries' digital infrastructure;
- how developing countries are facilitating investment in digital infrastructure and what additional steps might be taken;
- what role public-private partnerships can play in building digital connectivity;
- how synergies between e-commerce and investment facilitation can be harnessed; and,
- how the WTO with more coherent trade and investment policies can contribute to increasing digital connectivity in developing countries.
The WTO 11th Ministerial conference (MC11) will be held in Buenos Aires, Argentina on December 10 to 13 this year. It's not yet clear what form e-commerce discussions will take or what the possible outcomes will be. What is certain is that there are strong and competing country interests. The question that arises from all of this is whether, in a fast paced, digital world, we need to make new rules and approaches for consumer protection and empowerment, or whether we just need to adapt the approaches and rules we have or implement them better. Under the circumstances, developing countries need to do a lot of homework to be able to identify areas where a new set of WTO rules, if raised and negotiated at MC11, might cause difficulties in their cross-border trading.
