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E-Commerce: Some developing countries push back on idea of new WTO rules


E-Commerce: Some developing countries push back on idea of new WTO rules

E-Commerce: Some developing countries push back on idea of new WTO rules
Photo credit: The Kenyan Daily Post

While the profile of electronic commerce is rising in diverse international fora, some developing countries are saying they do not want to discuss a new negotiating mandate for e-commerce rules at the World Trade Organization.

The current work programme on e-commerce is still adequate, they find, and the WTO Ministerial Conference in December should address more pressing issues, such as agriculture, or completing the Doha Development Round negotiations.

A session organised by Our World Is Not for Sale network, and the Third World Network Africa on 27 September during the WTO Public Forum which took place from 26-28 September, gathered an Indian ambassador, and representatives of Rwanda, South Africa, and the intergovernmental South Centre. The session explored expectations and outcome of the 11th WTO Ministerial Conference (MC11) taking place in Buenos Aires, Argentina in December.

Among several issues expected to be discussed at the MC11, the delegates mentioned electronic commerce (e-commerce).

J.S. Deepak, Indian ambassador and permanent representative to the WTO, said, “We believe that there is no mandate for initiating negotiations on e-commerce.”

“Often we are told e-commerce is good for SMEs [small and medium-sized enterprises],” he said, but added that what is confusing in the discourse is that it is trying to pass off benefits of e-commerce as the benefit of rulemaking in the WTO on e-commerce.

The dominance of retail platforms often give bad deals to SMEs, according to Deepak. Unless SMEs have a choice of which platform on which they want to operate, they are open to exploitation, and this is something which needs to be addressed, he said.

The direction technology is evolving is uncertain and agreeing to any kind of rulemaking or to a change in the work programme would be like a leap in the dark which could have disastrous consequences for the membership at large and in particular for companies and SMEs and the people in the developing world.

The present work programme with its bottom-up approach needs to continue, he argued, adding that many aspects need to be explored before thinking of changing that programme.

He said India can be an e-commerce power, but “data is the new oil,” but “you don’t have to import it,” and “we should not let it go for free.”

The current WTO work programme on e-commerce was adopted in September 1998. Four WTO bodies are in charge of carrying out the work programme. These are: the Council for Trade in Services; the Council for Trade in Goods; the Council for TRIPS [WTO Agreement on Trade-Related Aspects of Intellectual Property Rights]; and the Committee on Trade and Development.

Édouard Bizumuremyi, commercial attaché at the Permanent Mission of Rwanda, concurred and said, “We have seen texts that were presented containing rules such as the free flow of data, no localisation requirement.” The African Group rejected any discussions on e-commerce rules, and called to maintain the current work programme, he added.

The African Group, said Bizumuremyi, sees effort at new discussions on e-commerce as a disguised manoeuvre to have a mandate on e-commerce, while Africa needs policy space for its digital industrial policy.

Mandatory binding rules would prevent the preservation of this policy space, he said. He cited as an example the proposal for no localisation requirement, which he said would be a special preferential treatment awarded to giant digital companies to locate their data centres wherever they want, maximising profit, benefitting from economies of scale, and if they chose to be located in the European Union, for example, be able to provide data to marketers without investment, or tax.

Digital economy is emerging, he said, it is difficult to evaluate its impact on the global scale, but its consequences on Africa are uncertain. He cited the generalisation of 3D printing in the manufacturing industry, which he said “is set to have a devastating impact” on Africa’s objective of industrialisation.

Cross-border E-Commerce called Asymmetrical, Oligopolistic

Vahini Naidu, counsellor at the South African Permanent Mission to the WTO, said although e-commerce can be used for development and has many benefits, the kind of rules being proposed are not necessarily going to contribute towards development.

Cross-border e-commerce is highly asymmetrical in nature, she said, very concentrated and dominated by six countries. The wider digital transformation of which e-commerce is a little part is important but very disruptive, she said. Automation and artificial intelligence also mean job losses and governments need the ability to have foresight in terms of adopting innovative policies to address this.

South Africa only very recently started looking at the 4th industrial revolution and to incorporate it into the industrial action plan, she said, adding that the time it will take is uncertain. She cited the car service Uber which led to civil unrest because it disrupted the taxi industry in South Africa.

Cross-border e-commerce is also oligopolistic, she said. When big players want to enter a market, they either decimate smaller players or buy them out, so in terms of developing national industries, it is becoming increasingly difficult without having certain policies to tackle those issues, she explained.

The African Group organised a panel discussion in June about digital industrial policy and development, she said. The report of the panel stated that “while the world is getting more connected, international bandwidth is unequally distributed and that most developing and least developed countries continue to lag far behind.” Citing the UN International Telecommunication Union, the report says that “more than half of the world’s population is not using the Internet, notably 75% of people in Africa.”

Developing countries need to look beyond the possible benefits of digital solutions, the report said, calling for those countries to start assessing the impact that the lack of digital and technological capabilities would have in cementing and widening the technology divide.

Digital Economy Challenge for Industrialisation

Aileen Kwa, coordinator, Trade and Development Program at the South Centre, said the digital economy brings huge challenges in terms of industrialisation. As pointed out in a UBS white paper [pdf] titled, “Extreme Automation and Connectivity: The global, regional, and investment implications of the Fourth Industrial Revolution,” written for the World Economic Forum, many developing country economies have not finished coping with the 2nd and the 3rd industrial revolution and might not do well in the 4th one, she said.

Two models of liberalisation under e-commerce are present in current WTO discussions, she said, the first is the 1998 work programme, and the second is the set of new rules that some members are suggesting to introduce at the WTO, such as the European Union, Japan, the United States, and others, she said.

The 1998 work programme is based on existing WTO agreements and how they can be fine-tuned to apply to e-commerce, she said, while new rules are about free data flows, no localisation rules, and no disclosure of source.

Those new rules are about comprehensive opening, she said, resulting in a complete opening of countries’ digital economies. The two models have led to a complete stalemate in discussions, Kwa asserted.

If those developing countries that are not on the forefront of new technologies, such as artificial intelligence, open their markets, they risk being “swamped” and this would further de-industrialisation. If countries want to have digital industrialisation, they need have a model creating markets also for domestic players, she said.

Agriculture, Doha Round

Deepak said the issue of public stock holding for food security and the quest for a permanent solution is one of the most important points of the upcoming MC11.

Public stockholding programmes are used by some developing countries to purchase food at administered prices for food security purposes, according to the WTO. In 2015, at the Nairobi Ministerial Conference, ministers adopted a Decision on Public Stockholding for Food Security Purposes [pdf] calling the countries to find a permanent solution to this issue. Such programmes are considered by some as trade-distorting.

Trade constraints and agreements cannot be allowed to come in the way of the fight against hunger, Deepak said.

He also mentioned an issue of domestic support for agriculture, and agricultural subsidies, pointing out what he said were unfair rules in the WTO Agreement on Agriculture, such as special safeguard mechanism left from the preceding Uruguay Round of negotiations, through which developed countries can subsidise their agriculture.

Bizumuremyi said “harmful” subsidies have led to cheap imports that have devastated many commodities in Africa, such as poultry and maize, and advocated for domestic support for agriculture.

Free trade is important, but fair trade is equally important, he said.

Bizumuremyi further talked about the effort of the African continent on the renewal of industrial development. He underlined the “extreme” importance of concluding the Doha Round. He said the African Group also supports the public stock holding for food security purposes.

Kwa also called for the conclusion of the Doha Round, and said developing countries are spending more and more money on food imports.


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