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Why e-commerce rules for global trade are critical to economic prosperity

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The rapid pace and scale of technological change and global flows of information, among other forces, are disrupting labour markets and fundamentally altering the future of work.

While these shifts may create economic growth, new jobs and flexible work, they may also lead to the automation and consequent disappearance of routine, manual roles.

Technological advancements, despite the disruption, also create opportunities for expansion into global markets for sectors of the population excluded from more traditional trade mechanisms.

The ability to seize these opportunities and manage potential obstacles, however, is not evenly distributed.

Vulnerable and marginalised populations could face a “double disadvantage” in the future, due to a lack of awareness of or means to adapt to these changes.

It is therefore important as part of the debate around the growing importance of e-commerce to global trade that we look at this from the following perspectives as part of developing the rules-based framework for e-commerce:

  • The recent announcement to progress e-commerce rules within the WTO
  • The domestic policy challenges and opportunities this will present for WTO members and
  • The importance of Global engagement and inclusion, particularly for Least Developed Countries (LDCs)

The importance of e-commerce and digital services trade for Micro-Small and Medium Enterprises (MSMEs)

Exporting online presents exciting opportunities for MSMEs thinking of expanding to new markets.

A PayPal study across six of the world’s largest e-commerce markets (China, United States, United Kingdom, Germany, Australia and Brazil) projected that the number of online shoppers would rise to 130 million cross borders shoppers generated US$307 billion in 2018.

Selling online gives access to a whole world of new customers, without many of the challenges, risks and expenses of establishing a physical presence in a new market.

The opportunity certainly exists, but to harness it, MSMEs need to be equipped with the necessary knowledge and skills to make informed business decisions. And they need to be supported by the right policy frameworks.

New challenges

E-commerce differs from traditional paths to market in a number of ways, each of which may present new challenges for new-to-online manufacturers or retailers. For example, bricks-and-mortar commerce requires a focus on location, merchandise assortment and display, as well as the in-store experience.

E-commerce on the other hand requires a focus on order fulfillment, logistics, the online customer experience and customer lifecycle management.

Many companies looking to enter the online export world have never exported before and yet this presents a significant new opportunity to assist a greater number of MSMEs to engage in expanding into overseas markets.

International Policy: Open, transparent and rules-based international trade are critical to economic prosperity at a time when we need critical support for the WTO

The Global Trade Professionals Alliance (GTPA) congratulates the 76 WTO members committed to establishing e-commerce rules and the role of Australia as a driving force in the WTO in this important initiative that can put in place a framework to shape the rules of e-commerce in years to come.

The GTPA understands that this initiative currently only includes around half of the WTO’s 164 members, and we believe that it is important to encourage other country members to join.

The good news is – after some uncertainty – Australia’s biggest two-way trading partner China has agreed to join the e-commerce talks.

Two years ago, China put in place rules mandating that data be stored within its borders.

The world’s second largest economy, which is locked in a trade war with the United States, has signalled “conditional” support for the initiative – a move certain to be welcomed by Australian exporters.

It comes at a time when many more Chinese consumers are using ordering and payment platforms like Alibaba to order goods and services direct from Australia.

The GTPA supports the need for implementing basic standards for digital trade in areas like consumer protection and electronic contracts. Such standards may play a critical role in removing barriers and complexities to digital trade, with studies finding that around 70 regional trade agreements around the world currently include chapters on e-commerce.

However, we note that there are concerns from consumers and civil society organisations and we therefore believe that it is important that policy must reflect the needs of consumers, importers, and exporters as well as the organisations that facilitate e-commerce and digital services trade.

Domestic policy: Creating the right domestic policy parameters to support and facilitate e-commerce opportunities

Building mechanisms that can create trust in e-commerce will be important at a domestic policy level. Therefore, it is important that businesses be engaged in any policy design and implementation through engagement with local governments, industry bodies and peak business associations such as the International Chamber of Commerce (ICC).

E-commerce is about creating jobs and growth in the digital age. Therefore, it is important we engage youth in the conversation. We need to focus on developing the skills of the younger generation to take advantage of the opportunities presented in the digital age.

More recently, the GTPA notes that certain countries have been introducing a policy environment that presents a major risk for the cross-border e-commerce sector, with governments viewing cross-border e-commerce as a prime target for increased revenue collection, via new taxes (for example, GST on low-value imported goods) and new cost recovery measures (a proposed levy on low value goods).

The GTPA believes it is imperative that more is done to promote the benefits of e-commerce to governments from the perspective of empowering business to trade and the opportunity this presents from a corporate and personal income tax perspective. At the same time, it must be noted that taxation policies that are reactionary will only benefit governments in the short term. For example, social media taxes, tariffs and GST/VAT are a regressive tax which will push businesses offline.

Successful policy around e-commerce will required interdepartmental coordination between government agencies at a country level to create a trusted environment and global engagement on governance.

Involving Least Development Countries (LDCs)

It is imperative that any new policy frameworks at a multilateral level consider the concerns from an LDC perspective. This includes capacity building, the need for education and skills development, as well as support and advocacy to assist in bringing LDCs into the digital economy and the broader world of traditional trade.

There are many issues to consider and the GTPA’s concerns are focused on the development of e-commerce policies and standards from an LDC perspective, particularly as these relate to:

  • Infrastructure requirements for e-commerce
  • Issues relating to payments and
  • Access to funding

This will ensure infrastructure is developed for efficient participation by all businesses in the e-commerce opportunity.

Support must be given to assist LDCs to prepare governments to actively participate in the negotiations and ensure that these officials have the capacity to effectively participate.

Lisa McAuley is CEO of the GTPA and Collins Rex is GTPA’s Director for Asia and Africa.

The Global Trade Professionals Alliance is a not-for-profit, membership-based organisation connecting individuals and organisations to a trusted trade network. It is the only organisation globally to develop the international standard for certifying trade professionals. To learn more visit: https://www.gtpalliance.com/

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