Recent years have seen remarkable developments in the digital economy, creating unprecedented opportunities for SMEs to enter global markets for the first time. Data from the eBay platform shows that SMEs that use on-line platforms are more than five times more likely to export than those in the traditional economy.
Small businesses and entrepreneurs in developing economies are also at the forefront of this emerging trend—with e-commerce providing important new opportunities for economic development. In Nigeria, for example, studies show that the development of e-commerce has leapfrogged the development of traditional bricks-and-mortar retail.
With the right global policies in place there is an opportunity to unleash a new era of “inclusive trade”: one in which all companies—regardless of size, sector or location—can benefit from equal access to the global trading system.
But trade policies need to keep pace with 21st Century trade.
Internet-led changes to the composition, nature and speed of global trade are raising increasing policy frictions—both in the online space and for the delivery of e-commerce shipments.
Today’s trade rules largely reflect 20th Century patterns of trade: large, containerised shipments on a B2B basis. The result is that tax, customs and market access rules are not always well suited to supporting the growth of SME e-commerce which is characterised by high-frequency, small shipments direct to consumers.
Another precondition for the success and viability of e-commerce is the ability for information to freely and efficiently cross borders—without being limited by technical barriers or anti-competitive bottlenecks. Fragmented national rules on data and the availability of online information increasingly act as a major impediment to trade.
For example, unjustified restrictions on cross-border data flows create significant costs for additional data management, local facilities and power—undermining the “global platform” model that most digital services suppliers use to keep costs low for SME users.
We think the time has come for a new global agreement to support Internet-led trade.
In September 2016, ICC issued a new report calling on WTO members to give active consideration to launching new talks on a holistic package of trade disciplines, rules and assistance to boost SME e-commerce—with an overriding objective to promote inclusive growth.
ICC’s report recommends that a new WTO e-commerce agreement could be based around three pillars:
1. Enhancing connectivity and capacity building for e-commerce
Upgraded WTO rules to enhance SME access to the Internet and related services—including the removal of regulatory impediments to trade in telecommunications.
A new, global capacity building fund to help SMEs growth through e-commerce.
2. Enabling MSMEs to get goods sold online to consumers more efficiently (“Trade Facilitation 2.0”)
Measures to simplify and expedite the clearance of e-commerce shipments through targeted customs, tax, and market access measures—building on the WTO’s landmark Trade Facilitation Agreement.
These could include: harmonized tariff codes for low-value items; mandatory de minimis thresholds; and provisions to encourage the use of electronic payments for customs duties.
3. Digital rules to support online growth and build consumer trust.
New global rules to promote an open, trusted and secure Internet, which would drive down transaction costs for businesses trading online.
Possible measures could include: commitments on cross-border consumer protection standards; and rules to promote technological innovation to enhance online security and reliability.
New multilateral provisions to ensure the free flow of data across borders are of particular importance to speeding the growth of e-commerce.