E-Trade: National and International Policy Implications

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E-trade is a huge opportunity for countries and exporters. But maximizing benefits requires establishing smart and efficient policies. Different types of e-trade involve different issues that have policy implications both at the national and international levels.
 
E-commerce (where goods and services trade are facilitated by the Internet)

For e-commerce in goods, the trade regime that affects these goods remains important, including issues like trade facilitation. Producers or consumers aiming to participate in this trade need not necessarily have access to cutting-edge technology and skills – access to a simple web platform to engage in online retailing might be the key objective.
 
Similarly, for services trade being facilitated through e-commerce, the underlying services regime remains important – although certain issues like consumer protection may become more important given the greater ease of service providers to reach individual consumers through online sale of their products.
 
Digital Trade (where goods and services are traded in digital form)
 
Turning to digital trade, where the goods and services are traded directly online, policies that affect cross-border flows of data are of central importance.
 
One of the challenges in this area is facilitating the free flow of data while retaining space for governments to address national public policy concerns like the protection of privacy. While some international organizations such as the OECD and APEC have developed valuable guidelines, it is unlikely that International standards on the protection of privacy can be agreed upon in the foreseeable future. In such cases the important principle to retain will be to balance public policy objectives at the national level with their impact on e-trade. Practical steps like promoting transparency in what regulations exist, and fostering dialogue between regulators, can also be helpful.
 
This has implications for countries at different levels of development. While many countries, including LDCs, are finding valuable niches for digital exports, such as Cambodian-made animation and games, it may not be realistic to think of firms in many low-income countries as competing in the data-driven, high-tech world of digital trade in the short term. A more practical way of focusing scarce resources may be to address the drivers of competitiveness in goods and services e-commerce, like increasing basic internet connectivity, strengthening trade facilitation, streamlining non-tariff measures, and improving the services regulatory regime.  
 
Implications for National Policies
National trade policies affect all dimensions of the e-trade environment. One example is how the services trade regime affects the capacity of people to connect to telecommunications networks. Foreign providers of telecommunications services are driving the rapid expansion of mobile phone networks in many developing countries. Combined with an appropriate regulatory regime, this can help drive costs down and increase access to mobile phones and digital networks.
 
Governments can define their e-trade policies by identifying the most relevant types of e-trade for their country’s circumstances. In addition, governments need not tackle everything at once. Instead, a sequenced approach can be used. For example, a low-income country might initially focus on increasing its firms’ participation in goods and services e-commerce, and prioritizing reforms in the key policy areas relevant to these. Main priorities in this sense include focusing on broadband connectivity, digital literacy, adequate e-payment solutions, and an enabling regulatory framework for related services and data.
 
Implications for International Trade Policy
What rules need to be negotiated? Where should these negotiations take place? The starting point should be a more intensive process of exploring what trade rules already cover aspects of e-trade; and where new rules or updates to existing ones might be needed.
 
Bilateral and regional trade agreements like the Trans-Pacific Partnership will continue to be important in pushing this regulatory frontier. Such agreements are increasingly containing rules related to the cross-border flow of data. Regional groupings like APEC have already been working on regulatory dialogue and coherence in this area for some time as well. Trade agreements and fora like APEC are important in sustaining domestic momentum for reform, lowering trade costs among participants, and acting as a test-bed for reform at the multilateral level.
 
In the WTO, voices are increasingly heard promoting an effort that goes beyond the WTO’s limited e-commerce work program.  A helpful starting point could be an effort to list existing WTO rules that are relevant to the different aspects of e-trade – even in digital trade, many WTO rules, in particular under the GATS, remain highly relevant, even if they were not drafted with this form of trade in mind. This process of surveying the existing landscape would help identify gaps where further work in the WTO could be fruitful. A multi-stakeholder expert group, drawing on the expertize of the WTO Secretariat but also outside institutions like the Bank, and the private sector, could report to the WTO General Council on this effort.
  
Implications for the World Bank Group
At the World Bank Group we believe that we have an important role to play in all this, both at the level of national policy-making on e-trade competitiveness; and at the international level. We are intensifying our country-level support on e-trade across all the different dimensions of the e-trade environment. Our support includes analytical advice to countries; technical assistance for policy reforms; and financing to address the key constraints countries face in upgrading their e-trade competitiveness.
 
We are also intensifying our role at the international level. As a global institution that also works intensively on these issues with developing countries around the world, we believe we have a role to play in sharing analysis, experiences of reform, and good practices to inform international policy-making.  There is no doubt that this is an exciting and important area for international trade and for development – and we’ll be sharing more on our work in this area in future.

Read the first part of this blog series: A policy framework for two types of e-trade
 
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