Facilitation 2.0: E-Commerce and Trade in the Digital Age

09/25/2018

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Maria Ptashkina | International Centre for Trade and Sustainable Development

Executive Summary

In today’s digitalised and globalised economies, many seemingly simple transactions are subject simultaneously to numerous regulations. A purchase of an item online is an electronic transaction that involves the provision of a good along with a number of services (electronic payment, delivery, etc.) and crosscuts at least three directly related policy areas—trade in goods, trade in services, and electronic commerce-touching upon various other regulatory domains, including intellectual property rights, data flows, and competition policy. With a growing number of transactions available on the internet, the interconnection between regulatory issues creates unprecedented complexities for both transaction subjects and policymakers. Through the lens of Facilitation 2.0, one can identify and target the development of simplified and harmonised procedures to facilitate cross-border exchanges of goods, services, and knowledge. In the case of e-commerce, these measures include trade facilitation measures to speed up the movement of goods and services across borders; measures conducive to creating a level playing field and favourable environment for businesses and consumers; and measures related to adjacent policy areas to minimise potential negative effects on traditional economic practices. Preferential trade agreements comprise the most comprehensive sets of international regulations to date and cover many of the measures suggested by the multidimensional nature of the Facilitation 2.0 approach. Modern e-commerce regulatory hubs correspond to the countries with the highest volumes of e-commerce as measured by the value of transactions—China, the United States, the European Union, Japan, and the Republic of Korea—along with regulatory champions, such as Canada and Australia. An extensive network of trade agreements between these economies suggests the following sets of measures are used to regulate and promote e-commerce:
  • General provisions: include issues related to cooperation or dialogue on a predetermined array of policy areas, transparency, non-discriminatory treatment of digital products, electronic supply of services, and domestic regulatory frameworks. General provisions crosscut the entire domain of e-commerce regulations and thus do not regulate any specific type of transaction or policy area.
  • Trade facilitation measures: encompass customs duties, paperless trading, electronic signature, and electronic certification. Trade facilitation measures relate specifically to ensuring faster and easier movement of goods and services across the border, and streamlining transactions accompanying trade flows.
  • Conducive environment: relates to provisions regulating online consumer
    protection, personal data protection, unsolicited (commercial) email, access
    to and use of the internet, and cybersecurity. These types of measure ensure a
    safer and more secure transaction environment, creating more potential for the
    expansion of cross-border e-commerce.
  • Technological issues: include location of computing facilities, treatment of source code, and cross-border transfer of information. This type of provision relates to measures requiring a conceptual position on the functionality of the entire digital domain and e-commerce systems from a technological perspective.
The number of provisions and their depth has increased in recent years. Considering these dynamics, the new generation of trade agreements might be more detailed and go beyond soft commitment and simple cooperation. As computer technology evolves, paperless trading is becoming a more convenient and cheaper way of conducting trade. Single windows, digital signatures, and electronic authentication are examples of technologies that have evolved as a response to complicated bureaucratic procedures. Paperless trading is in the interests of businesses and consumers, as long as it ensures safe and reliable transactions and is thus a potential area for convergence. Conducive environment and technological issues (such as data privacy, location of computing facilities, free flow of data across borders, and net neutrality), however, face a number of fundamental conceptual differences in approaches in different economies. The existing conceptual differences pose a potential threat to the development of a coherent regulatory environment envisioned by Facilitation 2.0. However, these discrepancies can be seen as a natural outcome of policies aligning with incentives, stemming from inherent differences in market structures and regulatory priorities. Thus, the evolution of e-commerce and technological development would continue to define policy frameworks in the future. Having an increasing impact on economic development, e-commerce, particularly in developing countries, has raised concerns about sustainability. Ensuring balanced development of the e-commerce sector across different countries and regions, securing equal rights and opportunities for internet users through adequate and harmonised regulations, and minimising negative effects on adjacent regulatory domains are just some of the many challenges that need to be taken into account when formulating cross-border e-commerce rules. Some of the existing measures in trade agreements, particularly those related to trade facilitation, play an important role in achieving relevant Sustainable Development Goals. Trade facilitation measures, for instance, have a direct effect on achieving increases in exports (Goal 17.11) through advancing the speed of transactions and simplifying exporting procedures, promoting the entrance of new firms to exporting markets, and expanding the level of incumbent exporter operators. Measures aimed at establishing a conducive environment for business play a major role in achieving the goal of assisting micro, small, and medium-sized enterprises in gaining access to financial services (Goal 8.3). In particular, verifiable online transaction records and cybersecurity measures enhance trust in online payment systems and expand financing opportunities. General provisions, such as transparency, are also critical for integrating smaller firms into global value chains (Goal 9.3), as they face high fixed costs of collecting and analysing information about export markets. Access to and use of the internet and transparency provisions are particularly relevant for the promotion and development of women entrepreneurship (Goal 8.5). The effects of e-commerce in developing markets with weaker regulatory structures are, however, ambiguous, leading to a more cautious approach to new regulations adoption… rta_exchange_-_ptashkina_-_facilitation_2.0_-_e-commerce_-_ptashkina_0

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