The Financial Express

E-commerce expands: Move to adopt binding global rules

| Updated: October 23, 2017 11:47:11

Evaly and Fianancial Express Evaly and Fianancial Express
E-commerce expands: Move to adopt binding global rules

Bangladesh, though still a least developed country (LDC), has already caught up with the modern trend of electronic commerce or e-commerce. It means business transactions, buying and selling of products and services, or transmitting funds or data, are done over an electronic network, mainly the internet.
With diversified innovation in information technology, e-commerce is gradually increasing in both the developed and developing countries. However, it is a long way for most of the developing countries and LDCs to get sufficiently accustomed with the new business system.
E-commerce is still at a nascent stage in Bangladesh. There is no comprehensive data on e-commerce transactions in the country. The only official data, albeit a partial one, is available at the Bangladesh Bank. It shows that total value of e-commerce transactions, based on debit and credit cards, stood at Tk 5.54 billion in 2016. On the other hand, the E-commerce Association of Bangladesh estimates that annual transaction of e-commerce stands at Tk 10 billion. Fashion and electronic products, according to the association, dominate e-commerce market.
Electronic mode of transactions is gradually getting popular in the country. The buzzword 'Digital Bangladesh' reflects the mood. But e-commerce needs a well-planned roadmap where rules and regulations play a critical role. Besides, IT-related hard and soft infrastructure has to develop .  
Some countries have taken a move to formulate a set of global rules for e-commerce industry. The global giants of e-commerce industry are advocating some binding rules for e-commerce under the framework of the World Trade Organisation (WTO). This is one of the 'new issues' for negotiations in the multilateral trade platform. Member-countries are, however, still to decide whether to discuss the matter now or later. All decisions in the WTO forum are made unanimously.
Developed countries like the United States and Canada, along with developing nations like Brazil, Argentina and Pakistan, are in favour of initiating a negotiation for adopting rules on e-commerce. India, with support from many African countries,  vehemently opposes the move.       
E-COMMERCE IN WTO: E-commerce was first tabled as an agenda for discussion in the second ministerial conference (MC2) of the WTO in 1998.  A declaration was adopted by the members to initiate a work programme for future negotiations. The declaration called upon members not to impose any tariffs on electronic transactions until the next meeting. This is known as moratorium which has since been extended at every ministerial conference up to MIC10 in Nairobi in 2015.    
The main agenda of the work programme is to examine the four core areas of the WTO related to e-commerce. Three councils for trade in goods, services and intellectual properties and one committee on development have  been asked to examine the implications of the possible rules and regulations of the e-commerce. The councils and the committee submitted their reports and those were discussed in 2001.  
In later years, e-commerce occasionally came into table but was kept outside the purview of the ongoing Doha negotiation which was initiated in MC4 in 2001. After 16 years, some member-countries of the WTO suggest that time is ripe to initiate negotiations on e-commerce now.
The reasons behind advancing the agenda are strong. E-commerce has made interactions between consumers and businesses easier, opened up new opportunities for businesses by reducing the cost and allowing them to reach a wider market. It has provided greater flexibilities to the consumers also. Moreover, both the business-to-business (B2B) and business-to-consumer (B2c) e-commerce are rapidly expanding in Asia, Latin America, Africa and the Middle-East. Various companies of   the countries of these regions are coming up with their own e-commerce platforms. According to a projection of the United Nations Conference on Trade and Development (UNCTAD), share of global B2C e-commerce in Asia and Oceania, and Middle East and Africa may rise from 28 per cent to 37 per cent and 2.2 per cent to 2.5 per cent respectively from 2013 to 2018. In Latin America, online retail sales may grow at a compound annual growth rate of 17 per cent between 2014 and 2019.
Proponents believe that a set of global rules will be beneficial for a systematic growth of e-commerce industry. Guided by global rules, there will develop a level playing field also.
The opponents, however, have also no dearth of arguments. While online domestic trade is booming in many developing countries, these countries are also facing challenges in facilitating e-commerce.   There is the lack infrastructure (soft and hard), legal frameworks and administrative measures.
The current e-commerce market is monopolistic in nature as a few giant companies are dominating the global market. One estimate shows that China's B2C e-commerce market was around $750 billion followed by the US with $600 billion in 2015. The markets in the UK and Japan were less than $200 billion. Other countries were well below $100 billion. Leading three e-commerce operators were Amazon, JD and Apple which together captured more than 60 per cent of the global retail revenue share in 2015. On the payment gateway segment of e-commerce, three companies are leading across the world. These are: MasterCard, Visa and AMEX.
The opponents of the global regulations on e-commerce argue that such uneven market situation will only strengthen these countries and multinational companies. Their comparative advantage will allow them to ultimately write the rule book. One may recall here that the drafting of the Agreement on Agriculture (AoA) of WTO was mostly sponsored by the farm lobbies of the US and Europe.  
Meanwhile, things have changed a lot in the past three decades. Developing nations have achieved more clout on global trade negotiations to make the rules more balanced. Some argue that before the conclusion of the Doha Round of negotiation, no new issues, like e-commerce, should be entertained.  
Nevertheless, it is likely that the next ministerial conference or MC11 of the WTO, scheduled to be held in Buenos Aires, the capital of Argentina, at the end of this year, will take up some new issues including e-commerce.
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