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Digital trade accounts for about a quarter of all international trade; it has been growing at a faster pace than traditional trade. The EU is the world’s leader in both exports and imports of digitally deliverable services, which amounted to €1.3 trillion in 2022, or over half of the EU’s total trade in services. Trade policy will play a vital role in attaining the EU’s objectives linked to the digital transition.
Background
Digital trade refers to commerce enabled by electronic means: i.e. by telecommunications and/or ICT services, etc. and covers trade in both goods and services. It affects all sectors of the economy and is highly important for European industry and development in general.
The global e-commerce market is growing at a dynamic rate, e.g. in 2018 alone, global e-commerce sales were more than €21 trillion and about 1.5 billion people were shopping online.
Digital technologies are increasingly enable trade; for example, the following aspects have to be mentioned: – banks rely heavily on the international transfers; – agricultural commodity traders use e-signatures to conclude international purchases; – manufacturers, freight operators and logistics enterprises can track and improve the performance of their machines and vehicles around the world thanks to electronic data transfers; and – everyday items increasingly combine sensors and internet-enabled applications, large datasets, and high-performance computing capabilities (e.g. the “Internet of Things”).
The latest agreement follows five years of dedicated negotiations by over 90 WTO members; the EU played an active role in the negotiation of these first global rules on digital trade.
Supporting European digital agenda is the EU-wide priority for the regional and global trade: the objective is to ensure a leading position for the EU in digital trade and in the area of technology, most importantly by promoting innovation.
The EU also negotiates digital trade agreements with key partner countries: these trade agreements aim to build consumer trust, ensure predictability and legal certainty for businesses as well as remove and prevent the emergence of unjustified barriers to digital trade. They are also designed to help the parties to the agreements to develop and implement the policies required to address new challenges posed by the digital economy. The digital trade agreements demonstrate the EU’s commitment to being at the forefront of new digital developments, while upholding open digital economies that are competitive, transparent, fair, and free of unjustified barriers to international trade.
Source: https://policy.trade.ec.europa.eu/help-exporters-and-importers/accessing-markets/goods-and-services/digital-trade_en
Digital trade principles
The EU has concluded digital partnerships with some of its partner countries to advance cooperation on several digital issues, including digital economy and trade, as well as trusted data flows and data innovation, standards and the digital transformation of businesses and public services. Digital partnerships pave the way for cooperation in new and emerging areas with transformative economic potential for the EU member states’ economies; they also enable regulatory cooperation and common positions in international forums.
Digital partnerships address digital trade and include digital trade principles as an important deliverable: these principles are non-binding instruments, but they reflect a common understanding on key issues relevant to digital trade and formulate a joint commitment to an open digital economy, free of unjustified barriers to international trade.
Digital trade principles cover data governance (including free flow of data with trust, and open government data), digital trade facilitation (including paperless trading, single windows, electronic contracts, electronic authentication and electronic signatures, electronic invoicing), consumer trust (including online consumer protection and safety), and business trust (including open internet access, cybersecurity, and protection of source code and cryptography-related technology).
Since 1998, WTO members have agreed to suspend customs duties on electronic transmissions, ranging from software, emails and text messages to digital music, movies and video-games. This moratorium is renewed every two years at the WTO Ministerial Conference. The EU is in favour of permanently prohibiting customs duties on electronic transmission, including the transmitted content. The EU believes that permanently prohibiting customs duties on electronic transmissions should be part of the negotiated outcome in the WTO e-commerce negotiations.
Recent trade agreement and statement
During the 11th WTO Ministerial Conference, MC11 in Buenos Aires in December 2017, a group of 71 WTO Members (including the EU) sponsored a Joint Ministerial Statement calling for the start of exploratory work toward future WTO negotiations on trade-related aspects of electronic commerce. Negotiations started formally in January 2019, when 76 WTO members confirmed their intention to “seek to achieve a high standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO members as possible”. Since then, additional WTO members have joined the initiative, bringing the total to 91 participants, who collectively account for over 90% of global trade. Participation remains open to all WTO members; the initiative has been chaired by Japan, Australia and Singapore as “cooperative convenors”.
More on global e-commerce in: https://www.wto.org/english/news_e/archive_e/jsec_arc_e.htm
Once integrated into the WTO legal framework, the recent e-commerce agreement (in the form of the “Joint Statement Initiative on Electronic Commerce”) will be the basis for global rules on digital trade among a broad range of WTO Members. The agreement will benefit both consumers and businesses, and support digital transformation among participating WTO members by: a) facilitating cross-border electronic transactions, b) reducing barriers to digital trade, and c) promoting innovation in e-commerce. As the joint statement conforms, “each party shall endeavor to adopt or maintain a legal framework governing electronic transactions that is consistent with the principles of the UNCITRAL Model Law on Electronic Commerce 1996”. Besides, “electronic signature” means data in electronic form that is in, affixed to, or logically associated with an electronic data message and that may be used to identify the signatory in relation to the data message and indicate the signatory’s approval of the information contained in the data message”.
Source – Joint statement on electronic commerce (26 July 2024) in: https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/INF/ECOM/87.pdf&Open=True
Citation from the Commission
= “We are happy to endorse this e-commerce agreement which represents the first-ever set of global digital trade rules in the WTO. These rules, once integrated into the WTO framework, will be fundamental for the development of global digital trade, setting a common ground and avoiding fragmentation. This agreement will benefit businesses and consumers, as well as contribute to integrating developing and least developed countries in the global digital economy by bridging the digital divide. The EU sees great value in the agreement and will work with all involved parties towards its incorporation into the WTO framework; the EU calls on all WTO Members to do the same”.
Dombrovskis V., Executive Vice-President and Commissioner for Trade
Basic rules in e-commerce
It is expected the “joint statement” will benefit consumers and businesses involved in digital trade, especially SMEs, in all developed and developing countries. Already negotiated e-commerce statement includes a set of ground rules on digital trade, including:
= Initiatives to promote seamless digital trade both within and across borders, including on electronic signatures and electronic invoices;
= Provisions to improve trust in the digital trade environment for both consumers and businesses, notably by strengthening consumer protection online;
= Provisions to make the international digital trade environment more reliable and affordable, including collaboration on cybersecurity risks;
= Prohibition of customs duties on electronic transmissions, which is of great commercial importance and is a key priority for industry worldwide; and
= Initiatives to facilitate participation of consumers and companies from developing countries in digital trade.
As the next steps, the EU and other participants of the Joint Statement Initiative will take necessary steps towards integrating the e-commerce agreement into the WTO rulebook, which will require consensus by all WTO Members.
Reference and citation from: https://ec.europa.eu/commission/presscorner/detail/en/IP_24_4022