E-commerce and Digital Trade

About 57% of worldwide internet users engage in e-commerce at least once a week. Have you recently purchased digital products such as software, a movie, or an e-book? Or bought tickets online? Did you order a physical product, such as clothing, and pay online? Did you order a physical book from a website and pay cash upon delivery? All of these examples can be classified as e-commerce. In 2023, approximately 2.64 billion people – a third of the global population – bought goods and services online. The e-commerce market is worth US$6.3 trillion globally, and is one of the most important drivers of economic growth.

AI and e-commerce

AI is changing the way in which online businesses operate. In the e-commerce industry, AI may be applied in three main areas: marketing, transaction processing, and customer support. It may also assist retailers in managing stocks and forecasting demand. 

AI’s potential in e-commerce

AI carries significant potential for businesses operating online. Algorithms are already used extensively to understand customer behaviour, enabling companies to tailor advertising to match customer preferences. AI can also make product recommendations by analysing the purchasing habits of individual customers, and can help in forecasting demand, so that companies have a better understanding of what products they should be stocking and when. This may contribute to enhancing sustainability in logistics. 

AI may also help to raise retailers’ profits by promoting price maximization (automated dynamic pricing), by allowing sellers to adapt in real-time to market trends, competitor pricing, and consumer habits. They can also assist in invoicing, payment optimization, and fraud detection. 

Digital assistants provide uninterrupted customer support to online shoppers, engaging in one-to-one negotiation and often facilitating the successful conclusion of transactions. Natural language processing (NLP) can interpret and respond to voice as well, facilitating interaction with consumers. 

AI may also have an impact on after-sales support, nurturing and maintaining relationships with customers, and facilitating consumer redress in case of disputes. AI support is consistent, and has no downtime or learning curve, making it an efficient tool for handling consumer complaints. Moreover, AI has the capability to analyse large volumes of complaints, enabling companies to identify and mitigate problems before they escalate, and to allocate resources more effectively.

AI risks that may impact e-commerce

AI technology provides a competitive advantage to larger e-commerce players with the resources to invest in advanced AI capabilities. This may lead to further market concentration, making it harder for smaller businesses to compete, and potentially reducing consumer choice. Implementing and maintaining AI technologies can be costly, requiring significant investments in infrastructure, access to quality data, talent acquisition, and constant development. Smaller businesses or startups with limited resources might struggle to compete with larger enterprises that can afford substantial AI investments, creating a potential barrier to entry or growth in the market.

An increasing number of companies rely solely on AI for customer service, refusing to switch to human interaction. This is a negative trend which may lead to unsatisfactory consumer experiences and service denial, if the automated assistant cannot satisfactorily provide resolution to a consumer’s problem.  

The safety of data is a major concern. AI systems rely heavily on consumer data, which may be susceptible to breaches or unauthorised access. Additionally, biases in AI decision-making processes, stemming from biased training data or algorithmic flaws, can have detrimental consequences. Furthermore, the possibility of cyber security threats presents a significant risk, as malicious actors could exploit vulnerabilities within AI systems to perform cyberattacks, with serious implications for businesses.
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The digital economy was made possible by two parallel developments: the accelerated speed of digitisation (the conversion of data from analogue to digital form) and the digitalisation of processes (i.e. trade and public services) known as the ‘digital transformation’ of societies. The concomitant increase in the processing power of computers allows more correlations to be seen and more information to be extracted from data than ever before. Data is the raw material from which new services, business models, and value are created. Global volume of data Statista

Volume of data/information created, captured, copied, and consumed worldwide from 2010 to 2025. Source: Statista, 2022

Digitisation leads to the dematerialisation of products previously commercialised as physical objects (such as books, films, games, and recorded music). Datal flows also underpin and facilitate every other kind of traditional cross-border flow: even when ships carry physical products, customers increasingly order and pay online. Data flows have also transformed the composition of world trade. Services such as education and healthcare, that were once almost impossible to provide across borders, are now considered tradable.

In parallel, there is growing servicification of global trade, which can be understood as the increasing integration of services with goods. Manufacturing companies increasingly buy, produce, and sell services to complement their wares; services are increasingly embedded in manufactured goods. Examples of servicification include services that are sold to the consumer as a bundle with goods, such as applications that accompany fitness equipment and health trackers.

China is currently the world’s biggest e-commerce market by sales, followed by the United States, the United Kingdom and Japan.


The biggest e-commerce markets by sales. Source: Hinrich Foundation, 2024

The most visible interfaces connecting individuals to global flows are digital platforms. Amazon and Alibaba are the world’s largest e-commerce companies, maintaining enormous market shares. Platforms facilitate access to market information and reduce transaction costs for consumers. They can democratise e-commerce by facilitating access to the global market for micro, small, and medium enterprises (MSMEs) as well. Nevertheless, many MSMEs face obstacles in accessing these platforms. It may also be difficult for MSMEs to compete with the products offered by the platforms themselves, especially when they heavily collect data that can be transformed into market intelligence.

In the Internet platform business model, user data is the core economic resource; it is collected, processed, and monetised via market and advertising. When searching for information and interacting on the Internet, users share their ‘electronic footprint’. Internet companies collect and analyse this data to extract bits of information about user preferences and habits. Internet platforms can predict with high certainty what a person with a certain profile is going to buy or do. 

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Some countries and regions have enacted legislation seeking to leverage the playing field between small and large platforms operating in the digital economy, fostering competition. In Europe, the Digital Services Act (DSA) modernised the EU’s 2000 directive on e-commerce. It covers a wider range of online services, including social media sites, e-commerce stores, and other online providers. The DSA aims to protect users’ fundamental rights, and establish a level playing field for businesses. The EU’s Digital Markets Act (DMA) complements the European regulation on competition. It regulates the activity of ‘gatekeepers’ – large digital platforms providing core platform services, such as online search engines, app stores, and messenger services. 

Together, these regulations aim to ensure transparency, better consumer protection, clear responsibility, liability rules, and enhanced competition between market players. The expectation is that a harmonised set of rules for the entire EU will foster the growth of cross-border digital trade.

Recording of the session “Unpacking EU regulations on digital markets and services (DMA & DSA)”

For detailed information on WTO’s Joint Initiative on e-commerce, visit the dedicated page on the Digital Watch Observatory.

As the primary policy player in modern global trade, the World Trade Organization (WTO) established a system of agreements that regulate international trade. The principal treaties are the General Agreement on Tariffs and Trade (GATT), dealing with trade in goods; the General Agreement on Trade in Services (GATS); and the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). Other agreements developed at the WTO which are of relevance to e-commerce include the Information Technology Agreement (ITA) of 1996, with an impact on the price of hardware and connectivity; the ITA-II of 2015; the Trade Facilitation Agreement (TFA); and the agreements and reference documents that guided the global opening of telecommunications services such as the GATS Annex on Telecommunications, the Fourth Protocol on Basic Telecommunications, and the WTO Reference Paper on Basic Telecommunications.

At the WTO, specific discussions on e-commerce are taking place in two parallel tracks. The first is known as the multilateral track, which was launched in 1998, following the Ministerial Declaration on Global Electronic Commerce. The second involves a subset of WTO members, which are currently part of the WTO Joint Initiative  on e-commerce.

The 1998 Ministerial Declaration on e-commerce launched the Work Programme on Electronic Commerce (WPEC) and put in place a moratorium on customs duties on electronic transmissions by stating that members would ‘continue their current practice of not imposing customs duties on electronic transmissions’. The moratorium has been renewed roughly every two years at the WTO Ministerial Conference. The last renewal took place in 2022 by means of a Ministerial Decision on the E-commerce Moratorium and Work Programme taken at the 12th WTO Ministerial Conference, in Geneva.

In recent years, there have been questions raised on the scope of the moratorium and on its impact on the revenue of developing countries. While some countries hope to make the moratorium permanent, others are increasingly putting its renewal into question.

The WPEC was mainly designed to build understanding around the trade-related aspects of e-commerce without a pre-set objective to negotiate new rules. Its main goals are (1) to examine all trade-related aspects of e-commerce, (2) to examine the relationship between e-commerce and WTO agreements, (3) to consider the economic, financial, and development needs of developing countries.

Diplo illustration e commerce negotiations

Due to the increasingly important role that e-commerce plays in the digital economy, some members argued that the WTO should more strongly incorporate e-commerce in its agenda. Accordingly, the first Joint Statement on Electronic Commerce was released at the 11th Ministerial Conference in Buenos Aires on 13 December 2017. The 71 signatories announced their goal to ‘initiate exploratory work together toward future WTO negotiations on trade-related aspects of electronic commerce.

During the 2019 World Economic Forum Annual Meeting in Davos, 76 members announced a Second Joint Statement expressing the participating members’ intention to begin negotiation at the WTO on ‘trade-related aspects of electronic commerce (…) that builds on existing WTO agreements and frameworks with the participation of as many WTO Members as possible. The co-facilitators of the JI on e-commerce are Australia, Japan and Singapore. The agenda of the JI on e-commerce initially included not only traditional issues, such as trade facilitation and market access, but also a wide range of digital policy issues, such as data flows, localisation, data protection, cybersecurity and spam.  

Recording of the Geneva Internet Platform’s Trade and Finance Tour, which discussed trade negotiations in Geneva.


The importance of e-commerce has found its way into free trade agreements (FTAs). A growing number of FTAs worldwide have e-commerce provisions or standalone e-commerce chapters. They include several topics, such as the elimination of customs duties on electronic transmissions, online consumer protection, digital authentication and e-signatures. The most recent agreements focus on digital trade, and include topics such as cross-border data flows, data localisation, and access to the source code of computer programs.

Regional Trade Agreements (RTAs) such as the Comprehensive and Progressive TransPacific Partnership Agreement (CPTPP) and the Regional Comprehensive Economic Partnership Agreement (RCEP) stand out in this landscape because of their large number of partners and the diverse membership. Both agreements cover a wide range of non-tariff barriers such as cross-border data flows, data localization, cybersecurity, spam, consumer protection and personal information protection. The CPTPP, in particular, ​has been used as a framework of reference for some of the agreements that were later signed by other countries in the Asia-Pacific region. Another important regional agreement is the African Continental Free Trade Area (AfCFTA), which entered into force on 19 May 2019. AfCFTA is being negotiated in phases. Phase three encompasses the negotiation of a protocol on Digital Trade.

Diplo illustration e commerce SMEs Africa goods

Digital Economy Agreements (DEAs) started to be seen as the next generation of trade agreements. They build upon the e-commerce chapters of FTAs, but present a sharp focus on digital issues. Their main goals are: 1) to promote seamless end-to-end trade, by focusing on issues such as e-payment, e-invoicing, and paperless trading; 2) to promote an open digital environment, especially through fostering free cross-border data flows, data protection, and open data provisions; 3) building trust, mainly through provisions on consumer protection, cybersecurity, and access to the source code. 

DEAs also tackle emerging trends and technologies that are not yet considered to be ‘treaty-ready’, such as digital identities or artificial intelligence (AI), establishing platforms for collaboration and harmonization on these issues. The Digital Economy Partnership Agreement (DEPA), celebrated between Chile, New Zealand, and Singapore, seeks the promotion of cooperation on financial technology (FinTech), artificial intelligence, and competition policy in the digital markets. DEPA is also remarkable for following a modular structure, which enables other countries to commit to specific aspects of the agreement. DEPA is also open to the accession of any WTO member, whilst also providing for the opportunity of withdrawal. 

For the past years, reports published by several organisations, such as The World Bank, the Internet Society, the World Economic Forum, and UNCTAD have argued that most of the benefits and wealth stemming from the digital economy were being accrued by few countries and players. In particular, the 2021 UNCTAD Digital Economy Report mentions that datasets and data processing infrastructure are highly concentrated in the United States and China, and that inequality in the data economy is expected to grow if no policy measures are taken to revert it. Promoting inclusiveness in the digital economy is not only a concern for developing countries, but an important goal for developed countries, whose digital economies also largely depend on SMEs.

The asymmetry of digital development across countries means that the ability of developing countries and Least Developed Countries (LDCs) to foster data-driven sectors for their economic growth is considerably limited compared to more digitally advanced countries. The difficulty to put in place catch-up measures became even more significant with the COVID-19 pandemic. The crisis reversed previous gains in poverty reduction, particularly affecting women and people living in large cities, engaged in manufacturing, service and commerce. It also led to a slow-down in investment in telecommunications infrastructure in developing regions, and to a decrease of foreign direct investment which is endangering the achievement of the Sustainable Development Goals (SDGs). The widening gap in SDG investment in developing countries has increased from USD 2.5 trillion to approximately USD 4 trillion per year leading up to 2030.

Digital trade has the potential to play a role in reducing global inequality, promoting economic inclusion, and lifting the living standards in developing and least developed regions. From this perspective, development-oriented considerations should be included in digital trade discussions from the outset of the negotiating processes. They should be seen as an integral part of strategies to mitigate post-pandemic effects, promote SDGs, and infuse notions of distributive justice in the digital economy. As noted by the ‘Friends of e-commerce for Development (FED), there should be a focus on the role of e-commerce “as a tool to drive growth, narrow the digital divide, and generate development solutions for developing and least-developed countries”. Although China and the US remain the largest e-commerce markets, the most significant growth of e-commerce is happening in developing countries. 

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Top 10 e-commerce markets by sales growth year-on-year. Source: Hinrich Foundation, 2024

The services sector accounts for an increasingly larger part of global trade. In spite of that, physical goods still correspond to over 97% of cross-border e-commerce expenditure in 2023. For developing countries, the importance of physically delivered products to the total of e-commerce transactions is even more significant. This means that enabling issues and trade facilitation issues – such as fostering readiness among border agencies to tackle e-commerce, improving national infrastructure in the fields of logistics, postal services and Internet connectivity, and promoting a thorough implementation of the Trade Facilitating Agreement (TFA) – are important topics in the negotiating agenda from a development perspective.

Some provisions in FTAs could have a positive impact on reducing digital inequality. They include concrete measures to promote digital inclusion, support micro, small and medium-sized enterprises (MSMEs), support the adoption of digital identities, provide special and differential treatment (SDTs) to developing countries, capacity development, and technical assistance. 

Many organisations address e-commerce-related issues. The UN Commission on International Trade Law (UNCITRAL) has done significant work in this area, leading to the adoption of the Model Law on Electronic Commerce, the UN Convention on the Use of Electronic Communications in International Contracts   and the Model Law on the Use and Cross-border Recognition of Identity Management and Trust Services. The model law on e-commerce is one of the most successful and widely-supported international initiatives in the field; it focuses on mechanisms for the integration of e-commerce with traditional commercial law (e.g. recognising the validity of electronic documents).

The UN Conference on Trade and Development (UNCTAD) is particularly active in research, analysis, capacity development, and technical assistance, focusing on the relevance of digital commerce to development. UNCTAD’s Digital Economy Report captures trends and policies related to access, use, and impact of digital technologies from a development perspective. UNCTAD’s ICT Policy Review (ICTPR) Programme provides technical assistance, advisory services, diagnostics, and strategy development on e-commerce and national ICT planning at the request of governments, taking into consideration eight key strategic policy areas ranging from ICT infrastructure and telecom services to electronic payments.

In 2016, UNCTAD launched the eTrade for All Initiative, a multistakeholder initiative aimed at improving the ability of developing countries to use and benefit from e-commerce.

The Organization for Economic Co-operation and Development (OECD) addresses various aspects related to e-commerce, including consumer protection, privacy and data protection, and digital signatures. Its involvement in e-commerce issues started with the 1998 Action Plan for Electronic Commerce, structured around building trust for users and consumers, establishing ground rules for the digital marketplace, enhancing the information infrastructure for electronic commerce, and maximising its benefits. Such issues have since been approached in OECD recommendations and guidelines. The OECD has also advanced research and publications that shed light on different aspects of digital trade.

The International Trade Centre (ITC) provides capacity development through a set of solutions that enable small and medium-sized enterprises (SMEs) to trade via digital channels. The ITC also provides advice for policy formulation with the objective to facilitate SME participation in digital commerce. The ITC has produced a number of publications on e-commerce, examining the issue from an SME perspective and linking the views from businesses to the policy discussions. A collection of ITC publications on e-commerce and digital trade is available online.

The World Intellectual Property Organization (WIPO) has created a Digital Agenda to respond to the confluence of digital technologies and the intellectual property (IP) system. Digital commerce often involves selling IP-based products and services, such as music, software, and design.

Trademarks are also an essential element for digital commerce as a branding and customer recognition tool. In addition, the dissemination of indigenous IP and culture by exposure to the global digital market is considered a major concern for developing countries. Diplo illustration e commerce diversity consumers Consumers International is the membership organisation for consumer groups around the world. The organization aims to defend consumer rights and ensure that consumers are treated safely, fairly, and honestly. It also aims to promote access to safe and sustainable products and services by influencing international policy-making forums and the global marketplace. Following the approval of the revised UN Guidelines for Consumer Protection, Consumers International produced a guide to the UN consumer protection guidelines, which summarises the main principles of consumer protection and how they can be applied.

The International Chamber of Commerce (ICC) is the largest business sector organisation in the world and is one of the most active international organisations.  It produces a wide range of recommendations and analyses in the field of e-commerce, with major emphases on rule-setting, arbitration, and policy.