E-commerce and trade

Global flows of goods, services, and money have historically underpinned economic and social development. These flows have been transported in many ways: in ships across oceans, in chariots on ancient highways, in trucks over paved roads, and by cargo planes. In the 21st century, global flows are increasingly carried by datagrams – packets of digital information flowing through fibre-optic cables. 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 known as digital transformation. 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.

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

 Digitisation is leading to the dematerialisation of products that were previously commercialised as physical objects (such as books, films, games, and recorded music). Digital 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. The digitisation of information and the instantaneous internet data flow have also transformed the composition of world trade. Services such as education and health that were once almost impossible to provide across borders are now considered tradable.

At the same time, 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 the provision (service) of a digital wrapper (a set of digital information that is paired to a product when crossing a border, including the information required for global tracking) – and services that are sold to the consumer as a bundle with goods, such as applications that accompany fitness equipment and health trackers.

 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 accessing these platforms. It may also be difficult for MSMEs to compete with the products offered by the platforms themselves.

For detailed information on WTO’s Joint Statement 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; 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 Statement Initiative (JSI) 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’(WTO, 1998). The moratorium has been renewed roughly every two years at the WTO Ministerial Conference. The last renewal took place in 2019 by means of a General Council decision.

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 developed countries hope to make the moratorium permanent, developing countries 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. The programme instructed four bodies of the WTO – the Council for Trade in Services, the Council for Trade in Goods, the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS), and the Committee on Trade and Development – to examine e-commerce issues under their purview and report to the WTO General Council. 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 JSI on e-commerce are Australia, Japan and Singapore. The agenda of the JSI on e-commerce includes not only classic trade 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.

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 and the UN Convention on the Use of Electronic Communications in International Contracts. The model law 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 digital 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. 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.