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REGIONAL WORKSHOP ON Using Evidence-based Trade Policy for Achieving the Sustainable Development Goals in LDCS and LLDCS
Session 7: Economy and trade in the digital era- technology, innovation, e-commerce (selected issues)
Mia Mikic Director
Trade, Investment and Innovation Division [email protected]
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Outline • Mapping digital economy and trade
• The role of technology as a disruptor
• e-Commerce platform technology
• Drivers for e-Commerce and digital trade
• e-commerce and WTO and trade rules
• Paperless trade
• Summary and recommendations
This presentation is based on the regional workshop ESCAP-ARTNeT/ITD Training course on “E-Commerce and Emerging Digital Trade Agenda”, Bangkok, 2017 (https://www.unescap.org/events/escap-artnetitd-training-course-e-commerce-and-emerging-digital-trade-agenda)
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But let’s start with a few definitions
• Digitization: diverse forms of information, such as text, sound, image or voice are converted into a single binary code; 0 or 1
• Digitalization: use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business (Oxford)
• Digital Economy: an economy which functions primarily by means of digital technology, especially electronic transactions made using the Internet (Oxford Dictionary).
• Economy: The state of a country or region in terms of the production and consumption of goods and services and the supply of money (Oxford Dictionary).
• e-Commerce: trading using the Internet (but see more later)
• Innovation: the introduction of new things, ideas or ways of doing something; an age of technological innovation (Oxford)
• Technology: methods, systems, and devices which are the result of scientific knowledge being used for practical purposes (Collins)
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Mapping the digital economy
Huawei, 2017
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The digital economy is not only difficult to define, but is also in a constant state of flux and is always evolving ~ under the influence
of many technological advances (frontier technologies) and innovation
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Effects of new technologies are accelerating the pace of change
WEF, DTI, 2016
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Changed face of cross border transactions
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Importance of data
• World largest taxi company owns no taxis → UBER
• Most popular media creates no content → FACEBOOK
• Largest accommodation provider owns no real estate → AirBnB
• Largest phone companies do not own any telephone infrastructure → SKYPE, WeCHAT, VIBER
• World most valuable retailer has no inventory → ALIBABA
• Fastest growing banks have no actual money → SOCIETY ONE
• World’s larget movie house owns no cinemas → NETFLIX
• Largests software vendor does not write their apps → GOOGLE
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Data traffic
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The rise of digital protectionism
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Policy and regulatory responses
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Trade rules for digital economy
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Summary: Digital economy implications
• More activities conducted online • New business models • New market places • New products and services • New competition • Changing skills requirements • Need for new or revised laws and regulations, e.g. – Data protection and privacy – Consumer protection online – Cybercrime
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E-Commerce
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What is e-Commerce?
• OECD definition of an e-commerce transaction: “...the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders”.
– Payment and delivery do not have to be conducted online.
– Orders made by telephone calls, fax or manually typed e-mail excluded
• Business-to-business (B2B)
– Online sales between enterprises, including linked to outsourcing and offshoring.
– Online presence needed for SMEs to participate in value chains.
• Business-to-consumer (B2C)
– Involves sales by e-commerce enterprises and traditional bricks-and-mortar firms adding online sales channels.
– Many ways to reach consumers: social networks, crowdsourcing, e-commerce websites, mobile applications.
• Consumer-to-consumer (C2C): e.g. eBay and Taobao
• Government-to-business (G2B): e.g. e-procurement
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Technology behind e-Commerce
• Instant messaging
• Social media
• The WWW
• Payment and settlement System
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2015 major e-Commerce markets (UNCTAD)
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AP – almost half of global e-commerce turnover
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Share of internet users involved in buying online and social networking (2015)
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e-Commerce, trade and development
• Goods and services increasingly traded online
• e-Commerce is crucial for SMEs (B2B and B2C) to
– access new markets (domestic and exports)
– participate in value chains
• Expanding opportunities as a result of:
– Improved ICT connectivity
– New e-commerce platforms and solutions
– Rise of new e-commerce companies in developing countries
• Transformational → both opportunities and challenges
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Readiness by the region
Source: UNCTAD
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e-Commerce readiness by factor
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Domestic vs. cross-border e-commerce
• Domestic transactions dominate in developed countries
– Canada: 80% domestic; 15% to US; 5% to rest of the world
– Japan: 82% domestic
– Republic of Korea: 75% domestic
• Different picture in some developing countries
– In India and Singapore: >50% are cross-border
– In Colombia, Paraguay and Venezuela, cross-border trade accounts for the bulk of e-commerce
• For many, no data is available…
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Barriers to e-Commerce uptake
• Limited use of the Internet among businesses and consumers
• Lack of awareness
• Insufficient access to affordable ICT infrastructure
• Inadequate trade logistics and facilitation
• Lack of security and trust in online transactions
• Inadequate online payment facilities
• Lack of trade finance
• Limited e-commerce skills among enterprises
• Absence of statistical data on e-commerce
• Weak legal and regulatory frameworks
• De minimis
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De minimis threshold
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WTO and e-commerce
• e-Commerce work programme since 1998 - several WTO agreements concerned
– Councils for Trade in Goods, Services and IPRs
– Committee on Trade and Development
• Bali Ministerial Decision (2013) :
– Renewal of moratorium
– Trade Facilitation Agreement
• Better data on cross-border e-commerce are needed
– Work started between WTO, UPU and UNCTAD
• Need for understanding of implications of e-commerce
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Implications for Asian LDCs
• Identify potential sectors (goods or services) for domestic and cross-border ecommerce
• Increase e-commerce readiness:
– Improve access to affordable ICT infrastructure
– Improve availability of relevant statistics to inform policy
– Adapt logistics and trade facilitation to e-commerce
– Improve legal and regulatory environment
– Facilitate online and mobile payment solutions
– Build skills in MSMEs and enhance their access to financing
– Rapid country assessments
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Paper-less trade
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Paperless trade (e-trade?)
• Paperless Trade • Conduct of trade activities on the basis of electronic rather than
paper documents e.g. electronic Customs declaration, electronic cert. of origin (application of e-commerce to international trade domain)
• Paperless Trade Systems • Legal/regulatory and technical frameworks in which paperless
trade transactions take place e.g. electronic Single Window facility, e-port management systems, Framework Act on Electronic Transactions (ROK)
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Challenges of adoption of cross-border paperless trade
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Treaty on paperless trade- benefits
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Key recommendations
• Address remaining regulatory gaps among member states
• Build capacity for law enforcement agencies - opportunity for regional and bilateral assistance
• Strengthen cross-border harmonization: cybercrime, consumer protection, e-signatures
• Adopt pieces e-payment regulations where missing
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Take-aways
• e-commerce can be a driver of inclusive growth and sustainable development
• More capacity-building to reduce gaps and enhance countries' e-commerce readiness
• Better data and monitoring needed
• Get partners on board!
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Reminder: Digitalization is transformational
Opportunities
• Lower transaction costs
• Improved market access - domestically and internationally
• Lower delivery costs (digitally provided)
• Opportunities for entrepreneurship and innovation
• Rural development
• Greater consumer choice
• Overcome barriers to growth
Challenges
• Economic barriers
– Infrastructure weaknesses
– Limited purchasing power
– Payments
– Risk of market dominance
• Socio-economic barriers
– Legal frameworks
– Cultural preferences
• Cognitive barriers
– Awareness and knowledge
– Low levels of e-literacy