Foreword
In June 2022, members of the World Trade Organization (WTO) left the 12th Ministerial Conference (MC12) in Geneva with a sense of achievement, possibility, and hope. This was not a guaranteed outcome. In fact, going into the meetings, there was an air of trepidation and skepticism following years of trade disruptions and turmoil created by the WTO’s Appellate Body crisis. Despite this, members descended upon Geneva with their sleeves rolled up and got to work.
A six-day marathon of negotiations produced a result that reflected the willingness of members to strike a compromise to reach tangible outcomes. Members reaffirmed the “critical role of international trade and the WTO in global economic recovery, growth, prosperity, alleviation of poverty, welfare of all people, sustainable development and to facilitate cooperation in relation to the protection and preservation of the environment.” With several ministerial declarations and decisions, MC12 reinvigorated negotiations, and, for the first time in many years, saw members rally toward a common goal.
Importantly, members agreed to intensify discussions on the moratorium on e-commerce duties. While the moratorium will stay in place until the next ministerial, a long-term solution will be needed to avoid the tension that arises each time it comes up for renewal. However, discussions on the moratorium should prompt a broader dialogue about the importance of digital trade to the modern global economy. Members should not miss the opportunity to advance negotiations on digital trade more broadly. In fact, doing so would not only be in line with the spirit of MC12 outcomes, but also with the theme of this year’s public forum — “Towards a sustainable and inclusive recovery: ambition to action.”
The COVID-19 pandemic underscored the importance of digital connectivity for both economic and social life, but also exposed the digital divide among developed and developing countries, as well as between genders. Developing countries face slower growth rates that hover below pre-pandemic levels. The gendered effects of the COVID-19 pandemic and the disproportionate economic effects on women cannot be ignored. Women experienced higher job-losses than men, with a 4.2% reduction in employment compared to a 3% reduction for men. And even in wealthy countries, like the United States, women have trailed behind in job recovery.
Closing these gaps is essential to increasing digital trade opportunities for all. A recent U.S. International Trade Commission working paper finds that internet connectivity is a strong driver of trade facilitation in both goods and services trade and has a notable effect on trade between developing countries. A 2019 paper by Andrea Andrenelli and Javier López-González at the Organisation for Economic Co-operation and Development (OECD) also shows that digitalization and the adoption of digital technologies is particularly beneficial for firms in developing countries. Digitalization, they argue, helps these firms, including small and medium size enterprises (SMEs), access export opportunities.
It is estimated that 31-38% of SMEs around the world are women-owned and increasing access to digitalization can help these businesses thrive. In fact, numerous studies have detailed the ways in which digitalization helps women. For example, digital trade can reduce some forms of gender-based discrimination by reducing or removing the need for face-to-face interactions. Furthermore, Amrita Bahri has suggested that blockchain can be useful “to enable women who lack identification documents to undertake transactions that otherwise would require official identification, and to prove their ownership of assets without interventions from male family members.” It should therefore not be surprising that there is some evidence to support the claim that women are more active online than in traditional businesses. Amplifying women’s participation in digital trade can therefore support the achievement of a critical sustainable development goal —gender equality— by taking women out of the informal sector and increasing economic opportunity in both goods and services trade.
As we think about the future and work toward achieving a sustainable and inclusive recovery from the pandemic, digital trade must feature in those discussions. Creating new rules on digital trade at the WTO will not be an easy endeavor, but a failure to do so will only lead to increasing global fragmentation of rules in the digital space. Furthermore, it risks exacerbating regional and developmental tension through the creation of heterogeneous trade rules that are difficult for firms, particularly from developing countries, to navigate. This creates regulatory uncertainty, which can discourage small and even mid-size firms from entering the market. The growing complexity and regulatory divergence of digital trade policy, not to mention outright protectionism, must be tackled head on. Having clear, consistent, and predictable rules at the WTO is therefore critical to ensure that the benefits of digital trade are truly global.
Such a task is not without challenges. Aside from the political divides, members will need to grapple with how to reduce barriers to trade that are not always obvious or simple to remove. Some of those barriers are unique to certain domestic contexts or may have a social or cultural dimension. This is true for women, who often lack access to technology and finance education. Importantly, this is not just limited to a lack of access to computers, mobile phones or the internet —referred to as a first-level digital divide— but also a lack of digital or strategic skills to use e-commerce effectively, known as a second-level digital divide. Furthermore, women also face cultural gender biases and lack representation in decision-making, exacerbating these challenges. Trade rules can play a role in closing the gender divide through labor provisions, curtailing harmful online behavior, cooperation provisions aimed at increasing digital capacity through education, and increasing women’s leadership roles in the tech industry.
On trade and gender, WTO members signaled a step forward in the MC12 outcome document by recognizing “women's economic empowerment and the contribution of Micro-, small and medium-sized enterprises (MSMEs) to inclusive and sustainable economic growth,” while also acknowledging “their different context, challenges and capabilities in countries at different stages of development.” It is imperative that members put these words to work and identify ways to increase trade opportunities that don’t inadvertently exclude women. Members can also take actions at home that can support women’s participation in digital trade. For example, a recent study examining the gender dimension of digital trade in Latin America found that two-thirds of the countries in the region do not place emphasis on the gender dimension in designing domestic digital policies. Members can also partner with other international institutions to tackle these challenges. For example, WTO Director-General Ngozi Okonjo-Iweala recently pointed to Nigeria’s success with the Growth Platform, which is focused on increasing access to digital trade for marginalized groups in Nigeria, including MSMEs, and women-owned enterprises, which make up 60 percent of Nigeria’s MSMEs. Innovative approaches such as these will be a helpful complement to global rules on digital trade.
Meanwhile, WTO members are also making strides toward addressing the development divide in digital trade. In June 2022, the co-conveners of the Joint Statement Initiative on E-Commerce (JSI), Australia, Japan and Singapore, stated “that while the digital economy offers benefits for all – including by reducing trade costs, improving productivity, and increasing ability to participate in export markets – least developed and developing countries face barriers in achieving these aims.” To help address this, they launched the E-commerce Capacity Building Framework to “bring together a wide range of capacity building efforts to support developing and LDC Members’ participation in the E-Commerce JSI and to harness the opportunity of digital trade.” Ensuring that all members can participate in and benefit from the creation of new rules on digital trade should guide ongoing negotiations, and this framework can play a critical role in helping these talks deliver for all.
As WTO members roll up their sleeves yet again to build upon the success of MC12, they should take the vast body of research and expertise on digital trade into account. In addition to the efforts already underway in a range of trade agreements, members should tap into international and non-governmental organizations, industry, academics, and policy experts who will have valuable ideas to bring to the discussion.
This report, “Ten ‘Quick Wins’ for Digital Trade,” brings together academics, policy experts, international bureaucrats, private sector representatives and independent consultants to offer practical suggestions for how to grow economic opportunities for digital trade for all WTO members. It is a timely contribution to ongoing dialogue on digital trade and outlines a set of priorities that members should seize upon to transform their ambitions into action.
Editors,
María Belén Gracia, Euijin Jung, Inu Manak, Penelope Ridings
Torino, Washington DC, Waikato
Project Coordinator,
Johanna Hill
San Salvador
August 23, 2022
