CALL TO ACTION; LET’S MAKE DIGITAL TRADE WORK FOR EVERYONE

February 26, 2019

London 26^th February 2019

By Chris Southworth, ICC United Kingdom Secretary General

Despite the challenging political environment, there is one area of policy where we have a consensus to move forward; digital trade, or ecommerce, as the World Trade Organization (WTO) call it. There are 76 countries, including the EU, China and USA, now negotiating a WTO Ecommerce Agreement in Geneva - together covering over 80% of the global trading environment. It is the first time in over 20 years that we have had a major breakthrough in modernising the global governance of digital trade and one area of policy where there is a consensus, so let’s grab the opportunity and make it work.

We are specifically looking for experts from the finance, telecoms, manufacturing, retail, IT, tech and media sectors to join us in focused sessions with the 76 negotiating teams – to help us work through the issues governments are wrestling with and come forward with practical proposals that can be incorporated into the ecommerce agreement.

Unbeknown to most people, the digital trade world operates on a set of rules that date back to 1998, before smartphones even existed. Two weeks after the 1998 rules were agreed, Google was launched out of a bedroom in California. It perfectly illustrates the growing gap between the reality of how we use technology today and the governance framework under which we operate. It is a no brainer that we need to modernise and update the rules that govern digital trade, but it isn’t a guarantee unless the business community start engaging at the WTO in a more effective way and on a different scale.

We have the chance to establish a common set of rules to open up opportunities across 76 countries, but we must make the case for how digital trade benefits everyone and, importantly, go and support the WTO trade negotiators to design the policies we know work. It’s not going to happen if everyone sits in their home countries and expects trade officials in Geneva to conjure up the solutions. It may be a shock to hear, but there is only one dedicated private sector digital trade expert in Geneva and only a tiny handful of companies engaged properly on the agenda.

There are so many reasons why we need a global agreement – it’s a solution to at least 12 of the UN Sustainable Development Goals, covering everything from poverty reduction to economic growth. It’s a fact that proportionately more women run digital businesses than men. If we want to promote financial inclusion and empower more women in the economy, digital trade is a proven solution. The same goes for rural communities where infrastructure costs are high. Countries like Kenya, Nigeria and Rwanda are all shining examples of how to master mobile technology to circumvent the need for expensive hard infrastructure, and to create opportunities for local communities to benefit from the global trade economy.

An agreement across 76 countries would begin to establish scale – a common set of standards for the handling of electronic documents, payments and finance, data management and commitment to develop modern digital infrastructure. This would dramatically cut business costs and unnecessary government bureaucracy. 4 billion documents float around the trading system every day – it is an incredible amount of paper, and inefficient given we have the technology available to cut it all out. Much of it is PDF documents, either printed or being sent by email. Even in Europe where there is a sophisticated trading market, a typical goods train will be carrying 26kg of paperwork to meet customs requirements. It’s not just documentation – a typical aircraft engine is transmitting thousands of pieces of data every minute to computers and satellites with updates on engine performance. The data is not personal data and it should be able to move freely to where it is required, rather than get caught up in a complex web of localised data regimes.

Key to having an agreement will be our ability to help ensure an agreement works for everyone; rich and poor countries, NGOs, businesses and consumers. If we can’t convey this inclusive approach, it is unlikely there will be a deal. How do we know that? Because this is, in part, the reason why we haven’t had a deal or any progress for the last 20 years. A handful of developing countries (mostly in Africa) have understandably demanded more progress on development first, before making progress on digital trade a key focus. They have a case. The EU and USA, in particular, failed dismally to open up their markets after the Doha Agreement, which contributed to a lack of economic growth for poor countries. We are now living with the legacy of this tension and it is getting in the way of progress in the one area of policy where we all know we need to see some development.

The argument for more investment in digital infrastructure is a good one. Aid for trade and multilateral bank budgets spend just 1% on ICT capability building. It’s truly woeful when we desperately need hard infrastructure, skills, governance and policy frameworks in place to enable digital trade. Digital trade and development must go hand-in-hand if the opportunity of a global agreement is to become a reality for everyone. We should not be in a position where there is disagreement between business and NGOs, or developed markets versus less developed countries. Digital trade will benefit everyone in creating jobs, investment, trade and prosperity to a wider section of the global population.

In Africa’s case, we would be far better off if we made the case for how digital trade can increase intra-African trade – the continental priority – than continually focusing on the global picture. A global deal should support a continental deal. Again, it isn’t an either-or. It’s about being more nuanced and smarter in our approach. Progress in Africa would be a game-changer for all of us, so we need to see the bigger picture. This is a continent of one billion people that will become four billion by the next century, and the largest concentration of young people globally. You don’t need to be Einstein to work out why working with African governments will help us all.

We don’t need soundbites and platitudes either. We need to engage properly on the hot topics like data protection, the digital divide and financial inclusion, and put forward concrete suggestions on what policies work and which policies should be incorporated into a global agreement. We also need to work much harder to de-bunk the myths – it is surprising how these can catch on, but bear no relation to the reality of day-to-day business. Discussions around data all too often focus on personal data forgetting that most data is business-to-business. We need a more sophisticated level of dialogue. If we don’t engage, we are unwittingly allowing the myths to grow and dominate the debate, when we should be taking facts and practical case studies to trade negotiators to show them what we need them to do.

From the UK, we are doing everything we can to engage companies with the WTO; taking delegations of business experts, engaging NGOs, setting up opportunities to speak directly to negotiators, supporting Australia, Singapore and Japan as the digital trade leads in Geneva, helping African and Indian business groups have a voice in the process, working with UNCITRAL to promote best in class legal frameworks, and championing the ICC Digital Trade Roadmap.

We can’t do this alone. We need more business groups to do the same and more companies to come and help. Let’s keep our eye on the prize – a single digital trade framework across 80% of the trade economy, and not lose the core message – to make digital trade work for everyone. If we do that, we will increase SME growth and investment, improve the business environment, address infrastructure challenges, enable more entrepreneurs to benefit from trade, and give more women the chance to benefit from the global economy. We all win.

If you want to find out more or get involved let us know.

Editor’s Note

ICC is the largest world business organisation representing 45 million companies and 1 billion employees in over 100 countries and the only business organisation with UN Observer Status. ICC United Kingdom is the representative office of ICC in the UK and works with British business groups worldwide to represent the voice of British business at inter-governmental level - the United Nations, G20 and World Trade Organization.