Singapore, 65 other WTO members introduce first set of global digital trade rules

The world’s first set of global digital trade rules, adopted by a group of World Trade Organization (WTO) members on March 28, will unlock opportunities for Singaporeans and Singapore businesses in the digital economy, said Minister-in-charge of Trade Relations Grace Fu.

Singapore is one of 66 consenting members, representing around 70 per cent of global trade, which agreed to activate the WTO Agreement on Electronic Commerce (ECA) in their countries at the 14th WTO Ministerial Conference in Cameroon. 

The others include Australia, Japan, Canada, China, the European Union, Laos, the Philippines, the United Arab Emirates and Britain.

This came after efforts to include digital trade rules in the WTO rulebook were in recent years blocked by dissenting members such as India.

The agreement is a culmination of almost a decade of efforts of the Joint Statement Initiative on E-commerce, led by Singapore, Australia and Japan, to create a formal framework for digital trade within the WTO.

Ms Fu said the deal “will open up new opportunities in the growing digital economy for our people and businesses, by reducing costs, enhancing trust and fostering inclusivity for cross-border transactions”.

She added that the ECA reaffirms the WTO’s role as a platform for developing global trade rules on key 21st century issues, and is open to all members to join at any time.

“We look forward to bringing the ECA into force while continuing our efforts on its incorporation.”

Digital transactions account for more than 60 per cent of global gross domestic product, according to the European Commission.

The WTO said the agreement supports the “urgent need to implement rules that allow businesses and consumers to seize the benefits of digital trade”.

For example, it encourages the adoption of legal frameworks to recognise electronic transactions, and to treat electronic and paper-based information as legal equivalents.

It also prohibits placing customs duties on electronic transmissions between parties to encourage open trade.

Research by the WTO and the Organisation for Economic Cooperation and Development shows that failing to implement the ECA could result in about US$159 billion (S$205 billion) in lost trade every year.

The countries also agreed to protect online consumers from misleading, fraudulent and deceptive commercial activities, and to work together on digital trade, among other commitments.

Mr Gareth Tan, senior adviser to the Digital Prosperity for Asia coalition of small and medium-sized technology enterprises in the Asia-Pacific region, said the move has been “eagerly anticipated” by the industry.

He told The Straits Times: “The e-commerce agreement is something that the Singapore delegation to the WTO has been actively supporting, and for good reason.

“This is because Singapore is such a trade-dependent economy, and its businesses and start-ups have significant and ever-growing stakes in digital trade.

“It importantly also opens the path to phase two negotiations on matters of great importance to Singapore, including cross-border data flows.”

However, the agreement is likely to face challenges in securing adoption across the WTO.

India has been one of the countries that have blocked the deal as it argued that trade agreements should be adopted by consensus.

The US has not yet signed up as the issue is still under review by the government.

Hinrich Foundation’s head of trade policy, Dr Deborah Elms, said the move by the 66 WTO members was “a pragmatic approach to moving forward”.

She said that Singapore, along with co-conveners Australia and Japan, saw the need for consistent digital trade rules, and had wanted the deal slotted easily into the existing WTO architecture. However, this was “looking impossible” with dissenting countries.

Dr Elms said: “Rather than keep waiting, particularly for fast-evolving topics, the group has agreed to try a different tack. They will do what needs to be done domestically first, bring the agreement into force and then see again about how to try anchoring it more clearly into the WTO.

“By then, conditions may be more suitable. And, in any case, the deal will get implemented by domestic procedures.”

The ECA is different from an e-commerce moratorium, which bans customs duties from being placed on digital downloads and streaming.

The tariff moratorium was initially meant to be temporary, but has been routinely renewed since it was first adopted in 1998.

It was set to expire in March at the WTO Ministerial Conference in Cameroon.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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