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New WTO rules for e-commerce raise concerns for some countries

The EU, US, Japan and China are among 76 members of the World Trade Organization (WTO) that launched negotiations to set future rules and obligations in e-commerce in January at the sidelines of the World Economic Forum in Davos.

Worldwide e-commerce growthMore than 80 members of the WTO have begun talks aimed at mapping out a rule-based e-commerce initiative.

Japan, Australia and Singapore co-chaired a meeting in Geneva last week. Attendees discussed ways of facilitating cross-border exchanges of client information, as well as customs procedures for online trade. Currently, there are no international rules on cross-border e-commerce.

However, India has opposed any such move to set e-commerce rules outside the ambit of WTO and has insisted that the current multilateral programme on e-commerce under WTO should be taken to its logical conclusion.

India expressed apprehensions about the European Union’s (EU’s) proposal to create new e-commerce rules on grounds that the high standards being proposed could decimate both the goods and services tariff rules under the World Trade Organisation (WTO), impacting its domestic industry and job creation.

Addressing the informal Trade Negotiations Committee of the Heads of Delegates, India’s permanent representative at the WTO J.S. Deepak said most developing countries including India are not ready for binding rules in e-commerce.

“We fear the impact of some of the e-commerce rules being proposed under the Joint Initiative on e-commerce, on existing trade rules, particularly the General Agreement on Tariffs and Trade (GATT) tariffs, which protect our industry, and General Agreement on Trade in Services (GATS) schedules that provide us useful flexibilities.

Both the GATT and GATS could wither away due to the onslaught of the so-called ‘high standard’ e-commerce elements,” he added. While the GATT rules regulate goods trade among WTO members, rules of GATS govern the trade in services among member countries.

The EU has made public the text of its initial negotiating proposals for e-commerce that include tackling barriers that prevent cross-border sales today; addressing forced data localisation requirements, while ensuring protection of personal data; prohibiting mandatory source code disclosure requirements; and permanently banning customs duties on electronic transmissions, among others.

India is currently drafting a national e-commerce policy, which seeks to use India’s data for its own development rather than allow its value to be appropriated by others.

“It also proposes to preserve our flexibility of imposing customs duty on electronic transmissions to protect domestic industry and leverage technology for creating jobs and wealth, by ensuring competition and a level playing field.

We are also keen to assess the extent of sacrifice of revenue involved, and the distribution of this loss among Members, when new technologies like additive manufacturing will result in electronic transmissions cascading and many dutiable goods being manufactured by digital printing,” Deepak said in his statement.

While the EU’s e-commerce proposal will be discussed along with proposals from other participating countries, India has decided to hold an informal WTO ministerial meeting of select developing countries in New Delhi to finalise a Delhi Declaration on development and WTO reforms including on e-commerce.

Deepak in his speech said the topmost priority of WTO members has to be a reform agenda that is balanced and inclusive and solves problems that India faces in the WTO rather than that which imposes additional burdensome obligations. “At the same time, we need to protect and preserve the dispute settlement system at the WTO,” he added.

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