Impatient with a lack of World Trade Organisation rules to cover the explosive growth of e-commerce, 76 countries and regions including the United States, the EU and Japan agreed on Friday to start negotiating a set of open and predictable regulations.
China, which is locked in a trade war with the United States, signalled conditional support for the initiative but said it should also take into account the needs of developing countries, in comments likely to rile Washington.
E-commerce, or online trade in goods and services, has become a huge component of the global economy. A WTO report put the total value of e-commerce in 2016 at $27.7 trillion, of which nearly $24 trillion was business-to-business transactions.
On the sidelines of the World Economic Forum in Davos, negotiators from the 76 countries and regions agreed on Friday to hammer out an agenda for negotiations they hope to kick off this year on setting new e-commerce rules.
“The current WTO rules don’t match the needs of the 21st century. You can tell that from the fact there are no solid rules on e-commerce,” Japan’s trade minister Hiroshige Seko told reporters in Davos.
In their joint statement, the members of the coalition said: “We will seek to achieve a high-standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO members as possible.”
China critical, India absent
China’s WTO Ambassador Zhang Xiangchen said the e-commerce declaration “could have been better drafted” but Beijing was still willing to co-sponsor it and would play an active role in the exploratory talks.
But Beijing’s call for “full respect (to be) accorded to the reasonable requests of developing members” could increase friction with Washington, which says the WTO must stop giving special treatment to countries such as China that call themselves “developing”.
Another Asian giant, India, did not join the initiative. It has previously said the WTO should finish off the stalled but development-oriented “Doha Round” of talks before moving into new areas.
However, trade experts say the global trade rule book is rapidly becoming outdated and needs to keep up or become obsolete. A recent study found that 70 regional trade agreements already include provisions or chapters on e-commerce.
Last month the WTO’s 164 members failed to consolidate some 25 separate e-commerce proposals at a conference at Buenos Aires in December, including a call to set up a central e-commerce negotiating forum.
E-commerce, which developed largely after the WTO’s creation in 1995, was not part of the Doha round of talks that began in 2001 and eventually collapsed more than a decade later.
US. President Donald Trump’s administration says the WTO is dysfunctional because it has failed to hold China to account for not opening up its economy as envisaged when Beijing joined in 2001.
To force reform at the WTO, Trump’s team has refused to allow new appointments to the Appellate Body, the world’s top trade court, a process which requires consensus among member states. As a result, the court is running out of judges, and will be unable to issue binding rulings in disputes.