Why India must review its position and gear up for constructively contributing to the global e-commerce story

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Published: February 1, 2018 5:06:21 AM

E-commerce might well be the issue on which India may find its leadership of the third world in global trade matters being put to test.

e commerce industry in india, india e commerce, World Trade Organisation, what is needed for e commerce in indiaIndia has been opposed to negotiation of multilateral e-commerce trade rules at the WTO.

E-commerce might well be the issue on which India may find its leadership of the third world in global trade matters being put to test. The last Ministerial Conference of the World Trade Organisation (WTO) in Buenos Aires in Argentina left little doubt in this regard. India must wake up to the reality that blocking all other trade matters on the ground of these diluting the importance and progress of the Doha Development Agenda (DDA) is no longer a position that is lauded and endorsed unanimously by poor and developing members of the WTO. India has been opposed to negotiation of multilateral e-commerce trade rules at the WTO. It has been supporting continuation of the existing WTO work programme on e-commerce that does not have the mandate to negotiate digital trade rules. The country’s opposition to negotiation of digital trade rules is essentially on two grounds. One, it would ‘overload’ the WTO’s existing work agenda, a large part of which pertaining to the implementation of the DDA remains unfulfilled; and, two, multilateral trade rules facilitating easy electronic transactions would flood the Indian market with cheap goods imported through online channels.

In addition to these, there are concerns over global e-commerce giants such as Amazon and Alibaba eating up the domestic e-commerce space and obliterating local etailers. Decisions at the WTO cannot be implemented without consensus. It was, therefore, obvious that India’s decision to oppose negotiations on e-commerce would ensure that the WTO work programme on the subject remains where it was. The Declaration from the Ministerial Conference reflects maintenance of status quo.

However, there were a couple of other developments that were worth noting. These include a statement issued by several WTO members expressing their desire to “work together towards future WTO negotiations on trade-related aspects of electronic commerce” (WT/MIN (17)/60; 13 December 2017). The second was the launch of the “Enabling E-Commerce” initiative on the sidelines of the Ministerial for facilitating public-private dialogue on e-commerce policies for benefiting small businesses. It is also notable that the launch function featured the WTO director-general Roberto Azevêdo, and Jack Ma, the executive chairman of the Alibaba Group. While China did not feature among the countries that issued the statement in favour of having e-commerce negotiations at the WTO, the Alibaba Group chairman’s prominent presence at the other function was an affirmation of China’s intention of contributing actively to e-commerce initiatives at the WTO.

There is little doubt that more and more countries will come together to demand negotiation of e-commerce rules at the WTO. This is inevitable, given the importance of electronic transactions and global trade in modern business. It is also clear that small businesses across the world will gradually latch on to e-commerce as they realise the benefits. If India keeps opposing the negotiation of these rules at the WTO, it will increasingly isolate itself in the WTO community. And there are clear reasons why it will do so.

First, much as the DDA was important for a balanced and inclusive rule-based global trade, it is unlikely to revive and restart. The consensus on the DDA will never return. Making the WTO immobile because of its inability to progress on the DDA is a fruitless exercise. India must realise that circumstances have changed so much from the time that the DDA was proposed that it is no longer a cause that would bind heterogeneous developing countries with a common glue. In fact, repeated emphasis on the DDA and preventing discussion on other significant issues such as e-commerce would soon lead to a situation where India would rapidly lose support for its cause.

Indeed, other developing countries and LDCs (least developed countries) might desert India rapidly as they realise that their limitations of economic size and the need for plugging into global business make it imperative to seek entry in global online space.

Second, India’s concern over the global digital divide and the view that global e-commerce rules would benefit some at the expense of others is also not good enough for blocking progress on e-commerce negotiations at the WTO. Indeed, bridging the digital divide might well be the motivation for many countries to demand multilateral digital trade rules, as the latter might have more enabling conditions for digitally backward countries. These countries might also allude to India’s roaring domestic e-commerce market and describe its position as being contradictory in the sense of its wholehearted backing of e-commerce at home while refusing growth of rules-based global digital trade.

Third, India must realise that even if it continues to prevent negotiations on e-commerce at the WTO, it will not be able to prevent emergence of global digital trade rules. These will come in through various regional and bilateral trade agreements. Around a fifth of the trade agreements notified to the WTO contain provisions on e-commerce. These are particularly noticeable in agreements between Asian countries, including developing countries. Even India has e-commerce provisions in its bilateral Comprehensive Economic Cooperation Agreement (CECA) with Singapore. As more and more countries from Southeast Asia and the Asia-Pacific engage in digital commerce, FTAs between them would inevitably include e-commerce rules. E-commerce is a prominent part of the Asia-Pacific Economic Cooperation’s (APEC) work programme, naturally so, given that the region is home to majority of the world’s retail e-commerce. In addition, there is no reason to assume that Africa would remain a silent spectator on e-commerce talks at the WTO. Home-grown online retailers like Konga, Bidorbuy and Jumia—in Nigeria and South Africa—have demonstrated the benefits of online trade to a growing African middle class and promising start-ups.

Shedding tears over the DDA and immobilising the WTO is unfortunately not going to cut much ice any more. India must review its position and gear up for constructively contributing to the global e-commerce story. This is essential for its own economic benefits and global credibility.

The author is senior research fellow & research lead, Trade & Economic Policy, Institute of South Asian Studies, National University of Singapore. Views are personal.

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