4 - E-commerce and Trade Policy

Summary

Introduction

Electronic commerce, or e-commerce, has become increasingly important globally. Based on UNCTAD's (2017) estimates, the value of global e-commerce was estimated to have reached US$25 trillion in 2015. Of this, US$7 billion are cross-border Business to Consumer (B2C) e-commerce. Using trade data from the World Bank, cross-border B2C accounts for only 0.04 per cent of total global exports. If we assume that the volume of Business to Business (B2B) e-commerce is nine times larger than that of B2C, e-commerce's share of global trade was 0.4 per cent in 2015. Though cross-border e-commerce is still a small portion of global trade, its share is likely to increase significantly in the future. Aliresearch (2016) estimates that global cross-border e-commerce will increase at an annual rate of 27.3 per cent during 2014–20.

The rising importance of e-commerce in global trade is also reflected not only in the inclusion of e-commerce related provisions in trade agreements but the increasingly more detailed coverage of such provisions. Of the 275 regional trade agreements (RTAs) in force and notified to the World Trade Organization (WTO) as of May 2017, 75 RTAs (27.3 per cent) explicitly addressed e-commerce (Monteiro and Teh 2017). More than 60 per cent of the RTAs that have entered into force between 2014 and 2016 contained e-commerce provisions (ibid.). The evolution of e-commerce provisions is also related to the evolution in e-commerce itself. Technological changes have been major drivers of this. Finally, e-commerce provisions in trade agreements also have important implications for domestic policies such as competition policy.

This chapter aims to examine the nature and evolution of e-commerce related provisions in trade agreements. The outline of the chapter is as follows. Section 2 discusses how e-commerce is contextualized within trade policy. Section 3 examines how e-commerce chapters in trade agreement have evolved and the factors driving these changes. Section 4 discusses some of the implications of these provisions for competition. Finally, Section 5 concludes.

Contextualizing E-commerce in Trade Policy

The starting point for placing e-commerce within the context of trade policy is the definition of e-commerce. What is e-commerce and how is it related to cross-border trade in goods and services?