Participants recognized the digital economy can generate a new industrial revolution and that it allows small enterprises in developing countries to tap into global markets. But they said infrastructure and skill gaps need to be addressed.
A new opportunity
“We have over 17 million people on Facebook, and the youth are keen on this new digital economy,” said Nigeria’s Trade Minister, Mr Okechukwu Enelamah, in a session organized by Huawei Technologies focusing on bridging the digital divide to facilitate inclusive global trade. “There is no question that if we build a digital economy, small enterprises can benefit the most,” said Mr Enelamah. He stressed that the government needs to eliminate bottlenecks and create a conducive environment for the digital economy to flourish.
A Kenyan digital entrepreneur, Mr Roy Ombatti, shared his experience in creating a 3D printer out of recyclable waste, illustrating how Africa is utilising the digital economy. But the growth of the digital economy is not without obstacles. The lack of access to finance and regulatory trade barriers can pose challenges for young entrepreneurs. He called for increased investment and partnerships in the digital economy.
Another speaker shared her use of digital fabrication in small-scale workshops to create unique, personalized objects at a session on the new landscape of inclusion in digital trade organized by the International Centre for Trade and Sustainable Development (ICTSD). Workshops of the sort — known as “fab labs” — are now flourishing all around the world, spurring creativity and enabling individuals to make products without mass production, said Martina Ferracane, a policy analyst and founder of a “fab lab” in Sicily. She cited policy issues such as intellectual property protection, taxation and safety standards faced by such innovation.
Digital technology allows developing countries to make significant advances in industrialization. Africa has the fastest growing mobile phone market, and small developing countries can now connect to the world in a way never seen before. “When we think about how to further discuss this topic in the WTO, we have to be careful not to put digital trade issues in a traditional North-South context,” said Ambassador Ihara of Japan, stressing that the digital economy is particularly beneficial for developing countries.
Digital trade allows many small enterprises to participate in the global market. A study by PayPal found that enterprises that trade across borders typically double their income compared with those who sell at home. A study in Viet Nam also shows that small enterprises selling online are 75% more productive. Much of the growth generated by the digital economy benefits people living in poorer, remote cities in developing countries.
Speakers at a session on the trade implications of business-to-business e-commerce cited the growing importance of B2B trade and said companies will come under increasing pressure to provide customers with seamless and simple transaction services. But the implications from a trade perspective are less clear: most e-commerce continues to take place domestically, and no reliable figures exist on the amount of e-commerce business that takes place across borders.
Bridging the digital gap
To reap the benefits of the digital economy, a lot more needs to be done, participants stressed. A number of speakers cited barriers that can hinder digital trade, including a lack of broadband infrastructure, secure payment solutions, logistics and digital entrepreneurship.
The government has a crucial role to play in helping electronic commerce flourish. This was highlighted at a session on e-commerce as a tool for inclusiveness in developing countries organized by the Argentinian ministries of Production and Communication. Participants stressed that the necessary infrastructure, including adequate access to broadband and quality mobile connections, must be in place to eliminate the ’digital gap’ between communities. Legislation that facilitates e-commerce is vital, speakers underlined.
Ms Daniela Zehenter-Capell of the German Ministry for Economic Cooperation and Development shared the German government’s efforts to foster education in information technology through its “lab of tomorrow” programme in Africa. “Information Technology solutions do not have borders, and we have to work together on these issues,” she told participants at a session on enabling African, Caribbean and Pacific countries to harness digital innovation.
The United Nations Conference on Trade and Development (UNCTAD) recently launched an e-Trade for All Initiative to bring together key public and private stakeholders and to help them cooperate more effectively with developing countries’ governments in harnessing electronic commerce.
Global rules on digital trade
The rise of the digital economy underlines the need for regulations at national and international level. “Because the nature of the Internet market place is global, only a global trade deal makes sense”, said Hosuk Lee-Makiyama of the European Centre for International Political Economy at a session on global trade rules for bridging the digital divide.
WTO rules on electronic commerce and on services trade could provide guidelines for digital trade. An early ratification of the WTO’s Trade Facilitation Agreement could also ensure that products can cross borders much more quickly, participants heard.
International organizations have a role to play in mapping and removing trade barriers in information and communication technology. The digital economy also requires trade negotiators to be more cooperative and open-minded. To enable small enterprise to trade, some participants put forward the idea of an agreement to ease the trading of low-value goods, and programmes to fast-track trusted small traders.
Participants recognized that the digital economy involved many complex and sensitive issues including consumer protection, privacy, Internet neutrality, competition and data access. While some of these issues can be dealt with in trade agreements, others need to be addressed in other fora. They called for international regulatory cooperation in digital trade to open access for data, harmonize regulations, and protect intellectual property.
At the same time, they emphasized that regulators must be careful not to introduce regulations without understanding the nature of digital trade. The WTO can help to improve members’ knowledge of the digital space and how it impacts trade, participants said. It is also essential to engage stakeholders in making new rules.