Bridging the digital divide
A century ago, when pandemic influenza struck a war-torn world, few multilateral institutions existed. Countries fought their common microbial enemy alone. Today, an array of multilateral mechanisms exists to confront global public health emergencies and address their economic, social, and political effects. The global nature of the current pandemic requires a global response. Let us make sure we leverage existing multilateral mechanisms to help fight the virus and overcome the current crisis.
The most acute health crisis in a century has provoked the worst economic crisis of our lifetimes. The social and economic impact has already been tremendous: shrinking output, massive job losses and rising hunger. Years of hard-won development progress risk being reversed. An unprecedented crisis requires unprecedented solidarity in response — and this includes cooperation on trade.
The continuous and efficient flow of medical supplies, agricultural products and other goods and services across borders will be critical to an effective response, to help minimize global impacts on supply and demand, and particularly to help small businesses. Therefore, the multilateral trading system should work to minimize disruptions to cross-border trade and global supply chains, taking only specific, proportional, transparent and temporary emergency measures that are consistent with our obligations to the World Trade Organization (WTO). Keeping flows open and monitoring measures taken by governments is of systemic importance.
With so many challenges facing the international trading system it would be a mistake not to use the tools and bodies there to help solve them: an international forum on trade was hard-won and would be difficult to recreate. The coronavirus crisis demonstrates the value of common agreements on how to deal fairly with one another and prevent a race to the bottom.
Strengthen digital services
The COVID-19 pandemic confirms that connectivity is critical, which gives further impetus to the digital economy. Policies to improve affordability would clearly represent a huge leap forward in putting digital services within the reach of billions. In this post-digital age, not being connected means being shut out of employment, of education, of access to vital health care services and information – in short excluded from the full economic and social participation every citizen should enjoy.
Affordable, meaningful connectivity is a crucial step for engaging in digital trade and reaping the benefits of digitalization. Trade rules can impact the cost of connectivity and contribute to bridging the digital divide. In developing such rules, you need an inclusive dialogue between telecommunications experts, trade negotiators, the private sector and civil society.
The crisis has also shown that trade digitalization is more urgent than ever. Trade remains notoriously reliant on paper-based processes. The Boston Consulting Group has estimated that four billion documents are circulating because of trade. This inevitably leads to many errors, redundancies, delays, and costs that weigh heavily on the smallest players.
The current situation has exposed the inherent weakness of this system—with difficulties in the physical exchange and review of trade documents creating significant bottlenecks to global trade. This has revealed the importance of trade facilitation and digital solutions to speed up processing and ensure that trade is as frictionless as possible.
The International Chamber of Commerce has called on governments to void legal requirements for trade documentation to be in hard copy (such as bills of lading, promissory notes and commercial invoices). While this is essential in times of crisis, in the longer-term we need governments to recognize e-signatures and e-documents legally.
Moreover, many private-sector representatives call on governments to transpose into their national legislation the UNCITRAL Model Law on Electronic Transferable Records, which provides a robust legal framework for electronic trade documents, both domestically and across borders. Such measures will help small businesses operate now and develop efficiently in the longer-term.
Digitalization is critical in this respect. It can help micro, small and medium-sized enterprises (MSMEs) overcome damaged supply chains by tapping into a wider range of international buyers and alternate suppliers. On average, 97% of internet-enabled MSMEs export, while export participation rates for traditional MSMEs range between 2% and 28% in most countries.
MSMEs using digital technologies, such as e-commerce, may be better adapted to the COVID-19 pandemic. All this has underscored the importance of the digital economy in providing small businesses with a market as well as the need to support public-private partnerships – given that the new digital economy requires access to infrastructure from basic electricity to high-speed internet. Furthermore, there is a need to increase digital literacy so populations in developing economies are aware of e-commerce and online opportunities.
At the multilateral level, this shows the importance of adjusting the WTO rulebook to support digitalization efforts.
The multilateral trading system will be an important ingredient in the economic recovery. The dramatic fiscal and monetary measures we have seen are essential. But trade policies must also pull in the same direction.