Executive Director remarks at MIKTA Workshop on e-commerce

5 July 2016
ITC News
Speech delivered by ITC Executive Director Arancha González at MIKTA Workshop on e-commerce
5 July 2016 - Geneva

Ambassador Choi Kyonglim
Director General Azevedo
Ladies and Gentlemen

I believe it is accurate to say that the Geneva trade community is witnessing an e-commerce revolution.

Just last week ITC, with the cooperation of DHL and E-Bay, held a ‘Caravan of Peace’ at the United Nations to showcase the power of going digital for small and medium sized enterprises (SMEs). Yesterday ITC held an e-commerce caravan and souk right here at the WTO with entrepreneurs from Cote d’Ivoire, Ethiopia, Morocco, Rwanda, Senegal, and Syria not only selling the physical goods from their countries but showcasing how these goods can be purchased using online platforms which ITC has helped to develop.

And UNCTAD is continuing to coordinate a number of the agencies in Geneva around an e-trade for all partnership that will be launched at UNCTAD XIV in Nairobi later this month. Therefore this event today organized by MIKTA is perfectly timed. I thank you for inviting ITC to be part of this.

In the WTO e-commerce has been on the agenda for many years. But recently the interest levels have increased. Why?

Because this is a booming market. Just in Africa this market is estimated to grow from US$ 8 billion in 2013 to US$ 50 billion in 2018. Because virtual selling is particularly adaptable for SMEs all around the world to connect with customers hence avoiding costly intermediation and capturing a higher value of the sale.

But for this form of trade to work, the rules of trade need to be supportive. The aim must be to create a trade policy architecture that balances the need to regulate e-commerce with supporting what is at the core of digital solutions: fast, technology driven, less expensive and more convenient. Despite the disruptive nature of new technologies and ways of transacting, effective e-commerce remains premised on three main elements from the trade policy perspective: trade facilitation, non-tariff barriers and services.

The WTO Trade Facilitation Agreement is the framework with which goods purchased online can get from point A to point B without unnecessary red tape. This is why having it enter into force is a crucial ingredient to make e-commerce happen. And improving it to ensure a fast route for small transactions – a big part of what MSMEs trade on-line – so called de-minimis, would be of great help to them.

This will mean also better identifying the non-tariff barriers that exist which may prevent this from happening at optimum efficiency.

The ability to offer globally connected digital solutions is very much linked to services regulations that support rather than hinder the establishment of platforms and payment solutions, specifically financial services; that support faster and more performing logistic and distribution services; that protect consumers through insurance services. And which embrace, rather than restrict competition in the related sectors. There is a clear need to better understand the services related policies around e-commerce and I am pleased to see that this will be one of the issues discussed during the sessions today.

ITC is working with policy makers and SMEs around the world to make e-commerce and digital solutions an integral part of the business ecosystem. Building on the information we have collected through our work, we have launched two publications over the last few months, which provide some important and practical information to help better position e-commerce.

The first one, “International e-commerce in Africa: the way forward’ is a practical assessment of the challenges and opportunities which SMEs face in Africa in using e-commerce. Despite e-commerce representing an estimated $15 trillion in annual business-to-business transactions and over $1 trillion in annual business-to-consumer trade, developing countries, especially in Africa, still have substantial untapped potential to exploit this approach.

The current share of consumer e-commerce by African enterprises is below 2% for example. This can be a game changer for SMEs in Africa and in the developing world.

A second publication launched in China last month on ‘Bringing SMEs onto the e-Commerce Highway’, examined major policy challenges in four key segments of the online retail: 1- establishing an online presence for business, 2- international e-payments, 3- international delivery and 4- after-sale services. It also contains a number of real-life case examples from developing country SMEs and provides checklists that explain what needs to be at the firm level, in the immediate business environment and at the national policy level in order for e-commerce to function smoothly and for SMEs to benefit from it.

ITC will continue to be your partner in providing both the important policy perspective on e-commerce and the on the ground experiences.

For example, with the World Bank, we are supporting MSMEs in Jordan, Morocco and Tunisia to increase exports of their goods and services through ‘virtual marketplaces’. This has ranged from supporting public and private sector discussions on these issues with the aim of targeting policy changes to improve the business environment for e-commerce polices and regulations, to helping SMEs become better equipped in terms of e-payment and risk insurance systems. In Rwanda we are working to empower SMEs to internationalise through the ‘made in Rwanda’ e-commerce platform in partnership with DHL.

Just yesterday at the ITC JAG, I signed a partnership agreement with Ebay, which will bring together ITC’s on the ground expertise with SMEs with Ebay’s enviable track record in providing platforms for entrepreneurs to use digital solutions to reach a consumer base in real time.

The cooperation will include ensuring MSMEs ITC works with gain higher on-line visibility as well as access to Ebay’s network of fulfilment centers to ensure more cost effective logistics. The possibilities here are incredible- the merging of ITC’s trade and market intelligence with data from Ebay’s research and analysis will help SMEs to better target product and market combinations in e-commerce.

Today as you discuss the policy elements around e-commerce I ask you to pay special attention to the practical ways of ‘doing e-commerce and e-trade’.

In my view, the trade policy architecture does not have to be remade for e-commerce, rather we have to ensure that it responds to the reality on the ground. WTO tools allow for adaptability to evolutions, as it happened for telecom and financial services Post Uruguay Round.

In your work to take the issue of e-commerce forward in the WTO, I encourage you to ensure that MSMEs are part of the intelligence gathering that will go into this process. It is an opportunity and a tool for them to multiply their customer base and deepen their trading footprint. Our collective aim must be to facilitate connectivity.

Thank you