Making cross border e-commerce work for consumers?

06 October 2017

In this blog, our Advocacy manager Anna Glayzer reports back from last week's WTO Public Forum in Geneva and explains why e-commerce looks set to be the next battleground for global trade.

There’s no doubt that the past twenty years represent little less than a revolution in the way many of us consume. The statistics are mind boggling - in 1995, only around 1% of us had access to the internet, but by 2016 half of the world had access to the internet and an estimated 1.61 billion people worldwide purchased goods online.  In 1997 Amazon had 1.5million customers worldwide. In 2015 it had 304 million. Over half of online consumers worldwide make purchases across country borders.

Last week Consumers International hosted a working session on cross border e-Commerce at the World Trade Organisation (WTO) Public Forum in Geneva, Switzerland. We used the session to explore e-commerce from some different perspectives; and to ask what ‘good’ might look like in terms of cross border e-commerce for consumers, citizens, businesses and nations.

E-commerce was a hot topic at this year’s forum. Debates around e-commerce and trade intensified sharply in July 2016 when seven different proposals were made for WTO to begin new work on e-commerce.  There are now almost a dozen proposals on the table, with some WTO members pushing for the negotiation of new global trade laws on digital commerce, and some members firmly against.

From the perspective of consumers, the term ‘e-commerce’ means little. The ability to buy and trade goods and services via a connected device is, for many, just an extension of conventional shopping. For younger consumers who have grown up with the internet, the distinction between online and offline shopping is less clear. And yet, e-commerce throws up challenges for consumers, which are amplified when shopping across borders. For consumers who have internet access but choose not to shop online, a major reason given is lack of trust. Concerns include payment fraud; scams, lack of data security and privacy; lack of clear, reliable information and insufficient systems of redress. Trust can also be undermined by poor or unreliable weak infrastructure when it comes to delivery of goods purchased online.

To give more insight into these challenges, panellist Linn Selle, policy officer for legal affairs and trade at vzbv presented new research carried out with BEUC which gave some indication of what good would look like from a consumer protection point of view: “Information and support should be enabled at both ends of the consumer’s journey.” She also underlined the need for strong international co-operation: “We need effective systems of market surveillance at a global level.”

Hanne Melin, director of global public policy at eBay agreed that trust was fundamental for consumers. She told the session: “Consumers risk aversion can be a cost to business. The role of global platforms like eBay is to ensure a safe and reliable service.”  Melin also talked about the potential for e-commerce to aid development in lower income countries: “The platform mechanism connects privileged consumers to less privileged producers.”

The role of e-commerce in development is fundamental to the work of UNCTAD. Head of the Competition and Consumer Policies branch at UNCTAD, Teresa Moreira, told attendees that consumption represents 60% of the world's GDP. She agreed that lack of trust prevents consumers from shopping online and emphasised the need to prioritise online consumer protection for all UN member states, especially developing and transition economies, but added: “Consumer protection challenges cannot be exclusively addressed by governments. Co-ordination and international co-operation are crucial. Strong engagement with business and civil society is also needed.

This interrelationship between consumers, civil society, business and governments, is at the heart of the controversy surrounding proposals for new WTO rules on e-commerce.  Critics of the proposals argue that introducing new rules now will be hugely detrimental to developing countries. It could lock in the dominance of current global players, at a time when technological transformation is still in full swing and many developing countries lack their own adequate legal structures for digital trade. New rules risk exacerbating inequality between countries by extending protectionism in favour of companies based in rich countries via patents and copyrights for technologies and content. Meanwhile new rules could hinder development by preventing developing countries from requiring that companies operating within their border make use of local content or inputs.

From a consumer perspective, critics argue that new rules would threaten personal privacy and data protection, since they would make it easier for companies to transfer data cross border, potentially without consumers’ knowledge or consent. It’s also suggested that there could be safety implications since the inclusion in the EU’s proposal for a ban on mandatory disclosure of source code could make connected devices more susceptible to hacking, since publicly available source code is constantly and widely peer reviewed.

This is by no means the first time e-commerce has been discussed in trade circles.  In a recent OECD survey, half of the countries had included provisions related to trade in a digital world in their bilateral or regional trade agreements. These provisions concern: on-line privacy; cross-border data transfers; consumer protection for online transactions; restrictions on certain types of Internet content, and restrictions on the imposition of customs duties on trade in digital products.

Digital provisions in the Trans-Pacific-Partnership (proposed under the Obama administration but abandoned under Trump) and similar provisions in the proposed Trade in Services Agreement also attracted criticism for restricting the rights of countries to regulate on privacy, consumer protections, cross-border data transfer and intellectual property. The Transatlantic Consumer Dialogue (TACD) and BEUC have both called for trade deals to focus solely on trade issues such as import tariffs, enforcement issues. Trade deals should not erode the ability of countries to regulate to protect consumers. Johannes Kleis, director of communications at BEUC, explained why: 'Trade looks for answers only through a trade perspective - this doesn't always work for people'

The question that arises from all of this is whether, in a fast paced, digital world, we need to make new rules and approaches to consumer protection and empowerment, or whether we just need to adapt the approaches and rules we have or implement them better. As Teresa Moreira pointed out: “Not moving forward e-commerce at WTO does not preclude discussions elsewhere.”

The WTO 11th Ministerial meeting will be held in Buenos Aires from 10th to 13th December 2017. It’s not yet clear what form e-commerce discussions will take or what the possible outcomes will be.  What is certain is that there are strong and competing country interests. Panellist Victor do Prado, Director of Council and Trade Negotiations Committee at the WTO, summed it up: “Some WTO members do not think that it’s time to discuss e-commerce at the WTO. They say that it is too early and we should finish the Doha round first. Some members are saying that this train is going to depart and you can either be part of the train or not, but we are not going to stop these discussions at the WTO.