Many digital rules being framed by a group of 86 countries under the Joint Statement Initiative (JSI) on e-commerce have high costs of compliance and could adversely affect trade competitiveness of developing countries in the digital economy, according to a research paper released recently by the UN Conference on Trade and Development (UNCTAD).
The paper shares progress on negotiations on digital rules under the JSI on e-commerce. An agreement would likely have a broad scope that would cover ‘almost all actions’ of the governments in the digital economy.Many digital rules being framed by a group of 86 countries under the Joint Statement Initiative (JSI) on e-commerce have high costs of compliance and could adversely affect trade competitiveness of developing countries in the digital economy, according to a research paper released recently by the UN Conference on Trade and Development (UNCTAD).#
Key rules being negotiated aim at free flow of cross-border data, mandatory legal frameworks for electronic transactions, restrictions on data localization, no customs duties on electronic transmissions, no source code disclosure, mandatory membership of information technology agreement (ITA) and ITA expansion, and mandatory commitments of national treatment and market access.
The paper, titled, ‘Joint Statement Initiative on E-Commerce (JSI): Economic and Fiscal Implications for the South,’ clarifies that countries recognise that any initiative to negotiate e-commerce rules is outside the World Trade Organisation (WTO) agreement and its mandates and the JSI negotiations remain ‘outside the ambits of the WTO’.
The outcomes of the JSI negotiations on digital rules will have no legal bearing in the WTO because the rules are not mandated for negotiations there, UNCTAD said on its website.
The paper states that acceptance of the proposed rules would ‘severely restrict regulatory space of the governments in the digital economy’, and strengthen the role played by foreign players, such as foreign investors and exporters.
It estimates that developing countries could lose around $10 billion per year as a result and that the potential tariff loss to sub-Saharan African countries is twice that of WTO high-income countries.
The paper also notes that WTO least developed countries (LDCs) could generate five times more tariff revenue than the developed countries if the moratorium on customs duties on electronic transmissions is removed.
Developing countries ‘need at least the same policy and regulatory space’ to build their digital infrastructure and their digital economies as developed countries had at the beginning of their digital advancement, the paper concludes.
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