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WTO Joint Initiative on E-Commerce guidance

Published 26 July 2024

Summary

The Joint Initiative (JI) on Electronic Commerce (E-Commerce) at the World Trade Organization (WTO) is the first global digital trade agreement.^{[footnote 1]} This is an economy-wide deal that will boost global trade in goods, services and information and help to make trade faster, cheaper, fairer and more secure. The JI is set to deliver new growth opportunities for the UK, with global digital trade already worth £4 trillion^{[footnote 2]} and growing strongly.

Increased digital trade, with fewer barriers, will lead to more opportunities and less red tape for UK businesses, new employment opportunities and higher wages for workers and increased choice and lower prices for consumers across the UK.

The core elements of the E-Commerce JI cover the following areas:

1․ Enabling E-Commerce

• electronic transactions framework
• electronic authentication and electronic signatures
• electronic contracts
• electronic invoicing
• paperless trading
• single windows data exchange and system interoperability
• electronic payments

2․ Openness and E-Commerce

• customs duties on electronic transmissions
• open government data
• access to and use of the internet for e-commerce

3․ Trust and E-Commerce

• online consumer protection
• unsolicited commercial electronic messages
• personal data protection
• cybersecurity

4․ Transparency, cooperation and development

• transparency
• cooperation
• development

5․ Telecommunications

Global trade is becoming increasingly digital, and harnessing its potential is central to growing a strong and resilient economy in the UK. By 2020, digital trade represented 25% of global trade, around £4 trillion.^{[footnote 3]}

The UK is at the forefront of digital trade and has a comparative advantage in digitally-delivered services such as finance, professional business services, creative industries, engineering and much more. UK trade is driven by digitally-enabled businesses, with exports of digitally-delivered services amounting to £252 billion in 2021, or 77% of total UK services exports.^{[footnote 4]}

Until this JI, there has been no common set of global rules on digital trade. This lack of rules has led to fragmented approaches to digital trade regulation, resulting in increased barriers for businesses, workers and consumers.

The E-Commerce JI, having brought together 91 negotiating countries, representing all levels of development and all the regions of the world, has sought to rectify this fragmentation of digital trade regulation. The Joint Initiative is a standalone agreement done at the WTO. The UK will set out its broader approach to trade in due course.

As a comprehensive, economy-wide agreement, the JI will boost global trade in goods, services and information and unlock a wide range of benefits for UK businesses, workers and consumers. Global adoption of digital customs systems, processes and documents would increase UK gross domestic product (GDP) by between £2.7 billion and £24.2 billion in 2023 UK GDP terms.^{[footnote 5]}

While the adoption of digital customs systems under the JI would not be universal, this estimate suggests that even partial adoption could represent a significant boost to UK GDP. Improvement in trade facilitation can increase the probability of a small business starting to export by up to 3 per cent and increase the value of small business exports.^{[footnote 6]} Protection for workers and consumers online will increase their trust and confidence in digital trade.

We have secured provisions to:

• digitalise a wide range of trading systems to help make trade cheaper, faster and more secure for businesses trading goods and services around the world
• permanently ban customs duties on digital content among JI parties
• protect personal data of workers and consumers in line with the UK’s high data protection standards
• protect online consumers from misleading, fraudulent and deceptive commercial activities
• ensure an inclusive JI that recognises the importance of development and calls for technical assistance and capacity building for developing and least-developed countries
• encourage competition in the telecommunications sector by safeguarding the financial independence of regulators, improving access to telecommunications infrastructure and, where appropriate, assigning frequency bands through market-based approaches

The agreement will be periodically reviewed to keep it up to date and relevant, given the rapid pace of technological development. Further negotiations on issues including international data flows and intellectual property of software or encryption technology would take place in a further phase of the JI.

The E-Commerce JI follows the conclusion of Joint Initiatives on Services Domestic Regulation and Investment Facilitation for Development. The agreement will provide a boost to the credibility of the WTO and the rules-based international system.

1․ Enabling E-Commerce

Modern transactions frameworks

Doing business electronically, as opposed to relying on paper, is faster, cheaper and more secure, benefitting businesses, workers and consumers. The JI sets out commitments that will encourage the adoption of legal frameworks that treat electronic and paper-based information equally and grant legal recognition to electronic transactions and processes.

The agreement will also encourage legal use and recognition of electronic transferable records, such as bills of lading, bills of exchange and promissory notes.

Electronic authentication and electronic signatures

The JI gives confidence to UK businesses that they will be able to use electronic signatures, seals, time stamps and registered delivery services without fearing that they will be rejected purely because they are in electronic form. For consumers, this will simplify the purchase of goods and services requiring a signature to authorise the transaction, which will now be accepted digitally instead of having to be on a piece of paper.

Companies doing business electronically will be free to agree appropriate authentication and signature methods for their transactions. However, some methods of authentication or electronic signature may need to meet certain performance standards or require certification by an accredited authority.

The agreement facilitates interoperable electronic authentication and encourages cooperation on the mutual recognition of electronic signatures. This paves the way to more seamless cross-border trade.

Electronic contracts

The agreement ensures that electronic contracts are not denied validity and legal enforceability. Any exceptions must be set out in legislation or regulations. This will help businesses find new exporting opportunities and enter into supply contracts without having to physically travel to countries participating in the JI, making trade cheaper.

For workers, electronic contracts provide greater accessibility, facilitating remote and flexible working arrangements, improved record keeping and enhanced security that protects against tampering.

Electronic invoicing

The JI ensures that electronic invoices are legally valid. Any exceptions must be set out in legislation or regulations. It also seeks to establish common principles and cooperation on interoperability that can prevent country-specific technical standards from becoming a trade barrier.

E-invoices are increasingly growing in relevance, especially for small businesses. Therefore, the JI aims to ensure that parties design e-invoicing frameworks in a manner that will support cross-border interoperability and take into account international standards. For consumers, e-invoices facilitate quicker transactions and resolution of billing issues as they can be delivered instantly, reduce the risk of human error that can occur with manual invoicing and ensure easy access.

Paperless trading

By making the vast majority of the forms necessary for the import, export or transit of goods available and accepted electronically, the JI will reduce administrative barriers, transaction costs and time taken to import and export goods. For businesses, this will in many cases end the need to print off forms and hand them over at customs – a slow, expensive and old-fashioned way of working.

The benefits of moving to a paperless trading system include reduction in trade costs for businesses, especially small businesses, which will facilitate exporting, improved innovation (particularly in ‘just in time’ supply chains) and greater ability to tackle illegal and counterfeit trade.

Single windows data exchange and electronic interoperability

By facilitating the adoption of an electronic single trade window, the JI will streamline import, export and transit procedures for businesses. This will make trade faster, simpler and cheaper, while enabling enhanced compliance, safeguarding and security across the supply chain. 

Single trade windows eliminate duplication in data and documentation requirements, make better use of the available data and simplify the process for traders moving goods across the border. This ensures that businesses are able to export more easily and cheaply as trade administration documents and other documents required in the course of trade can be submitted through a single entry point in each jurisdiction.

Electronic payments

Globally, electronic payments services have proliferated. The UK has a growing, innovative payments sector, and we are keen to ensure that the landscape for payments regulation creates an environment to allow innovative firms to thrive, both domestically and internationally.

The JI provides a baseline for the development of regulations applied to this crucial sector and facilitates transparency and the adoption of international standards of regulation.

2․ Openness and E-Commerce

Duty-free digital content

Businesses, workers and consumers rely on digital content for innovation, enhancing productivity, accessing new employment opportunities and entertainment. Delivering a permanent ban on customs duties on electronic transmissions between JI parties provides the certainty businesses need to trade openly in the new global digital economy and avoids the price increases the introduction of such duties would cause.

This will ensure that British businesses’ digital exports of software, music and film are not subject to tariffs in any of the countries participating in the JI, protecting their competitiveness and avoiding price increases for consumers as a consequence of tariffs.

Open government data

The JI facilitates public access to government data to foster economic and social development, competitiveness and innovation. This allows businesses, especially small businesses, to develop innovative, data-based products and services which can fill gaps in the market.

Such innovation brings social, environmental and economic benefits, and provides workers and consumers with better apps, services and experiences, such as real-time public transport information.

3․ Trust and E-Commerce

Online consumer protection

The digital era has delivered numerous benefits for consumers. However, accessing and purchasing goods and services online also gives rise to new risks facing consumers. Robust online consumer protection regimes can mitigate against these risks and provide comfort to online consumers, knowing that their rights are protected. The JI requires parties to put in place legal frameworks that protect online consumers from misleading, fraudulent and deceptive commercial activities.

Protection against unsolicited commercial electronic messages

Digital communication technologies have dramatically changed the communication strategies of direct marketers. The use of unsolicited commercial electronic messages (otherwise known as spam or junk mail), whether as texts or e-mails, has become widespread due to its low cost for marketers and its high potential for interactivity with target consumers. But their use may be a nuisance and undermine consumer welfare.

The JI will reduce spam by requiring each party to put in place measures to minimise unsolicited commercial electronic messages. This could be through facilitating the ability of recipients to opt out from receiving such messages, requiring consent prior to receiving commercial messages or other methods. This provides an important global baseline to ensure that consumers are protected from spam and encourages international cooperation in this space.

Personal data protection

Personal data protection increases workers’ and consumers’ trust and confidence in digital trade. The JI locks in a commitment from parties to put in place legal frameworks that provide for the protection of personal data. This is in line with the UK’s high standards of personal data protection.

Furthermore, the agreement encourages compatibility between different data protection regimes. It is key that different data protection regimes can interact to ensure consistently high levels of protection.

Trade deals can and do reinforce, not undermine, the importance of personal data being protected. Once this agreement is in force, UK citizens will enjoy the same protections for their personal data as they do now. Nothing in the agreement will change that.

Cybersecurity

The global expansion of the internet and the increased use of data by businesses, workers and consumers have increased the risks and costs of cyberattacks. By facilitating cooperation, the development of national cybersecurity capability and risk-based approaches to cybersecurity, the JI will help to protect UK businesses, workers and consumers engaged in digital trade and avoid potential trade barriers associated with prescriptive approaches to cybersecurity.

4․ Transparency, cooperation and development

Working together on digital trade

Digital technologies are constantly evolving. The interconnected, international nature of digital trade means that no country can go about it alone. From working together to increase inclusion in digital trade to exchanging experiences on laws and regulations, the JI will facilitate cooperation on digital trade to truly unleash its transformative potential for the benefit of people, businesses, workers and consumers around the world. 

Development

Global digital trade creates opportunities for economic growth and sustainable development. But making the most out of digital trade may be challenging, especially for developing countries and least-developed countries (LDCs). Inclusion is at the heart of this agreement. In response to the challenges and opportunities faced by developing countries and LDCs on digital trade, the JI provides a broad and practical commitment to inclusivity by prioritising tangible support and flexibility for participating developing countries and LDCs.

The agreement contains an effective, multi-avenue approach to supporting developing countries’ and LDCs’ implementation of the JI, through a combination of implementation periods, capacity building and technical assistance.

The UK has an established track record of supporting partner countries through capacity building and technical assistance in digital development. We are a strong advocate of leaving nobody behind, and are continuing to work towards bridging the digital divide.   

5․ Telecommunications

Telecommunications infrastructure underpins the digital economy. It is hugely important in supporting current and future growth. Previous WTO agreements have played a fundamental role in facilitating liberal telecoms markets through robust regulatory principles. This has generated substantial and positive impacts on the sector across the world.

The JI improves upon these agreements, bringing the global trade rules governing telecommunications up to speed with technological progress which has taken place in recent years.

The JI also encourages parties to carry out a process of assigning frequencies in an open, transparent and non-discriminatory way for all users, relying on market-based approaches, which underpins the principle of ensuring competitive markets and provides greater choice to businesses, workers and consumers. 

Additional provisions

Scope and exceptions

The E-Commerce JI is an economy-wide agreement covering goods, services and information. Government procurement, government services and, partially, government information are excluded from the JI’s scope.

The JI incorporates general and security exceptions from the General Agreement on Tariffs and Trade and the General Agreement on Trade in Services, and includes exceptions for prudential measures, personal data protection and indigenous peoples.

1. The outcome of the E-Commerce Joint Initiative is officially called the ‘Agreement on Electronic Commerce’ ↩

2. OECD (2023): Key issues in digital trade. Converted from US$ ↩

3. OECD (2023): Key issues in digital trade. Converted from US$ ↩

4. ONS (2020): Modes of supply, UK experimental estimates ↩

5. Estimates based on LSE (2024): Benefits of the digitalisation of trade processes and cross-border barriers to their adoption ↩

6. Lopez-Gonzalez and Sorescu (2019): Helping SMEs internationalise through trade facilitation ↩