E-commerce focus may threaten India's interests at WTO

Permanent solution to foodgrain stock holding, special safeguard mechanism may be affected

With developed nations becoming louder on demands for talks on e-commerce, India may have a hard time ignoring the issue at the upcoming ministerial this year.

Barely two months after World Trade Organisation (WTO) head Roberto Azevedo visited India, warning that discussions on e-commerce would move forward no matter who participated, news pouring in from Geneva over the last few days show growing deliberations on e-commerce among nations.

An international grouping has been formed in this regard, composed of Latin American nations Argentina, Chile, Colombia, Costa Rica, Uruguay as well as their partners in this issue, Kenya, Mexico, Nigeria, Pakistan and Sri Lanka.

Named the 'Friends of E-Commerce for Development', the grouping has initiated panel-level talks on the issue with some nations also mooting the idea of making it part of the formal agenda for the upcoming ministerial conference in Argentina later this year in December.

Participating in the talks, Azevedo had said e-commerce had broad benefits for consumers as well as medium and small enterprises. "Between 2013 and 2015, the value of the global online trade jumped from $16 trillion to $22 trillion," he added.

Developed nations at the WTO have pushed for discussions on proposed global rules on e-commerce for a long time. Over the last couple of weeks, Australia, Switzerland, Norway and the European Union, among others, have made fresh arguments on its behalf.

"Such groupings are cropping up fast. Drawing from what our experience had been at the last ministerial conference in Nairobi, it is imperative that India starts building coalitions on the issue as well," Sachin Chaturvedi, director-general of trade think tank RIS, said.

There are significant business interests involved with global e-commerce giants looking for an official route to tap the lucrative markets of the developing world, especially India.

New firms were coming up in developing markets like India and Kenya, which would be severely hit by major corporations from advanced economies, Chaturvedi added.

While India has said the issue should be taken up only after support from a larger number of nations, growing deliberations on the issue may yet again dilute focus on older development-based issues from the Doha round of negotiations, which developing nations in Africa as well as LDCs consider their priority.

"India obviously does not support such topics becoming a part of the official agenda, when more important issues are at stake," an official said under conditions of anonymity.

Foremost among these issues is the search for a permanent solution to the controversial topic of public stockholding for food security purposes, which has been repeatedly sought by India.

On the Special Safeguard Mechanism (SSM), the WTO has only given a cursory nod towards recognising developing members' rights to have recourse to it. The SSM, a long-standing demand of developing nations, allows countries to temporarily raise tariffs to deal with surging imports and subsequent price falls.

However, any WTO legislation on e-commerce, if binding, will hit India's e-commerce sector, rules for which are not yet finalised. This would also curtail the space available to the government to regulate the market to protect consumer interests, addressing anti-competitive practices and preventing market failure, Abhijit Das, head of the Centre for WTO studies had said earlier.

The WTO's brush with the subject had started way back during the second ministerial conference in 1998 whereby it had been decided to put a moratorium on customs duties imposed on digital transactions. It was also decided to hold discussions on various aspects of e-commerce, but there was no understanding on negotiating rules.

"In 2015, Internet penetration in the least developed and low income countries was about 12.6 per cent and 9.4 per cent, respectively. Even for low middle income countries, the figure was well below the global average. These disparities in Internet penetration should make it clear as to who will be the likely beneficiaries of e-commerce rules," said Biswajit Dhar, a trade expert and a professor at the Jawaharlal Nehru University.

On this note, Azevedo himself said at the meeting that four billion people in the developing world remain offline on Friday. He added that only one in four people in Africa uses the Internet - and only one in seven people in least developed countries.