DAVOS, Switzerland (Reuters) – Impatient at a lack of rules from the World Trade Organization on the explosive growth of e-commerce, 76 members – including the United States, China, the European Union and Japan – agreed on Friday to start negotiations on a to start new frame .
China, which is locked in a trade war with the United States, signaled conditional support for the initiative but said it should also consider the needs of developing countries, in comments likely to anger Washington.
E-commerce, or trading goods and services online, has become a huge part of the global economy. A WTO report put the total value of e-commerce at $27.7 trillion in 2016, of which nearly $24 trillion was business-to-business transactions.
On the sidelines of the World Economic Forum in Davos on Friday, negotiators from the 76 countries and regions agreed to lay out an agenda for negotiations they plan to start this year on setting new e-commerce rules.
“I have said for some time that it is unacceptable that by 2018 the WTO will not have a deeper and more effective discussion on a phenomenon that is driving the global economy today,” said WTO Director-General Roberto Azevedo.
“China wasn’t an original signatory, but now they are. They have confirmed their intention to start negotiations on e-commerce. I think that’s a welcome development,” he said at a briefing in Davos.
Japan’s Trade Minister Hiroshige Seko said his country hopes to use his presidency of this year’s meeting of the Group of 20 major economies to speed up negotiations.
“Current WTO rules do not meet the needs of the 21st century. You can see that in the fact that there are no hard and fast rules for e-commerce,” Seko said in a separate briefing.
CHINA CRITICAL, INDIA ABSENT
China’s WTO ambassador Zhang Xiangchen said the e-commerce declaration “could have been drafted better” but Beijing is still ready to lend its support.
But Beijing’s call for “full respect for the reasonable demands of developing countries” could increase tensions with Washington, which says the WTO must stop giving special treatment to countries like China that describe themselves as “developing countries”.
Another Asian giant, India, did not join the initiative. It has previously said that the WTO should end the stalled but development-oriented “Doha Round” of talks before moving on to new areas.
“It would always be better if we had all WTO members present,” Azevedo said. “But it is also important that this group is open. It’s an open group, so anyone who wants to join this conversation can join at any time.”
Trade experts say the global trade rulebook is rapidly becoming obsolete and needs to keep up or become obsolete. A recent study found that 70 regional trade agreements already contain provisions or chapters related to e-commerce.
The 164 members of the WTO failed to consolidate some 25 separate e-commerce proposals at a conference in Buenos Aires in December, including a call for the establishment of a central e-commerce negotiating forum.
E-commerce, which largely developed after the creation of the WTO in 1995, was not part of the Doha round of talks, which began in 2001 and eventually collapsed more than a decade later.
US President Donald Trump’s administration says the WTO is dysfunctional because it failed to hold China accountable for not opening up its economy as planned when Beijing joined in 2001.
To force reform of the WTO, Trump’s team has refused to allow new appointments to the Appellate Body, the world’s top trade court, a process that requires consensus among member states. As a result, the court will run out of judges and will not be able to make binding decisions in disputes.
While the United States was a signatory to the E-Commerce Agreement, it did not attend a separate informal WTO meeting chaired by Switzerland.
Azevedo said Washington’s absence was “driven entirely and solely by domestic political considerations” and had nothing to do with the country’s distrust of the multilateral trading system.
But he expressed concern at the tide of protectionism that has overshadowed discussions at Davos among the rich and powerful.
“These trade tensions are not just a threat to the system. They are a threat to the entire international community,” he said. “The risks are very real. There will be economic implications.”
Additional reporting by Tom Miles in Geneva; Editing by Mark Trevelyan
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