Using Trade Facilitation to Assist MSMEs in E-Commerce in Developing Countries

In anticipation of the 11th WTO Ministerial Conference (MC11), several developing country Members submitted proposals reflecting concerns related with e-commerce and the continued involvement of micro, small and medium enterprises (MSMEs) in cross-border e-commerce. Some developing countries perceive the booming significance of MSMEs as an opportunity to further enhance their economic relevance by incorporating them into e-commerce. The increase of MSMEs in e-commerce has also been reflected by the International Trade Centre (ITC). In one of the ITC’s most recent surveys conducted on 2262 firms, the statistics indicated that of the firms that engage solely in cross-border e-commerce, 82% are MSMEs. Notwithstanding these significant changes on the ground, Members have differed significantly in their views since 1998 concerning the e-commerce agenda. This has created considerable inroads in defining what e-commerce is as well as the rules that should regulate e-commerce. More recently, the e-commerce dialogue has reflected concerns on how the WTO could potentially deal with the rapid inclusion of MSMEs in the market through e-commerce. Although all companies face red tape in cross-border trade, due to size and financial constraints, MSMEs in developing countries face the most challenges in cross-border e-commerce. Many of these problems are related to the cross-border delivery of goods, the after-sales services as well as limited cross-border de minimis exemptions that discourages MSMEs from e-trading. Therefore, several Members consider that it is vital to continue to work on trade facilitation matters, especially those that are forward looking and can better assist MSMEs to better integrate into the e-commerce world. This article adopts two specific discussion points based on the proposals submitted by different Members for the WTO MC11 suggesting ways to move forward. First, using case studies from different countries, the article will focus on some of the challenges faced by MSMEs in developing countries, such as inefficient customs administration which is a result of issues related to cross-border trade. Part of this discussion will also assess how developing countries can use the recently agreed TFA to address these issues. The second part of the article will focus on how current provisions in the TFA as well as other forward looking trade facilitation efforts that are not reflected in the agreement, can help MSMEs to benefit from cross-border e-commerce. In relation to this part of the discussion, an exploration of the possibilities of technical assistance and capacity building that is e-commerce relevant would thus be necessary. Finally the article will conclude, highlighting limitations associated with the recommendations given.