Digital Commerce Capacity Development - UNCTAD

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DIGITALCOMMERCECAPACITYDEVELOPMENT:Preparing trade professionalsfor the challengesof the digital economy

ImpressumDigital commerce capacity development:Preparing trade professionals for the challenges of the digital economyPublished by DiploFoundation (2018)E-mail: diplo@diplomacy.eduWebsite: http://www.diplomacy.eduAuthors: Marilia Maciel, Roxana Radu, Hannah SlavikEditing: Mary MurphyLayout and design: Diplo’s CreativeLabPhotos: Aleksandra VirijevićExcept where otherwise noted, this work is licensed 3.0/2

ContentsForewords / 4The world economy is increasingly digital; so is trade / 8Negotiators and practitioners need a multidisciplinary approach to / 10digital commerce capacity developmentCapacity Development for Digital Commerce: a project with / 13an innovative approachCourse implementation / 19Webinars / 28Online publications / 293

ForewordDiploFoundation and theGeneva Internet PlatformOur capacity development initiative addressed complex and controversial policy developments in thebuild-up and as a follow-up to the 11th World Trade Organization (WTO) Ministerial Conference (MC11) inDecember 2017. At MC11 in Buenos Aires, differences on digital commerce could not be bridged. Viewswere significantly opposed. Discussions were heated. While negotiators cannot reach compromise letalone consensus, the digital economy continues to grow very fast, with major economic and societalimpacts. Digital growth shapes our reality in both positive and negative ways. This was the general backdrop for our course.The only effective way to address such controversial issue is through informed, impartial, and inclusivediscussions. The exchange among participants, both online and in situ, reflected a wide range of views ondigital commerce and digital policy. Participants were presented with the positions of the main actors indigital policy negotiations, but the arguments put forward were balanced and the approach of the courseremained neutral.This capacity development programme covered a wide range of issues from explaining technical functionality of the Internet that impacts policy-making (e.g. technical tools for cybersecurity, digital signature) to discussions on data protection. It connected the dots between different digital policy fields thataffect digital commerce, such as cybersecurity, standardisation, and the development of a technical infrastructure.Throughout the course, the underlying question under discussion was the impact of digital policies ondevelopment. How do specific policies on digital commerce affect companies in developing countries?Lastly, we tried to look beyond the here and now by discussing the impact of fast-emerging technologies,such as artificial intelligence (AI), blockchain, and the Internet of Things (IoT). In this field, there are stillmany ‘unknowns’ for both developed and developing countries. Many unanswered questions remain. Thesearch for answers will be high on the agenda of trade diplomats and professionals. We hope that ourcapacity development contributed towards making future trade debates more informed and inclusive.Jovan KurbalijaDirector of DiploFoundation andHead of the Geneva Internet Platform4

ForewordCUTS International GenevaThe digital revolution is profoundly changing the economic and social fabrics of societies around theworld. The pace of change is breath-taking and its impact beyond any single policy area or geographicalboundary. It promises both unimaginable opportunities and unprecedented challenges. But, to managethese challenges and capitalise on the opportunities, all relevant stakeholders, particularly policy makers and negotiators, need the knowledge and skills. The knowledge to understand the basic technicalside of the digital revolution and its linkages with economic and social policies, and the skills to managethe interactions among a large and diverse group of stakeholders. This joint initiative by Diplo & GIP, ITC,UNCTAD and CUTS International Geneva is an effort to provide the required knowledge and skills to policymakers, negotiators and other relevant stakeholders in a user-friendly and objective manner.Digital commerce is a reality and its growth inevitable. But there is no inevitability about its positive impact for inclusive growth and development to equitably benefit individuals, enterprises, communities andcountries. Policies, rules and regulations – as well as the processes to develop and implement these - atthe national, regional and international levels will have an important role to play in that respect. Our initiative strives to equip the policy makers, negotiators and other relevant stakeholders to track, understandand shape these policies, rules and regulations in line with the development objectives as enshrined inthe Sustainable Development Goals (SDGs).Developing and least-developed countries are generally lagging behind and the “digital divide” does exist. But it does not have to be permanent. The world should not remain divided between “connected” and’connected-nots“. There is immense “digital dividend” which can lift all boats, everywhere. For that tohappen, developing and least-developed countries need assistance at many levels to equally participatein digital commerce. Our initiative focusse on one of these needs, i.e. capacity development of policy makers, negotiators and other relevant stakeholders.The delivery of three phases of out initiative since early 2017 has demonstrated its utility. We have learntvaluable lessons also. Now we look forward to building on these successes and lessons in the futurephases of our initiative with support from all our collaborators and partners.Rashid S KaukabExecutive Director, CUTS International Geneva5

ForewordInternational Trade Centre (ITC)Digital technologies are rapidly transforming the way we live and work, with Information CommunicationTechnologies (ICT) playing an increasingly critical role in the way we produce, consume and trade.Changes are happening at an accelerated speed, imposing new challenges on companies – to keep uptheir competitiveness in a rapidly changing business world – as well as on governments – to respond toand encourage innovations from a regulatory perspective. This new and dynamic environment requiresall stakeholders being more strategic and inclusive than ever as to ensure not leaving anyone behindacross or within countries.ITC embraces the digital reality and works for transforming digital disruption into business opportunities,especially for SMEs in developing countries. A focus on digital commerce is embedded into all ITC offerings, from our flagship report on SME Competitiveness, to sector specific e-strategies and e-commercestudies, as well as technical assistance projects on the ground.Geneva is a global centre for trade policy and digital commerce, where several international organisations deal with these themes from different angles according to their respective mandates. To equippolicy makers with the up-to-date knowledge on digital commerce, we have collaborated with DiploFoundation, CUTS International, UNCTAD and GIP to offer a joint course on digital commerce.This capacity building initiative intends to increase awareness and understanding of issues related todigital commerce, to help participants better engage in the discussions and make informed decisions.The course has been “just in time” considering the increased focus on the topic at the WTO and otherinternational organizations.This joint course has allowed for a common space to explore the connection between trade and ICTrelated issues, such as net neutrality, cybersecurity, consumer protection and data flow, among others.It also allowed for exploring the development implications of offline elements connected to the digitaleconomy, such as competition and market concentration, standardisation, and infrastructure development. ITC is proud of having actively supported this initiative and reinforces its commitment for inclusivecapacity building on e-commerce.Marion JansenChief Economist, ITC6

ForewordUN Conference on Tradeand Development (UNCTAD)The DiploFoundation plays an important role in enabling more countries to raise their awareness andunderstanding of issues related to the fast evolving digital economy. Since April 2017, the UN Conferenceon Trade and Development (UNCTAD) – through its Division on Technology and Logistics – has been cooperating with DiploFoundation, the International Trade Centre, CUTS International and the Geneva InternetPlatform in the delivery of three editions of the Digital Commerce Course. Our collaboration in the organization and delivery of these capacity-building activities has been both fruitful and rewarding. Diplo’sapproach to capacity building offers a trusted place for high quality, insightful, cutting edge content, aswell as rich discussion on the development implications of e-commerce and emerging technologies. Wecommend Diplo for its excellence, professionalism and commitment to delivering world class trainingand research on Internet-related issues and diplomacy.The DiploFoundation is one of the founding members of the eTrade for all initiative, launched in 2016,which acts as a web-based channel to connect countries in need of assistance to develop e-commerce,and engage in the digital economy with institutions which can offer this support, across seven policy areas. Currently 29 members share this collective vision of supporting developing countries, and LCDs inparticular, on their journey to e-commerce for development. UNCTAD looks forward to the pursuit of thiscooperation with the DiploFoundation in the coming years.Shamika N. SirimanneDirector, Division on Technology and LogisticsUNCTAD7

1. The world economy isincreasingly digital; so is tradeTechnology has significantly transformed theworld’s economy, from the organisational structure of firms to their methods of production; fromtrade and logistics to the skills required from thelabour force. Many of these changes are underpinned by the introduction of information and communications technologies (ICTs), which brought together the power of computers and networks.On the one hand, the widespread adoption of computers sparked the vertiginous process of digitisation. Much of the information that was storedin physical format has been digitised, followingan exponential increase in the processing powerof microchips and a decrease in the cost of hardware. It is estimated that in the year 2000, 25% ofthe information available in the world was digital.In 2010, the situation had drastically changed: only2% of the available information was non-digital.On the other hand, the Internet connected devices,enabling digitally stored information to flow between them.multinationals’ supply chains. In recent years, thetrade of goods has been growing more slowly thanworld GDP. In parallel, the impact of cross-borderdata flows on GDP growth is now larger than theimpact of the traditional flow of goods (Manyika etal., 2016).The fact that digital flows also underpin and enable every other kind of traditional cross-borderflow helps to explain this changing scenario: evenwhen ships carry physical products, customersincreasingly retrieve, order, and pay for them online. This is an increasing trend not only in developed countries, but also in developing ones. Thesignificant penetration of mobile phones in the developing world allowed the emergence of mobilepayments, money transfer, and micro-financingservice. A growing supply of apps is being developed for mobile devices, aiming to solve real community issues related to the trade of goods andservices in developing countries and least developed countries (LDCs), ranging from cattle, honey, and bananas, to transportation services (TheEconomist, 2017).The ability to make data flow worldwide instantaneously through the Internet and the digitisation of information have enabled new business Data has become one of the key elements thatmodels and transformed the composition of binds the world’s economy, in a web of ever moreintricate and dynamic exchanges. While the flowstrade.of international trade and finance have flattenedBefore the economic crisis of 2008, the world’s since 2008, economic globalisation is still movtrade in goods (including commodities, finished ing forward, supported by soaring digital flows.goods, and intermediate inputs) was growing Across the board, there has been an increase inroughly twice as fast as global gross domestic countries’ participation in global digital flows (Figproduct (GDP), linked to the expansion of major ure 1).8

RegionsNAUnited States and CanadaBandwidthGigabits per second (Gbps) MEMiddle EastAFAfrica1,000–5,00045x largerMEAFOCLA 20,000EUNAASOCOceania5,000–20,0002014100% 211.3 Tbps2005100% 4.7 Terabits per second (Tbps)NALALatin AmericaASOCLANOTE: Lines represent interregional bandwidth (e.g., between Europe and North America) but exclude intraregional cross-border bandwidth (e.g., connectingEuropean nations with one another).SOURCE: TeleGeography, Global Internet Geography; McKinsey Global Institute analysisFigure 1. Cross-border data flows (Manyika et al., 2016)Advancements in the deployment of Internet infra- of online shopping, has increased consumer choice,structure and in the quality and speed of connectivity access to different markets, and less time-consumhave enabled the emergence of new economic ac- ing online banking and e-payment operations. At thetivities, such as cloud computing, trade digitalisation, same time, it has created significant challenges forand online platform-based services.policymakers and regulators, who try to apply existing international trade norms to the context of cyberThe digitalisation of trade brought about numerous space, in which the ‘cross-border’ element is muchadvantages for consumers, such as the conven

build-up and as a follow-up to the 11th World Trade Organization (WTO) Ministerial Conference (MC11) in December 2017. At MC11 in Buenos Aires, differences on digital commerce could not be bridged. Views were significantly opposed. Discussions were heated. While negotiators cannot reach compromise let alone consensus, the digital economy continues to grow very fast, with major economic and .

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