WT/COMTD/W/264/Rev.1  
 
10 March 2023  
(23-1805) Page: 1/6 
Committee on Trade and Development  Original: English  
 
GLOBAL ELECTRONIC COMMERCE FOR INCLUSIVE DEVELOPMENT  
Revision  
The following communication , dated 8 March 2023, is being circulated at the request of 
the delegations of India and South Africa.  
 
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1  INTRODUCTION  
1.1.  Under the 1998 Work Program on Electronic Commerce (Work Program 1998), the 
WTO Members had agreed " to examine all trade -related issues relating to global electronic 
commerce, taking into account the economic, financial, and development needs of developing 
countries ".1 The Committee on Trade and Development was specifically tasked to examine and 
report on the development implications of electronic commerce, including in relation to SMEs; 
challenges to and ways of enhancing the participation of developing countries i n electronic 
commerce; use of information technology in the integration of developing countries in the 
multilateral trading system; implications for developing countries of the possible impact of electronic 
commerce on the traditional means of distribution  of physical goods; and financial implications of 
electronic commerce for developing countries .2 
1.2.  However, to date, a comprehensive assessment of the developmental impacts of global 
e-commerce focusing on developing countries, particularly their digital industrialization and 
export -oriented development, has yet to be undertaken under the auspices of the 
Work Program  1998. 
1.3.  Given the widening digital divide, which is exacerbating global inequalities, more so in 
post-pandemic scenario, it is essentia l for the Members to ensure that global electronic commerce 
delivers inclusive and equitable development.  
1.4.  Against this backdrop, the proposal highlights some of the development impacts of electronic 
commerce in the context of the vast digital divide; its i mplications for SMEs; the challenges of 
cross-border electronic commerce; and digital industrialization. This proposal aims to invigorate the 
work on examining the development implications of electronic commerce as agreed by the Members 
under the Work Program 1998.  
2  STARK DIGITAL DIVIDE  
2.1.  COVID -19 has exposed the existing digital divide and its repercussions.  Numerous barriers 
exacerbate the digital divide.  As per ITU statistics for 2022, 34% of the world 's population does not 
use the internet.3 The pandemic led to a situation of complete lock downs for months wherein internet 
remained the only source of any communication. Every activity, the schools, health and telemedicine 
services, financial and other services, offices, and trade moved to onlin e. However, even with such a 
huge demand pull for internet, the use of the internet increased only marginally for developing 
 
1 WT/L/274, para 1.1 . 
2 WT/L/274, para 5.1 . 
3 https://www.itu.int/itu -d/reports/statistics/facts -figures -2022. 
 WT/COMTD/W/264/Rev.1  
 
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  countries including LDCs. In 2021, while 90% of the developed countries' population had access to the 
internet, the figures reached  only 57% for developing countries and 27 % for the LDCs .4  
2.2.  Also, it is estimated that 23% of the population in LDCs has no access to a mobile broadband 
network and even when they do, it is typically at relatively low download speeds (at eight times 
lesser than that in a developed economy) and with relatively high price tag attached. Further, while 
developed countries have 36 fixed broadband subscriptions per 100 inhabitants, the developing 
countries including LDC have less than one third of thi s.5 It has been stated in the 
UN Secretary  General 's High Level Panel report on Digital Cooperation 20206 that in 19 of the 
least developed countries, the price of 5  GB of fixed broadband is more than 20 % of monthly gross 
national income per capita. The report goes on to add that even when ostensibly available, access 
to digital technologies remains uneven , "The people being left behind are typically those who can 
least afford it ". Digital divides amplify existing social, cultural, and economic inequalities. Thus, the 
SDG goals  [9(c)] of 'significantly increased access to information and communications technology 
and striving to provide universal and affordable access to the Internet in least developed coun tries 
by 2020 ' remains elusive.  As a result, COVID -19 pandemic has disproportionately impacted 
developing countries and LDCs. The hyper -connected developed countries have been able to 
continue their economic operations online during the ongoing pandemic and grow in cross border 
e-commerce while the developing countries including LDCS, particularly their SMEs have been 
deprived from effective participation due to lack of access to internet.   
2.3.  Another dimension of the digital divide is the "data val ue chain". The infrastructure and 
capacities to create, store, secure and capture value from raw data are required to use data as an 
economic resource. According to the Digital Economy Report, UNCTAD (2021)7, developing countries 
may find themselves in su bordinate positions, with data and associated value capture getting 
concentrated in a few global digital corporations and other multinational enterpri ses who control 
global data. The developing countries are at grave risk of becoming mere raw data provider s to 
these global digital platforms while having to pay for the digital intelligence obtained from their 
data.8 Consequently, the digital divide is more pronounced in terms of existing digital infrastructure, 
data processing skills and digital technologies. The capacity to store and process data is an important 
aspect of a data -driven economy. According to the Digi tal Economy Report, UNCTAD (2019)9, out of 
a total of 4,422 so -called colocation data centers, 80% are in developed countries, with United  States 
accounting for about 40%. Africa and Latin America account for less than 5% of the 
world's  colocation data ce nters. The Cloud market is also highly concentrated, where the share of 
the top five providers (with four out of the five are based in the US), exceeds 75%. The immense 
power and value of data in the modern economy can and must be harnessed to meet the SDG s, but 
this will require new models of collaboration.  
2.4.  Thus, there is a serious need to examine the development needs of developing countries 
including LDCs to bridge the digital divide and ensure inclusive global economic development. This 
requires deeper appreciation of the challenges faced by the developing countries including the LDCs. 
There is an emergent need for global co -operation for supporting developing countries in their efforts 
for digital industrialization, digital infrastructure, and capacity.  
3  GROWING CROSS BORDER E -COMMERCE: IMPLICATIONS FOR SME s IN DEVELOPING 
COUNTRIES  
3.1.  Advanced digital infrastructure and data collection, storage and processing skills have given 
the first -mover advantage to digital platforms in electronic commerce, leading to the growing 
concentration of rents and monopolies. Three developed countries (the US, Japan and Germany) 
 
4 Measuring digital development, Facts and figures, 2021, ITU Publications . 
https://www.itu.int/en/ITU -D/Statistics/Documents/facts/FactsFigures2021.pdf  
5 Ibid. 
6 Road map for digital cooperation -Report of the UNSG  https://www.un.org/en/content/digital -cooperation -
roadmap/  
7 Digital Economy Report 2021, Cross -border data flows and development: For whom the data flow, 
United Nations Conference on Trade and Development, 2021 , 
https://unctad.org/system/files/official -document/der2021_en.pdf.  
8 Ibid. 
9 Digital Economy Report 2019, Value Creation and Capture: Implications for Developing Countries, 
United  Nations  Conference on Trade and Development,  2019,  
https://unctad.org/syst em/files/official -document/der2019_en.pdf  WT/COMTD/W/264/Rev.1  
 
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  together account for 45% of global e -commerce sales10, and a handful of digital platforms have 
captured the cross -border e -commerce markets. COVID -19 has further increased the market  
dominance of digital platforms and big -tech firms in the developed world, while the developing 
countries including LDCs suffer ed further due to lack of even the basic internet. These handful of 
companies (digital platforms) have become global digital corporations with planetary reach; 
huge financial, market and technology power; and control over large swathes of data about their 
users. And they have seen their size, profits, market value and dominant positions strengthening 
further during the pandemic, as digitali zation has accelerated .11 
3.2.  According to the  Digital Economy Report 2019  released by the United Nations Conference on 
Trade and Development, prior to the COVID -19 pandemic, seven "super platforms " are in 
two countries and  constitute  two-thirds of total market value worldwide . On the extreme end, the 
combined share of Africa and Latin America in terms of total number of platforms was only 1%. 
Geopolitical fault lines are beginning to form, with technology being a central domain of competition 
and conflict. Members need to assess the implications of this in view of the vision to create an inclusive 
multilateral trading system.  
3.3.  While theoretically digital technologies can benefit small and medium firms (SMEs) in developing 
countries through easier market access in the digital world, in practice, digital technologies and the 
growth of super platforms have led to extreme concentration of export markets which has 
affected distributional outcomes adding to existing global inequalities. This greater vulnerability, and 
in some cases, ultimate bankruptcy of SMEs within developing countries, could also lead to their 
integration into larger companies as antitrust authorities are likely to address vertical integration 
more favorably than horizontal mergers between companies in the same sector .12 It is now 
extensively documented that MSMEs face considerable challenges in sel ling their products through 
online retail platforms, where the platform owner can also function as a vendor. Some of the 
problems confronted by MSMEs are: 
• On average, prominent online platforms keep 30% of the sale value made by independent 
vendors, thereby squeezing vendors' profits whilst enriching the platform owners.13 
• Online platforms leverage vendors' and consumers' access to data to identify popular a nd 
profitable products. After that, the platform itself becomes a vendor of these products. This 
adversely affects the MSME vendors and allows platforms to free ride on 
vendors'  innovations.14  
• Online platforms compel vendors to purchase additional services, such as adverti sement , 
warehousing, transportation etc. It is not uncommon that vendors who decline to 
purchase the additional services find access to their products blocked.15 
• The platform's products often appear much higher in the search listing than independent 
vendors' sim ilar products.16 
3.4.  Thus, the narrative that MSME vendors can expand their sales and exports by linking with 
online retail platforms may only be partially accurate. This narrative completely ignores the adverse 
impact of practices followed by many online reta il platforms on MSME vendors who seek to sell 
through such platforms. It is apprehended that on account of the practices followed by the super 
online retail platforms, most MSMEs may not sustain their businesses.  
 
10 Ibid. 
11 Trade and Development Report 2020, From Global Pandemic to Prosperity for All: Avoiding Another Los t 
Decade, United Nations Conference on Trade and Development, 2020,  
https://unctad.org/system/files/official document/tdr2020_en.pdf  
12 Ibid. 
13 Investigation of Competition in Di gital Markets, United States, pages 220, 339 and 354; and Amazon 's 
Stranglehold, Stacy Mitchell and Olivia LaVecchia, page 20.  
14 Investigation of Competition in Digital Markets, United States, page 291.  
15 Ibid, page 359 . 
16 Richard Kozul -Wright & Rashmi Banga, Moratorium on Electronic Transmissions: Fiscal Implications  
and Way  Forward, UNCTAD Research Paper No. 47,  UNCTAD/SER.RP/2020/6,2020,  
https://unctad.org/system/files/official -ocument/ser -rp-2020d6_en.pdf  WT/COMTD/W/264/Rev.1  
 
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  3.5.  Lack of digital infrastructure and skills p oses grave threats to the existing export 
competitiveness of SMEs in developing countries and LDCs. There is a potential danger of many 
SMEs in the developing world being outcompeted by those in developed countries with access to 
digital technologies.  
3.6.  Overall, SMEs in developing countries have an insignificant share in the profits and sales 
emerging from the expone ntial growth of global e -commerce, with most of the gains accruing to big 
tech firms and digital platforms, which are majorly owned by entities in developed countries.  
4  FINANCIAL IMPLICATIONS OF THE PRESENT STATE OF PLAY IN CROSS -BORDER 
E-COMMERCE AND E -COMMERCE MORATORIUM FOR DEVELOPING COUNTRIES  
4.1.  The unfairly skewed distribution of rents in favour  of a few super platforms arising from global 
electronic commerce is reinforced by their ability to pay little or no taxes on their profits.  
4.2.  The existing E -Commerce Moratorium on electronic transmissions also limits the ability of 
developing countries to impose tariffs on the growi ng imports of electronic transmissions. UNCTAD 
Research Paper 4717 estimates a potential tariff revenue loss of USD 10 billion per annum for 
developing countries compared to USD 289 million for advanced countries. It has been argued that 
developing countri es can impose internal taxes to compensate for the tariff revenue losses. However, 
a recent study has shown that developing countries lose these tariff revenues permanently .18 
4.3.  As more goods are digiti zed with the advent of industry 4.0 and advances in 3D printing 
technologies, this estimate of fiscal revenue foregone will snowball. With the advance of 3D printing 
technologies shortly, carefully negotiated GATT  bound rates, typically higher in developing countries, 
will be brought to zero for their digiti zed counterparts.  Various studies have demonstrated explosive 
growth in 3D printing. Illustratively a Harvard Business review reveals that Hearing Aid Industry in 
the US has converted to 100 % reliance on 3D printing technology in a space of less than 500 
days19. 
5  CHALLENGES FACED BY DEVELOPING COUNTRIES IN ACHIEVING DIGITAL 
INDUSTRIALI ZATION FOR REAPING THE GAINS FROM GROWING GLOBAL E -COMMERCE  
5.1.  The above -discussed challenges highlight that the gains from the growing global electronic 
commerce will not be automatic for developing countries. This will require strategic interventions 
at all levels, including at the national and international levels. Dev eloping Countries will have to 
scale up their digital industrialization enormously in quick time for remaining competitive, and 
survival in the cross -border trade. For this, the developing world will require policy and fiscal space, 
besides technology tran sfers, technical assistance, and other resources , to rebuild its economies and 
revive its declining trade competitiveness and falling exports.  
5.2.  Every new cycle of industrialization, be it industry 1.0, 2.0, 3.0 or 4.0, requires policy 
interventions by way of well calibrated tariffs, subsidy and internal taxes beside other resources and 
technology transfers. Tariff is a significant policy tool for digital industrialization too. Continued 
e-commerce moratorium deprives the developing coun tries of this policy tool.  
5.3.  The transition to e -commerce has been hastened hugely in cross border trade by the pandemic 
as digital trade became a necessity and a way of life.  However, due to lack of digital industrialization 
and capacity the developing coun tries including LDC have not been able to reap the gains of this 
growth. Developing countries did not get enough time, opportunity, and policy space to prepare for 
this hasty transition. Technological challenges continue to grow in terms of availability, a ccessibility, 
and affordability.  As the supply side of developing countries loses competitiveness, crowding out of 
 
17 Banga Rashmi, Growing Trade in Electronic Transmissions: Implications for the South, UNCTAD Research 
paper  No.29,UNCTAD/SER.RP/2019/1/Rev.1,  February  2019,  
https://unctad.org/system/files/official -document/ser -rp-2019d1_en.pdf . 
18 Devika Dutt & Kevin P. Gallagher & Rachel D. Thrasher, 2020. "Trade Liberalization and Fiscal Sta bility in 
Developing Countries: What Does the Evidence Tell Us?," Global Policy, London School of Economics and Political 
Science, vol. 11(3), pages 375 -383, May . 
19 D'Aveni, "The 3 -D Printing Revolution " Harvard Business Review, May 2015,  
https://hbr.org/2015/05/the 3-d-printing -revolution.  WT/COMTD/W/264/Rev.1  
 
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  their industries is eminent in growing demand for cross border e -commerce. This is particularly true 
for SMEs suffering closures in large num bers. 
5.4.  As stated above, in the present state of play, the global digital platforms are in a privileged 
position to collect data at a massive scale which gives them a significant competitive advantage. 
Network effects, combined with access to data and econom ies of scale and scope, have led to 
monopolistic trends and increased the market power of the world's largest digital platforms .20 
Developing counties need to leverage their position as one of the major data sources to capture a 
fair share of the digital p ie and achieve their digital industrialization and capacities instead of merely 
linking to the digital platforms of others . This would inter alia  require policy space for national laws 
and regulations, like laws regarding data sovereignty . 
5.5.  Digital industrialization and capacity creation are necessary pre -requisites for developing 
countries to participate competitively in the cross -border e -commerce trade. As per the 
UNCTAD's  B2C E -Commerce index, which measures an economy's preparedness to p articipate in 
and support online shopping, there are substantial divides between countries in terms of levels of 
readiness and participation in e -commerce. In the 2020 edition of the index, eight of the top ten 
economies with the highest scores in the inde x were from Western Europe, while the other two were 
high-income economies in Asia -Pacific . 
5.6.  While 3D printing is currently at a nascent stage in developing countries, its market grew 
annually by 22% in 2014 -2018, with estimates that it could potentially re place almost 40% of 
cross-border physical global trade by 2040 if investments in 3D printing are doubled. The most 
affected sectors would include textiles and clothing, footwear, auto -components, toys, mechanical 
appliances, hand tools, etc. – the sectors that generate large -scale employment for low -skilled 
workers and in which most SMEs operate .21 This could have a catastrophic effect on the ability to 
developing countries to protect their nascent domestic digital industries. Developing countries, 
therefor e, need to take a more strategic approach and manage the potential impact of e commerce . 
5.7.  Thus, developing countries, including the LDCs, will also have to quickly build digital 
infrastructure and design digital industrial policies to rebuild their trade an d industry post -pandemic. 
Else, they may lose even their existing export competitiveness . 
DIGITAL TECHNOLOGY TRANSFER  
5.8.  The role of technology in e -commerce is inevitable and seamless. Competitiveness in 
e-commerce depends on access to and the ability to adapt to technological transformations which is 
critical to guarantee success in e -commerce in the competitive digital world . 
5.9.  Digital technology transfers will be pivotal in bridging the digital divide and building the export 
competitiveness of developing countries. The active role of developed countries to reali ze such 
technology transfers will also be crucial. Unless immediate measures are taken to improve digital 
industrialization, the developing countries/LDCs would suffer further resulting in enormous loss of 
employment and economic activities, which would not be sustainable . 
6  GUIDING QUESTIONS:  
1. What steps can be taken to improve digital infrastructure, digital industrialization, and digital 
skills capacity in developing countries, including the LDCs?  
2. How can developed countries support international cooperation to enable developing countries 
to create digital infrastructure, acquire digital skills, achieve growth in digital industrialization to 
reap gains from e -commerce?  
 
20 Digital Economy Report 2021, Cross -border data flows and development: For whom the data flow, 
United Nations Conference on Trade and Development, 2021,  
https://unctad.org/system/files/official -document/der2021_en.pdf.  
21 Rob Davis et al., Reforming the International Tradi ng System for Recovery, Resilience and Inclusive 
Development,  UNCTAD Research Paper No. 65, UNCTAD/SER.RP/2021/8, 2021,  
https://unctad.org/system/files/official -document/se r-rp-2021d8_en.pdf  WT/COMTD/W/264/Rev.1  
 
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  3. How can digital technology trans fers to developing countries, including least developed countries, 
be facilitated to hasten their digitali zation process?  
4. What steps have Members taken in their domestic economies to provide easier market access 
for developing countries' companies in the d igital economy, in keeping with Part IV of the GATT 
[e.g. Article XXXVIII.1a on reducing barriers to products from less developed countries ] and the 
GATS [e.g.  Article IV on increasing participation of developing countries]?  
5. What are the constraints faced by developing countries including LDCs in reaping the benefit of 
e-commerce?  
6. How can the adverse financial implications arising from cross -border E -commerce for developing 
countries be addressed?  
7. What has been the experience of MSMEs who have sold their products through online retail 
platforms over the past four-five years? What favourable  conditions, if any, have Members put 
in place to support sustainable participation of MSMEs in digital trade?  
8. What has been the trend of cross border e -commerce imports by developed countries from 
Africa, South America, South Asia and Southeast Asia? What can be done to improve this trend?  
9. What are the initiatives that Members have implemented to promote technolog y transfer to 
boost digital industrialization and competitiveness?  
10. Which international organizations can the CTD and WTO collaborate with to unpack and address 
the challenges of the digital divide  to ensure inclusive digital industrialization ? 
 
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