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Saudi Arabia is one of around 80 countries that agreed to rules regulating global digital commerce at a recent World Trade Organization (WTO) meeting in Geneva.
The agreement, finalized on Friday, marks the culmination of five years of negotiations between WTO member states.
The agreement aims to establish new standards for digital trade around the world, with key provisions within its scope including the recognition of electronic signatures and the prevention of online fraud.
EU Trade Commissioner Valdis Dombrovskis expressed optimism about the deal's impact. “We have negotiated the first international rules on digital trade,” Dombrovskis said after the deal was signed in Geneva. “This will boost electronic trade, spur innovation and integrate developing countries into the digital economy.”
✅ Historic news from the WTO's Joint Initiative on Electronic Commerce.
We have negotiated the first global rules on digital trade!
This will boost electronic trade, spur innovation and integrate developing countries into the digital economy.
🇪🇺https://t.co/pDE31QtbGL pic.twitter.com/Dx5a15Ohbe
— Valdis Dombrovskis (@VDombrovskis) July 26, 2024
Digital Trade
The agreement mandates the digitization of customs documents and procedures, the acceptance of electronic documents and signatures, and legal protections against online fraud and misleading product claims.
These measures aim to make trade faster, cheaper, fairer, and more secure. Additionally, the agreement aims to limit spam, protect personal data, and provide assistance to least developed countries.
The agreement will benefit consumers and businesses, especially Micro, Small and Medium Enterprises (MSMEs), and will significantly support the digital transformation among the participating countries.
The negotiated rules include:
- Facilitate seamless digital transactions through e-signatures and invoices.
- Strengthening consumer protection will increase confidence in the digital trading environment.
- Enhance the reliability and affordability of the international digital trading environment, including through cooperation on cybersecurity risks.
- Prohibiting tariffs on electronic transmissions is a major commercial priority worldwide.
- Increase participation of consumers and businesses in digital trade in developing countries.
The agreement has broad support from various countries.
The UK welcomed the deal as an important step towards modernising trading practices and protecting consumers. “Once this agreement comes into force, trade will be faster, cheaper, fairer and more secure,” the UK government said.
Australia, Japan and Singapore, who have led the Initiative on Electronic Commerce as co-chairs, expressed satisfaction with the progress made so far. They stressed that the agreement will increase legal predictability and certainty in the growing field of electronic commerce, particularly in the face of increasing regulatory fragmentation.
Developing countries
A key element of the agreement is preferential treatment for developing countries. The text outlines provisions for technical assistance and capacity-building support to help these countries effectively implement the new rules.
It also seeks to make permanent the long-standing suspension of tariff exemptions for electronic transactions, which have been extended at every WTO ministerial conference since 1998 and are set to expire in 2026.
Saudi Arabia is seeing a growth in the e-commerce industry in the post-pandemic era. E-commerce sales through “Mada” cards in the first quarter of 2024 increased by SAR 7.89 billion, a 22% annual growth rate, to reach a total of SAR 44.42 billion. This represents the highest level ever recorded compared to the same period in 2023, when e-commerce sales amounted to SAR 36.53 billion.
In terms of monthly growth, e-commerce sales in the Kingdom of Saudi Arabia increased by 9.2% to reach SAR 16.22 billion in May from SAR 14.85 billion in April 2024.
State-run Saudi Press Agency (SPA)However, these figures do not include credit card transactions.
Next steps
Despite progress, actual implementation of the agreement could take years. Several countries have yet to sign it, including the United States, Brazil, Indonesia and Turkey. The United States has expressed concern that the current document is insufficient, especially regarding key security exceptions.
Observers say that while the agreement is a major step forward, embedding digital trade rules in the WTO's legal framework requires the agreement to be backed by all member states, which could be difficult given some countries' reluctance to support a plurilateral agreement over a multilateral one.
One possible solution would be to move the agreement to a different international organisation, but this would mean abandoning the WTO's mechanisms for settling trade disputes.
The historic agreement on global digital commerce marks a pivotal moment in international trade: by setting new rules for digital commerce, strengthening consumer protections and promoting innovation, it is expected to drive economic growth and digital transformation across participating countries.
Saudi Arabia's engagement underscores the country's efforts to integrate into the global digital economy and support the development of a secure and inclusive e-commerce environment.
Read: MENA region's total e-commerce market expected to exceed $57 billion by 2026
