Saudi Arabia joins global e-commerce agreement

Saudi Arabia, is among approximately 80 countries, who have agreed to rules for governing global digital commerce (e-commerce) at a recent World Trade Organization (WTO) meet, in Geneva.

This agreement, finalised on Friday, marks the culmination of five years of negotiations among members of the WTO.

The deal brings under its ambit, critical provisions such as the recognition of electronic signatures, and protections against online fraud, and aims to set a new standard for digital trade worldwide.

EU trade chief Valdis Dombrovskis expressed optimism about the agreement’s impact. “We negotiated the first global rules on digital trade,” Dombrovskis said after the deal was struck in Geneva. “This will facilitate e-transactions, boost innovation, and integrate developing countries into the digital economy.”

✅ Historic news from the WTO’s Joint Initiative on Electronic Commerce.

We negotiated the first global rules on digital trade!

This will facilitate e-transactions, boost 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 digitalisation of customs documents and processes, the recognition of electronic documents and signatures, and legal safeguards against online fraud and misleading claims about products.

These measures aim to make trade faster, cheaper, fairer, and more secure. Additionally, the agreement seeks to limit spam, protect personal data, and offer support to least-developed countries.

This agreement is poised to benefit consumers and businesses, particularly Micro, Small, and Medium Enterprises (MSMEs), and will significantly support digital transformation among participating countries.

The negotiated rules include:

• Promoting seamless digital trade through electronic signatures and invoices.
• Enhancing trust in the digital trade environment by strengthening consumer protection.
• Making the international digital trade environment more reliable and affordable, including collaboration on cybersecurity risks.
• Prohibiting customs duties on electronic transmissions, a significant commercial priority globally.
• Facilitating the participation of consumers and companies from developing countries in digital trade.

The agreement has received widespread support from various countries.

The UK hailed it as a significant step toward modernising trade practices and protecting consumers. “Once in place, the deal will make trade faster, cheaper, fairer, and more secure,” the UK government stated.

Australia, Japan, and Singapore, which have been leading the ‘Initiative on Electronic Commerce’ talks, as co-conveners, expressed satisfaction with the progress made. They emphasised that the agreement would enhance legal predictability and certainty in the growing e-commerce sector, particularly amid increasing regulatory fragmentation.

Developing countries

A key component of the agreement is the preferential treatment for developing countries. The text outlines provisions for technical assistance and capacity-building support to help these nations implement the new rules effectively.

It also aims to make permanent a long-standing moratorium exempting electronic transactions from customs duties, which has been extended at each WTO ministerial meeting since 1998 and is set to expire in 2026.

Saudi Arabia has seen its e-commerce industry grow in the post-pandemic era. E-commerce sales through the “Mada” cards in Q1 2024, saw a 22 per cent annual growth rate, an increase of SAR7.89bn, reaching a total of SAR44.42bn. This represents the highest level ever, compared to the same period in 2023, when e-commerce sales were SAR36.53bn.

In terms of monthly growth, e-commerce sales in the kingdom recorded a 9.2 per cent increase, reaching SAR16.22bn in May, compared to SAR14.85bn in April 2024.

According to the state-run Saudi Press Agency (SPA), these figures do not include transactions made with credit cards.

Future steps

Despite the progress, the actual implementation of the agreement could take years. A few countries, including the US, Brazil, Indonesia, and Turkiye, have yet to sign on. The US has expressed concerns that the current text falls short, particularly regarding essential security exceptions.

Observers note that while the agreement represents a significant step forward, incorporating the digital trade rules into the WTO legal framework will require consensus backing from all members. This could be challenging, given the reluctance of some countries to endorse plurilateral agreements over multilateral deals.

One potential solution could be moving the agreement to another international body, although this would mean forgoing the WTO’s mechanism for resolving trade disputes.

The historic agreement on global digital commerce marks a pivotal moment in international trade. By setting new rules for digital transactions, enhancing consumer protection, and fostering innovation, it promises to drive economic growth and digital transformation across participant countries.

Saudi Arabia’s involvement underscores its commitment to integrating into the global digital economy and supporting the development of a secure and inclusive e-commerce environment.

Read: Total e-commerce market value in MENA region to surpass $57bn by 2026