China’s e-commerce industry is increasing its influence on global governance and the formulation of global trade regulations.
In March 2016 at the Boao Forum for Asia in Hainan province, the Alibaba Group Chairman Jack Ma proposed an Electronic World Trade Platform (EWTP), which came to be included on the agenda at the 2016 G-20 summit as part of the Strategy for Global Trade Growth.
Alibaba’s primary purpose behind the initiative is to provide parties often overlooked in business dealings — small- and medium-sized enterprises (SMEs), developing countries, women, young people — with more convenient access to the global market by allowing them to buy and sell products and services internationally from their mobile phones.
This would give new impetus to SMEs and hopefully alleviate unemployment rates among women and young people. Alibaba’s ultimate goal is to bring trade back to its roots by taking it away from political interference. However, Ma was careful to classify the EWTP as a platform, not a trade organization.
Under the EWTP, Ma advocates establishing a new international trade code that balances the interests of multiple parties. Businesses should be allowed to trade freely, with commerce as the primary driving force: nongovernmental organizations, governments, and individuals will participate in the process and subsequently make their recommendations to governments and international organizations. This process should occur following a careful review of existing international regulations, agreements, and function under the scope of e-commerce.
Though the initiative is at present still just an idea and thus lacking a precise legal framework, I am confident that Chinese businesses will push to implement the proposal for several reasons.
First, there is a huge demand for e-commerce in the Chinese market. The rapid growth of the country’s economy has helped facilitate a sharp rise in disposable income for the average Chinese citizen and an expansion in the consumer market. Due to limited domestic resources there is huge potential and enthusiasm from the Chinese side in cross-border e-commerce.
Second, cross-border e-commerce as it stands is limited by multitudinous issues, including taxation, licensing, standards, security, and financing. These greatly increase associated costs and hamper the potential for many goods to become tradable on the global market. In order for Chinese e-commerce to further develop, it is essential to keep pushing for standardized and perfected international regulations.
Third, advancements in Chinese internet technology have made it possible for an increasing number of SMEs and individuals to enter into the world of global e-commerce. The range of products traded across the world has been expanding rapidly in recent years. Thus, Chinese e-commerce companies have not just the means but also the ambition to establish the EWTP. But what do other G-20 nations see in this platform?
Globally, SMEs are playing an increasingly important role in driving economic growth, social innovation, and providing employment opportunities. These enterprises are the main focus of the EWTP. With the new regulations, the proposal hopes to lower the costs for SMEs entering the global market and stimulate their desire to innovate, greatly increasing employment rates.
Ma believes that the EWTP will be an ongoing experiment. As opposed to other trade partnerships, where strict regulations are typically agreed on in advance, his idea is for businesses to begin trading from the outset in a loose framework.
Problems that arise should be solved on a case-by-case basis with the aim of reaching an equilibrium in which all parties ultimately benefit. Relevant regulations will then be formulated and implemented on the basis of these real-life scenarios. This approach would enable countries to do away with the reservations that normally arise when regulations have to be negotiated in advance.
Nevertheless, establishing the EWTP will be no easy feat. Judging by the articles governing e-commerce in the Trans-Pacific Partnership — the current benchmark for global e-commerce regulations — many issues are extremely hard to resolve, like nondiscrimination, free flow of information across borders, and location of data storage.
However, as time passes and ideas evolve, problems that seem insurmountable now may prove easily resolved in the future. Furthermore, if the EWTP is adopted, it will have a huge impact on Chinese businesses, since they will likely have a strong role to play in formulating the international standard for cross-border e-commerce.
A Chinese version of this article first appeared in Sixth Tone’s sister publication, The Paper.
(Header image: An employee works at an Alibaba Group warehouse on the outskirts of Hangzhou, Zhejiang province, Oct. 30, 2014. Carlos Barria/Reuters/VCG)