RCEP countries aim to strike a balance on e-commerce ahead of trade deal conclusion

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The Jakarta Post - 18 September 2019

RCEP countries aim to strike a balance on e-commerce ahead of trade deal conclusion
By Dian Septiari

The different levels of digital trade development and readiness among the 16 countries currently negotiating the Regional Comprehensive Economic Partnership (RCEP) have placed e-commerce in a list of top major issues to be finalized in the coming months.

Experts have said that balancing the interest of more advanced nations with those who prefer a more cautious approach to the rapidly evolving sector will be key to wrapping up negotiations for the trade deal by the end of this year.

“The RCEP that we are negotiating basically covers everything, and one of the chapters covers e-commerce,” Indonesia’s lead negotiator, Iman Pambagyo, told reporters on the margins of the Centre for Strategic and International Studies (CSIS) Global Dialogue in Central Jakarta on Tuesday.

“But I see a lot of ambiguity here and there because we don’t have a multilateral discipline that relates to e-commerce yet.”

E-commerce emerged as a late addition to the ambitious RCEP framework, which has been under negotiation for the past seven years, with countries like Japan reportedly pushing for strong cross-border arrangements.

Iman said the proposal had initially faced strong objections from some negotiating countries, resulting in the decision to limit deliberations to transparency and cooperation. But it was only after more confidence in the sector had developed and after multiple rounds of negotiations that the discussion eventually moved toward more meaningful commitments.

“I can say that negotiations have been challenging and discussions are split between those with loftier ambitions and those who remain concerned about the future role of e-commerce in largely agriculture-based economies,” said the Trade Ministry official.

Steven Wong, deputy chief executive of the Institute of Strategic and International Studies (ISIS) Malaysia, said various digital services like fintech, online retail platforms, payment systems and peer-to-peer (P2P) lending have grown rapidly in some ASEAN countries – but not all.

According to an iPrice report on “The Biggest eCommerce Websites and Apps in Southeast Asia – Q1 2019,” there are more than 350 million internet users in Southeast Asia, mostly in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

The report says that e-commerce is the fastest-growing sector in the internet economy, reaching US$23 billion in 2018 and expected to exceed $100 billion in gross merchandise value by 2025.

RCEP members are set to meet again this week in Danang, Vietnam, for the 28th round of negotiations, with the aim of reaching an agreement on e-commerce. In the recent ASEAN Summit in Thailand, leaders mandated the conclusion of the RCEP by the end of this year.

Iman said negotiators aim to at least agree on moderate provisions, noting that unlike the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which consists of mostly developed countries that have a high tolerance for flexible e-commerce provisions, RCEP comprises nations of an extremely diverse level of development.

“We have to strike a balance, so the question becomes how general the provision could be, while at the same time, [addressing] how constructive it should be,” he said.

When concluded, RCEP e-commerce provisions are expected to regulate, among other things, customs and duties, location of computing facilities, disclosure of source codes, cross-border transfers of information by electronic means, and the application or non-application of a related chapter on dispute settlements.

Initiated in 2012, the RCEP is a trade agreement that includes all 10 ASEAN member states as well as China, India, Australia, New Zealand, Japan and South Korea. Together, they represent about 45 percent of the world’s population and a combined gross domestic product (GDP) of $21.3 trillion or around 40 percent of global trade, making the RCEP a highly lucrative deal.

However, disagreements between regional rivals, mainly between China and India over access to India’s giant consumer market, have undercut talks in recent months.

Experts have urged countries to formulate new approaches to economic policy and governance following a rapid increase in connectivity that cuts across borders. However, some developing countries remained reluctant because they don’t know what the future holds for them.

Duangthip Chomprang, director of the Bangkok-based International Institute for Trade and Development, insisted that what was essentially missing in a lot of trade deals was the perceived urgency to shift to digital technologies. One of the main priority issues is to establish interoperability of standards, she said, because various ASEAN and non-ASEAN countries follow different data formats and standards.

But the debate also extends to intellectual property rights.

Intan Ramli, a policy fellow at the Economic Research Institute for ASEAN and East Asia (ERIA), said that in order to encourage trade and investment through the digital economy, provisions on intellectual property rights must find the right balance between securing the rights of IP owners and of the user so as to create a positive ecosystem for innovation.

"Regional organizations must be able to find a balance between pushing competition rules and stimulating overall innovation," she said