Saudi Arabia Joins WTO Historic Agreement on E-commerce

Saudi Arabia has joined around 80 countries in reaching an agreement on Friday regarding rules governing e-commerce.

The historic agreement on global digital commerce is the product of five years of negotiations among members of the World Trade Organization (WTO). It includes recognition of e-signatures, and protection against online fraud.

Digital Products Joint Statement Initiative on E-commerce

On July 26, 2024, Australia, Japan and Singapore issued the Joint Statement Initiative (JSI) on E-commerce, as co-conveners on behalf of the participants. The three countries confirmed that after five years of negotiations, participants have reached a “stabilized text” that reflects a balanced and inclusive outcome.

They added that the agreement will benefit consumers and businesses involved in digital trade, especially MSMEs. It will also play a key role in supporting digital transformation among participant countries.

The negotiations involved 91 countries of the WTO’s 166 member states, including Saudi Arabia, Canada, China, Argentina and Nigeria.

Digital Products Huge Benefits

The agreement will help participant countries by facilitating cross-border electronic transactions, reducing barriers to digital trade, and promoting innovation in e-commerce. Moreover, it will reinforce developing and least-developed countries in implementing the agreement through identifying their needs, and providing technical assistance and capacity building support.

Additionally, the agreement will include provisions to enhance trust in digital trade through reinforcing consumer protection online, and create a more reliable and affordable international digital trade environment. It will also prohibit custom duties on electronic transmissions.

Digital Products International Praise

The historic agreement has received the approval of several countries and international bodies. The European Commission welcomed the E-commerce Agreement, highlighting the EU’s role in negotiating these first global rules on digital trade.

“We are happy to endorse this E-commerce Agreement which represents the first-ever set of global digital trade rules in the WTO. These rules, once integrated into the WTO framework, will be fundamental for the development of global digital trade, setting a common ground and avoiding fragmentation,” said Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade.

He added that the agreement will “benefit businesses and consumers, contribute to integrating developing and least developed countries in the global digital economy, and help bridge the digital divide.”

Dombrovskis encouraged other countries to follow suit. “The EU sees great value in the agreement published today, and will work with all involved parties towards its incorporation into the WTO framework. We call on all WTO Members to do the same,” he said.

Similarly, Britain endorsed the agreement, calling it “groundbreaking.” The UK government said that the agreement will boost global trade in goods, services and information. It will also help to make trade faster, cheaper, fairer and more secure.

Digital Products US Absence

The US didn’t join the E-commerce Agreement. In a statement on the WTO E-Commerce Joint Statement Initiative, the US Ambassador to the WTO, María L. Pagán, said: “The United States remains committed to working with the WTO E-Commerce Joint Statement Initiative (JSI) co-conveners and participants to achieve a high-standard outcome that brings meaningful benefits to workers, businesses, governments, and the public.”

She noted that the text of the JSI “represents an important step forward for the WTO in a sector of growing importance to the global economy while demonstrating the supportive role that JSIs can play in revitalizing the WTO’s negotiating function.”

However, “the current text falls short and more work is needed, including with respect to the essential security exception. We look forward to working with interested Members in finding solutions to all remaining issues and moving the negotiation to a timely conclusion,” she added.

Furthermore, other countries, such as Brazil, Indonesia and Turkey, had some reservations. The new deal may face some challenges to make a formal WTO agreement because this requires consensus among all WTO member countries.

In recent years, the e-commerce sales have been thriving in Saudi Arabia. In the first quarter of 2024, e-commerce sales through “Mada” cards recorded 22% annual growth rate, with an increase of SAR 7.89bn, to reach a total of SAR 44.42bn. This marks the highest level ever, compared to the same period of 2023, where e-commerce sales reached SAR 36.53bn.

Moreover, the “Mada” e-commerce sales recorded a 10% quarterly growth, with an increase of SAR 3.89bn, compared to SAR 40.53bn in the fourth quarter 2023. As for monthly growth rate, e-commerce sales in the Kingdom recorded a 9.2% increase, to reach SAR 16.22bn in May, compared to SAR 14.85bn in April 2024.

According to the Saudi Press Agency (SPA), these figures reflect transactions made with “Mada” cards used for payments through online shopping sites, online applications, and electronic wallets, but they do not involve transactions made with credit cards.

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