The World Trade Organization (WTO) must continue challenging traditional thinking in trade facilitation. That is the message you get when combining the conclusions of a WTO working paper with this week’s presentation by Hanne Melin of eBay’s Public Policy Lab in Geneva.

The working paper, released on 7 April, describes how a new and inclusive mentality secured the successful outcome of the WTO trade facilitation negotiations. The following day, Hanne Melin spoke at a conference organized by the International Chamber of Commerce (ICC) on the topic “facilitating trade in the digital economy”. She used the same terms – new and inclusive – to describe the very landscape that trade facilitation measures must cater for.

At the Bali Ministerial in December last year, the WTO members concluded difficult negotiations for a trade facilitation agreement. The agreement commits the members to simplify and modernize customs procedures and make them more transparent. eBay Inc. is a strong supporter of trade facilitation and this agreement. 

The work to ensure the entry into force of the Bali agreement and its efficient operation has started. This will include technical assistance to help developing countries build up capacity to implement the agreement.

Now, it is at this stage that the Bali agreement will become real for people: when small business owners, entrepreneurs and individuals hear about and then start feeling the efforts at national level to streamline the administrative processes they come into contact with when selling to or buying from foreign markets.

The right mindset is therefore called for. This is a mindset that recognizes the diversity of today’s trade. The Internet and digital services have transformed the global trading landscape by opening it up to - also - small businesses, consumers, remote locations, emerging and developing economies. See our Commerce 3.0 research findings.

Not only do these new trade actors look different to the traditional large corporation exporters, they behave differently: small technology-enabled traders transact directly with customers in on average 20 to 40 different markets; they sell different categories of products, specializing only as they grow; and a significant proportion of them are newcomers.

Importantly, this means that when designing and implementing trade facilitation measures as provided for by the agreement, such as trusted trader programs (authorized economic operators) and risk management systems, the characteristics of “technology-powered trade” must be fully reflected. Otherwise, the Bali agreement will come to facilitate only a part of today’s trade.

At this week’s ICC conference, Hanne Melin described some of the characteristics that ought to influence trade facilitation measures:

• Many to many: Technology-powered trade enables all firms to trade directly with customers worldwide.  Our most recent Commerce 3.0 report finds that 98% of “commercial sellers” using the eBay marketplace in India export. Those firms sell to around 200 countries and consumers in India export through eBay from 141 countries.
• Randomness: Technology-powered trade is driven by the consumer as the fixed cost to enter a new market or into a new trading relationship are low. See research by Lendle and Vezina (2013) on destination-specific costs in trade.
• Limited resources: The huge promise of technology-powered trade is the fact that it opens up the global economy to small firms. We are witnessing the “rise of the micro multinational”. However, as expressed by DG Azevêdo, multinationals are “geared up to deal with the complexities of breaking into new markets” but “SMEs don’t have that capacity”.
• Little experience: Technology-powered trade is to a larger degree than traditional trade driven by newcomers. The share of newcomers in exports is on average 26% across the eight emerging and developing countries we have studied – compared to the typical 5% in traditional markets. By their very nature, those firms have little to no experience in the administration, formalities and procedures of global exporting.

The conclusions of the WTO working paper suggest that there is indeed ground for implementing and operating the trade facilitation agreement based on a new mindset. The author Nora Neufeld describes how the negotiations leading up to Bali broke with “conventional WTO wisdom” by, first, allowing developing countries to tailor how they will implement the deal and, second, being carried out in an open-ended, inclusive setting and a bottom-up approach.

Neufeld finds that traditional thinking has now been challenged at the negotiation stage. This movement should continue to the operation and implementation stage. Shaping a 21^st Century WTO wisdom should include the goal of catering to the diversity of today’s trade in terms of the richness of patterns and actors. That will help connect the WTO’s work with the people it exists to serve.