How to measure e-commerce exports - the WTO draft handbook

WTO released the draft handbook on measuring cross border e-commerce. For those with shortage of time, I am summarizing key points of our interest here. 

The WTO Handbook on Measuring Digital Trade provides several key insights that are particularly relevant:

1. Statistical Framework for Digital Trade: The Handbook introduces a comprehensive framework to classify and measure digital trade, focusing on transactions that are either digitally ordered or digitally delivered. This framework is crucial for policymakers to understand the scope of digital trade and its implications on traditional trade metrics and policies.
2. Digital Trade's Impact on Policymaking: By providing detailed methodologies for measuring digitally ordered and delivered trade, the Handbook equips policymakers with the data needed to formulate informed trade policies. It emphasizes the importance of adapting trade policies to accommodate the growing digital economy, ensuring they remain relevant and effective in promoting economic growth and development.
3. Role of Digital Intermediation Platforms (DIPs): The Handbook highlights the significant role of DIPs in facilitating digital trade. Understanding these platforms' operations and their economic impact is vital for developing regulatory frameworks that promote fair competition, consumer protection, and data privacy while fostering innovation and growth in the digital economy.
4. International Cooperation and Harmonization: The case studies from different countries underscore the importance of international cooperation and harmonization in measuring digital trade. As digital trade crosses borders effortlessly, a collaborative approach in developing measurement standards and sharing best practices can lead to more accurate and comparable data across countries. This is crucial for international trade negotiations and agreements, especially in addressing issues like cross-border data flows, e-commerce regulations, and digital taxation.
5. Data Integration and New Technologies: The Handbook points to the necessity of integrating data from various sources and leveraging new technologies for better measurement and analysis of digital trade. For someone with your computational analysis background, exploring innovative methods (such as big data analytics, machine learning, and advanced visualization techniques) to analyze digital trade data could provide deeper insights into trends, patterns, and impacts, informing more nuanced policy decisions.
6. Challenges and Future Work: Recognizing the challenges in measuring digital trade, including the fast pace of technological change and the emergence of new business models, the Handbook calls for ongoing research and development in statistical methods and technologies. This aligns with your interest in continuous learning and specialization in international trade, suggesting areas where your expertise could contribute to advancing the field.

How to measure e-commerce exports of the type (goods, physically delivered but online ordered, B2C or B2B) we are interested in: 

The method proposed in the WTO Handbook on Measuring Digital Trade to measure e-commerce exports that are ordered digitally but delivered physically across borders is focused on identifying and quantifying digitally ordered trade transactions. It emphasizes capturing both goods and services that are ordered online (through computer networks) but require physical delivery across international borders. This involves leveraging a variety of data sources to accurately estimate the scale of digitally ordered exports, including:

1. Business Surveys: Enhancing existing business surveys or implementing specific modules in general business surveys to collect detailed information on e-commerce transactions, distinguishing between domestic and international e-commerce activities.
2. Customs Records: Utilizing customs records to identify digitally ordered goods, potentially marked with specific customs procedure codes that indicate an e-commerce transaction. This is vital for capturing low-value trade driven by digital ordering, which might not be fully recorded due to de minimis thresholds.
3. ICT Surveys and Administrative Data: Employing ICT usage surveys and administrative data to gain insights into the prevalence of digitally ordered transactions and the role of digital intermediation platforms in facilitating these transactions.
4. Household Surveys: Conducting household and/or travel surveys to measure e-commerce transactions undertaken by individuals, encompassing both purchases and sales, to ensure a comprehensive understanding of the consumer side of digitally ordered trade.
5. Integration of Data Sources: Recommending the integration of information from various sources, including business surveys, customs data, and ICT surveys, to derive estimates that cover all institutional units and provide a complete picture of digitally ordered trade at the economy level.

This approach aims to address the challenge of accurately measuring digitally ordered trade by combining and enhancing existing data collection efforts, recognizing the importance of capturing the full spectrum of e-commerce activities that cross international borders physically.

 

Specifically about customs procedure, the following is noteworthy from India’s point of view: 

Digitally Ordered Trade chapter states that customs records are the main data source from which to derive estimates of digitally ordered trade in goods. The handbook recommends that customs authorities implement specific customs procedure codes to identify e-commerce/digitally ordered shipments in customs reporting systems.

Some key points:

• China Customs has established specialized procedure codes to identify digitally ordered B2C and B2B goods in customs declarations (see Case Study 1 in Chapter 6).
• Turkish Customs has also developed a methodology using traditional customs records with a specific field added to identify digitally ordered transactions, as well as using electronic customs declarations for low-value digitally ordered trade (see Case Study 5 in Chapter 6).
• The handbook encourages implementation of the WCO Framework of Standards on Cross-Border E-Commerce, including provisions for the identification of e-commerce shipments.
• Statistical compilers are encouraged to work closely with customs authorities to ensure statistical needs are considered when designing customs reporting processes to capture information on digitally ordered goods trade.

So in summary, leveraging customs data by implementing specific e-commerce coding appears to be the primary recommended approach to measure the cross-border physical delivery of digitally ordered merchandise exports. Close collaboration between statistics compilers and customs is needed to operationalize this.

Cross country comparison case studies: 

WTO Handbook on Measuring Digital Trade provides case studies from several countries, showcasing their approaches to measuring digitally ordered merchandise trade. Here's a summary of these country-specific examples:

China

• Methodology: China has developed a methodology for measuring digitally ordered merchandise trade, focusing on e-commerce exports. This involves collecting data from various sources, including customs declarations, surveys, and information from e-commerce platforms.
• Data Sources: The General Administration of Customs of China (GACC) plays a crucial role in data collection, utilizing customs declarations that specifically identify e-commerce transactions. Additionally, surveys targeting businesses engaged in e-commerce and information from major e-commerce platforms are utilized.
• Challenges and Solutions: Addressing the underreporting of e-commerce transactions in customs data, China has implemented specific codes for e-commerce transactions in customs declarations to improve data accuracy.

Jamaica

• Approach: Jamaica's approach to measuring digital trade emphasizes the use of surveys to collect data on e-commerce activities. The focus is on understanding the role of digital platforms in facilitating trade and capturing the value of digitally ordered goods and services.
• Implementation: The Statistical Institute of Jamaica (STATIN) and the Bank of Jamaica (BOJ) collaborate to conduct surveys and analyze data on digital trade, including both exports and imports facilitated through digital platforms.

Spain

• Data Collection: Spain has taken steps to include questions related to e-commerce in existing surveys conducted by the National Statistics Institute (INE). These surveys aim to capture information on digitally ordered transactions by businesses and consumers.
• Integration of Data: Efforts are made to integrate data from different sources, including business and household surveys, to provide a comprehensive view of the e-commerce landscape in Spain.

Türkiye

• Comprehensive Measurement: Türkiye's strategy includes the use of customs data and business surveys to measure e-commerce transactions. The Turkish Statistical Institute (TurkStat) and the Ministry of Trade are involved in data collection and analysis.
• Customs Data Enhancement: Similar to China, Türkiye has made adjustments to customs procedures to better identify and track e-commerce transactions, facilitating more accurate measurement of digitally ordered trade.

These case studies illustrate the diversity of approaches taken by countries to measure digitally ordered trade. Each country utilizes a combination of customs data, business and household surveys, and information from digital platforms, tailored to its specific context and available resources. The common goal is to enhance the understanding of digital trade's impact on the economy and to inform policy-making with accurate data. 

On the statistics collection, however, the Handbook on Measuring Digital Trade covers all types of e-commerce and digital trade statistics beyond just digitally ordered goods that are physically delivered across borders that we have focussed. The key categories discussed include:

1. Digitally ordered trade (Chapter 3): This includes both goods and services that are ordered digitally, regardless of how they are delivered. The Handbook discusses using not just customs data, but also enterprise surveys (including ICT usage surveys), household surveys, and postal data to measure digitally ordered trade.
2. Digitally delivered trade (Chapter 4): This focuses on services that are both ordered and delivered digitally, such as streaming services, cloud computing, and other digital services. The Handbook recommends using international trade in services surveys, as well as exploring the potential of using ICT surveys, VAT data, and ITRS data to measure digitally delivered services trade.
3. Digital intermediation platform (DIP) enabled trade (Chapter 5): This covers transactions that are facilitated by digital platforms, which are increasingly important in e-commerce. The Handbook discusses identifying DIPs, measuring their transactions (including fees), and properly attributing these in trade statistics.
4. Broader conceptual framework (Chapter 2): The Handbook provides a conceptual framework for digital trade that goes beyond just e-commerce. It considers the nature of transactions (digitally ordered and/or digitally delivered), the products involved (goods and services), and the actors (businesses, households, governments, etc.).
5. Case studies (Chapter 6): The case studies provide examples of how some countries (China, Jamaica, Spain, Türkiye) are approaching the measurement of various aspects of digital trade, including digitally delivered services trade and the role of digital intermediation platforms.

So while digitally ordered goods that are physically delivered is an important component, the Handbook takes a comprehensive view of digital trade, considering digitally delivered services, the role of platforms, and the broader conceptual issues in measuring the digital economy.