Saudi Arabia Participates in Recent WTO Ecommerce Agreement

Saudi Arabia was among 91 members the World Trade Organisation (WTO) to participate in agreeing a new multilateral E-commerce Agreement on 16 July, which represents a framework for the first global rules on digital trade after five years of dedicated negotiations.

Once integrated into the WTO legal framework, it will benefit both consumers and businesses, and support digital transformation among participating WTO Members by facilitating cross-border electronic transactions, reducing barriers to digital trade and promoting innovation in e-commerce.

Digital Trade accounts for around 25% of all international trade and has been growing at a faster pace than traditional trade. Saudi Arabia has seen significant growth in its e-commerce industry, with e-commerce sales through ‘Mada’ cards achieving an annual growth rate of 22%, with an increase of approximately SAR7.89 billion (USD2.1 billion) to reach a total of SAR44.42 billion in the first quarter of 2024.

This compares to SAR36.53 billion in the same period of 2023, with the number of executed transactions amounting to over 263 million. This marks the highest level ever, according to the statistical bulletin for May issued by the Saudi Central Bank (SAMA).

‘Mada’ is the major payment system in Saudi Arabia. The sales include transactions made with Mada cards used for payments and purchases through online shopping sites, electronic applications and electronic wallets, but they do not include transactions made with credit cards.

The negotiated E-commerce Agreement is a balanced, inclusive, and commercially significant agreement. It is also of strategic importance for the WTO. It will benefit consumers and businesses involved in digital trade, especially SMEs, from both developed and developing countries.

The negotiated E-Commerce Agreement includes a set of ground rules on digital trade:

• Initiatives to promote seamless digital trade both within and across borders, including on electronic signatures and electronic invoices.
• Provisions to improve trust in the digital trade environment for both consumers and businesses, notably by strengthening consumer protection online.
• Provisions to make the international digital trade environment more reliable and affordable, including collaboration on cybersecurity risks.
• A prohibition of customs duties on electronic transmissions, which is of great commercial importance and is a key priority for industry worldwide.
• Initiatives to facilitate participation of consumers and companies from developing countries in digital trade.

Saudi Arabia and other participants of the Joint Statement Initiative will take necessary steps towards integrating the E-commerce Agreement into the WTO rulebook, which will require consensus by all WTO Members.

The negotiations started formally in January 2019, when 76 WTO members confirmed their intention to “seek to achieve a high standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO members as possible”.

Since then, additional WTO members have joined the initiative, bringing the total to 91 participants, who collectively account for over 90% of global trade. Participation remains open to all WTO members. The initiative is chaired by Japan, Australia and Singapore, acting as ‘co-convenors’.

“The agreement stipulates that customs documents and processes should be digitalised, e-signatures and documents should be recognised, and that legal safeguards should be implemented in order to combat online fraud and misleading claims,” said Martin Zubeldia, Business Development Manager at Sovereign. “It looks to make international trade more efficient, cost effective, fair and secure.”