Digital trade refers to commerce that is enabled by electronic technologies. It happens across all sectors of the economy and is highly important for the European industry.
The global e-commerce market continues to grow at a fast pace. Globally, e-commerce sales were estimated at €3.2 trillion in 2019, with around 1.5 billion people shopping online. As the EU is the world’s largest exporter of services, it can greatly benefit from the opportunities of digital trade.
Modern trade is to a very high extent enabled by digital technologies. For example
- banks rely heavily on the international transfer of data
- agricultural commodity traders use e-signatures to conclude international purchases
- manufacturers, freight and logistics enterprises can track and improve the performance of their machines and vehicles across the planet thanks to electronic data transfers
Software-related services represent an increasing share of the revenues of companies worldwide, and this trend is set to continue. The "Internet of Things" is all about capturing the opportunities created by combining sensors and internet-enabled devices, large datasets, and high performing computing capabilities.
Smaller companies have greatly increased their participation in international trade transactions using the Internet to connect with customers and suppliers, provide information, take and place orders, and facilitate the delivery of products and services.
EU policy on digital trade
The importance the EU attaches to digital trade is reflected both in its bilateral trade negotiations and in the World Trade Organisation.
In bilateral negotiations, the EU seeks to establish horizontal disciplines that are indispensable for the good functioning of online trade and that apply across the board to online trade in goods, services, public procurement, etc. The overall goal is to
- ensure predictability and legal certainty for businesses
- ensure a secure online environment for consumers
- remove unjustified barriers
In the World Trade Organisation, over eighty members are engaged in negotiations on e-commerce. The EU sees this initiative as a unique opportunity to deliver long overdue trade policy responses and aims at negotiating a comprehensive and ambitious set of rules enhancing both domestic and global e-commerce.
Trade in digital services embedded in a product
Trade in services is growing in importance, not only in intangible form but also in tangible form, i.e. through incorporation of such services in a final product. The phenomenon of “servicification of manufacturing”, which results in “embedded services”, affects a growing share of trade of goods. An example of such “embedded services” is software which travels across the border as a component of many goods, in particular in the automotive sector.
The growing demand for green goods will increasingly require advanced technology that will include many more “smart” processes and software.
The EU is striving to facilitate trade in such goods, including through the use of appropriate customs procedures that will allow for duty free treatment of services that are embedded in a final product.
Selling goods or services on-line
Trade today is greatly facilitated by online platforms for e-commerce. These can be either
- individual websites such as online shops
- hosted platforms, such as online marketplaces where a firm offers an interface and usually back-office software for different sellers and buyers
E-commerce platforms make trading easier because
- buyers and sellers in different countries can contact each other easily
- sellers can advertise and offer their goods and services to many potential customers
Online marketplaces offer a greater choice to customers as they can search for and compare products or services from different sellers.
Customers can be either end-users (natural persons or firms) or resellers.
If you want to sell your product or service via such online channels to customers in markets outside the EU, it is necessary to check the exporting requirements as you would for traditional sales channels.
When selling small quantities to end-users it is important to inform yourself about de minimis rules. These often exempt low-value items from tariffs and have only minimal formal requirements regarding paperwork.
Depending on the products or services you want to sell, there may be additional requirements to check. For example, you will need to consider questions about
- the payment gateways used online
- data privacy requirements in your target market and the cross-border transfer of data
- how to handle warehousing and logistics
- consumer protection and product safety rules
- intellectual property rights
- VAT rules
- costs of postal/courier services etc.
You can contact chambers of commerce, export promotion agencies, consultancies or similar institutions for help in this process. The Enterprise Europe Network also offers a general in Europe which includes information on overseas markets.