Fueling Digital Trade in Mercosur: A Regulatory Roadmap
Date
Oct 2018
Mercosur members have grown into Latin America’s digital leaders in the past decade. Online sales have grown much faster than national economies, retail, or foreign trade. Brazil generates 60 percent of Latin America’s ecommerce purchases and is home to such ecommerce powerhouses as B2W, Argentina has produced dozens of startups such as Mercado Libre that have grown into global technology companies, and Buenos Aires and Montevideo are booming as regional startup hubs. Regional tech events bring habitually together thousands of ecommerce companies and tech entrepreneurs with first-rate foreign speakers.
Mercosur member countries’ rapid transformation into digital economies is in many ways a staggering for a region that as for decades been known primarily for its commodities and, in the case of Brazil, heavy manufactures. Digitization has changed the way people in Mercosur countries shop, bank, and communicate. More recently, it has changed the prospects of the region’s trade. Digital trade – trade in goods and services sold online and across borders – appears to have grown much faster than regional overall trade.
The next frontier in the region’s digitization must be regional integration. Indeed, most digital sales and purchases in Mercosur countries are still domestic; digital trade in the region is still quite nascent. One reason is that the regional economies have yet to attain regulatory coherence that would enable digital companies and online sellers to seamlessly operate across the regional market. Mercosur governments have in some cases widely differing visions and proposals on such key domestic regulations as data privacy and transfer, over the top rules regulating online services and audiovisual productions, Internet companies’ legal liability for online content, and taxation of online sales. This is an area where Mercosur governments can make a difference: work together to create the right conditions for Mercosur region’s digital companies and online sellers to grow and scale their sales not just in their domestic markets, but in the broader intra-regional market.
The purpose of this report is to provide a regulatory roadmap that helps Mercosur region’s policymakers and business leaders in this key juncture to unlock digital trade in goods and services as an engine of regional trade and job-creation. The report pays particular attention to frameworks and policies that enable Mercosur region governments best help SMEs that sell goods and services online to grow, export, and create jobs. This report draws on new interview and survey data on the way firms in the region leverage ecommerce, and on the enabling environment for ecommerce, and puts forth policy recommendations.
Mercosur member countries’ rapid transformation into digital economies is in many ways a staggering for a region that as for decades been known primarily for its commodities and, in the case of Brazil, heavy manufactures. Digitization has changed the way people in Mercosur countries shop, bank, and communicate. More recently, it has changed the prospects of the region’s trade. Digital trade – trade in goods and services sold online and across borders – appears to have grown much faster than regional overall trade.
The next frontier in the region’s digitization must be regional integration. Indeed, most digital sales and purchases in Mercosur countries are still domestic; digital trade in the region is still quite nascent. One reason is that the regional economies have yet to attain regulatory coherence that would enable digital companies and online sellers to seamlessly operate across the regional market. Mercosur governments have in some cases widely differing visions and proposals on such key domestic regulations as data privacy and transfer, over the top rules regulating online services and audiovisual productions, Internet companies’ legal liability for online content, and taxation of online sales. This is an area where Mercosur governments can make a difference: work together to create the right conditions for Mercosur region’s digital companies and online sellers to grow and scale their sales not just in their domestic markets, but in the broader intra-regional market.
The purpose of this report is to provide a regulatory roadmap that helps Mercosur region’s policymakers and business leaders in this key juncture to unlock digital trade in goods and services as an engine of regional trade and job-creation. The report pays particular attention to frameworks and policies that enable Mercosur region governments best help SMEs that sell goods and services online to grow, export, and create jobs. This report draws on new interview and survey data on the way firms in the region leverage ecommerce, and on the enabling environment for ecommerce, and puts forth policy recommendations.
