DW Weekly #171 – 2 August 2024
Welcome to another issue of the Digital Watch weekly!
The co-conveners of the World Trade Organization (WTO) Joint Initiative (JI) on Electronic commerce – Australia, Japan and Singapore – have published a stabilised text of an Agreement on Electronic Commerce, a significant milestone after almost seven years of discussions and negotiations.
Either you know exactly what we’re writing about, or it is all gobbledygook to you. Let’s break it down.
What’s a WTO JI? WTO Joint Initiatives (JIs) are a way for a group of World Trade Organization members to move forward on specific issues without waiting for the entire organisation to reach a consensus. They are open to any WTO Member.
What does the WTO JI on Electronic commerce negotiate? This JI tackles a mix of traditional trade issues and modern digital policy challenges. Discussions cover trade facilitation, cross-border data flows, data localisation, access to source code, and net neutrality.
Why is the WTO JI particularly important? So far, e-commerce and digital trade regulations have been handled mainly through preferential trade agreements (PTAs) between countries. However, there isn’t a specific WTO agreement on e-commerce. Creating one would help standardise e-commerce rules globally, making it easier for everyone to do business in the digital age.
What’s in the Agreement on Electronic Commerce? The text contains provisions to:
- Promote easy digital trade within and between countries, including electronic signatures and invoices.
- Make international digital trade more reliable and affordable by working together on cybersecurity risks.
- Permanently ban customs duties on digital content among participating countries.
- Protect online consumers from misleading and fraudulent activities.
- Protect the personal data of workers and consumers
- Help consumers and companies from developing countries participate in digital trade.
- Digitalise the various trading systems to make global trade cheaper, faster, and more secure for businesses.
- Encourage competition in the telecommunications sector by ensuring independent regulators, better access to infrastructure, and market-based frequency band assignments.
What’s missing in the text? Negotiations on crucial digital issues like data flows and source code hit a roadblock when the USA pulled its support to maintain domestic policy flexibility. While data flows are essential for the digital economy, global rules on this matter are unlikely to be agreed upon anytime soon. The co-conveners simply state that ‘participants recognise that some issues of importance to digital trade have not been addressed in this text. Participants will discuss the inclusion of these issues in future negotiations.’
Who’s missing from the deal? The latest draft text, published by the co-conveners, represents 82 out of 91 JI members. However, Brazil, Colombia, El Salvador, Guatemala, Indonesia, Paraguay, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Türkiye, and the USA are still reviewing the text domestically.
What are the next steps? To become the basis for global rules on digital trade among WTO members, the text must be integrated into the WTO legal framework. However, the JI on e-commerce runs into a snag here.
The JIs themselves run into opposition from a number of WTO members who hold that JSIs do not have any legal status because they were not launched based on consensus. Similarly, these countries claim that the outcomes of JIs are not based on consensus and are neither multilateral agreements nor plurilateral agreements as defined in Article IV of the agreement that established the WTO – the Marrakesh Agreement.
If the agreement crosses the finishing line, our colleague Marilia Maciel writes that five changes in the global landscape are important to consider in its implementation. These are rising digital inequality, a shift eastwards in digital trade rule-making, the growing importance of Digital Economy Agreements (DEAs), the uncertain consequences of the re-wiring of Global Value Chains, and the systemic nature of challenges to multilateralism.
Andrijana and the Digital Watch team
Highlights from the week of 26 July-2 August 2024
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