The World Trade Organization (WTO) is an intergovernmental organisation that deals with the rules of trade among its members. Its main functions include: administering WTO trade agreements; providing a forum for trade negotiations; settling trade disputes; monitoring national trade policies; providing technical assistance and training for developing countries; and ensuring co-operation with other international organisations.
WTO Members have negotiated and agreed upon rules regulating international trade, fostering transparency and predictability in the international trading system. The main agreements are the Marrakesh Agreement Establishing the WTO, the General Agreement on Tariffs and Trade (GATT); the General Agreement on Trade in Services (GATS); and the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS Agreement).
Digital Activities
Several Internet governance and digital trade policy related issues are discussed in the WTO. These include e-commerce, intellectual property (IP), and market access for information and communication technology (ICT) ICT products and services. E-commerce discussions are ongoing under the Work Programme on Electronic Commerce and among a group of members currently negotiating e-commerce rules under the Joint Statement on E-commerce. Discussions focus on several digital issues, including: data flows and data localisation; access to source code; cybersecurity; privacy; consumer protection; and customs duties on electronic transmissions.
As part of its outreach activities, the WTO organises an annual Public Forum, which brings together governments, non-governmental organisations, academics, businesses, and other stakeholders, for discussions on a broad range of issues, including many relating to the digital economy.
Digital policy issues
- E-commerce and trade
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The WTO agreements cover a broad spectrum of trade topics, including some related to e-commerce, which has been on the WTO's agenda since 1998 when the ministers adopted the Declaration on Global Electronic Commerce. The Declaration instructed the General Council to establish a Work Programme on electronic commerce. In that Declaration, members also agreed to continue the practice of not imposing customs duties on electronic transmissions (the ’moratorium’). The Work Programme provides a broad definition of e-commerce and instructs four WTO bodies to explore the relationship between WTO Agreements and e-commerce. The Work Programme and the moratorium have been periodically reviewed and renewed. In December 2019, the General Council agreed to reinvigorate the Work Programme and continue the moratorium until the Twelfth Ministerial Conference. In addition, members agreed to have structured discussions on all trade-related topics of interest brought forward by members, including on the scope, definition, and impact of the moratorium.
At the Eleventh Ministerial Conference in 2017, a group of members issued a Joint Statement on Electronic Commerce (JSI) to explore work towards future WTO negotiations on trade-related aspects of e-commerce. Following the exploratory work, in January 2019, 76 Members confirmed their ’intention to commence WTO negotiations on trade-related aspects of electronic commerce’ and to ’achieve a high standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO Members as possible.’ Negotiations are continuing among 85 Members and are structured under 6 broad themes, namely: enabling digital trade/e-commerce; openness and digital trade/e-commerce; trust and digital trade/e-commerce; cross-cutting issues; telecommunications; and market access. Specific issues under discussion include provisions related to customs duties, paperless trading. cross-border transfers of information, spam, cybersecurity, electronic authentication and electronic signatures, location of computing facilities, consumer protection, protection of personal information, and market access.
- Taxation
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WTO members agreed to a temporary moratorium on the imposition of customs duties on electronic transmissions at the Second WTO Ministerial Conference in the 1998 Geneva Ministerial Declaration. The moratorium has been extended periodically, including most recently in December 2019. While some WTO members argue that the moratorium should be made permanent, others have noted the need to clarify its scope and for further analysis of its impact; for example on development and customs revenues, especially given concerns that more types of physical goods could be digitised or transmitted digitally in the future. Other members have supported a more holistic approach to the moratorium, beyond the revenue implications.
- Access
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Information Technology Agreement (ITA-I and ITA-II)
The ITA-I was concluded by 29 participants in 1996. Through this agreement, participating WTO members eliminated tariffs on several ICT products – including computers and mobile telephones – with the aim to intensify global competition among certain ICT goods allowing for greater access to the Internet and growth of the digital economy, including for least-developed countries. Currently, 82 WTO members are participants in ITA-I, accounting for approximately 97% of world trade in ITA-I products. At the Tenth WTO Ministerial Conference in Nairobi in 2015, over 50 WTO members concluded ITA-II, an agreement expanding the coverage of ITA-I by 201 tariff lines. ICT products such as optical lenses and GPS navigation equipment were added. The rationale of this product expansion was to keep the benefits of tariff elimination in touch with innovation. At present, the ITA-II consists of 55 WTO members, representing approximately 90% of world trade in ITA-II products. The ITA is being discussed in the JSI under the market access focus group.
- Telecommunications infrastructure
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In 1997, WTO members successfully concluded negotiations on market access for basic telecommunications services through the GATS Annex on Telecommunications, which contains provisions to guarantee service suppliers access to and use of basic telecommunications needed to supply their services. Through a reference paper on regulatory principles, members also agreed to safeguard against anticompetitive practices by dominant suppliers of basic telecommunications. Since 1997, an increasing number of WTO members have undertaken commitments on telecommunications. Under the JSI negotiations, participants are discussing a proposal focused on telecommunications services, aiming to update provisions of the reference paper.
- Digital standards
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International standards are important to the global digital economy as they can enable interconnectivity and interoperability for telecommunications and Internet infrastructures. The WTO Technical Barriers to Trade Agreement (TBT Agreement) aims to ensure that technical regulations, standards, and conformity assessment procedures affecting trade in goods (including telecommunications products) are non-discriminatory and do not create unnecessary obstacles to trade. The TBT Agreement strongly encourages that such regulatory measures be based on relevant international standards.
The TBT Committee serves as a forum where governments discuss and address concerns with specific regulations, including those affecting digital trade. Examples of relevant TBT measures notified to or discussed at the TBT Committee include: (i) measures addressing the Internet of Things (IoT) and related devices in terms of their safety, interoperability, national security/cybersecurity, performance, and quality; (ii) measures regulating 5G cellular network technology for reasons related to, among others, national security and interoperability; (iii) measures regulating 3D printing (additive manufacturing) devices; (iv) measures regulating drones (small unmanned aircraft systems) due to risks for humans/consumers, interoperability problems, and national security risks; and (v) measures dealing with autonomous vehicles, mostly concerned with their safety and performance.
- Data governance
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The growth of the global digital economy is fuelled by data. Discussions on how provisions of WTO agreements apply to data flows are ongoing among WTO members. In this context, the GATS is particularly relevant, as it could apply to services such as: (i) data transmission and data processing by any form of technology (e.g. mobile or cloud technologies); (ii) new ICT business models such as infrastructure as a service (IaaS); (iii) online distribution services e.g. (e-commerce market platforms); and (iv) financial services such as mobile payments. The extent to which members can impose restrictions on data or information flows is determined by their GATS schedules of commitments. Under the JSI, proposals on cross-border data flows have been submitted and are being discussed. These proposals envision a general rule establishing free flow of data for the purpose of commercial activities. Proposed exceptions to this general rule are, for the most part, similar to the existing GATS General Exceptions and relate to, for example, protection of personal data, protection of legitimate public policy objectives, national security interests, and exclusion of governmental data. Issues related to data flows have also been raised by members in other contexts at the WTO, especially when national measures adopted for cybersecurity have been considered as trade barriers.
- Intellectual property rights
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The TRIPS Agreement is a key international instrument for the protection of IP and is of relevance to e-commerce. The technologies that underpin the Internet and enable digital commerce such as software, routers, networks, switches, and user interfaces are protected by IP. In addition, e-commerce transactions can involve digital products with IP-protected content, such as e-books, software, or blueprints for 3D -printing. As IP licences often regulate the usage rights for such intangible digital products, the TRIPS Agreement and the international IP Conventions provide much of the legal infrastructure for digital trade.
IP-related issues are also being discussed in the JSI. Submitted proposals include text on limiting requests to the access or transfer of source code. The source code or the data analysis used in the operation of programmes or services is often legally protected by IP law through copyright, patent, or trade secret provisions. The main goal of the JSI proposals on access to source code is to prevent members from requiring access or transfer of the source code owned by a national of another member. Some exceptions to this general prohibition have also been proposed. For example, for software that is used for critical infrastructures and public procurement transactions.
- Arbitration
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One of the core activities of the WTO is to provide a dispute settlement mechanism through which WTO members can enforce their rights under the WTO agreements. A trade dispute arises when a member considers that another member is violating a legal provision or commitment made under any of the WTO agreements. Disputes under this mechanism have involved Internet-related issues, telecommunications services, electronic payment services, IP rights, ICT products, and online gambling. The US – Gambling case concerning the cross-border supply of online gambling and betting services is particularly relevant to e-commerce.
- Cybersecurity
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Cybersecurity issues have been addressed in several WTO bodies. For example, the TBT Committee has discussed national cybersecurity regulations applicable to ICT products and their potential impact on trade. In the TBT Committee, to date, WTO members have raised over 15 specific trade concerns related to cybersecurity regulations. Some of the specific issues discussed include how cybersecurity regulations discriminating against foreign companies and technologies can have a negative impact on international trade in ICT products. Proposals on cybersecurity have also been tabled in the JSI on e-commerce. Discussions have focused on strengthening national capacities for incident response and collaboration mechanisms; encouraging co-operation; and sharing of information and best practices on addressing incidents. Cybersecurity has also been discussed in the context of cross-border data flows and electronic authentication.