The WTO Joint Initiative on e-commerce

Joint Initiatives are a negotiating tool initiated by a group of WTO Members who seek to advance discussions on certain specific issues without adhering to the rule of consensus decision-making involving the whole WTO membership. They are open to any WTO Member. On the occasion of the 11th WTO Ministerial Conference, in 2017, JIs were created on the following issues: JI on e-commerce, JI on investment facilitation for development (negotiations concluded in July 2023); and JI on services domestic regulation (negotiations concluded in December 2021). An informal working group on small and medium-sized enterprises (MSME), and an informal working group on trade and gender were created on the same occasion. In 2020, two new discussions were launched: a structured dialogue on trade and environmental sustainability and an informal dialogue on plastics pollution and environmentally sustainable plastics trade.

Some actors see Joint Initiatives as key mechanisms to make progress on trade liberalization, in a context in which consensus on rulemaking has been harder to achieve on a multilateral basis. They would be a way to reinvigorate the WTO’s negotiating arm. Others argue that Joint Initiatives go against consensus-based decision-making and weaken multilateralism at the WTO. India, South Africa, and Namibia in particular, introduced a communication in February 2021 (WT/GC/W/819.Rev 1), questioning the legality of Joint Initiatives and their outcomes. In December 2023, India expressed concerns once more when discussing the outcomes of the JI on Investment Facilitation for Development (WT/GC/262).

E-commerce discussions in the WTO currently take place in two parallel tracks. The first is known as ‘the multilateral track’, which was launched in 1998, following the Ministerial Declaration on Global Electronic Commerce. The second involves a subset of WTO members, which are currently part of the WTO JI on e-commerce.

The 1998 Ministerial Declaration on e-commerce launched the Working Program on e-commerce (WPEC) and put in place a moratorium on customs duties on electronic transmissions, by stating that Members would “continue their current practice of not imposing customs duties on electronic transmissions”. The moratorium has been renewed roughly every two years at the WTO Ministerial Conference. The last renewal took place in 2022 at the 12th WTO Ministerial Conference. 

The WPEC was mainly designed to build understanding around the trade-related aspects of e-commerce, without a pre-set objective to negotiate new rules. Its main goals are: a) to examine all trade-related aspects of e-commerce; b) to examine the relation between e-commerce and WTO agreements; c) to give consideration to the economic, financial, and development needs of developing countries.

While the WPEC involves all WTO Members and has an exploratory and informative nature, the JSI involves a subset of WTO members and is aimed at achieving a high standard negotiated outcome that builds on existing WTO Agreements and frameworks with the participation of as many WTO Members as possible.  

Over recent years, an increasing number of digital policy issues have been included under trade negotiations on e-commerce at the WTO, and also in the context of Trade Agreements. This reality is reflected in the negotiating agenda of the JSI on e-commerce, which includes not only traditional issues, such as trade facilitation and market access, but also a wide range of digital policy issues, such as data flows, localisation, data protection, cybersecurity and spam.

The themes advanced in members’ proposals have initially been aggregated in six sections in JSI’s first negotiating documents: A. enabling electronic commerce; B. openness and e-commerce; C. trust and e-commerce; D. cross-cutting issues; E. telecommunications; and F. market access. 

In 2022, several changes were introduced to this structure, as could be noticed from the updated negotiating document (INF/ECOM/62.Rev3). There was the exclusion of topic ‘F’ dedicated to market access, and the introduction of an ‘annex’, where articles from various sections were placed. In addition, several topics were relocated in different sections. For example, articles related to the ‘free flow of data’, and ‘data localization’ were placed under “Cross-cutting issues”. In earlier negotiating text versions, they appeared under “openness and electronic commerce”. Ismail provided a comparative analysis between different versions of the negotiating document (Rev.2 and Rev.3), interpreting these changes.  

The table of contents of the negotiating document from November 2023 (INF/ECOM/62/Rev.5) can be seen in the table below. The Annex serves as a record of the achieved progress on these issues, which may be relevant if discussions continue in a second phase. 

Regular updates on the negotiations are issued by the three co-conveners of the JSI (Australia, Japan and Singapore). In November 2023, the co-convenors mentioned that the initiative has achieved “substantial conclusion” on several digital trade rules that “will facilitate electronic transactions and foster an open and trusted digital economy”. 

In December, the co-conveners announced in a press release the “conclusion of negotiations on a number of global digital trade rules”, covering three broad areas: (a) digital trade facilitation; (b) open digital environment; and (c) business and consumer trust. Agreement has been reached in thirteen topics: E-authentication and E-signatures; E-contracts; Paperless trading; Open government data; Online consumer protection; Unsolicited commercial electronic messages; Transparency; Electronic transactions framework; Cybersecurity; Open Internet access; E- Invoicing; Single Windows; Personal data protection. In other topics, consensus was considered within reach: Customs duties on electronic transmissions, Development, Electronic payments, ICT products that use cryptography, and Telecommunications services. 

Provisions on data flows and localization, which have been considered by co-conveners “key to achieving a high-level agreement”, as well provisions on access to the source code, will be left out of the ongoing negotiations, as “they would require substantially more time for discussions as divergent approaches and sensitivities remain”. The decision to postpone the discussion of these topics took place after the US announced that it would withdraw its support for proposals on data flows, localization and source code, in order to allow policy space for domestic regulation of big tech. Commentators dubbed the decision as “​​one of the most dramatic turns in trade policy”, as the US has exerted leadership in data flows and source code-related proposals in the context of the Joint Initiative since 2018.  

In this context, the co-conveners proposed to approach negotiations in phases. The current phase would be focused on finalizing the negotiation of issues in which agreement is within reach. In the next stage, outstanding issues could be discussed. They mentioned that this solution is not without precedent, as “we have seen a similar ‘stages’ approach in the previous negotiations”. This indicates that discussions on e-commerce could continue beyond the achievement of this partial agreement. 

At the end of 2023, discussions focused on e-payments, telecommunications, and information and communication technology products that use cryptography. In January 2024, participants will focus on topics in which agreement is still considered feasible, as well as on horizontal provisions and legal architecture. 

On 26 July, the co-conveners of the Joint Initiative (JI) on e-commerce published a stabilised draft text of an “Agreement on Electronic Commerce“.

The text proposes rules on a range of substantive issues, including:

• Openness and electronic commerce, which includes commitments on customs duties on electronic transmissions; open government data; and access to and use of the internet for electronic commerce.

• Trust and electronic commerce, which covers online consumer protection;
  unsolicited commercial electronic messages (spam); personal data protection; and cybersecurity.

• Telecommunications, which presents a revised version of the Telecommunications Reference Paper
• Cross-cutting topics related to transparency, cooperation, and development.

In addition, the text of the “Agreement on Electronic Commerce” enshrines a commitment not to impose customs duties on electronic transmissions (to be reassessed after five years). Currently, a moratorium on customs duties on electronic transmissions is in place among all WTO members, exempting  digital products, such as online films, music, and software from tariffs (customs duties) as they cross borders. Nevertheless, this WTO-wide moratorium is likely to expire at the next WTO Ministerial Meeting. The inclusion of a moratorium in the e-commerce agreement means that the status quo – the non-application of custom duties – would continue to be the rule among most WTO members, regarless of the expiration of the wider moratorium.