African Group will not negotiate e-commerce rules at WTO
The African Group of countries has opposed moves to reorient ongoing WTO discussions on electronic commerce towards crafting multilateral disciplines in this sector.
by D. Ravi Kanth
GENEVA: The African Group on 5 October fiercely rejected proposals by major industrialized countries and their allies in the developing world for changing the structure of the current electronic commerce work programme so as to establish a separate working group at the WTO’s eleventh Ministerial Conference in Buenos Aires, trade envoys told the South-North Development Monitor (SUNS).
In one of the strongest messages delivered at the WTO, the African Group said unambiguously that it will “not negotiate multilateral rules on e-commerce, or agree to a time-based decision to move in this direction.”
Many developing countries, including India, as well as the least-developed countries (LDCs) endorsed the position adopted by the African Group.
However, a group of industrialized countries and their allies in the developing world pressed ahead with their proposal for a new mandate on e-commerce (see following article).
Separately, Russia has circulated a draft ministerial decision to be considered at Buenos Aires for establishing “a Working Group on Electronic Commerce under the auspices of the General Council to perform such functions as may be necessary to ensure efficient continuation of work on e-commerce issues and to provide Members with the appropriate forum for discussions on e-commerce issues and its development, including the possibility of developing international rules.”
The way forward
The chair of the WTO’s General Council, Ambassador Xavier Carim of South Africa, convened the meeting on 5 October to discuss the way forward in e-commerce, including the current moratorium on import duties for e-commerce transactions.
Carim said that he had held consultations with 39 delegations to elicit members’ views on four questions:
i. What are your delegation’s views on the future of the Work Programme? Would we be able to recommend to Ministers that the current Work Programme be continued in its current form?
ii. With regard to the moratorium, what is your delegation’s view on its possible renewal? What do you think we can agree on as a recommendation to Ministers?
iii. What are your delegation’s views on a possible negotiating mandate on e-commerce? Would your delegation support the proposals for a negotiating mandate as expressed in two recent proposals?
iv. What are your delegation’s views on establishing a horizontal forum for discussions as raised in some recent submissions?
On the existing moratorium for not imposing customs duties on e-commerce transactions, the chair said “some delegations stated their preference for a longer-term moratorium or a permanent one.”
Many industrialized countries as well as some developing countries like Korea, Hong Kong (China) and Singapore had said repeatedly during the previous meetings that there should be a permanent moratorium.
Given the difficulties in reaching consensus on the permanent moratorium during the next two months, the proponents said they are ready “to accept, at a minimum, a 2-year extension”, the General Council chair said.
But, “others raised concerns about the moratorium notably about costs related to revenue foregone or increased imports”, the chair said.
“One delegation,” according to the chair, “noted that an extension should not be seen as given.”
Significantly, “one delegation did express the view that the moratorium should lapse at the end of the year”, the chair pointed out.
Carim said “most delegations were prepared to accept a 2-year extension, as in the past, with several recalling the link to the moratorium on non-violation complaints in the TRIPS context.”
(At a separate meeting on 6 October, the US said that there is no linkage with the moratorium on non-violation complaints in the TRIPS context, according to an African trade official.)
Coming back to the work programme on e-commerce, the chair said the views expressed by members were varied.
“Some suggested that it was ineffective and should be replaced by a new institutional arrangement to provide a locus for future discussions on e-commerce,” the chair said.
“Another delegation indicated that if the work programme is considered to be ineffective, it could be terminated and not replaced by any new arrangement,” Carim added.
In sharp opposition to changing the work programme, many delegations would like to see it “continue in its current exploratory, non-negotiating bottom-up manner”, the chair said.
Many members said “discussions have not yet been exhausted and many questions on the table remained unanswered”, Carim maintained.
Other members, according to the chair, “suggested that the Work Programme should evolve to address current realities and, in their view, simply ‘rolling over’ the current Work Programme would not suffice.”
They suggested “the Work Programme continue but with more focused discussion on issues of interest to Members including those raised in submissions, as well as the wide-ranging issues around development and e-commerce, the role of the WTO in e-commerce and the relevance of existing WTO agreements.”
Many members also supported “more horizontal exchanges on e-commerce, notably to discuss cross-cutting issues.”
Members also differed on how to conduct horizontal exchanges as some members said there is “no need to create a new structure and they were concerned about diverting attention from substance to structure”, the chair said.
Effectively, many countries want the existing institutional structure of the work programme to continue as it allows “for horizontal discussions under the auspices of the [General Council]”, and members “simply need to effectively utilize the existing structure.”
Members remained sharply divided on “a possible recommendation to Ministers involving negotiations on rules, even at some future date.”
Russia has indicated that “the ministerial decision should not only establish a working group on e-commerce, but also that the decision should empower the working group to begin preparing the ground for negotiations.”
But a large majority indicated that “they would not agree to any reference to negotiations in a recommended decision for Ministers.”
“In their view, it is premature to decide on negotiations given the different levels of development and the digital divide,” the chair said.
Carim said “while several delegations expressed their readiness to negotiate rules, some were mindful that a negotiating mandate may not be possible at MC11.”
“Thus, they were more tentative, suggesting that the ministerial decision only leave open the possibility for negotiation sometime in the future, perhaps, in one or two years,” the chair noted.
Further, a few members “cautioned against pressing too aggressively in the short time we have left, or we risk closing off all dialogue on e-commerce.”
Despite the entrenched positions and differences among members on e-commerce, the chair said “the immediate challenge now is to shift gear, adjust our approach, and begin to work towards preparing a draft decision for Ministers.”
“Our objective should be to have an agreed draft decision, as we have done in the past, in Geneva, before proceeding to the ministerial conference, and this has to be done in time for the last General Council meeting at the end of November,” Carim pointed out.
The draft decision on e-commerce, according to the chair, could contain the following elements:
A. The possibility of a two-year extension of the moratorium appears to have drawn the most support. Those that want a longer term or permanent moratorium and those opposed have expressed some willingness to accept a two-year renewal. However, members will need to reconcile the view expressed by one delegation that the moratorium simply lapses as well as take into account the link that has been made to the TRIPS moratorium.
B. Members will need to reconcile the different views expressed on the future of the current work programme. [Many members want it to continue as it is, others want it adjusted, while a few members believe it has become ineffective and should be terminated. If the work programme is to be continued, as most members appear to want, does it continue on its current trajectory or does it evolve and, if the latter, do we agree to more focused discussion on specific issues and/or encourage more horizontal discussions? If we want more focused discussion on specific issues, we may have to spend some time to agree on which issues to specify.]
C. If members agree to strengthen the possibility for more horizontal discussions, we will have to decide whether this is pursued on the basis of the current institutional setup, under the auspices of the General Council, or through the establishment of a new working group or some other institutional structure.
The chair said “the possibility of including a reference to negotiating e-commerce rules in a Ministerial decision may require particular focus as positions are quite polarized as I heard them.”
In response to the chair’s exhaustive summary of his discussions with 39 countries, Rwanda, on behalf of the African Group, said the Group “will not agree to change the structure of the current Work Programme to establish a separate Working Group, or to negotiate multilateral rules on e-commerce, or agree to a time-based decision to move in this direction.”
Trade ministers of the African Group, in their recent meeting, had called for continuing the “discussions on e-commerce under the current Work Programme.”
The African trade ministers said it is “premature to begin negotiations on multilateral rules on e-commerce.”
Consequently, said Rwanda, the African Group wants to reaffirm “the comprehensive framework set out in the current Work Programme.”
The 1998 work programme, according to the African Group, “covers a broad range of issues for technical examination within the scope of existing agreements and the WTO framework in the four relevant bodies.”
Further, it provides “for a horizontal process to deal with issues that have matured in the technical bodies, examines trade-related issues of a cross-cutting nature, as well as the moratorium.”
Rwanda said “the drafters of the Work Programme, back in 1998 to 2015 intended for the work to be bottom-up, exploratory in nature, and for technical discussions within the scope of existing agreements to be held in regular bodies mandated to administer the relevant agreements.”
“We do not think that the discussions have evolved in any substantial manner to justify a change in structure, or to move in a direction to negotiate rules,” the African Group said.
The African Group underscored the need for addressing “the unresolved issues, as well as the development perspectives of e-commerce such as implementing digital industrial policies, narrowing the digital and technological divide, and the preservation of digital rights.”
It called for a “Digital Industrial Policy and Development”, specifically for examining issues relating to infrastructure, connectivity, competition and regulatory capacity.
The African Group posed the following questions for members to consider at this juncture:
l What is required to build the capabilities of developing and least-developed countries so that they can effectively participate in cross-border e-commerce?
l What specific government measures can be employed to support the development of e-commerce drawing on the experience of other countries?
l What is the impact of e-commerce on Africa’s longstanding developmental objectives of industrial development, structural transformation and employment?
l What are the policy perspectives for promoting inclusive and equitable growth, trade and development in the digital economy?
Rwanda said that the moratorium for levying customs duties on e-commerce transactions “will have serious implications” at a time when countries in Africa have embarked on “building a single continental market and in terms of regional integration.”
The African Group said that it “is still studying the issue [of the moratorium], and therefore the renewal of the moratorium should not be seen as automatic.”
In short, the battle lines are drawn on changing the e-commerce work programme at the upcoming Buenos Aires meeting. It remains to be seen how the African Group and other developing countries will ensure a favourable developmental outcome that would enhance their interests in e-commerce, trade envoys said. (SUNS8548)
Third World Economics, Issue No. 647, 16-31 August 2017, pp5-7