South nations throw down gauntlet on e-commerce at MC11

The WTO membership remained divided over how to approach the contentious issue of e-commerce at MC11, split between those which wanted to continue with the existing WTO work programme of discussions and others which called for upgraded negotiations.

by D. Ravi Kanth

GENEVA (22 NOV): A large majority of developing and poorest countries, including India and South Africa, on 21 November threw down the gauntlet on electronic commerce at the WTO, challenging the European Union, Japan and other countries that want to change the existing mandate on e-commerce at MC11, trade envoys told the South-North Development Monitor (SUNS).

At a meeting on e-commerce convened by the WTO General Council chair Ambassador Xavier Carim of South Africa on 21 November, the large majority of developing and many least-developed countries made clear they will only adhere to the existing, non-binding 1998 work programme that requires WTO members to explore e-commerce from all areas, and would not engage in, but oppose, any programme for negotiating rules and disciplines on e-commerce.

E-commerce proposals

The proponents, led by the EU, Japan and other developed countries, delivered long statements as to why there has to be a change in the e-commerce mandate and why members must agree to establishing a working party that “shall conduct preparations for and carry [out] negotiations on trade-related aspects of electronic commerce on the basis of proposals by members.”

In a restricted document issued on 21 November, Japan along with Costa Rica, Hong Kong (China) and Chinese Taipei called for “establishing a Working Group on Electronic Commerce” that “shall assess whether the clarification or strengthening of the existing WTO rules is necessary.”

The joint proposal said the Working Group shall “assess the priority needs of developing country Members, particularly those of LDCs, with respect to, inter alia, issues relating to the development of infrastructure for electronic commerce, enabling services and technical assistance and capacity building.”

The proposal also suggested that the Working Group shall “examine opportunities, challenges, and barriers for access to electronic commerce by micro, small and medium sized enterprises, including small producers and suppliers.”

Effectively, therefore, micro, small and medium-sized enterprises (MSMEs) were also included in the proposal.

In another proposal, some of the same proponents along with Australia, Brunei Darussalam, Canada, Colombia, Korea, Laos, Malaysia, Moldova, Myanmar, New Zealand, Nigeria, Panama, Qatar, Singapore, Chinese Taipei and Thailand proposed horizontal processes to carry out “focused work and holistic discussions on e-commerce.”

The proponents said “members should reflect and build on the discussions since MC10, and identify possible (i) improvements to processes, and (ii) issues of interest, if any, that they would like to take forward.”

“The outcome of these discussions should be captured in the MC11 Ministerial Decision on E-commerce. Ministers at MC11 should give clear direction for future work in e-commerce, with development at the core, and set out a clear, updated framework/process through which future work could be undertaken,” the proponents argued.

In short, the proponents have tabled different proposals with differing language and goals but all leading towards their stated objective of changing the 1998 work programme, said a trade envoy who asked not to be quoted.

“But the large majority of developing and least-developed countries saw the writing on the wall, particularly attempts to mislead them through different proposals,” said a trade envoy who asked not to be identified.

India and the African Group countered the proponents with their own draft ministerial decisions on e-commerce.

India, for example, issued a restricted proposal on 20 November in which it called for continuing the work under the e-commerce work programme adopted on 25 September 1998.

India proposed that ministers “instruct the General Council to hold periodic reviews in its sessions of July and December 2018 and July 2019 based on the reports that may be submitted by the WTO bodies entrusted with the implementation of the Work Programme and report to the next session of the Ministerial Conference.”

India also drew a linkage between the “moratorium on electronic transmissions” and the “decision on moratorium on TRIPS Non-Violation and Situation Complaints”, suggesting that the two moratoriums be simultaneously adopted without any change for another two years.

Intervening several times during the 21 November meeting, India made clear that it will not accept any change from the existing process until members explore all the issues on a non-binding basis, said a participant who asked not to be quoted.

At the meeting, the African Group led by Rwanda and other countries from the region such as South Africa, and Uganda delivered equally strong messages.

In its proposal, the African Group explained why it wants to adhere to the 1998 work programme. It set out its case by acknowledging and recognizing the rapid growth in e-commerce. It said it remains “committed to addressing the uneven spread of global electronic commerce and risk of disruptive impacts.”

More importantly, countries in Africa want to overcome “the digital and technological divide underlying digital trade and electronic commerce,” the African Group said.

The Group underscored the need for “diverse national measures” to build “national capabilities, with a view to promote inclusive, equitable and sustainable growth.”

It pointed out that there is a fundamental “need to clarify the treatment of electronic commerce in relevant WTO Agreements, and the broad interest of Members to continue examining all trade-related issues relating to global electronic commerce.”

The African Group reminded the EU and other proponents that “half of the world’s population” remain offline.

Therefore, “taking particular account of the economic, financial, and development needs of developing countries”, the exploratory work on e-commerce under the 1998 work programme must continue without any change, the African Group insisted.

The African Group set out the following markers:

A. To continue the work under the work programme on e-commerce since the last Ministerial Conference, based on the existing mandate and guidelines, in the relevant WTO bodies as set out in paragraphs 2 to 5 of the work programme.

B. To address all open issues in the relevant bodies, as provided for in paragraphs 2 to 5 of the work programme, including but not limited to definition, classification and technological neutrality.

C. To discuss, in the relevant bodies, the manner in which members can preserve their right to regulate e-commerce and consideration of all measures to promote national digital industrial development with a view to promoting inclusive, equitable and sustainable growth.

D. To undertake, in the relevant bodies, a thorough examination of the opportunities and risks associated with digital transformation and e-commerce.

E. To discuss, in the relevant bodies, measures members have taken and may take to develop their national institutional regulatory capacity that ensure: the protection of information of all members and their citizens, including but not limited to mandatory disclosure of data; the disclosure of source codes; access to and transfer of technology.

F. To continue, in the relevant bodies, the practice of national experience sharing of, inter alia: the historical development of the digital industry; the challenges and measures adopted to promote digital economy and e-commerce.

G. To instruct the General Council to hold periodic reviews in its sessions of July and December 2018 and July 2019 based on the reports that may be submitted by the WTO bodies entrusted with the implementation of the work programme and report to the next session of the Ministerial Conference.

On extending the moratorium on tariffs on e-commerce imports, the African Group said it “is still discussing it in view of the revenue implications of the current moratorium on customs duties, particularly in the context of increasing digitization of goods and services.”

Therefore, the “renewal of the moratorium should not be seen as automatic”, the African Group made clear.

“Dialogue of the deaf”

The 21 November meeting, however, turned out to be an instance of “dialogue of the deaf”: the proponents of e-commerce negotiations were not prepared to even listen to the points raised by the African Group and India among others, said a trade envoy who asked not to be quoted.

Significantly, the United States, which had put forward the most ambitious proposals on e-commerce two years ago, remained silent at the meeting. “The US is not going to fight for anything and probably they want to continue with things as they are and watch the situation,” said a trade envoy from South America who asked not be quoted.

But the meeting revealed that the “divergences between the two sides are so wide that the notion that they can be bridged in the next two weeks is irrational and misplaced,” said a trade envoy who asked not to be quoted.

The EU however appears determined to take the issue to Buenos Aires regardless of the fallout, the envoy suggested.

In his concluding remarks, the General Council chair said there are eight proposals on the table with differing options, and that ministers will not have time to go through eight proposals at Buenos Aires as they will be preoccupied with various other issues. He urged the two sides to hold consultations to see if they can bridge their positions.

It is clear that the developing countries must remain ready to fight it out on e-commerce at Buenos Aires as the EU and other developed and some developing countries are going to press for an outcome based on their proposals, several trade envoys said. (SUNS8581)   

Third World Economics, Issue No. 651/652, 16 October – 15 November 2017, pp11-12