TWN Info Service on WTO and Trade Issues (Jan19/10)
29 January 2019
Third World Network

Intention to launch e-com pluri talks announced at Davos

Published in SUNS #8833 dated 28 January 2019

Davos, 25 Jan (D. Ravi Kanth) – A group of countries, including the United States and China, on Friday (25 January) announced in Davos their “intention” to launch plurilateral talks at the WTO on electronic commerce. They made the announcement under the banner of “WTO negotiations on trade-related aspects of electronic commerce,” trade envoys told SUNS.

Significantly, the US, which is a signatory to the joint call issued by 75 countries, was absent at the meeting due to the ongoing shutdown of the federal government.

India, South Africa, and a large majority of countries at the World Trade Organization stayed away from the meeting on grounds that they would like to adhere to the WTO’s 1998 work program on electronic commerce.

In a statement issued after a brief breakfast meeting, the three chairs from Australia, Japan, and Singapore unveiled a joint statement confirming the intention of more than 75 countries “to commence WTO negotiations on trade-related aspects of electronic commerce.”

The statement says “we will seek to achieve a high standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO members as possible.”

To attract the other developing and least-developed countries who stayed out of the plurilateral initiative, the statement says “we recognize the unique opportunities and challenges faced by Members including developing countries and LDCs, as well as by micro, small and medium sized enterprises, in relation to electronic commerce.”

The signatories appealed to other countries who are not part of the initiative to “participate” in the negotiations in order to further enhance the benefits of electronic commerce for businesses, consumers and the global economy.

[Significantly, ever since the Buenos Aires Ministerial Conference, where some of the signatories called for the e-com pluritalks, claiming to do so among others to benefit the micro-, small and medium sized enterprises, national organisations across the developing world, including in some of the signatory countries, representing the micro-, small- and medium enterprises, have come out publicly opposing e-com trade rules, and denouncing the move as merely aimed at benefiting some technology giants, particularly in the Silicon Valley.

[The latest among these national organisations is the one from Nigeria, which has accused its government of joining the initiative without any consultations domestically.

[Leading civil society organisations (CSOs) from the developing world and in industrialized countries too have denounced the move as one aimed at “digital colonization” of the developing world.

[These CSOs have also insisted that the issues raised and needing international rules went far beyond trade, and hence need to be discussed and negotiated in universal organisations in full transparency and not in secretive negotiations at the WTO. (See SUNS #8826 dated 17 January 2019).

[Some trade observers have also questioned the legality of the move, since what the signatories (and the main protagonists) are promoting is to provide via WTO international commercial transactions via e-commerce a privileged and preferential position over other methods of commercial transactions.

[In pith and substance, this involves changes to the existing WTO rules on trade in goods, services and intellectual property, without going through the amendment processes and procedures set out by the WTO treaty. It may thus amount to a colourable exercise of amending the WTO treaty and its annexed agreements. SUNS]

China’s trade envoy to the World Trade Organization, Ambassador Dr Zhang Xiangchen, told SUNS that “China wants to be part of the negotiations” for achieving a balanced outcome.

He said it would be important to arrive at balanced rules for e-commerce.

In a statement issued at the meeting, China’s trade envoy said “the multilateral trading system is in a deep crisis.”

“Against this backdrop, the launching of e-commerce negotiation will in a significant way help reinvigorate the negotiating function of the WTO, and shore up confidence in the multilateral trading system and economic globalization.”

“China actively participated in the previous discussions on this issue,” said Ambassador Zhang, arguing that “to be very frank, the current text of the Joint Statement before us, in our view, could have been better drafted if time allows.”

“However, considering the importance of e-commerce in the global economy, and the comprehensive views expressed by my previous speakers, China is still willing to co-sponsor the Joint Statement, and will play an active role in this exploratory process,” Ambassador Zhang maintained.

The Chinese envoy maintained that “China stands ready to work closely with all Members.”

He expressed confidence that “through negotiations on equal footing, we will achieve an outcome with broad participation of Members, especially developing ones, an outcome with flexible frameworks to accommodate the legitimate needs of different Members, an outcome that could strike a balance between the progress of technology, the development of business, and the public policy objectives of Members.”

China emphasized that the “importance of making the negotiation an open, transparent, inclusive and non-discriminatory process was highlighted by members.”

“In recent years, China’s electronic commerce has seen a boom and played a significant role in promoting the country’s economic and trade growth, as well as inclusive and sustainable economic development,” China maintained.

“As one of the world’s biggest electronic commerce markets with significant progress pace, China has been attaching great importance to the international cooperation in this area,” China maintained.

China said it “has been an active rule-maker on electronic commerce in its bilateral and regional free trade agreements, and tabled several submissions at the WTO in an effort to facilitate progress in the multilateral discussions on the topic.”

China said it would support “making rules on trade-related aspects of electronic commerce at the WTO” that would revitalize “the WTO negotiating function and the necessary reform of the WTO, and will help the WTO better respond to calls from the industry and boost the confidence of all in the multilateral trading system and economic globalization at large.”

It hoped that “the WTO negotiations on trade-related aspects of electronic commerce shall contribute to the multilateral trading system, adopt an open process and focus on development, with full respect accorded to the reasonable requests of developing members.”

China said it would expect “the WTO negotiations on trade-related aspects of electronic commerce shall strike a balance among technological development, business development and the legitimate public policy objectives of various members, and reach an outcome acceptable to all members through equal consultation.”

“Only by so doing, can the huge potential of electronic commerce be brought into full play, thus assisting the vast number of developing members to take hold of and benefit from relevant development opportunities, hence better participate in economic globalization,” said Ambassador Zhang.

Nevertheless, there are sharp differences among the sponsors over several issues concerning “free flow” of data across borders and regulatory barriers imposed on retaining data locally in the servers, said people familiar with the development.

Under the existing WTO e-commerce work program, members are required to intensify the exploratory work so that they are in a position to decide the next steps in the multilateral rule-making in digital trade.

Until now, countries have addressed various aspects concerning e-commerce from development, trade in goods, trade in services, and intellectual property provisions.

India has all along demanded that work on e-commerce must be continued on the basis of the 1998 work program.

A large majority of countries supported India and South Africa for a re-think on continuing with the current moratorium not to impose customs duties on e-commerce transmissions.

But, in an attempt to undermine the current multilateral e-commerce work program, trade ministers from 75 countries issued a “political” statement following a breakfast meeting on 25 January from Davos, said a trade envoy from a developing country, who asked not to be quoted.

“Surprisingly, the sponsors of the meeting remain divided on the core issues of the proposed e-commerce rules but they seem determined to create an impression that things are fine in the informal plurilateral negotiations,” the envoy said.

Asked to comment on China’s insistence that the e-commerce negotiations should remain multilateral, open, and inclusive, a participant at the meeting had said earlier that when China is insisting on multilateral, it does not mean that there has to be a consensus of all 164 members.

If members aim for a “MFN (most-favored-nation or equal access for all) based open-ended plurilateral” then it is not exactly plurilateral, it is a multilateral because that formula is already included in the services agreement such as the Telecom Reference Paper, the participant emphasized.

As part of the Telecom Reference Paper, a total of 108 WTO members had made commitments in 1996 to facilitate trade in telecommunications services.

Further, 82 WTO members have committed to the regulatory principles spelled out in the “Reference Paper”, that largely reflects “best practice” in telecoms regulation.