TWN Info Service on WTO and Trade Issues (Aug19/03)
14 August 2019
Third World Network

Pluri-accord on e-com could reinforce lawlessness in digital trade
Published in SUNS #8965 dated 13 August 2019

Geneva, 9 Aug (D. Ravi Kanth) - The proposed informal plurilateral agreement on electronic commerce being negotiated by the participants of the Joint Statement Initiative (JSI) group at the World Trade Organization could further reinforce lawlessness in the global digital trade order by enabling the tech-giants to monetize data with abandon, trade envoys told the SUNS.

The United States, Japan, and other former allies of the failed Trans-Pacific Partnership (TPP) group as well as the European Union have called for plurilateral rules on a range of issues that would create more asymmetries in the global e-commerce.

The new rules will further strengthen the e-commerce behemoths like Google, Facebook, Amazon, Microsoft, Apple, Alibaba, and Baidu among others to monetize data on an unprecedented scale, said a trade envoy, who asked not to be quoted.

During the last round of meetings of the JSI participants that lasted for three days between 15 and 17 July, the US, Japan, and the EU among others called for a prohibition on transferring/accessing of "source code" of software or to an algorithm expressed in that source code, as a condition for the import, distribution, sale, and use of that software.

In separate proposals, the US, Japan, and the EU demanded a prohibition on the transfer of, or access to, source code of software owned by the company of another country, or to an algorithm expressed in that software, as a condition for imports.

In its proposal on "WTO Digital Agreement" circulated on 26 April, the US has specifically proposed stringent disciplines on source code.

The US maintained that "no party shall require the transfer of, or access to, source code of software owned by a person of another Party, or to an algorithm expressed in that source code, as a condition for the import, distribution, sale, or use of that software, or of products containing that software in its territory."

The US has suggested that the prohibition on sharing the source code "does not preclude a regulatory body or judicial authority of a Party from requiring a person of another Party to preserve and make available the source code of software, or an algorithm expressed in that source code, for a specific investigation, inspection, examination, enforcement action, or judicial proceeding, subject to safeguards against unauthorized disclosure."

The EU, in its proposal for WTO disciplines and commitments relating to e-commerce on 26 April, has stated that "members shall not require the transfer of, or access to, the source code of software owned by a natural or juridical person of other Members."

Several other former TPP members such as Japan have also suggested a prohibition for sharing forced transfer of source code.

Effectively, the US, Japan, and the EU do not want countries to insist on sharing the source code for sale or import or use of software.

But several studies by data scientists in the US and other countries have showed that software with complex source code could contain certain hidden algorithms that facilitate dark data flows without the consent of the countries.

During the discussions, Russia challenged the need for a prohibition on source code, saying that without credible security and other guarantees, it is incumbent on the suppliers of software to provide source code, said a trade envoy who asked not to be quoted.

Moscow said it would need to understand the "source code" before permitting a supplier to export or distribute that software because of growing threats from certain algorithms and hidden flows of dark data, a JSI participant told the SUNS.

China sought more clarity on why a prohibition is being demanded for source code, suggesting that members would need to know the built-in algorithms.

Singapore and Korea also spoke about the appropriate remedies while emphasizing the importance of source code, particularly their use in the critical infrastructure.

Significantly, the US, Japan, and Australia among others do not want any discriminatory restrictions on the treatment of digital products, cross-border transfer of information by electronic means, and location of computing facilities, including cloud-computing among others.

Yet, the US, Japan, the EU, and other former TPP members insist on having restrictions on mandatory transfer of source code for selling software.

In effect, the US, Japan, and the EU want to ensure that there is no legal burden on the tech giants such as Google, Facebook, Amazon, and Microsoft among others to create huge revenue flows through their complex software and source code, algorithms, and machine-intelligence, for data monetization.

In her book "The Age of Surveillance Capitalism," Shoshana Zuboff argued succinctly that tech companies such as Google, Facebook, Amazon, and Microsoft among others, while insisting that their technology is too complex to be legislated, spend billions of dollars lobbying against any oversight.

Further, the tech companies "while building empires on publicly funded data and the details of our private lives, have repeatedly rejected established norms of societal responsibility and accountability," she argued.

Zuboff maintained that the tech companies prefer lawlessness to continue without any hurdles for their "new form of exploitation and exceptionalism"- for monetizing data on an unprecedented scale.

During the JSI group meeting last month, China and Korea among others for the first time proposed a trade facilitation agreement in electronic commerce, said a JSI participant, who asked not to be quoted.

China and Korea separately called for electronic invoicing and paperless transactions for goods for facilitating trade.

But several JSI participants said there should not be any rush into the e-commerce trade facilitation for goods at this juncture when the general Trade Facilitation Agreement is being ratified by World Trade Organization members.

China, which had serious reservations on data flows and source code, made a strong pitch for the trade facilitation agreement for e-commerce transactions involving goods, the participant said.

Even though there is still no clarity on the scope and structure of the proposed plurilateral agreement on e-commerce, the European Union insisted that the JSI group participants must discuss market access without any further delay.

The EU has called for including the expanded Information Technology Agreement, which was concluded at the WTO's tenth ministerial conference in Nairobi in December 2015, in the market access negotiations.

The EU has also called for including computer services in the market access negotiations, said another JSI participant, who asked not to be quoted.

The EU said members must adopt the request-and-offer approach like the Doha round negotiations for market access in e-commerce, the participant said.

The EU also demanded a revised Telecoms Reference paper and telecommunications services as part of the agreement.

Although the US has not circulated any concrete proposal on market access, Washington has included a place holder for market access.

The US said that it wants to discuss market access for express delivery services, while China has demanded warehouses and construction of ports among others as part of e-commerce market access.

But several JSI participants cautioned the EU about discussing market access without having any clarity on the scope and methodology, saying that the cart should not be put before the horse, said a JSI negotiator, who asked not to be quoted.

In short, the plurilateral agreement being negotiated by the JSI participants is replete with disciplines/rules that would help the American tech giants to continue their data-mining operations on an unprecedented scale without any international oversight, said trade envoys, who asked not to be quoted.

[The proponents of such plurilateral rules have been coy and have not explained how they hope to get it on to the WTO rule-book, even as an Annex IV agreement, as a consensus decision, at a Ministerial Conference, as required under Art. X:9 of the WTO treaty, without the agreement of the majority of the WTO membership not signing on and/or opposed. And without such a consensus decision, the proposed e-com pluri-rules will be WTO-illegal, and cannot bind non-signatories to rules relating to source code or data localisation, as proposed. SUNS]