TWN Info Service on WTO and Trade Issues (Mar18/13)
20 March 2018
Third World Network

DG, defying mandates, deputes his officials to attend pluri-meetings
Published in SUNS #8644 dated 19 March 2018

Geneva, 16 Mar (D. Ravi Kanth) - Despite failure to secure multilateral approval at the eleventh Ministerial Conference (MC11) at Buenos Aires for various plurilateral initiatives, the WTO Director-General Roberto Azevedo appears to have deputed his officials to attend the various meetings on plurilateral initiatives being held at the WTO, according to some trade envoys.

[The 2004 July Framework Agreement of the General Council (re-launching the Doha Work Programme (DWP) negotiations, after the collapse of the Cancun Ministerial in 2003), while enabling negotiations on trade facilitation, expressly stipulated that none of the other Singapore issues will be taken up for negotiations or figure on the WTO agenda until the DWP negotiations have been concluded (Para 1.g of the July framework agreement). Also, besides the DWP negotiations, "high priority" was to be given by the WTO to other issues in the DWP that did not involve negotiations, but were of particular importance to developing countries (para 1h). - SUNS]

The Nairobi Ministerial Declaration, in its paragraph 34, has mandated that WTO members can only launch negotiations that are multilaterally agreed by all members.

That paragraph says that "any decision to launch negotiations multilaterally on such issues [electronic commerce, disciplines for MSMEs, investment facilitation] would need to be agreed by all members."

At MC11 there was no multilateral consensus on any plurilateral negotiations (on e-commerce, disciplines on micro-, small- and medium enterprises (MSMEs), investment facilitation or gender issues). Nor are of these issues, as those not involving negotiations but covered by the DWP, stipulated as high priority items on the WTO agenda in the July Framework agreement.

The first three of the current plurilateral initiatives (e-commerce, disciplines on MSMEs and investment facilitation) were rejected at the heads of delegations meeting at Buenos Aires on 12 December.

However, on 13 December, groups of countries issued joint statements on the three issues on the margins of the eleventh ministerial meeting.

As a follow-up to the joint statements, the sponsors of the three initiatives held separate meetings during the past fortnight at the WTO.

At these meetings, WTO officials had been deputed to be present by the Director-General.

During the meeting on electronic commerce on Wednesday (14 March), Azevedo had deputed his deputy director-general, Yi Xiaozhun, to assure the participants that the WTO Secretariat will provide the requisite assistance, including technical assistance to developing countries, according to participants familiar with the meeting.

At the two other plurilateral meetings, WTO officials were present but did not speak or intervene.

It is not clear whether the DG had cleared the holding of the meetings at the WTO and the use of secretariat resources (with attendant services, like interpretation etc, and the "expenditure") with the Budget Committee.

The plurilateral sessions on electronic commerce led by Japan, Singapore, and Australia were held on 14 March in Room W at the WTO.

The joint statement on electronic commerce was signed by around 60 countries in Buenos Aires but, in the meeting at the WTO, 82 countries took part, said a participant who asked not to be quoted.

For facilitating the negotiations, the secretariat is preparing a paper mapping out the main issues, including the legal aspects concerning those issues, said another participant who asked not to be quoted.

The three main sponsors of the joint statement on electronic commerce - Japan, Singapore, and Australia - offered process-related information as to how they intend to proceed ahead of the next meeting in April.

Japan's trade envoy Ambassador Junichi Ihara said: "transparency," "inclusiveness," and "openness" will propel the proceedings during the regular sessions that will start next month. He said the meetings will be open for any member wishing to join for hammering out rules in e-commerce.

Australia's trade envoy Ms Frances Lisson and Singapore's trade envoy Ms Tan Yee Woan also presented their respective assessments on how to go forward with proposals and other process-related issues.

China and Pakistan, which did not sign the joint statement on e-commerce in Buenos Aires, also took part in the brief meeting.

China's trade envoy Ambassador Xiangchen Zhang urged the participants to strive towards an outcome that can be multilateralised, said a participant who asked not to be quoted.

The US deputy ambassador Mr Chris Wilson said that Washington remains committed to achieving a "comprehensive, high-standard, ambitious agreement", according to a participant familiar with the proceedings.

Mr Wilson said the US wants a "commercially viable" outcome on digital trade, suggesting the broad markers such as cross-border information flow, localization requirements, and privacy protection.

In an electronic commerce work program circulated on 4 July 2016, the US has said "governments should not prevent service suppliers of other countries, or customers of those suppliers, from electronically transferring information internally or across borders, accessing publicly available information, or accessing their own information stored in other countries."

Washington also demanded that "governments should not require ICT service suppliers to use local infrastructure, or establish a local presence, as a condition of supplying services. In addition, governments should not give priority or preferential treatment to national suppliers of ICT services in the use of local infrastructure, national spectrum, or orbital resources."

The US intends to bring up around 20 issues during the plurilateral negotiations on electronic commerce that were the core elements of the failed Trans-Pacific Partnership (TPP) agreement into the WTO, said a trade envoy who asked not to be quoted.

In its non-paper on the work program on electronic commerce, the US had suggested what ought to be the "positive contributions to a flourishing digital economy."

It prescribed the following markers for arriving at a global digital economy:

1.1. PROHIBITING DIGITAL CUSTOMS DUTIES: The complete prohibition on customs duties for digital products can ensure that customs duties do not impede the flow of music, video, software, and games so that creators, artists and entrepreneurs get a fair shake in digital trade.

1.2. SECURING BASIC NON-DISCRIMINATION PRINCIPLES: Fundamental non-discrimination principles are at the core of the global trading system for goods and services. Rules that make clear that the principles of national treatment and MFN apply to digital products can contribute directly to stability in the digital economy.

1.3. ENABLING CROSS-BORDER DATA FLOWS: Companies and consumers must be able to move data as they see fit. Many countries have enacted rules that put a choke-hold on the free flow of information, which stifles competition and disadvantages digital entrepreneurs. Appropriately crafted trade rules can combat such discriminatory barriers by protecting the movement of data, subject to reasonable safeguards like the protection of consumer data when exported.

1.4.PROMOTING A FREE AND OPEN INTERNET: A free and open Internet enables the creation and growth of new, emerging, and game-changing Internet services that transform the social-networking, information, entertainment, e-commerce and other services we have today. The Internet should remain free and open for all legitimate commercial purposes.

1.5. PREVENTING LOCALIZATION BARRIERS: Companies and digital entrepreneurs relying on cloud computing and delivering Internet-based products and services should not need to build physical infrastructure and expensive data centers in every country they seek to serve. Such localization requirements can add unnecessary costs and burdens on providers and consumers alike. Trade rules can help to promote access to networks and efficient data processing.

1.6. BARRING FORCED TECHNOLOGY TRANSFERS: Requirements that make market access contingent on forced transfers of technology inhibit the development of e-commerce and a flourishing digital economy. Trade rules may be developed to prohibit requirements on companies to transfer technology, production processes, or other proprietary information.

1.7. PROTECTING CRITICAL SOURCE CODE: Innovators should not have to hand over their source code or proprietary algorithms to their competitors or a regulator that will then pass them along to a State-owned enterprise. It is important to ensure that companies do not have to share source code, trade secrets, or substitute local technology into their products and services in order to access new markets, while preserving the ability of authorities to obtain access to source code in order to protect health, safety, or other legitimate regulatory goals.

1.8. ENSURING TECHNOLOGY CHOICE: Innovative companies should be able to utilize the technology that works best and suits their needs. For example, mobile phone companies should be able to choose among wireless transmission standards like Wi-Fi and LTE. Trade rules may play a role in ensuring technology choice by stipulating that companies are not required to purchase and utilize local technology, instead of technology of their own choosing.

1.9. ADVANCING INNOVATIVE AUTHENTICATION METHODS: The availability of diverse electronic signature and authentication methods protects users and their transactions through mechanisms such as secure online payment systems. Trade rules may assist in ensuring that suppliers can use the methods that they think best for this purpose.

1.10. SAFEGUARDING NETWORK COMPETITION: It is important to enable digital suppliers to build networks in the markets they serve or access such facilities and services from incumbents - whether landing submarine cables or expanding data and voice networks - to better access consumers and businesses.

1.11. FOSTERING INNOVATIVE ENCRYPTION PRODUCTS: Encryption is increasingly seen as an important tool to address protections of privacy and security in the digital ecosystem. Rules may be developed to protect innovation in encryption products to meet consumer and business demand for product features that protect security and privacy while allowing law enforcement access to communications consistent with applicable law.

1.12. BUILDING AN ADAPTABLE FRAMEWORK FOR DIGITAL TRADE: New and innovative digital products and services should be protected against future discrimination. Trade-based protections for services and investment should continue to apply as markets change and innovative technologies emerge, unless a specific, negotiated exception applies.

1.13. PRESERVING MARKET-DRIVEN STANDARDIZATION AND GLOBAL INTEROPERABILITY: Innovators should not have to design products differently for each market they seek to serve; that is why we have the global standards process, where industry leads and the best technologies win. Trade rules can help to ensure that countries cannot arbitrarily demand that less competitive national standards be forced into innovative products.

1.14. ENSURING FASTER, MORE TRANSPARENT CUSTOMS PROCEDURES: The sorts of provisions contained in the WTO Trade Facilitation Agreement can make very direct contributions to digital trade. Administrative and at-the-border barriers can often be a bigger problem than tariffs for exporters of digital equipment.

1.15. PROMOTING TRANSPARENCY AND STAKEHOLDER PARTICIPATION IN THE DEVELOPMENT OF REGULATIONS AND STANDARDS: The development of new regulations and standards can pose a significant challenge to suppliers of information and communications technology, whose product cycles are short and whose regulatory environment is constantly evolving. A positive environment for e-commerce/digital trade entails strong commitments on transparency, stakeholder participation, coordination, and impact assessment for new regulatory measures, standards, and conformity assessment procedures.

1.16. RECOGNIZING CONFORMITY ASSESSMENT PROCEDURES: Conformity assessment procedures verify that products, including information and communications technology, meet required standards and technical regulations, but overly burdensome conformity assessment procedures can hinder such exports. "National treatment" in conformity assessment, so that testing and certification performed by one qualified conformity assessment body will be accepted as consistent with another Party's requirements, can be an important means of facilitating trade in products relevant to the digital economy.

At the meeting on Wednesday in Room W, the US merely spoke about the importance of "digital trade" without any barriers.

But, according to a trade envoy from an industrialized country, there were differences of opinion among the signatories of the joint statement on electronic commerce.

On Tuesday (13 March), China, Brazil, Nigeria, along with many other countries held an organization meeting on investment facilitation. The participants of the investment facilitation group exchanged ideas and discussed about the roadmap.

A senior WTO official in charge of the services division attended the meeting but did not speak, according to a participant who asked not to be quoted.

It remains moot whether the director-general can assign his officials to participate in these meetings and make statements as was the case with electronic commerce, knowing full well that there is no ministerial mandate to approach these issues plurilaterally, said a trade envoy from a developing country who asked not to be quoted.

The director-general cannot promote the plurilaterals in rule-making areas without a ministerial or General Council mandate, and by deputing his officials to suggest that the Secretariat is ready to offer technical or other assistance, he appears to be violating the Nairobi ministerial mandate, the envoy said.

In the past, trade ministers, for example, had failed to reach "explicit" consensus on four Singapore rule-making issues such as trade and investment, government procurement, competition policy, and trade facilitation.

Subsequently, trade facilitation was brought into the Doha agenda in 2004 on grounds that the remaining areas in the Doha Development Agenda will be addressed on the firm footing of special and differential flexibilities and less-than-full-reciprocity (LTFR) commitments.

Consequently, government procurement remained a closed-door plurilateral group. There is no legal clarity whether there can be anything like open-ended plurilaterals for rule-making and binding commitments for electronic commerce, disciplines for MSMEs, and investment facilitation.