Info Service on WTO and Trade Issues (Oct19/24)
Geneva, 29 Oct (D. Ravi Kanth) – Key members of the plurilateral informal Joint Statement Initiative (JSI) group on electronic commerce have remained divided on a range of issues.
These include “digital trade facilitation and logistics,” “flow of information” covering cross-border data flows and localization of computing facilities, “privacy” of personal information protection and data protection, “cybersecurity”, and “telecommunications,” participants told the SUNS.
During the last JSI group meetings, held on 22-25 October at the World Trade Organization, the participants discussed different proposals in the consolidated draft text on five issues – “digital trade facilitation and logistics,” “flow of information” covering cross-border data flows and localization of computing facilities, “privacy” of personal information protection and data protection, “cybersecurity”, and “telecommunications.
Prior to the meetings, the coordinators of the JSI group – Australia, Japan, and Singapore – had circulated restricted draft texts on all the five areas.
The draft texts, seen by the SUNS, contains language on five issues with different alternatives in square brackets. Each area was being handled by a focus group.
Around 52 members (the European Union is taken as one representing its 28 members) took part in the meetings.
Members of the former Trans-Pacific Partnership (TPP) group such as the US, Australia, Japan, Singapore, and Canada, as well as the EU, China, Russia, and Brazil among others dominated the discussions, said participants, who asked not to be quoted.
In the Focus Group A on “digital trade facilitation and logistics”, members discussed (1) Paperless trading/ Electronic trade administration documents, (2) Electronic transferrable records, (3) Customs procedures, (4) Improvements to trade policies, (5) Enhanced trade facilitation, (6) De minimis, (7) Single windows data exchange and system interoperability, (8) Electronic availability of trade-related information, (9) Use of technology for the release and clearance of goods, and (10) Logistics services.
China, Korea, and Brazil among others are the major proponents of the Focus Group A given their interests in market access.
Brazil, for example, is the main proponent on the “Single windows data exchange and system interoperability.”
Even though the Doha Trade Facilitation Agreement that was concluded at the WTO’s ninth ministerial conference in Bali, in 2013, is yet to be fully implemented by all WTO members, several JSI participants said it is not correct to rush into “digital trade facilitation agreement” without much clarity on what would constitute electronic transmissions, said a participant, who asked not to be quoted.
The “Focus Group B” discussed the most difficult issues concerning new rules in three different areas. They include (1) Cross-border transfer of information by electronic means/Cross-border data flows, (2) Location of computing facilities, and (3) Location of financial computing facilities for covered financial service suppliers.
The US is the main driving force seeking ambitious rules in all these three areas. The US has submitted language exclusively on the “location of financial computing facilities for covered financial suppliers.”
In a heavily bracketed text on cross-border transfer of information by electronic means/cross-border data flows, the US along with some other members proposed language that: “No [Party/Member] shall [prohibit or restrict/prevent] the cross-border transfer of information, including personal information, by electronic means, [if/where] this activity is for the conduct of [an enterprise/the business of a covered person/the business or for the consumers to access, distribute and use services and applications].]”
Japan, Brazil, and Singapore also proposed language on cross-border transfer of information, saying, “each [Party/Member] shall allow the cross-border transfer of information by electronic means [, including personal information,] when this activity is for the conduct of the [business of a person of [Parties/Members]/business/ business activity of a covered person].]”
In contrast to the first two Alternatives, the EU proposed language that: “The [Parties/Members] are committed to ensuring cross-border data flows to facilitate trade in the digital economy.
To that end, cross-border data flows shall not be restricted by:
(a) requiring the use of computing facilities or network elements in the [Party’s/Member’s] territory for processing, including by imposing the use of computing facilities or network elements that are certified or approved in the territory of the Party;
(b) requiring the localisation of data in the [Party’s/Member’s] territory for storage or processing;
(c) prohibiting storage or processing in the territory of other [Parties/Members];
(d) making the cross-border transfer of data contingent upon use of computing facilities or network elements in the [Party’s/Member’s] territory or upon localisation requirements in the [Party’s/Member’s] territory.]”
During the meeting, cracks emerged among key participants on the interpretation of cross-border transfer of information by electronic means/cross-border data flows, said a participant, who asked not to be quoted.
The US and the EU differed sharply on the issue of restricting cross-border transfer of data on account of “safeguards” to ensure the protection of personal data and privacy.
The US along with Japan, and Canada proposed language in square brackets that: [This Article does not/Nothing in this Article shall] prevent a [Party/Member] from adopting or maintaining a measure inconsistent with paragraph 5 [dealing with cross-border data flows to facilitate trade in digital economy] [that is necessary] to achieve a legitimate public policy objective, provided that the measure:
(a) is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade;
(b) does not impose restrictions on transfers of information greater than are [necessary/required] to achieve the objective.
Singapore and Brazil proposed language that: “Nothing in this Article shall prevent a [Party/Member] from adopting or maintaining measures inconsistent with paragraph 5 to achieve a legitimate public policy objective, provided that the measure is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised [restriction on trade/barrier to the transfer of information and to trade through electronic means]].”
In sharp contrast to the US proposal on cross-border data flows, the EU proposed alternative language that: “[Parties/Members] may adopt and maintain the safeguards they deem appropriate to ensure the protection of personal data and privacy, including through the adoption and application of rules for the cross-border transfer of personal data. Nothing in the agreed disciplines and commitments shall affect the protection of personal data and privacy afforded by the [Parties’/Members’] respective safeguards.]”
The US objected to the EU’s language at the meeting, saying that it is too broad and full of exceptions, said a participant, who asked not to be quoted.
In response, the EU maintained that it will need absolute safeguards for protecting personal data and privacy, the participant added.
On location of computing facilities too, sharp differences came to the fore during the meeting.
The US, Japan, Canada, and Korea among others proposed that: “No [Party/Member] shall require [a covered person/an enterprise/a person of [Parties/Members]] to use or locate computing facilities in that [Party’s/Member’s] territory as a condition for conducting business in that territory.]”
Singapore proposed language that: “[Parties/Members] shall not require the use or location of computing facilities in its territory as a condition for conducting business in that territory.]”.
China, for example, said it would need to protect information in computing facilities covering its hospitals, power plants, infrastructure units, and shopping Malls among others on legitimate policy grounds.
Significantly, the US is the only member that provided language exclusively on “Location of financial computing facilities for covered financial service suppliers”.
The US proposal covers “Financial services” such as “all insurance and insurance-related services and all banking and other financial services (excluding insurance), as well as services incidental or auxiliary to a service of a financial nature.”
The US proposal is drawn largely from the former TPP agreement, said a participant, who asked not to be quoted.