Service on WTO and Trade Issues (Nov19/01)
talks on e-com unlikely to provide MFN access
Geneva, 30 Oct (D. Ravi Kanth) -- The proposed plurilateral informal Joint Statement Initiative (JSI) on electronic commerce at the World Trade Organization is unlikely to provide most-favoured-nation (MFN) access, as the participants remain concerned about accommodating free-riders in any future deal, sources told the SUNS.
[Any plurilateral accord on e-commerce to be part of the WTO rule-book in Annex 4, would need the consensus of the membership as a whole at a Ministerial Conference. Without this, and without MFN treatment for non- signatories, the accord will be WTO-illegal. SUNS]
The ever-expanding JSI negotiating mandate that would now include "digital trade facilitation and logistics" as well as "telecommunications", in addition to "flow of information", "privacy", and "cybersecurity", has made the negotiations unwieldy and messy, said a participant, who asked not to be identified.
Significantly, China has brought, for the first time, the security-related sanctions slapped on the Chinese telecoms company Huawei as well as restrictions on the supply of chips to the Chinese companies to the center-stage of the JSI negotiations.
During the JSI meetings held at the WTO on 22-25 October, these three developments caused resentment among the key members, the participant said.
Privately, the leading JSI proponents such as the United States, Japan, and Australia among others have begun discussing how to restrict the MFN provision as well as stop free-riders from availing the benefits accruing from the proposed open-ended plurilateral agreement on e-commerce, said a participant from Africa, who asked not to be identified.
The proposed JSI deal on electronic commerce is supposed to be premised on an MFN framework so as to enable the non-JSI members to avail of the market access and other benefits.
At the time of launching the JSI at the WTO's eleventh ministerial conference in Buenos Aires in December 2017, the participants had agreed that the final plurilateral agreement on digital trade would be modelled on the lines of the Information Technology Agreement (ITA) so that non-participants are open to avail all the benefits.
But, there is now growing resentment among key members to allow the benefits of the plurilateral agreement to be passed on to the non-JSI members, the participant said.
More importantly, the manner in which the JSI mandate is being expanded to cover every issue on the digital trade agenda remains a major source of concern among key members, the participant said.
For example, the European Union, China, Korea, and several other countries are increasingly shaping the JSI discussions into market access negotiations on Telecommunications and the Digital Trade Facilitation and Logistics.
The EU, China, Russia, and Thailand among others are also insisting on strong "safeguards", "legitimate public policy" carve-outs, and exceptions through "privacy" and "cybersecurity", the participant said.
In contrast, the US along with its former Trans-Pacific Partnership (TPP) allies, is insisting on negotiations aimed at framing rules on cross-border transfer of information, location of computing facilities, and source code among others, said another participant, who asked not to be quoted.
"It became apparent at last week's meeting that the negotiating agenda is becoming messy like a dog's breakfast," the participant said.
During the discussion on telecommunications on 25 October, the EU and China hogged the limelight with their proposals on various aspects of telecommunications.
The proposals submitted by the EU would amount to re-writing a new Telecommunications Reference Paper to replace the 1996 Telecommunications Services Reference Paper, the participant said.
Several countries such as Brazil, not members of the 1996 Telecoms Reference Paper, are now being asked to agree to the new Telecoms Reference Paper, the participant said.
The EU has largely submitted the proposals on Telecommunications that cover specific language on "Competitive Safeguards", "Interconnection," "Universal Service," "Licensing and Authorization," "Telecommunications Regulatory Authority," "Allocation and use of scarce resources," "Essential facilities," "Resolution of disputes," and "Transparency" (on which the EU and China provided language).
Several members voiced sharp concerns over the EU's proposals on telecommunications, arguing that it would undermine the negotiations on the central issues concerning digital trade, the participant said.
The EU is also considering bringing the revised Information Technology Agreement that was concluded at the WTO's tenth ministerial conference in Nairobi into the Digital Trade Agreement, the participant added.
As part of the discussions on Telecommunications, China has submitted a comprehensive proposal on "Electronic commerce-related network equipment and products" that seeks to address the security-related sanctions slapped by the US on the supply of vital electronic commerce-related network equipment products and services, including the ban imposed on the Chinese telecoms company Huawei, the participant said.
Although China did not specifically name the US which has imposed the sanctions on the Chinese telecoms company Huawei, the Chinese proposal is aimed at stopping the American restrictions as part of the plurilateral deal on digital trade, the participant said.
China's proposal says unambiguously that "no [Party/Member] shall, whether in written form or not, block the supply chains of electronic commerce-related network equipment and products, in particular those based on long-term commercial cooperation, including cutting or prohibiting the supply to enterprises of any other [Party/Member] of necessary raw materials, components, parts, software, technologies and their updates for electronic commerce-related network equipment and products, unless in a way consistent with the WTO Agreement, and based on the conduct of an investigation pursuant to legitimate public policy objectives, a conclusion thereof with concrete evidences, and advance notices."
The Chinese proposal argues that: "Electronic commerce-related network equipment and products refer to all hardware and related software and services that can be used to support transactions done by electronic means, including telecommunication network equipment, products, resources, and related services such as installation, trial operation, testing, optimization, maintenance and repair services and etc., and other related equipment, products, resources and related services."
Further, it insists that "[Parties/Members] recognize the importance of electronic commerce-related network equipment and products and their supply chains to ensure the sustainable development of electronic commerce."
More importantly, "with respect to all measures affecting the production, supply, rental, sale, export and import of electronic commerce-related network equipment and products, each [Party/Member] shall accord to enterprises and electronic commerce-related network equipment and products of any other Member treatment no less favorable than that it accords to any other like enterprises or any other like electronic commerce-related network equipment and products," China demanded.
Moreover, "no [Party/Member] shall, whether in written form or not, exclude or limit the supply of electronic commerce-related network equipment and products or other normal business operations of enterprises from any other [Party/Member], unless in a way consistent with the WTO Agreement, and based on the conduct of an investigation pursuant to legitimate public policy objectives, a conclusion thereof with concrete evidences, and advance notices," China said.
China demanded that "No [Party/Member] shall prevent public telecommunications networks or their services suppliers, including value-added services, from choosing the supporting technologies of their networks and services, and/or electronic commerce-related network equipment and products related to the technologies."
In short, the JSI negotiations last week revealed that the promises made at the WTO's eleventh ministerial conference in Buenos Aires in December 2017 are difficult to be met due to the expanding agenda and MFN concerns, the participant said.
More disturbingly, the issues that are being negotiated by the members of the JSI group on e-commerce would severely erode the commitments made by members in the GATT (General Agreement on Tariffs and Trade) and GATS (General Agreement on Trade in Services)," the participant added. +