TWN Info Service on WTO and Trade Issues (Sept20/12)
15 September 2020
Third World Network

JSI group on e-com to discuss open internet access, competition issues
Published in SUNS #9189 dated 15 September 2020

Washington DC, 14 Sep (D. Ravi Kanth) – Despite the worsening e-commerce war between the United States and China, the participants of the informal plurilateral Joint Statement Initiative (JSI) group on e-commerce plan to discuss on 17 September the issues of open internet access, competition, and access to and use of interactive computer services.

In an email sent on 9 September to JSI participants, the three coordinators of the JSI group on e-commerce – Japan, Australia, and Singapore – indicated the three discussion topics centering around open internet access, competition, and access to and use of interactive computer services.

The coordinators suggested that JSI members “consider the unique opportunities and challenges faced by members, including developing countries and LDCs, as well as by MSMEs (micro, small, and medium enterprises), in relation to these issues” of open internet access, competition, and access to and use of interactive computer services.

Significantly, the non-mandated JSI negotiations on e-commerce aim to create seemingly intrusive “two dozen digital rules”.

They include the permanent moratorium on customs duties on digital transmissions, removal of restrictions on data flows, elimination of barriers on storing data in local servers and “no demands for source codes (that include capturing data through complex algorithms) or data sovereignty”.

These new rules that are being negotiated by the JSI members would severely constrain development of digital industrial policies in developing countries, former South African trade minister Rob Davies had warned at a virtual brainstorming session on 2 September.

These two dozen new rules were earlier concluded in the failed TPP (Trans-Pacific Partnership) regional free trade agreement that was largely led by the United States.

Subsequently, the US along with Australia, Singapore, and Japan brought these rules to be negotiated as part of the JSI work program.

Davies had criticized the plurilateral JSI on e-commerce on grounds that the new rules will further reinforce the unbridgeable disparities in the global e-commerce trade that is being dominated by GAFA (Google, Amazon, Facebook, and Apple) as well as Microsoft, Alibaba, and Tencent among others.

Minister Davies had warned that the “fourth Industrial Revolution” is all about big data management, mining and application of data or monetization of data that will be facilitated through 5G (fifth generation of mobile internet applications), Internet of Things (IoT), additive manufacturing (3D printing), robotics, nano-technology, quantum computing and AI (artificial intelligence).

The non-mandated JSI negotiations are inconsistent with the core provisions of the rules set out in the Marrakesh Agreement and surprisingly, the WTO Secretariat is facilitating the e-commerce negotiations, said an analyst, who asked not to be quoted.

“Members should oppose the JSI negotiations being conducted at the WTO,” the analyst said.

As regards the legal status of JSIs, it is a somewhat open secret that the participants failed to get a multilateral mandate at the WTO’s eleventh ministerial meeting (MC11) in Buenos Aires, Argentina, in December 2017.

After the failure to secure a multilateral “green light” at the Buenos Aires meeting, the US along with its allies such as Japan, Australia, and Singapore and other developed countries had launched the JSI negotiations with active support from behind the scenes of the former WTO director-general Roberto Azevedo.

Meanwhile, in her presentation on “the legal status of JSIs and potential conflicts with consensus decision-making and Article X (of the Marrakesh Agreement) on amendments” at a brainstorming session convened on 8 September by Prof Abhijit Das of the Centre For WTO Studies in New Delhi, the South Centre, and Third World Network among others, Aileen Kwa of the South Centre had argued that JSIs on e-commerce, investment facilitation, and disciplines for MSMEs had “no multilateral mandate”, nor any “legal status or locus standi in the WTO.”

She argued that Article X of the Marrakesh Agreement concerning “amendments” recognizes that any Member may initiate a proposal to amend the provisions of the Marrakesh Agreement or the Multilateral Trade Agreements in Annex 1 by submitting such a proposal to the Ministerial Conference (or the General Council in the absence of a Ministerial Conference).

Ms Kwa said that such amendments which could dilute or elaborate on existing rules or bring in new rules that would add to the existing framework of the WTO rules under Article X would require “multilateral consensus”.

It is clearly stipulated that, as per Article X, the following conditions have to be fulfilled. The conditions include:

A. Under Article 10.1 of the Marrakesh Agreement, “Any Member of the WTO may initiate a proposal to amend the provision of this Agreement or the Multilateral Trade Agreements in Annex 1 by submitting such proposal to the Ministerial Conference…”

B. “If consensus is reached, the Ministerial Conference shall forthwith submit the proposed amendment to the Members for acceptance”.

C. Under Article 10.5 (of the Marrakesh Agreement), “Except as provided in paragraph 2 above, amendments to Parts I, II and III of GATS and the respective annexes shall take effect for the Members that have accepted them upon acceptance by two thirds of the Members…”

Under Marrakesh Agreement Article XVI.3, she argued that ” in the event of a conflict between a provision of this Agreement (Marrakesh Agreement) and a provision of any of the Multilateral Trade Agreements, the provision of this Agreement shall prevail to the extent of the conflict.”

She argued that only “Article X (amendments) prevails over any provision in the Multilateral Trading System.”

Further, Ms Kwa said that the existing mandates of the JSI talks on domestic regulation for services “will render the GATS (General Agreement on Trade in Services) Article VI.4 multilateral negotiating mandate” obsolete.

In a similar vein, the JSI negotiations on e-commerce will have an impact on the ongoing multilateral discussions under the 1998 e-commerce work program, she suggested.

The trade envoys of Jamaica and South Africa had already warned at a brainstorming session early this month that the informal plurilateral JSI negotiations risk further fragmenting the multilateral trade negotiations.