Digital: What's new in the June WTO JSI E-Commerce Text
The WTO Joint Statement Initiative1 on Electronic Commerce continues to progress towards finalisation. Bilaterals.org recently obtained a copy of the latest draft negotiation text dated 28 June. I’m writing this while in transit, so have just sketched out the most substantive changes that were highlighted by the Co-convenors, as compared to the March text.
First, the change that has already gotten some attention, there is now a commitment to review the prohibition on customs duties on electronic transmissions:
Article 11: Customs Duties on Electronic Transmissions
11.1 For the purposes of this Article, "electronic transmission" means a transmission made using any electromagnetic means and includes the content of the transmission.
11.2 The Parties acknowledge the importance of the Work Programme on Electronic Commerce (WT/L/274) and recognise that the practice of not imposing customs duties on electronic transmissions has played an important role in the development of the digital economy
11.3 No Party shall impose customs duties on electronic transmissions between a person of one Party and a person of another Party.
11.4 For greater certainty, paragraph 16.3 shall not preclude a Party from imposing internal taxes, fees or other charges on electronic transmissions in a manner consistent with the WTO Agreement.
11.5 Taking into account the evolving nature of electronic commerce and digital technology, the Parties shall review this Article in the fifth year after the date of entry into force of this Agreement, and periodically thereafter, with a view to assessing the impacts of this Article and whether any amendments are appropriate.
Some have suggested this change means the customs duties prohibition is “not permanent”, but Article 11.5 seems much more modest than this. The new language does not make the obligation in Article 11.3 cease operation after five years, it just obliges the Parties to meet and review “whether any amendments are appropriate”. Unless the Parties agree to amend or delete the Article - which would require consensus - the obligation will remain on foot.
Indeed, while the new Article 11.5 explicitly requires a review of the customs duties prohibition after five year, Article 35 of the Agreement already established a review of the entire agreement after two years. There was always the possibility of reconsidering of the customs duties prohibition through that process even in the absence of this new explicit language.
Second, there is a small tweak to the Relation to Other Agreements provision with a new footnote clarifying that the JSI’s exceptions on measures regarding Personal Data Protection and Indigenous Peoples don’t diminish a Party’s rights or obligations under the WTO Agreement:
Article 3: Relation to Other Agreements
3.1 The Parties affirm their rights and obligations under the WTO Agreement. The Parties further affirm that this Agreement does not create either obligations or rights for Members of the WTO that have not accepted it.
3.2 Nothing in this Agreement shall be construed as diminishing a Party's rights and obligations under the WTO Agreement, including any market access commitments inscribed in a Party's schedule of commitments to the GATT 1994 or the GATS, respectively.[fn1]
[fn1] For greater certainty, this provision also applies to the exceptions set out in Articles 25 and 26.
Article 25 is an exception allowing Parties to adopt or maintain “measures on the protection of personal data and privacy”. Article 26 is an exception for measures a Party “considers necessary to accord more favourable treatment to Indigenous Peoples in its territory”.2
I wonder if this change was driven by concerns around the new exceptions suggesting that similar policy space is not available under the WTO Agreement (given this language is not found in, for example, the GATT or the GATS). I also note that the issues identified in Ines Willemyns’ IELP Blog post have not been addressed.
Third, the provisions on telecommunications has had a range of drafting changes, but the one I’ll highlight here is a slight lowering of ambition:
Article 21: Telecommunications
…
21.6 Each Party shall endeavour to:
(a) ensure that the assignment of frequency bands for public telecommunication services are carried out through an open process that takes into account the public interest, including the promotion of competition; and
(b) carry out such assignment using market-based approaches, such as bidding procedures where appropriate.
Previously the obligations in sub-paragraphs (a) and (b) were entirely separate paragraphs - with Parties being under a clear obligation to “ensure” that frequency bands are assigned through an open process, and only being required to “endeavour to ensure” that the assignment used market-based approaches. In merging the two paragraphs together, the lower ‘endeavour’ standard now applies to both obligations.
Fourth, there has been some streamlining of the dispute settlement provision:
Article 27: Dispute Settlement
27.1 Articles XXII and XXIII of the GATT 1994 or a̶n̶d̶ Articles XXII and XXIII of the GATS, as elaborated and applied by the Dispute Settlement Understanding, shall apply to consultations and the settlement of disputes arising under this Agreement.
27.2 The Dispute Settlement Understanding shall apply to disputes brought pursuant to paragraph 1. F̶o̶r̶ ̶a̶n̶y̶ ̶d̶i̶s̶p̶u̶t̶e̶ ̶c̶o̶n̶c̶e̶r̶n̶i̶n̶g̶ ̶t̶h̶e̶ ̶i̶n̶t̶e̶r̶p̶r̶e̶t̶a̶t̶i̶o̶n̶ ̶o̶r̶ ̶a̶p̶p̶l̶i̶c̶a̶t̶i̶o̶n̶ ̶o̶f̶ ̶t̶h̶e̶ ̶p̶r̶o̶v̶i̶s̶i̶o̶n̶s̶ ̶o̶f̶ ̶t̶h̶i̶s̶ ̶A̶g̶r̶e̶e̶m̶e̶n̶t̶,̶ ̶P̶a̶r̶t̶i̶e̶s̶ ̶m̶a̶y̶ ̶h̶a̶v̶e̶ ̶r̶e̶c̶o̶u̶r̶s̶e̶ ̶t̶o̶ ̶t̶h̶e̶ ̶D̶i̶s̶p̶u̶t̶e̶ ̶S̶e̶t̶t̶l̶e̶m̶e̶n̶t̶ ̶U̶n̶d̶e̶r̶s̶t̶a̶n̶d̶i̶n̶g̶.̶
I don’t have much to say on this - although at first glance the Article would appear to go further than, e.g., the CPTPP insofar as it allows for non-violation complaints to be brought in relation to electronic commerce rules (see in contrast CPTPP, Article 28.3(1)(c) which limits non-violation complaints to specific chapters, not including the Electronic Commerce Chapter).
Finally, while not substantive, I believe this is the first time the formal title of “WTO Electronic Commerce Agreement” has been used for the JSI. This makes clear again the participants’ intentions to keep the Agreement within the WTO, although there are not yet any public signs that opponents are showing flexibility.
I know it’s apparently just a “Joint Initiative” now but the negotiation’s own documents still refer to it as a Joint Statement Initiative and most people know this term so I’ll keep using it.
Article 26 is essentially a multilateralised version of New Zealand’s Treaty of Waitangi exception, see, e.g., Article 29.6 from the CPTPP:
