WTO/Digital Trade: Electronic Commerce Joint Initiative Chair's Text - Some Initial Views

Last week negotiators from 90 WTO Members met to keep working on the Joint Initiative for Electronic Commerce, with less than a month to go until the WTO’s 13th Ministerial Conference (MC13). The Co-conveners at the end were typically upbeat, with Australia’s new Ambassador to the WTO saying that the Co-conveners judge “it will be possible to conclude an agreement in the next few months.” The next week of meetings in Geneva will take place 11-14 March.

Bilaterals.org managed to obtain a copy of the latest “Chair’s text” prepared by the three co-conveners (Australia, Singapore and Japan) ahead of the meeting, which provides some insights into what the likely consensus landing zones are for the Joint Initiative and what likely won’t be achieved.

So here are some initial hot takes on what it tells us:

1. The “substantially concluded” provisions all look - on a quick review - to be at a relatively good level of ambition. These were announced last October as “online consumer protection; electronic signatures and authentication; unsolicited commercial electronic messages (spam); open government data; electronic contracts; transparency; paperless trading; cybersecurity; open internet access; electronic transaction frameworks; electronic invoicing; and ‘single windows’”. Most are at least equivalent to the rules found in agreements like CPTPP and other more recent digital economy deals, with some being diluted down (such as with a “shall endeavour”). There are also a few actual minor improvements and new provisions as well compared to past precedents. Considering the range of participants - many having not agreed to these kind of rules previously - these would all be a useful achievement to lock in place and also set a good baseline for future discussions.

2. On future discussions - the text is packed with plenty of provisions on cooperation, collaboration and discussion pointing to a key benefit of the Joint Initiative, which is putting the WTO at the centre of digital trade discussions (see my previous post highlighting this as a talking point for the Joint Initiative). This includes a dedicated Committee on Trade-Related Aspects of Electronic Commerce to monitor the operation and implementation of the final agreement.

3. As expected - data flows, data localisation, and source code rules are nowhere to be seen in the Chair’s text. They aren’t even mentioned in the ‘placeholder’ provisions where more work is still being done. These have been well and truly kicked to the long grass.

4. More positively - it seems there is hope the Joint Initiative will be able to achieve a moratorium on customs duties on electronic transmissions among its participants. Given the increasingly gloomy prospects around an extension of the multilateral moratorium at MC13, this would be a real concrete outcome of immediate and recognisable value. Late last year, at least five participants had proposed alternative text for this that would have linked it to Ministerial outcomes (i.e. not provided certainty), and Indonesia remains opposed to a broad-ranging moratorium (arguing it should apply in relation to the transmission only not the contents of the transmission). So its not a clear win yet, but a positive sign.

5. The Chair’s text highlights ICT products that use cryptography, electronic payments, and development as three areas Co-conveners hoped talks last week could keep advancing (i.e. no consensus visible yet). Each have their own sensitivities - ICT products is about encryption and forced disclosure of cryptographic algorithms; and electronic payments is linked to financial services (although the range of ‘endeavour’ provisions in previous texts means you’d think there’s a version of this that could be agreed upon).

6. On development - while everyone agrees transitional provisions will be included, there were 14 pages of proposals in the last Consolidated Text. So that means it will take time to work through the detail of the proposals in addition to finding an appropriate balance that provides the required policy space and time for implementation, but isn’t either overly complex or renders the obligations inoperative for decades to come. What’s needed on the development side will also depend on what is agreed in the substantive rules.

7. The Chair’s text also contains the institutional provisions that will be needed to bring this all together as an actual international agreement (e.g. scope, exceptions, dispute settlement, and final provisions). These all indicate a hope this will be a standalone agreement - i.e. likely a Plurilateral Trade Agreement in Annex 4 of the WTO Agreement - rather than a more complicated architecture such as through amended GATS/GATT Schedules. And the WTO’s public statement says there was “‘healthy’ convergence” on a number of these - suggesting legal architecture hasn’t been too contentious among participants.

Where does this all leave us? While there’s still a lot of work ahead, if the Chair’s text does represent a real landing zone, things are looking positive for the Joint Initiative. There’s still a range of proposals in the Consolidated text that haven’t made it to the Chair’s text. So there is a chance some participants could hold out for something - but I would think most accept they won’t get everything they want (as Singapore’s Ambassador said “We must move beyond our narrow national interest”). It is good that early signs don’t suggest any major controversies among participants on the proposed legal architecture, there will be enough headaches from non-participants on this once the agreement is done. The potential aim of concluding in a “few months” seems optimistic (it would represent potentially only three more in-person meetings based on past history), but perhaps is a sign that last week went very well.

In the end, the tension in the Joint Initiative has always been between finding a package that had enough ambition to justify its existence, but not being so ambitious that it scared off Members from joining. The Co-conveners see the Chair’s text as finding the right balance with a “commercially meaningful and inclusive package”. On inclusivity - hitting 90 participants is a good sign. On ambition - while the outcome won’t be at a CPTPP or DEPA level of ambition, this was never really possible. At least, though, it seems a credible deal could be within reach.