TWN Info Service on WTO and Trade Issues (Oct17/15)
19 October 2017
Third World Network

South countries shoot down proposals for e-commerce negotiations
Published in SUNS # 8555 18 October 2017

Geneva, 17 Oct (D. Ravi Kanth) - A large majority of developing and least developed countries shot down on Monday (16 October) proposals from major industrialized and some developing countries for establishing a "Working Party" or "Working Group" on Electronic Commerce at the World Trade Organization's upcoming ministerial meeting in Buenos Aires, several trade envoys told SUNS.

The proposals for a working party or working group are disguised efforts at starting negotiations for WTO e-com rules.

India, the African Group, Uganda on behalf of the least-developed countries (LDCs), and several other members severely questioned the underlying motives of the proponents seeking negotiations to craft rules in e-commerce without concluding the Doha Development Agenda (DDA) trade negotiations.

They said that the proposals are aimed at undermining the 1998 work program so as to deny the "developmental space" for industrialization.

The DDA work program provided the development space to developing and poorest countries, India, the African Group, and Uganda argued.

In the strongest statement issued by the African Group yet, Rwanda described the attempts by the proponents to confuse members through a slew of proposals as grotesque and diabolical, according to trade envoys, who asked not to be identified.

Rwanda accused the e-commerce proponents - Japan, Russia, Costa Rica, the European Union, Canada, Australia, Chile, Korea, Norway, and Paraguay - for undermining the Doha Development Agenda negotiations at Buenos Aires so that they can start negotiations on e-commerce.

Last week, South Africa's trade minister Rob Davies, during the ministers-only dinner in Marrakesh, told his counterparts that his country will fight tooth and nail against the proposals for launching e-commerce negotiations, according to a trade minister who asked not to be quoted.

The divide over e-commerce between the proponents and the opponents is unbridgeable at this juncture. The WTO director-general Roberto Azevedo, during the recent Marrakesh ministerial meeting, said there are too many wide gaps which are difficult to bridge at this juncture.

On Monday, the WTO's General Council chair, Ambassador Xavier Carim of South Africa, convened another meeting to prepare the mandate on e-commerce, particularly for exploring the level of acceptability for proposals to launch negotiations as well as the extension of the current moratorium on e-commerce transmissions.

In a restricted Job document, Job/GC/140, on 16 October, several proponents - the European Union, Canada, Australia, Chile, Korea, Norway and Paraguay among others - called for establishing "a Working Party" at the Buenos Aires meeting that "shall conduct preparations for and carry out negotiations on trade-related aspects of electronic commerce on the basis of proposal by Members."

The proponents maintained that "the Working Party shall establish its own procedures and shall report periodically to the General Council."

They demanded continuance of "the current practices of not imposing customs duties on electronic transmissions until our next session, which we decided to hold in 2019," according to the draft proposal obtained by SUNS.

Prior to the latest proposal by the proponents, two other demandeurs for e-commerce negotiations - Japan and Russia - had circulated their own respective proposals that also called for establishing a "Working Group."

Japan suggested that "existing WTO Agreements apply to electronic commerce." Japan indicated that issues such as the free flow of data without data localization requirements, permanent moratorium on customs duties, non-disclosure of source code, and prohibition of forced technology transfer will also come under the purview of future negotiations as and when they are launched.

Russia, in its proposal, had suggested the possibility of developing rules in the Working Group, indicating that it could act as a negotiating group.

In addition, Costa Rica circulated a proposal last week on "E-commerce for Development Agenda" even though the issues it raised as part of e-commerce and development are currently examined in the WTO's Committee on Trade and Development (CTD).

India said it "wants continuation of the existing [1998 e-commerce] work program" that provides an exploratory and non-negotiating mandate.

Proposals to establish a new Working Group at Buenos Aires are clearly aimed at imposing "a top down approach" as opposed to "bottom up approach" in the 1998 work program, India said.

India's trade envoy, Ambassador J. S. Deepak, argued that "gains from e-commerce should not be confused with the likely benefits of rulemaking in e-commerce," according to a source familiar with the meeting.

Ambassador Deepak said "negotiations on rules and disciplines in E-commerce would be highly premature at this stage," according to the source who spoke to SUNS.

India also linked the extension of the two-year moratorium for not imposing customs duties on e-commerce transactions with the moratorium on TRIPS non-violation and situation complaints.

Rwanda, on behalf of the African Group, severely demolished the proposals circulated by the e-commerce proponents.

The African Group said it "can agree to continue the exploration of issues under the 1998 Work Program."

"However, we will not agree to change the current structure or institutional arrangement of the Work Program," the African Group said.

Even before members explored the e-commerce issues from a trade perspective, Japan and other members are arguing that "existing WTO Agreements apply to electronic commerce".

The African Group asked whether the proponents are saying "that our Schedules of Commitments negotiated in the Uruguay Round automatically apply to new technologies such as 3D printing, robotics, drone delivery and Artificial Intelligence, to name a few?"

The African Group said it "objects to this erroneous assumption by Japan et al, because it has no legal basis in the WTO's framework."

Further, such an approach "goes against the basic principle of progressive liberalization," the African Group said, arguing "new business models, new services and new technologies that did not exist at the time Members' Schedules were negotiated do not apply post-hoc."

Rwanda reminded members at the meeting that "there still remains a long paper trail in the WTO of 19 years of unresolved issues pertaining to e-commerce."

The African Group said the e-commerce issue had thrown up divergent views "on the technological neutrality of the GATS, the distinction between, and application of GATS Modes 1 and 2 in e-commerce, whether products delivered electronically are services or goods or both, and the classification of 'new services'."

Without resolving "these issues" which were placed under the carpet, the proponents are now "advocating for new multilateral rules on new issues such as e-commerce," the African Group pointed out.

Rwanda warned that "A Working Group will not replace these systemic divergences, and these discussions, as per the Work Programme, are required to take place in the bodies responsible for administering the relevant Agreement."

The African Group said the proponents made a flawed case "advocating for new multilateral rules on new issues such as e-commerce."

By suggesting a "false narrative", the proponents for e-commerce are primarily aiming at "kicking away the development ladder" as set out in the Doha Development Agenda.

"In our view, the Work Programme has not been tested to warrant a change in its structure," the African Group said.

It exposed the ignorance of Costa Rica which had tabled a proposal on "e-commerce for development agenda" when the 1998 work program clearly mandates members "to examine all trade-related issues relating to global electronic commerce, taking into account the economic, financial, and development needs of developing countries."

The African Group said that the Costa Rican proposal is saying erroneously that "the CTD does not have a mandate to deal with these development aspects."

It argued that the exclusion of ITU (International Telecommunication Union) from the list of organizations that would collaborate with the WTO is untenable.

"We cannot support the creation of multilateral fora just for the sake of creating motion when there is neither movement nor value-addition," the African Group said.

It urged the chair to "ensure that the draft MC11 text on e-commerce is agreed in Geneva." It asked the chair to place all their concerns in his report.

Nigeria supported the proposals from the proponents, breaking ranks with the African Group, according to participants present at the meeting.

The chair urged the proponents to consult not only among themselves for harmonizing their proposals but also discuss with their critics so as to bridge the wide gaps between the two sides.

Ambassador Carim acknowledged that there are wide divergences between the two sides.

In short, the developing and least-developed countries have exposed graphically the continued attempts to bury the DDA work program by major industrialized countries and their allies in the developing world through "new issues" such as e-commerce, investment facilitation, and disciplines for small and medium enterprises.

The moot issue, however, is whether the large majority of developing and poorest countries will stand united at Buenos Aires, or yield meekly as they did at Nairobi.