TWN Info Service on WTO and Trade Issues (Nov17/21)
24 November 2017
Third World Network

South nations throw down gauntlet on e-com at MC11
Published in SUNS 8581 dated 23 November 2017

Geneva, 22 Nov (D. Ravi Kanth) - A large majority of developing and poorest countries, including India and South Africa, on Tuesday (21 November) threw down the gauntlet on electronic commerce at the World Trade Organization, challenging the European Union, Japan, and other countries that want to change the existing mandate on e-commerce at the eleventh ministerial conference in Buenos Aires (MC11) next month, trade envoys told SUNS.

At a meeting on e-commerce, convened by the General Council chair Ambassador Xavier Carim of South Africa on 21 November, the large majority of developing and many least-developed countries made clear they will only adhere to the existing non-binding 1998 work program that requires members to explore e-commerce from all areas, and would not engage in, but oppose, any program for negotiating rules and disciplines.

The proponents led by the European Union, Japan, and other developed countries delivered long statements as to why there has to be a change in the e-commerce mandate and why members must agree to establishing a "Working Party on Electronic Commerce" that "shall conduct preparations for and carry [out] negotiations on trade-related aspects of electronic commerce on the basis of proposals by members."

[The persistent efforts of the EU, Japan and others to push for a decision on e-com negotiations and disciplines, are increasingly being seen as clearly an effort on behalf of Silicon Valley tech giants to sidetrack efforts at wider UN fora for internet governance to safeguard democratic polity and pluralism in countries. They are attempting to hijack the issue into the WTO and write rules and disciplines to ensure continued monopolistic control over information by the Silicon Valley tech giants, and prevent future competition. For further background and details, see article by Deborah James in SUNS #8579 dated 21 November 2017 and commentary by Chakravarthi Raghavan in SUNS #8580 dated 22 November 2017. SUNS]

In a restricted Job/GC/156 document issued on 21 November, Japan along with Costa Rica, Hong Kong (China) and Chinese Taipei called for "establishing a Working Group on Electronic Commerce" that "shall assess whether the clarification or strengthening of the existing WTO rules is necessary."

The joint proposal of Japan and the other three countries said the Working Group shall "assess the priority needs of developing country Members, particularly those of LDCs, with respect to, inter alia, issues relating to the development of infrastructure for electronic commerce, enabling services and technical assistance and capacity building."

Japan's proposal also suggested that the working party shall "examine opportunities, challenges, and barriers for access to electronic commerce by micro, small and medium sized enterprises, including small producers and suppliers."

Effectively, Japan also included micro, small and medium sized enterprises in its proposal.

In another proposal in document Job/GC/132, some of the same proponents along with Australia, Brunei Darussalam, Canada, Colombia, Korea, Laos, Malaysia, Moldova, Myanmar, New Zealand, Nigeria, Panama, Qatar, Singapore, Chinese Taipei, and Thailand proposed horizontal processes to carry out "focused work and holistic discussions on e-commerce."

The proponents said "members should reflect and build on the discussions since MC10, and identify possible (i) improvements to processes, and (ii) issues of interest, if any, that they would like to take forward."

"The outcome of these discussions should be captured in the MC11 Ministerial Decision on E-commerce. Ministers at MC11 should give clear direction for future work in e-commerce, with development at the core, and set out a clear, updated framework/process through which future work could be undertaken," the proponents argued.

In short, the proponents have tabled different proposals with differing language and goals but all leading towards their stated goal of changing the 1998 work program, said a trade envoy who asked not to be quoted.

"But the large majority of developing and least developed countries saw the writing on the wall, particularly attempts to mislead them through different proposals," said a trade envoy who asked not to be identified.

India and the African Group countered the proponents with their own draft ministerial decisions on e-commerce.

India, for example, issued a restricted proposal (Job/GC/153) on 20 November in which it called for continuing "the work under the Work Programme on Electronic Commerce" as per the work program adopted on 25 September 1998.

India said ministers must "instruct the General Council to hold periodic reviews in its sessions of July and December 2018 and July 2019 based on the reports that may be submitted by the WTO bodies entrusted with the implementation of the Work Programme and report to the next session of the Ministerial Conference."

India also drew a linkage between the "moratorium on electronic transmissions" and the "decision on moratorium on TRIPS Non-Violation and Situation Complaints" suggesting that the two moratoriums will be simultaneously adopted without any change for another two years.

Intervening several times during the meeting, India made clear that it will not accept any change from the existing process until members explored all the issues on a non-binding basis, said a participant who asked not to be quoted.

At the meeting, the African Group led by Rwanda and other countries from the region such as South Africa, and Uganda delivered equally strong messages.

In its proposal (Job/GC/155), the African Group explained the issues as to why they want to adhere to the 1998 work program.

The African Group set out its case, by acknowledging and recognising the rapid growth in e-commerce. The African Group said it remains "committed to addressing the uneven spread of global electronic commerce and risk of disruptive impacts."

More important, countries in Africa want to overcome "the digital and technological divide underlying digital trade and electronic commerce," the African Group said.

The African Group underscored the need for "diverse national measures" to build "national capabilities, with a view to promote inclusive, equitable and sustainable growth."

It pointed out that there is a fundamental "need to clarify the treatment of electronic commerce in relevant WTO Agreements, and the broad interest of Members to continue examining all trade-related issues relating to global electronic commerce."

The African Group reminded the EU and other proponents that "half of the world's population" remain offline.

Therefore, "taking particular account of the economic, financial, and development needs of developing countries", the exploratory work on e-commerce under the 1998 work program must continue without any change, the African Group insisted.

The African Group set out the following markers in seven bullet points:

A. To continue the work under the Work Programme on Electronic Commerce since our last session, based on the existing mandate and guidelines, in the relevant WTO bodies as set out in paragraphs 2 to 5 of the Work Programme.

B. To address all open issues in the relevant bodies, as provided for in paragraphs 2 to 5 of the Work Programme on Electronic Commerce, including but not limited to definition, classification and technological neutrality.

C. To discuss, in the relevant bodies, the manner in which Members can preserve their right to regulate electronic commerce and consideration of all measures to promote national digital industrial development with a view to promoting inclusive, equitable and sustainable growth.

D. To undertake, in the relevant bodies, a thorough examination of the opportunities and risks associated with digital transformation and electronic commerce.

E. To discuss, in the relevant bodies, measures Members have taken and may take to develop their national institutional regulatory capacity that ensure: the protection of information of all Members and their citizens, including but not limited to mandatory disclosure of data; the disclosure of source codes; access to, and transfer of technology.

F. To continue, in the relevant bodies, the practice of national experience sharing of inter alia: the historical development of the digital industry; the challenges and measures adopted to promote digital economy and electronic commerce.

G. To instruct the General Council to hold periodic reviews in its sessions of July and December 2018 and July 2019 based on the reports that may be submitted by the WTO bodies entrusted with the implementation of the Work Programme and report to the next session of the Ministerial Conference.

On extending the moratorium on zero-tariffs on e-com imports, the African Group said it "is still discussing it in view of the revenue implications of the current moratorium on customs duties, particularly in the context of increasing digitization of goods and services."

Therefore, the "renewal of the moratorium should not be seen as automatic," the African Group made clear.

The Tuesday meeting, however, turned out to be an instance of the "dialogue of the deaf": the proponents of e-com negotiations were not prepared to even listen to the points raised by the African Group and India among others, said a trade envoy who asked not to be quoted.

Significantly, the United States, which had earlier put forward the most ambitious proposals on e-commerce two years ago, remained silent at the meeting.

"The US is not going to fight for anything and probably they want to continue with things as they are and watch the situation," said a trade envoy from South America, who asked not be quoted.

But the meeting revealed that the "divergences between the two sides are so wide that the notion that they can be bridged in the next two weeks is irrational and misplaced," said a trade envoy who asked not to be quoted.

The EU however appears determined to take the issue to Buenos Aires regardless of the fallout, the envoy suggested.

In his concluding remarks, the GC chair said there are eight proposals on the table with differing options. He urged the two sides to hold consultations to see if they can bridge their positions. Ambassador Carim said ministers will not have time to go through eight proposals at Buenos Aires as they will be preoccupied with various other issues.

It is clear that the developing countries must remain ready to fight it out on e-commerce at Buenos Aires as the EU and other developed and some developing countries are going to press for an outcome based on their proposals, several trade envoys said.