TWN Info Service on WTO and Trade Issues (Feb18/20)
28 February 2018
Third World Network

DG inciting sponsors of plurilateral initiatives to intensify campaign
Published in SUNS #8629 dated 26 February 2018

Geneva, 23 Feb (D. Ravi Kanth) - The World Trade Organization Director-General Roberto Azevedo appears to be encouraging the sponsors of various plurilateral initiatives announced after the failed eleventh ministerial conference (MC11) at Buenos Aires last December to intensify their campaign, according to trade envoys familiar with the development.

These plurilateral initiatives on electronic commerce, investment facilitation, disciplines for micro, small, and medium enterprises (MSMEs), and trade and gender were announced by their sponsors in the form of their own declarations when their proposals failed to secure any multilateral consensus at MC11, and the conference adjourned without any conclusions or declaration.

During a retreat meeting of the ACP (Africa, Caribbean, and Pacific) countries on 15 February, the Director-General said: "I also want to acknowledge the declarations put forward by various groups of members in Buenos Aires - including some ACP members - covering e-commerce, investment facilitation, MSMEs and women's economic empowerment."

Knowing full well that these "declarations" failed to get adopted at the open-ended heads of delegations meetings convened by different minister-facilitators on 12 December in Buenos Aires, the Director-General is subtly inciting the sponsors of those declarations to step up their campaign, said an ACP participant who asked not to be quoted.

Instead of adhering to a member-driven process in which members have spoken against these four initiatives, the Director-General said "it will be up to proponents to take these initiatives forward," the participant pointed out.

This, participants said, amounts to a clear attempt by the Director-General to undermine the WTO's multilateral decision-making process based on the principle of consensus, when he told the ACP countries "it's encouraging that, in each case, proponents are clear that these initiatives will be open, inclusive and as transparent as possible."

The Director-General's jarring remarks on these controversial initiatives failed to surprise the least-developed and developing countries, said another participant who asked: "Is he openly lobbying for the plurilateral initiatives?"

In what was viewed by some of the participants as "clever and mischievous" remarks, the Director-General said, "I have always stressed that these initiatives should not be a departure from multilateralism, but a way to help and support it."

How can these plurilateral "initiatives," which lacked multilateral approval, be anything but a "departure from multilateralism", the ACP participant wondered. Surely, they are not "a way to help and support it," the ACP participant said.

Azevedo said: "So I am urging that these processes should be conducted very carefully. They should remain genuinely open, inclusive and transparent - and take all perspectives into account."

Unsurprisingly, in his speech to the ACP group, the Director-General made no reference to the unresolved multilateral issues in the Doha Development Agenda (DDA). He did not also indicate how the DDA work program which has the support of more than 100 countries will be carried forward.

A day after the Director-General asked his plurilateral "constituency" to intensify their war-like drumbeat, Chinese Taipei issued a plurilateral "work program on electronic commerce" that made no reference to the multilateral 1998 work program on electronic commerce.

In its proposal, titled "Removing Cyberspace Trade Barriers: Towards A Digital Trade Environment with Reciprocally Equal Access", Chinese Taipei has laid the markers for what needs to be discussed before approaching the disciplines on e-commerce.

Chinese Taipei says that while governments can regulate "cyberspace", there should be an attempt to frame regulations for both "offline" activities as well as "online matters."

It says "driven by a variety of policy objectives, government regulations on cyberspace activities can take different forms" such as "interventions into the data-flow" which include "mandatory data localization requirements that personally identifiable information (PII) be stored in domestic servers, protecting the privacy of the data owners and preserving the domestic authority's access to those data."

The Chinese Taipei proposal is a throwback to the non-paper submitted by the US in 2016 which had mentioned about the governments' ability to intervene in internet traffic, directly or with assistance from Internet services providers (ISPs), to filter online requests and to block access to certain websites with immoral or illegal content.

Echoing the concerns raised by the US in its non-paper, Chinese Taipei has argued that "given the increasingly widespread use of the Internet in the practice of international trade, government intervention in the cross-border transmission of information by electronic means may well cause trade concerns."

It says government interventions will "increase the marketing, transaction and administration costs of suppliers, which weakens their positions versus competitors who have access to the Internet, and are able to reach or to be reached via the Internet."

To bolster its arguments on the restrictions imposed on data flows and other barriers, Chinese Taipei has coined the term "cyberspace trade barrier" (CTB) to refer to the interventions by governments in the cross-border transmission of information by electronic means, which can have a restrictive or prohibitive effect on international trade.

Chinese Taipei says that "trade barriers can also be created by the inaction of government, such as a lack of protection of Internet privacy or the absence of proper signature legislation."

Citing the US non-paper for "enabling cross-border data flows," it has mentioned three issues for addressing data flow concerns.

These three issues include (a) "enabling cross-border data flows" which relates to the tension between the free flow of information and consumer data protection, (b) "promoting a free and open internet" which deals with the general openness of the Internet, and (c) "preventing localization barrier" that aims to address the mandatory local data-centre requirement - data-flow is not specifically mentioned.

Chinese Taipei has also referred to the proposals from other plurilateral proponents such as Canada, Chile, Colombia, Cote d'Ivoire, the EU, Korea, Mexico, Moldova, Montenegro, Paraguay, Singapore, Turkey and Ukraine on "measures ensuring openness" and Brazil's proposal for ensuring cross-border data flow.

Against the backdrop of the slew of proposals from e-commerce plurilateral sponsors, Chinese Taipei has clarified that the term "cyberspace trade barrier" will apply to "the trade restrictive effects of government interventions in the cross-border transmission of information by electronic means."

"In this context," it says, "the term "data" or "information" should refer to its broadest scope: all types of information transmitted via the Internet."

"Note should also be taken that data here refers not only to data generated during the course of, or after the transaction (e.g. personal data provided to foreign online vendors for shipment), but also to data transmitted before a transaction is made (e.g. online communications with the vendor regarding price negotiation) and even before the parties match (e.g. as the consumer searches the Internet to find the best vendors)."

Unlike "traditional trade barriers" such as customs duty, quotas or other non-tariff requirements which apply after the transaction has been formed or completed, Chinese Taipei says "CTBs often prevent potential sellers and consumers from matching with each other via the Internet, thus barring any trade opportunities in the first place."

"Under such circumstances, if the discussions do not properly cover data associated with earlier stages in the trading process (i.e., the pre-matching phase), then they could not remedy the negative trade effects brought about by CTBs," Chinese Taipei has pointed out.

In short, says Chinese Taipei, members must first address and clarify the "existing WTO rules and commitments relating to CTB measures," and identify "the scope of legitimate policy objectives for which CTB measures can be justified."

Subsequently, members "may further consider reaching concrete, legally-binding disciplines on the CTB issue."

But none of the plurilateral issues raised in Chinese Taipei's proposal can be discussed unless members complete the multilaterally-agreed 1998 work program on electronic commerce that deals with exploring all the ramifications of e-commerce under different WTO bodies, some trade diplomats pointed out.

Further, there is no clarity whether rule-making is permitted even in open-ended plurilateral initiatives like the ITA (Information Technology Agreement) which deals only with the elimination of tariffs.

Besides, the plurilateral initiatives on rule-making in different areas seem inconsistent with a multilateral rule- making trade body.

However, the Director-General and the plurilateral sponsors seem to reckon that the only way to save the WTO is by embarking on initiatives which are acceptable to the US and other industrialized countries, including their allies in the developing world, whether or not these are acceptable to the large majority of the membership who oppose such plurilateral initiatives.

Obviously, the Director-General and the plurilateral sponsors seeking new rules seem least bothered about preserving the sanctity and integrity of the member-driven WTO, said a trade envoy from a least-developed country, who asked not to be quoted.