Info Service on WTO and Trade Issues (Nov18/13)
22 November 2018
Third World Network
China comes out against ambitious rules on e-commerce
Published in SUNS #8800 dated 21 November 2018
Geneva, 20 Nov (D. Ravi Kanth) - China has inveighed against binding
provisions for free cross-border data flows, preventing data localization,
and protection of source code among others, in the ongoing informal
plurilateral discussions on e-commerce at the World Trade Organization,
causing a setback for developing ambitious rules as demanded by the
United States, Japan, Australia, and Singapore, trade envoys told
During a meeting of the members of the plurilateral Joint Statement
on Electronic Commerce Initiative on 31 October, China had delivered
the strongest statement yet for "open, transparent, inclusive
and pro-development" outcomes, "without imposing any preconditions
on the participation of any member and without prejudice to members'
positions in future discussion."
China, which did not initially join the plurilateral initiative on
e-commerce when it was announced by the trade chiefs of the United
States, Japan, Australia, and Singapore, along with other industrialized
and several developing countries at the WTO's eleventh ministerial
conference in Buenos Aires in December 2017, said "full account
shall be given to the concerns and needs of developing members including
those who have not joined the discussion, particularly the LDCs [least
China said it will work closely with countries that are outside the
plurilateral initiative group.
China's strong statement has apparently resulted in the cancellation
of a planned meeting of several trade ministers of the plurilateral
group on e-commerce in January 2019 on the margins of the annual World
Economic Forum meeting in Davos, Switzerland, said a trade envoy who
asked not to be quoted.
More important, China told the plurilateral participants that "discussion
shall focus on "trade-related aspects" of e-commerce as
the 1998 Work Program so mandated."
"Let's stick to e-commerce without substituting its concept or
generalizing its expanded scope," China said, in opposition to
ongoing attempts by the US, Japan, Australia, Singapore, and Canada
among others to incorporate rules from the failed Trans-Pacific Partnership
Many developing countries led by India and South Africa have repeatedly
maintained that the sanctity and integrity of any outcome on e-commerce
will hinge on how members proceed according to the 1998 work program
Clearly, China's latest position comes somewhat close to what a large
number of developing countries are calling for as per the 1998 work
Significantly, China remained silent on a permanent moratorium against
imposing customs duties on electronic transmissions.
It remains to be seen what China will say during the General Council
meeting next week to discuss a proposal from India and South Africa
that has called for re-examining the moratorium because of the fiscal
burden it would impose on developing and poorest countries.
Further, China said that "members' right to regulate shall be
fully respected and members' sensitivities be accommodated in scoping
the discussion" at the plurilateral proceedings.
Without naming the US, Japan, Australia, and Canada, who want to discuss
all regulatory issues at the plurilateral meetings, China said "any
future disciplines that might be foreshadowed in the exploration,
shall in no way prevent the WTO members from exercising their right
to regulate and fulfilling legitimate public policy objectives".
Clearly, China is calling for policy space as "most developing
countries are still at the lower end of the learning curve or just
starting to formulate domestic regulatory frameworks on e-commerce."
"Therefore, their [developing countries'] policy space, the right
to regulate and the right to develop need to be duly preserved,"
China criticised the US and other developed countries that are calling
for free cross-border data/information flows, saying that "there
is no member that permits completely free flow, nor any member that
absolutely prohibits such flow."
Hence, members may apply different regulatory systems due to various
concerns and priorities, China said.
All countries, according to China, "are entitled to [implement]
reasonable regulation in this regard, including allowing lawful and
orderly free flow of information on the precondition of protecting
privacy and public interests, as well as safeguarding national security
and network security."
Against this backdrop, "any multilateral coordination of possible
rules cannot neglect members' legal and institutional arrangements
as such," China cautioned the proponents who are seeking ambitious
China explained that it has witnessed phenomenal development in its
Given the explosive growth in its e-commerce involving an enormous
amount of data "from more than 800 million Chinese citizens,
representing one fifth of the global online population," China
said it is imperative that there is a proper "regulation of such
data, especially the cross-border data flow [which] is among the top
priorities of regulators."
"At the same time, we are also aware of the need for justifiable
flow of e-commerce data across borders in order for this business
model to operate globally," China maintained.
"The Cyber Security Law of China stipulates that personal information
and other important data gathered or generated by critical information
infrastructure operators during operation in China shall be stored
within the Chinese territory, and those [that] really need to be provided
to overseas shall be subject to security assessment," China maintained.
Elaborating on the law, China said "the [Cyber Security] law
ensures the lawful and orderly free flow of network information."
Besides, China said its "newly-publicized E-commerce Law also
stipulates that the state safeguards the security of e-commerce transaction
and customer information, encourages the development of utilization
of e-commerce data and safeguards the lawful and orderly free flow
of e-commerce data."
Without naming the US, which is calling for complete free data flows
and prohibitions against localization of servers, China expressed
serious doubts whether the WTO must develop rules on sensitive issues
"for many members, developing or even developed."
"It is no coincidence that, according to the [WTO] Secretariat
Note on E-Commerce in RTAs, only less than 5% of the notified RTAs
with e-commerce related disciplines contain binding provisions on
cross-border information flow, location of computing facilities, and
source code," China said.
It argued that "very few RTAs that contain such rules are yet
to stand the test of time when it comes to the enforcement of such
Citing a Chinese saying - "highbrow songs find few to join in
chorus" - China said "what we [WTO members] need now in
this exploration work is indeed chorus," implying that the ambitious
proposals by the US and its allies will not fly .
China urged members to "embrace a pragmatic ambition, and take
forward the elements of wider convergence shown in the discussion."
In sharp contrast to the US proposal, China said that it wants rules
on "E-signatures, E-authentication, E-contract, paperless trading,
consumer protection, anti-spam, international regulatory cooperation,
and facilitation of trade in goods enabled by the internet" among
"In our view, a multilateral framework would be optimum, or a
widely participated MFN-based pro-multilateral framework that is flexible
and inclusive enough to reflect everybody's interest could be an alternative,"
China said at the meeting.
Effectively, China struck a body blow to the aspirations of the e-commerce
plurilateral sponsors, said trade envoys familiar with China's stand.