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Info Service on WTO and Trade Issues (Jan24/11) Geneva, 26 Jan (D. Ravi Kanth) — Australia, Japan, and Singapore, the co-convenors of the controversial Joint Statement Initiative (JSI) on E-commerce, have intensified the “WTO electronic commerce negotiations” in an attempt to announce a decision at the WTO’s upcoming 13th ministerial conference (MC13) that is seemingly legally flawed and replete with questionable goals, said people familiar with the development. In what appears to be a race to announce a decision in parallel with the proposed plurilateral Agreement on Investment Facilitation for Development (IFD) at MC13, which begins in Abu Dhabi on 26 February, the JSI co-convenors issued a draft chair’s text on 15 January. The co-convenors have issued two restricted proposals (INF/ECOM/84, and INF/ECOM/85), seen by the SUNS, for an intense phase of negotiations at an upcoming meeting to be held from 30 January to 2 February. In the first proposal (INF/ECOM/84) issued by Australia on 10 January, the “Final Provisions” include: (1) Acceptance and Entry into Force; (2) Accession; (3) Implementation (which is still in square brackets); (4) Reservations; (5) Amendments; (6) Withdrawal; (7) Non-application of this Agreement between Particular Parties; (8) Secretariat, which states that “this agreement shall be serviced by the WTO Secretariat”; (9) Deposit; and (10) Registration. Significantly, Australia said in paragraph one of the provision on “Acceptance and Entry into Force”: “Any Member of the WTO may accept this Agreement. Acceptance shall take place by deposit of an instrument of acceptance to this Agreement with the Director-General of the WTO (“the Depository”). This Agreement shall enter into force, for those Members of the WTO that have accepted it, on the 30th day following the date of deposit of the [X]th instrument of acceptance.” It is somewhat puzzling as to how this agreement can be deposited with the DG because there is no mandate for such an agreement despite the proponents’ best efforts at MC11 in Buenos Aires, Argentina, in December 2017, said a negotiator, who asked not to be quoted. The circulation of the Joint Statement by interested participants expressing their intention to initiate exploratory discussions on E-commerce at MC11 does not represent a multilateral mandate decided by consensus. This must have been done with the prior consent of the Director-General, who would certainly know the legal status of the JSI e-commerce negotiations, the negotiator said. Further, questions are being raised as to the involvement of the WTO Secretariat in servicing the proposed agreement without any approval from the WTO’s Committee on Budget, Finance and Administration (CBFA), said another member familiar with the Committee. Lastly, in paragraph 10 of the restricted proposal, the co-convenors said that “this Agreement shall be registered in accordance with the provisions of Article 102 of the Charter of the United Nations.” This is somewhat unprecedented because what is being negotiated at the WTO without a proper ministerial mandate is now being sought to be registered under Article 102 of the Charter of the United Nations and not the Marrakesh Agreement, the latter of which would require the consensus of the membership for the agreement to become part of the legal structure of the WTO. DRAFT CHAIR’S TEXT The second restricted proposal (INF/ECOM/85) contains the “draft chair’s text”, which has been prepared “by the Co-convenors of the WTO JSI on E-commerce for further review and negotiation.” “Australia, Singapore and Japan, as Co-convenors, take sole responsibility for this Chair’s Text, which reflects our judgement on where consensus is most likely to be achieved in the agreement,” according to the proposal. The 28-page draft text, according to the co-convenors, “does not represent the dropping of any proposals from the Consolidated Text INF/ECOM/62/Rev.5 issued on 15 November 2023, which remains a comprehensive record of proposals, attributions, and drafting notes.” As previously reported in the SUNS, the proposed agreement appears to have lost its value after the United States pulled out its proposals on cross-border data flows, localization of servers, and source code, due to national security concerns, as it would involve sharing data with China, said people familiar with the development. Subsequently, the co-convenors ratcheted up the negotiations on what are called digital trade liberalization measures. The co-convenors said, “in the upcoming meeting (30 January-2 February 2024), the Co-convenors propose that Members engage in a first reading of the Chair’s Text in its entirety.” They claimed that “given the nature of negotiations at the WTO, it is unlikely that any Member will see all their drafting preferences reflected in the Chair’s Text.” The three co-convenors urged “Members to take a holistic approach in considering the Chair’s Text,” expressing confidence that “this Chair’s Text represents a commercially meaningful and inclusive package, reflects broadly the views and feedback of all participants since discussions began in 2019, and provides a sound basis for us to achieve a consensus agreement.” They admitted that “for a limited number of proposals, Co-convenors were not able to make recommendations regarding text that would most likely achieve consensus.” However, they included “placeholders in the Chair’s text for the following issues: * ICT products that use cryptography (pages 24-25 of the Consolidated Text), Electronic Payments (pages 8-9 of the Consolidated Text) and Development (pages 37-51 of the Consolidated Text): these issues require further small group work. * Scope and exceptions/carve-outs (page 58 paras 2-5, proposals related to government procurement, services supplied in the exercise of governmental authority, government information and financial services, page 62 indigenous peoples, page 63 taxation and page 19 protection of personal data and privacy): these issues depend on the stabilisation of the core obligations and have therefore not had sufficient opportunity for in-depth discussion.” CONTENTS OF DRAFT TEXT The contents of the “Draft Chair’s Text” include several sections covering digital trade facilitation. In Section A on “enabling electronic commerce”, for example, several issues are listed. They include: (1) electronic transactions frameworks; (2) electronic authentications; (3) electronic contracts; (4) electronic invoicing; (5) paperless trading; and (6) single window data exchange and system interoperability. In Section B on “openness and electronic commerce”, the issue of customs duties on electronic transmissions is included along with open government data and access to and use of the Internet for electronic commerce. The proposed language on “customs duties on electronic transmissions” is as follows: “1. For the purposes of this Article, “electronic transmission” means a transmission made using any electromagnetic means and includes the content of the transmission. 2. The Parties acknowledge the importance of the Work Programme on Electronic Commerce (WT/L/274) and recognise that the practice of not imposing customs duties on electronic transmissions has played an important role in the development of the digital economy. 3. No Party shall impose customs duties on electronic transmissions between a person of one Party and a person of another Party. 4. For greater certainty, paragraph 3 shall not preclude a Party from imposing internal taxes, fees or other charges on electronic transmissions in a manner consistent with the WTO Agreement.” Significantly, the above coverage on electronic transmissions was never agreed in the current moratorium on customs duties on electronic transmissions, said an e-commerce negotiator, who asked not to be quoted. Further, at a time when the fate of the continuation of the e-commerce moratorium is expected to be decided at MC13 as per the MC12 mandate, the inclusion of this item is inconsistent with the negotiations on the moratorium on customs duties on electronic transmissions, the negotiator said. TRUST & ELECTRONIC COMMERCE In Section C of the draft chair’s text on “trust and electronic commerce,” issues like “online consumer protection”, “unsolicited commercial electronic messages” (spam), “personal data protection”, and “cybersecurity” are included. While the section focuses on “transparency, domestic regulation, and cooperation and development”, Section E covers telecommunications. Lastly, the chapter on “Final Provisions”, which was earlier intimated by Australia on 10 January, is now pasted in the draft chair’s text as it is, though it remains in square brackets, denoting lack of agreement. In short, the draft text on JSI on e-commerce appears replete with legal inconsistencies as well as seemingly illegitimate goals, said several negotiators who asked not to be quoted. +
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