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Info Service on WTO and Trade Issues (Jun20/17) Geneva, 12 Jun (D. Ravi Kanth) – Members of the plurilateral Joint Statement Initiative (JSI) group on electronic commerce held a virtual meeting on 11 June to consider a “digital trade facilitation and logistics” agreement. Such an agreement would include additional commitments to what was already agreed to in the Trade Facilitation Agreement (TFA) in 2013, a trade envoy told the SUNS. [For any e-commerce agreement to find its way into the WTO rule book, either it has to be as a new plurilateral agreement to be included in Annex 4 of the WTO treaty, or through an amendment to any of the existing agreements in Annex 1. [Any additions or changes to the agreements in Annex 1 (1A, 1B or IC), would need to go through the amendment processes of the WTO Agreement. For any new Annex 4 plurilateral agreement, it must be on a subject, not part of any existing agreements, and agreed to by consensus at a ministerial conference. None of the proponents of the new plurilateral initiatives have so far explained how they will meet with these obligations. SUNS] Despite the worsening Covid-19 pandemic that has imposed a massive economic slowdown and huge costs on developing countries, the JSI members on e-commerce discussed several aspects of a digital trade facilitation agreement based on a background document. In a 21-page restricted document circulated on 5 June, seen by the SUNS, the three coordinators of the JSI group on e-commerce – Australia, Japan, and Singapore – said that the background document is a “preliminary comparison between Electronic Commerce JSI proposals on “digital trade facilitation and logistics” and the TFA.” The coordinators said the comparison “aims at highlighting where JSI proposals, as reflected in the facilitator’s streamlined text, build on the TFA.” The document is based on proposals made by JSI members last month. “The objective of the background paper, namely, a “comparison between proposals in the Joint Statement Initiative (JSI) on Electronic Commerce and the TFA” is not clear,” said an e-commerce analyst. “It either attempts to inject some of the JSI outcomes into the WTO’s Trade Facilitation Agreement (TFA) or lure member countries who have ratified the TFA to join the JSI.” According to the summary of preliminary observations in the background paper, the coordinators said that “it was possible to identify elements of JSI proposals that were additional to TFA obligations.” The additional TFA obligations include: 1. Accepting electronic trade administration documents as the legal equivalents of paper versions. 2. International cooperation on paperless trading and regulation of products. 3. Revenue collection models. 4. Customs warehouses and free zones for e-commerce. 5. De minimis. 6. Digital aspects of single windows. 7. Electronic availability of trade-related information on a single portal. 8. The use of technology in the release and clearance of goods. 9. Cooperation with the private sector to use data provided by embedded technology to expedite the processing of trade operations. 10. The use of technology for risk management. 11. The use of non-intrusive or remote technology for inspections. 12. To identify some value-added to the TFA in elements of JSI proposals related to response to enquiries, or electronic/online publication, while the JSI proposals so far have not referred to transit operations or publication in different WTO languages. 13. In addition, the TFA does not have provisions related to electronic transferrable records making improvements to trade policy, or logistic services. The TFA does not have any reference or provision related to developing e-commerce. The TFA, according to the background paper, “does not include any language that prevents Members from adopting any of the JSI proposals.” The TFA, for facilitating all trade in goods, and composed of “binding and best-endeavour provisions on the use of information technology in the implementation of the Agreement, does not preclude Members from including JSI provisions on Digital Trade Facilitation and Logistics.” In line with the TFA preamble and Article 1 of the TFA concerning publication and availability of information, including improving relevant aspects of Article V (freedom of transit), VIII (fees and formalities) and X (publication and regulations) of the GATT 1994, the JSI members want to fork out a digital trade facilitation agreement. Further, the JSI coordinators argued that the proposed initiative will take into consideration “the particular needs and especially least-developed country members and desiring to enhance assistance and support for capacity building in this area.” The JSI coordinators suggested “single windows data exchange and system interoperability” in addition to the TFA commitments. The commitments would include “data exchange solutions” such as that JSI members “shall provide, on their national foreign trade single window systems, to the extent practicable, electronic interfaces for the exchange of data, including electronic trade administration documents, with traders, international trade logistic service providers, governmental agencies and other relevant stakeholders.” The electronic interface “shall, at the minimum, provide for the exchange of data relevant for customs clearance,” the JSI coordinators said, adding that “whenever possible, the electronic interface shall allow the submission of data in advance in order to begin processing information prior to the arrival of goods with a view to expediting the release of goods upon arrival.” As regards “single window internal interoperability,” the JSI members “shall endeavour to establish arrangements by which authorized private entities, such as port community systems, logistic service providers and e-commerce platforms, may exchange data with the single window system in lieu of traders and other trade stakeholders under an agreement to use this private solution.” More importantly, the single window internal interoperability “shall, whenever possible, favour private solutions designed to provide international trade services to small and medium enterprises.” Further, the JSI coordinators also proposed language on “interoperability between national single windows” whereby JSI members “are encouraged to develop interoperability solutions for their single window systems to exchange data, including electronic trade administration documents, with the single windows of other Members with the purpose of expediting the clearance and release of goods and implementing cooperation arrangements between Customs and between other border agencies.” Lastly, the JSI coordinators issued “guidelines for data exchange and interoperability”. The guidelines include that JSI members “shall endeavour to adopt the WCO (World Customs Organization) Data Model or other compatible relevant international standard for the exchange of information with their single windows.” JSI members “shall determine what data should be exchanged with their single windows.” Significantly, new technologies such as “blockchain” are suggested as part of “interoperability and data exchange solutions.” The JSI coordinators suggested “to the extent possible, employ technologies, such as blockchain, that ensure the compliance with all international and internal legal requirements related to the protection and confidentiality of the exchanged information.” JSI members, according to the language proposed by the three coordinators, “shall determine the operational conditions for the exchange of information between their single windows and other systems” and “whenever a national single window is not available or not integrated with Customs or other relevant governmental agencies, this article applies to customs management systems or other relevant governmental electronic systems used for processing trade.” But the TFA has proved to be difficult “to ratify in many countries and more difficult to implement,” the e-commerce analyst suggested, preferring not to be quoted. “Although the Paris-based Organization for Economic Cooperation and Development (OECD) study predicted that if fully implemented, TFA could reduce the costs by 14% for low-income countries, 15% for middle-income countries and 13% for upper middle-income countries,” the OECD study did not make it clear that these costs would decline for exporters of developed countries and not for developing countries as these costs relate to import costs and not export costs, the analyst said. Since developed countries have had all the trade facilitating provisions in their rule-book decades ago before the TFA was negotiated, no further decline in their import costs are expected post-TFA, which could benefit exporters of developing countries, the analyst said. Also, the much touted $1 trillion benefits to the world economy from the 2013 TFA has proved to be a pipe dream. “These gains are nowhere to be seen, especially by the developing world,” the analyst suggested. “TFA also violated one of the key principles of S&DT (special and differential treatment) as according to which LDCs are not expected to undertake any commitments in the WTO agreements, but in the TFA, LDCs were also required to take commitments with the only flexibility of a comparatively longer grace period of 6 years for Category A provisions and 8 years for Categories B and C under Dispute Settlement,” the analyst said. “Therefore, TFA may not be a good agreement for any comparisons,” the analyst argued.
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