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TWN
Info Service on WTO and Trade Issue (Oct23/20) Geneva, 26 Oct (D. Ravi Kanth) — China on 25 October apparently sought to know from the United States as to why it has chosen to withdraw its three core proposals – cross-border data flows, location of computing facilities, and source code – from the WTO electronic commerce negotiations that Washington has championed since 2018, said participants familiar with the discussions. However, the US apparently remained silent to the Chinese query, participants told the SUNS. At a meeting of the Joint Statement Initiative (JSI) group on digital trade on 25 October, a US official announced that Washington is withdrawing its proposals on the three issues on public policy considerations as well as on privacy grounds, said participants, who asked not to be quoted. The US apparently indicated that the withdrawal of its proposals on cross-border data flows, location of computing facilities, and source code could act as a catalyst to finalize an agreement by the WTO’s 13th ministerial conference (MC13), to be held in Abu Dhabi in February 2024, said participants, preferring not to be quoted. Several JSI members seemed somewhat surprised by the US announcement, as many industrialized countries, including the three coordinators of the JSI group – Singapore, Japan, and Australia – had thrown their weight behind the US proposals. However, the three coordinators did not comment at the meeting. Apparently, Canada and the United Kingdom among others expressed concern over Washington’s withdrawal of the three proposals, while the European Union seemed somewhat equivocal in its comments on the US action, said participants. However, it was China that asked for a detailed explanation from the US on its withdrawal of the three proposals. Beijing had opposed several provisions on the three issues during the JSI e-commerce negotiations, said participants who preferred not to be quoted. In one stroke, the JSI e-commerce negotiations, which have been challenged as being allegedly WTO-illegal for failing to adhere to the provisions of the Marrakesh Agreement, have now become centred on issues like “enabling electronic commerce” that includes (1) facilitating electronic transactions, (2) electronic transaction frameworks, (3) electronic authentication and electronic signatures, (4) electronic contracts, and (5) “digital trade facilitation and logistics” such as paperless trading and single window data exchange and system interoperability/ unique consignment reference numbers. It could also include openness and electronic commerce that cover customs duties on electronic transmissions, access to internet and data, consumer protection, and privacy among others. Interestingly, many of these issues seem to be largely China-driven, said a participant, who asked not to be quoted. SOURCE CODE According to a restricted draft updated consolidated negotiating text issued in August (Inf/Ecom/62/Rev.4), seen by the SUNS, the language on source code has been suggested by the US along with several other members like Japan, Singapore, Australia, Canada, the United Kingdom, and the European Union. The text on the source code in which the US joined with the G7 industrialized countries to propose the language is as follows: (1) Source code 1. [“Algorithm” means a defined sequence of steps taken to solve a problem or obtain a result.] 2. No [Party/Member] [shall] [to the extent practicable] require the transfer of, or access to, source code of software owned by a person of another [Party/Member], [or the transfer of, or access to, an algorithm expressed in that source code,] as a condition for the import, distribution, sale, or use of that software, or of products containing that software, in its territory. 3. [For greater certainty, paragraph 2 does not apply to the voluntary transfer of [source code,] or granting of access to source code on a commercial basis, by a natural or juridical person, for instance in the context of a public procurement transaction or a freely negotiated contract.] 4. This Article/Paragraph 2 [does/shall] not preclude a competent authority of a [Party/Member] from requiring a person of another [Party/Member] [:] [Alt 1 (a) to preserve and make available [[1]] the source code of software [, or an algorithm expressed in that source code,] for [an/a specific] investigation, inspection, examination, enforcement action, or judicial proceeding, [including those relating to non-discrimination and the prevention of bias,] subject to safeguards against unauthorised disclosure. [; and (b) to transfer or provide access to the source code of software [, or an algorithm expressed in that source code,] for the purpose of the imposition or enforcement of a remedy granted in accordance with that [Party’s/Member’s] law following an investigation, inspection, examination, enforcement action, or a judicial proceeding].] [Alt 2 to preserve and make available[1] the source code of software [, or an algorithm expressed in that source code,] for [an/a specific] investigation, inspection, examination, or judicial proceeding, [to determine compliance with its laws and regulations, including those relating to non-discrimination and the prevention of bias;] or to preserve, make available, or transfer the source code of software [, or an algorithm expressed in that source code,] for an enforcement action, subject to safeguards against unauthorized disclosure.] 5. When source code of software has been preserved, made available, or transferred [for the purposes referred to in paragraph 4], that [Party/Member] shall adopt or maintain [measures/safeguards] to prevent the unauthorised disclosure of that source code. CROSS-BORDER DATA FLOWS In a similar vein, the US joined with several industrialized countries in proposing language on cross-border data flows. According to the textual proposals on cross-border data flows, China and Brazil also submitted textual language on cross-border data flows. The textual formulation on cross-border data flows is as follows: (1) [Cross-border transfer of information by electronic means/Cross-border data flows] 1. “Covered person” means a national of a [Party/Member] or an enterprise of a [Party/Member]. 2. “Enterprise” means [an/any] entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including [any branch/a/any] corporation, trust, partnership, sole proprietorship, joint venture, [or other association/association or similar organisation]. 3. [Alt 1: “Personal information” means any information, including data, about an identified or identifiable natural person.] [Alt 2: “Personal data” means any information relating to an identified or identifiable natural person. 4. [Parties/Members] recognise that each [Party/Member] may have its own regulatory requirements concerning the transfer of information by electronic means [compatible and interoperable with the requirements and limitations established in this Section]. 5. [Alt 1: No [Party/Member] shall prohibit or restrict the cross-border transfer of information, including personal information, by electronic means, if this activity is for the conduct of the business of a covered person.] [Alt 2: [Unless otherwise provided for under its laws or regulations,] [eachEach] [Party/Member] shall allow the cross-border transfer of information by electronic means when this activity is for the conduct of the business activity of a covered person.] [Alt 3: The [Parties/Members] are committed to ensuring cross-border data flows to facilitate trade in the digital economy. To that end, cross-border data flows shall not be restricted by: (a) requiring the use of computing facilities or network elements in the [Party’s/Member’s] territory for processing, including by imposing the use of computing facilities or network elements that are certified or approved in the territory of the Party; (b) requiring the localisation of data in the [Party’s/Member’s] territory for storage or processing; ( c) prohibiting storage or processing in the territory of other [Parties/Members]; (d) making the cross-border transfer of data contingent upon use of computing facilities or network elements in the [Party’s/Member’s] territory or upon localisation requirements in the [Party’s/Member’s] territory.] 6. [Alt 1: Nothing in this Article shall prevent a [Party/Member] from adopting or maintaining [a measure/measures] inconsistent with paragraph 5 [that is necessary] to achieve a legitimate public policy objective, provided that the measure: (a) is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade [; and (b) does not impose restrictions on transfers of information greater than are [necessary/required] to achieve the objective.]] [Alt 2: [Parties/Members] may adopt and maintain the safeguards they deem appropriate to ensure the protection of personal data and privacy, including through the adoption and application of rules for the cross-border transfer of personal data. Nothing in the agreed disciplines and commitments shall affect the protection of personal data and privacy afforded by the [Parties’/Members’] respective safeguards.] 6bis. For greater certainty, legitimate public policy objectives include the protection or promotion of the rights, interests, duties and responsibilities of indigenous peoples. 7. This article does not apply with respect to financial service suppliers, which are addressed by Article [X] (Financial Information). 8. Paragraphs 5 and 7 shall not prevent a developing or least-developed [Party/Member] from adopting or maintaining any measure regulating the cross-border transfer of information, including personal information, by electronic means, that it considers appropriate. For greater certainty, if a [Party/Member] invokes this paragraph in a dispute, the body or mechanism hearing the matter shall find that it applies. LOCATION OF COMPUTING FACILITIES Lastly, on the “location of computing facilities”, the consolidated text suggests that the US joined with several other industrialized countries in proposing language. The textual formulation on the location of computing facilities is as follows: 1. “Computing facility” means a [computer servers/computer server] [and/or] storage device for processing or storing information for commercial use. 2. “Covered person” means a national of a [Party/Member] or an enterprise of a [Party/Member]. 3. “Enterprise” means [an/any] entity constituted or organized under applicable law, whether or not for profit, and whether privately or governmentally owned or controlled, including [any branch/a/any] corporation, trust, partnership, sole proprietorship, joint venture, or [other association/association or similar organization]. 4. [PartiesMembers] recognize that each [PartyMember] may have its own regulatory requirements regarding the use of computing facilities, including requirements that seek to ensure the security and confidentiality of communications. 5. [Unless otherwise provided for under its laws or regulations], [noNo] [Party/Member] shall require a covered person to use or locate computing facilities in that [Party’s/Member’s] territory as a condition for conducting business in that territory. 6. Nothing in this Article shall prevent a [Party/Member] from adopting or maintaining measures inconsistent with paragraph 5 to achieve a legitimate public policy objective, provided that the measure: (a) is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade; and (b) does not impose restrictions on the use or location of computing facilities greater than are [necessary/ required] to achieve the objective. 6bis. For greater certainty, legitimate public policy objectives include the protection or promotion of the rights, interests, duties and responsibilities of indigenous peoples. 7. This article does not apply with respect to [covered] financial service suppliers, which are addressed by Article [X] ([Financial Information/Location of financial computing facilities]). 8. Paragraph 5 shall not prevent a developing or least developed [Party/Member] from adopting or maintaining any measure regulating the use or location of computing facilities in its territory, that it considers appropriate. For greater certainty, if a [Party/Member] invokes this paragraph in a dispute, the body or mechanism hearing the matter shall find that it applies. In short, the US seems to have dealt a blow to its partners in the JSI e-commerce negotiations, who had rallied under US leadership since 2018, said participants, who asked not to be quoted. It remains to be seen what the other proponents of the three proposals that the US withdrew will do in the coming days. The next round of JSI e-commerce negotiations is scheduled to be held in November. +
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