TWN Info Service on WTO and Trade Issues (Jul24/26)
30 July 2024
Third World Network

Trade: JSI E-com co-convenors issue “stabilized” text, but no deal in sight
Published in SUNS #10056 dated 30 July 2024

Geneva, 29 Jul (D. Ravi Kanth) — Many members of the ongoing controversial Joint Statement Initiative (JSI) on Electronic Commerce appear to have welcomed the “stabilized” text issued on 26 July by the co-convenors at the World Trade Organization, but the final agreement appears to be nowhere near closure, said people familiar with the discussions.

The United States as well as several other members of the JSI e-commerce negotiations expressed serious concerns/reservations over the “stabilized” text, allegedly stymying an early agreement, said people familiar with the discussions.

It is a rather “toothless” agreement, and it remains to be seen how it will affect the JSI members when the current moratorium on customs duties on electronic transmissions is scheduled to be terminated before the commencement of the WTO’s 14th ministerial conference (MC14) in Cameroon in 2026, said a trade envoy who asked not to be quoted.

At a meeting of the JSI e-commerce participants on 26 July, the three co-convenors – Singapore, Japan and Australia – said that “after five years of negotiations under the WTO Joint Statement Initiative on Electronic Commerce, participants have reached a new phase, achieving stabilized text on the attached Agreement on Electronic Commerce that reflects a balanced and inclusive outcome.”

The co-convenors claimed that “Participants will proceed with their domestic processes, with a view to integrating the outcome of negotiations in the WTO legal framework.”

The three countries reaffirmed “the importance of supporting developing and least-developed country Members in implementing the Agreement on Electronic Commerce by addressing their identified needs including through implementation periods, technical assistance and capacity building support.”

They said that “taking note of the evolving nature of cross-border electronic commerce and digital technology, participants recognise that some issues of importance to digital trade have not been addressed in this text.”

According to the “stabilized” text, “participants reserve the right in any future negotiations to propose amendments to the attached Agreement including with respect to scope, exceptions and dispute settlement.”

The co-convenors did not mention the issues that were excluded from the so-called “stabilized” text.

However, it is an open secret that the US, the initial proponent of the JSI negotiations on e-commerce since January 2019, removed its proposals on cross-border data flows, localization of servers, and source code among others due to alleged national security concerns.

Therefore, the watered-down “stabilized” text focused on digital trade facilitation provisions, and issues such as a permanent moratorium on customs duties on electronic transmissions, which seem to include electronic goods and services, said people familiar with the text.

Australia, one of the co-convenors, took to X (formerly known as Twitter) to claim success in crossing a major milestone in the JSI e-commerce negotiations.

In his X message, the Australian trade envoy, Ambassador James Baxter, thanked and congratulated the JSI members for “tirelessly” working “for five years to get us to this important milestone today.”

“On behalf of the JSI Co-Convenors,” said Ambassador Baxter, “I hope this great achievement encourages continued momentum on our journey to incorporation.”

China’s minister counsellor for trade, Mr Fu, said that “keeping the WTO fit for the 21st-century economy requires updating the rule-book, particularly concerning digital trade.”

China, which did not join when the JSI on e-commerce was announced at the WTO’s eleventh ministerial conference (MC11) in Buenos Aires, Argentina, in December 2017, but joined at the Davos meeting in 2019, said that “we have stabilised the text after five years of joint efforts.”

The Chinese trade official expressed disappointment that “we cannot make it before the summer break. We also share the objective of seeking incorporation of this text as a WTO agreement.”

Though members “are very close to the finish line,” China suggested that “the last leg of a journey marks the halfway point,” adding that “to complete our journey, we must avoid that time and perfect become our enemies.”

The Chinese official suggested the following steps to conclude the process:

1. Given the top priority to finalize all issues on the table as scheduled, JSI participants “should lock in the existing hard-won outcomes and keep working on the remaining issues through a pragmatic and flexible approach.”
2. A clear roadmap and time-line towards fully concluding the negotiation are urgently needed. These will increase the sense of urgency of all participants and facilitate their domestic procedures.
3. The JSI should maintain its openness and inclusiveness as always. There may be some members who are not ready to join the consensus in the near future, but the door should never be closed.

RESERVATIONS/OPPOSITION

However, the co-convenors appear to have presented an allegedly “misleading” picture in their document (INF/ ECOM/87), not revealing the continued differences over several issues in the draft text, said people familiar with the discussions.

Indonesia’s trade envoy Ambassador Dandy Iswara appears to have opposed the provision on the permanent moratorium on customs duties on electronic transmissions that has now been expanded to cover goods and services, said people familiar with the discussions.

Brazil, which appears to have been the first country to take the floor at the meeting, issued a long statement raising serious reservations about the draft text, said people familiar with the discussions.

A US representative is understood to have said that Washington is not in a position to consider the “stabilized” text as final, adding that the US continues to have serious concerns, said people familiar with the discussions.

The US official, according to people who spoke to the SUNS on the condition of anonymity, said it is not happy with the “stabilized” text.

In fact, the countries that expressed reservations on one ground or the other include Brazil, Colombia, El Salvador, Guatemala, Indonesia, Paraguay, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Turkiye and the United States.

It appears that out of around 91 WTO members who are participants in the JSI e-commerce negotiations, some seventy countries consider the “stabilized” text as a basis for making progress towards the final agreement, said people familiar with the discussions.

E-COM MORATORIUM

On the issue of customs duties on electronic transmissions, the “stabilized” text suggests that “the practice of not imposing custom duties on electronic transmissions” will be reviewed at the end of the fifth year after the agreement is incorporated into the WTO’s rule-book.

Article 11 on Customs Duties on Electronic Transmissions states:

“11.1  For the purposes of this Article, “electronic transmission” means a transmission made using any electromagnetic means and includes the content of the transmission.

11.2 The Parties acknowledge the importance of the Work Programme on Electronic Commerce (WT/L/274) and recognize that the practice of not imposing customs duties on electronic transmissions has played an important role in the development of the digital economy.

11.3 No Party shall impose customs duties on electronic transmissions between a person of one Party and a person of another Party.

11.4  For greater certainty, paragraph 3 does not preclude a Party from imposing internal taxes, fees, or other charges on electronic transmissions in a manner not inconsistent with the WTO Agreement.

11.5 Taking into account the evolving nature of electronic commerce and digital technology, the Parties shall review this Article in the fifth year after the date of entry into force of this Agreement, and periodically thereafter, with a view to assessing the impacts of this Article and whether any amendments are appropriate.”

It remains rather unclear what changes the “stabilized” text may undergo once countries carry out a thorough legal scrutiny of every provision of the text by their respective legal authorities, said people familiar with the discussions.

As previously reported, the agreement’s 38 articles comprise eight sections.

Section A includes “Scope” in Article 1, “Definitions” in Article 2, and “Relation to Other Agreements” in Article 3.

Section B, focused on “Enabling Electronic Commerce”, covers “Electronic Transactions Framework” in Article 4; “Electronic Authentication and Electronic Signatures” in Article 5; “Electronic Contracts” in Article 6; “Electronic Invoicing” in Article 7; “Paperless Trading” in Article 8; “Single Windows Data Exchange and System Interoperability” in Article 9; and “Electronic Payments” in Article 10.

Section C on “Openness and Electronic Commerce” includes “Customs Duties on Electronic Transmissions” in Article 11; “Open Government Data” in Article 12; and “Access to and Use of Internet for Electronic Commerce” in Article 13.

Section D, which addresses “Trust and Electronic Commerce”, includes “Online Consumer Protection” in Article 14; “Unsolicited Commercial Electronic Messages (Spam)” in Article 15; “Personal Data Protection” in Article 16; and “Cyber Security” in Article 17.

Section E, which deals with “Transparency, Cooperation, and Development”, includes “Transparency” in Article 18; “Cooperation” in Article 19; and “Development” in Article 20.

Section F deals with “Telecommunications” in Article 21.

Section G, which is focused on broad “Exceptions”, consists of “General Exceptions” in Article 22; “Security Exception” in Article 23; “Prudential Measures” in Article 24; “Personal Data Protection Exception” in Article 25; and “Indigenous Peoples” in Article 26.

Section H on “Institutional Arrangements and Final Provisions” covers “Dispute Settlement” in Article 27; “Committee on Trade-Related Aspects of Electronic Commerce” in Article 28; “Acceptance and Entry into Force” in Article 29; “Implementation” in Article 30; “Reservations” in Article 31; “Amendments” in Article 32; “Withdrawal” in Article 33; “Non-application of this Agreement between Particular Parties” in Article 34; “Review” in Article 35; “Secretariat” in Article 36; “Deposit” in Article 37; and “Registration” in Article 38. +