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TWN
Info Service on WTO and Trade Issues (Feb25/08) Geneva, 18 Feb (D. Ravi Kanth) — The World Trade Organization’s General Council (GC) meeting on 18-19 February could test the waters on how the Trump administration will respond to two separate issues on the GC’s agenda, namely the incorporations of the Agreement on Electronic Commerce and the Investment Facilitation for Development Agreement (IFDA) into the list of plurilateral agreements under Annex 4 of the Marrakesh Agreement that established the WTO in 1995. The two issues are scheduled to be discussed at the GC meeting. On both these issues, the previous Biden administration had adopted rather ambiguous positions without explicitly agreeing to them. For instance, regarding the Agreement on Electronic Commerce, the Biden administration substantially diluted the draft final text by removing the provisions on cross-border data flows and source code among others. Though the former US Trade Representative (USTR) Ambassador Robert Lighthizer along with Australia, Japan and Singapore launched the Joint Statement Initiative (JSI) negotiations on electronic commerce at the end of the WTO’s 11th ministerial conference (MC11) in Buenos Aires, Argentina in December 2017, the Biden administration chose to remove the most important areas that it had initially campaigned for, said people familiar with the discussions. Last year, the US 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. However, the co-convenors (Australia, Japan and Singapore) 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. As previously reported in the SUNS, a US representative had 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 the US is not happy with the “stabilized” text. Moreover, with President Donald Trump having demanded that countries treat domestic taxes, particularly the value-added tax (VAT), as an import tariff, it is not clear how the participants of the proposed plurilateral Agreement on Electronic Commerce will respond. Around 101 countries seem to have implemented a VAT, or a goods and services tax (GST), on cross-border online sales. In the European Union countries, VAT revenues on account of digital services from foreign companies collected from these measures increased sevenfold in seven years, between 2015 and 2022, according to a study cited on taxfoundation.org The study suggests that “the maximum revenue potential of a VAT on e-commerce is 2.5 times higher than that of tariffs at the current rates.” Against this backdrop, it remains to be seen whether the Trump administration will join the consensus at the GC meeting on the incorporation of the Agreement on Electronic Commerce into Annex 4 of the WTO Agreement, said people familiar with the development. DRAFT “STABILIZED” TEXT An earlier version of the draft “stabilized” text contained 38 articles comprising eight sections (A-H). Section A includes “Scope” in Article 1; “Definitions” in Article 2; and “Relation to Other Agreements” in Article 3. Section B, focusing 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 the 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 “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. IFDA On the Investment Facilitation for Development Agreement (IFDA), a plurilateral initiative, the former US trade envoy to the WTO, Ambassador Maria Pagan, had adopted a rather confusing stance. On the IFDA initiative in which some 126 countries are members, with China being the key proponent, the former US trade envoy repeatedly said that Washington is not going to join the agreement. During a Trade Negotiations Committee (TNC) meeting in October last year, Ambassador Pagan said that Washington “has no intention of joining the IFDA”, emphasizing that it has “no objection to incorporation [in] Annex 4”, said people familiar with the development. Ambassador Pagan narrated the story depicted in the Hollywood movie “Groundhog Day” in which “the character went through the loop 12,400 times but he did break the loop.” The lead character in the movie “Groundhog Day”, she said, “kept getting stuck in the loop because he was a bad person doing bad things to people. He broke the loop by learning how to [play] the piano, doing ice sculpting, saving people, etc. but generally he broke the loop by being a good person and by doing good deeds. Yes, we do Groundhog Day very well here but maybe there’s a way to breaking the loop at some point.” Further, the WTO’s Director-General Ms Ngozi Okonjo-Iweala has allegedly openly supported the IFDA. She called on members to incorporate the IFDA into Annex 4 of the WTO Agreement. When India, South Africa, and Namibia did not join the consensus on the proposal to incorporate the IFDA into Annex 4 of the WTO Agreement, the DG had said “we have detected a willingness to find a way out” and “I think it may not be a bad idea to have a solutions-oriented dialogue to working expeditiously and urgently to try to get this IFD to conclusion.” Against this backdrop, it remains to be seen whether the Trump administration will stick by the stand adopted by the Biden administration to not oppose the incorporation of the IFDA into Annex 4 of the WTO Agreement. With the Trump administration unilaterally imposing a 25% tariff on all goods from Canada and Mexico, which remains paused for a period of 30 days, a 10% tariff on Chinese goods and a 25% tariff on steel and aluminium from all countries, it may even oppose a plurilateral agreement on investment, said people familiar with the development. +
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