the world trade organization in times of digital...
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Universitat de Barcelona Facultat d'Economia i Empresa Máster de Internacionalización: Aspectos Económicos, Empresariales y Jurídico-políticos
The World Trade Organization in times of digital trade Addressing digital protectionism? Master thesis Author: Manuel Metschel NIUB: 17088186 [email protected] Supervisor: Dr. Xavier Fernández Pons Date: 23 April 2018
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Index1.Introduction..........................................................................................................................4
2.Theriseofdigitaltrade.........................................................................................................5
2.1Definitionanddimensionsofdigitaltrade......................................................................5
2.2Developmentofdigitaltrade..........................................................................................8
3.Anewdigitalprotectionism................................................................................................14
3.1Existingpre-barrierstodigitaltrade..............................................................................14
3.2Keybarrierstodigitaltradeimplementedbygovernments.........................................16
3.2.1Introduction............................................................................................................16
3.2.2Tariffs......................................................................................................................17
3.2.3Datalocalizationmeasures....................................................................................17
3.2.4Quotas....................................................................................................................19
3.2.5Webblockingandfiltering.....................................................................................19
3.2.6AccesstonetworkinfrastructureandtheInternet................................................21
3.2.7Netneutrality.........................................................................................................22
3.2.8Taxation..................................................................................................................23
3.2.9Intellectualpropertyrights.....................................................................................24
3.2.10Geoblocking..........................................................................................................24
3.2.11Technicalstandardsandforcedtechnologytransfer...........................................25
3.2.12Otherbarriers.......................................................................................................25
3.3Summary.......................................................................................................................25
4.WTOframeworkregardingdigitaltrade.............................................................................26
4.1TheWorkProgrammeonElectronicCommerce...........................................................26
4.2ApplicabilityofWTOprovisionstoelectroniccommerce.............................................28
4.2.1Difficultiesofclassification.....................................................................................28
4.2.2ClassificationofdigitallytransmittedproductsundertheGATT............................30
4.2.3ClassificationofdigitallytransmittedproductsandservicesundertheGATS.......31
4.2.4Neitherproductsnorservices–asuigeneris?.......................................................32
4.2.5Newchallenges......................................................................................................33
5.AnalysisofdigitaltradeundertheGATS.............................................................................34
5.1ThelogicoftheGATS....................................................................................................34
5.2Modesofsupply............................................................................................................35
5.3InclusionofdigitalservicesanddatawithinGATSschedules.......................................37
5.4.BarrierstodigitaltradecoveredbyGATSprovisions...................................................39
5.4.1Generalobservations.............................................................................................39
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5.4.2Tariffs......................................................................................................................39
5.4.3Datalocalizationmeasures....................................................................................39
5.4.4Quotas....................................................................................................................41
5.4.5Webblockingandfiltering.....................................................................................41
5.4.6Accesstotelecommunicationsinfrastructureandnetneutrality..........................42
5.4.7Taxation..................................................................................................................43
5.4.8Technicalstandards................................................................................................43
5.4.9Intellectualpropertyrights,geoblocking,andothers............................................44
5.5GATSexceptions............................................................................................................44
5.6Summary.......................................................................................................................46
6.WTOMinisterialDecisionsandnewways...........................................................................46
6.1MinisterialDecisionssincethelaunchoftheWorkProgramme..................................46
6.2PositionsofkeyWTOMemberStates...........................................................................49
6.3Newways–aplurilateralapproach?............................................................................51
7.Mid-conclusion:analysisoftheresponseoftheWTOtotheriseofdigitaltrade..............53
8.PossiblesolutionstoensureliberalizationofdigitaltradewithintheWTOframework.....56
8.1AviewoutsidetheWTO:TheEuropeanUnionandfreetradeagreements.................56
8.2AddressingopenbasicquestionsfortheWTOregardingdigitaltrade.........................60
8.3Overcomerootcausesofstandstill...............................................................................63
9.Conclusion...........................................................................................................................66
11.Annex................................................................................................................................68
12.Bibliography......................................................................................................................70
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ListofabbreviationsandacronymsB2B BusinesstobusinessB2C BusinesstoconsumerB2G BusinesstogovernmentC2B ConsumertobusinessC2C ConsumertoconsumerCAD Computer-aideddesignCPC CentralProductClassification(productandservicesclassificationsystem
usedbytheUnitedNationsStatisticalCommission)CPTPP ComprehensiveandProgressiveAgreementforTrans-PacificPartnershipDSB DisputeSettlementBodyECIPE EuropeanCentreforInternationalPoliticalEconomyEU EuropeanUnionFTA FreetradeareaG2B GovernmenttobusinessG2C GovernmenttoconsumerGATS GeneralAgreementonTradeinServicesGATT GeneralAgreementonTariffsandTradeGDP GrossdomesticproductGDPR GeneralDataProtectionRegulation(EUregulation)ICT InformationandcomputertechnologyIMF InternationalMonetaryFundIPRs IntellectualPropertyrightsIT InformationTechnologyITA InformationTechnologyAgreementITC InternationalTradeCentreISP InternetservicesproviderLDC LeastdevelopedcountryLTE Long-TermEvolution(high-speedwirelessdatacommunicationstechnology)M2M MachinetomachineMC MinisterialConferenceMC9[e.g.] 9thMinisterialConferenceoftheDohaRound[numberexemplary]MFN Most-favourednationOECD OrganisationforEconomicCo-operationandDevelopmentPPB ProcessoProdutivoBasico(Brazilianregulation)SDGs SustainableDevelopmentGoalsSMEs SmallandmediumenterprisesTiSA TradeinServicesAgreementTPP Trans-PacificPartnershipTRIPS Trade-RelatedAspectsofIntellectualPropertyRightsUN UnitedNationsUNCTAD UnitedNationsConferenceonTradeandDevelopmentUS UnitedStatesUSITC UnitedStatesInternationalTradeCommissionUSTR UnitedStatesTradeRepresentativeVAT Value-addedtaxVPN VirtualPrivateNetworkWTO WorldTradeOrganization
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1.Introduction
Digitaltransformationisaffectingmoreandmoreindustries,changingexistingtradeingoods
and services, and creating a new, digital trade. Baldwin (2016a) calls it the 4th phase of
globalization, the secondunbundling,drivenby the informationand computer technology
(ICT)revolution.1Thespeedofthistransformationisfasterthanotherdisruptivechangesin
thepast2anddigitaltradeisbecominganimportantpartofinternationaltrade.
Atthesametime,theinternationaltradesphereisexperiencingaseverecrisis,withbarriers
toclassicaltradeingoodsrisingandatradewarbetweenChina,theUnitedStates(US)and
theEuropeanUnion(EU)imminent.TheWorldTradeOrganization(WTO)isthemultilateral
organizationthathasdealtwithrulesforinternationaltradefordecades,ensuringtradeflows
tobeasfreeandpredictableaspossible.Now,theorganizationseemstobeparalyzed,not
knowinghowtorespondtothenew,protectionist,realitiesininternationaltrade.
InMarch2018,GermanChancellorAngelaMerkelhighlightedinhergovernmentdeclaration
that“digitalizationandprotectionismaretwoopponentpolesthatinourunderstandingdo
notgowellwitheachother.Thisisactuallywhythe21stcenturyisthecenturyofmultilateral
solutionsandmultilateralinstitutions.Thisisespeciallythecasewithregardtotrade.”3
Foralongtime,theInternethasbeenthespherewheretradeflowshavebeenmostlyfree
andunregulated.In2000,BillClintonclaimed,“tryingtocrackdownontheInternet(…)issort
ofliketryingtonailJell-Otothewall.”4
Today,protectionismisrisinginthedigitalsphereascountriesarestartingtoimplementan
increasingnumberofbarrierstodigitaltrade–thewell-knownChineseGreatFirewallisjust
the tipof the iceberg.Recentdata scandals, suchasFacebook–CambridgeAnalytica,5or
discussionsaboutfakenewshavechangedthepublicopiniontowardstheInternet,freeflows
ofdata,anddigitalproductsandservices.Callsformoreregulation,includingfordigitaltrade,
havebecomelouder.
1See:Baldwin,RichardE.(2016a):Thegreatconvergence:informationtechnologyandthenewglobalization.Cambridge,MA:TheBelknapPressofHarvardUniversityPress.,79-110.2Baldwin2016a,17-110.3TranslatedfromGerman:Merkel,Angela(2018):Regierungserklärungvom21.März2018.Online:https://www.bundesregierung.de/Content/DE/Regierungserklaerung/2018/2018-03-22-regierungserklaerung-merkel.html.4BillClinton,8March2000,speechrecordedbytheFederalNewsServiceandexcerptspublishedintheNewYorkTimes(“Clinton’sWordsonChina:TradeisTheSmartThing.”NewYorkTimes,9March2000.Online:https://www.nytimes.com/2000/03/09/world/clinton-s-words-on-china-trade-is-the-smart-thing.html).5SeeSchulz,Thomas(2018):AußerKontrolle.DerSpiegel,18,24.03.2018,12-24.
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TheWTO,ontheotherhand,hasbeenmuchcriticizedfornottakingactioninregardtothe
riseofdigitaltradeandrespectivebarriers.6Therefore,thispaperaimstoinvestigatetherole
oftheWTOanditsagreementsfortradeliberalizationinthisarea.Itwillbeanalysedifexisting
WTOrulesaddressbarrierstodigitaltradealreadyorifmodifications,orenhancements,need
tobeundertaken.
Inordertodoso,keybarrierstotradeinthedigitalspherewillbeidentifiedfirst.Then,the
applicability of the existing WTO framework in regard to this new kind of trade will be
examined.Lastly,theresponseoftheWTOasanorganizationregardingdigitaltradewillbe
analysedandpossiblefuturesolutionswillbepointedout.
2.Theriseofdigitaltrade
2.1Definitionanddimensionsofdigitaltrade
Asoftoday,manytermsare inusetodescribethedigitallyenabledformoftradesuchas
electronictrade,electroniccommerceordigitaltrade,andthereisnogenerallyagreedupon
definition of what is understood by those terms.7 Often, they are used interchangeably,
withoutdefiningthescopeofeachconcept.8Atthesametime,theWTOhasnotbeenableto
reachconsensusonafinaldefinitiondespiteongoingdiscussionforthepast20years.
For the purpose of itsWork Programmeon Electronic Commerce, theWTOuses a broad
workingdefinitionofelectroniccommerce.Itunderstandsthetermelectroniccommerceto
mean “the production, distribution, marketing, sale or delivery of goods and services by
electronicmeans.”9Thescopeofthisdefinitionreachesfromsellingtangibleproductsover
theInternet,toofferinganonlinemarketingactivitywithnosaleofanykindofproductor
service.Thisverybroadapproachofdefiningelectroniccommerceisconsistentwiththelogic
oftheexplorativenatureoftheWTOWorkProgrammeonElectronicCommerce,aimingto
examineallpossiblerelatedaspectsofdigitaltraderelevantfortheWTO.Itisinterestingto
6See,interalia,Fleuter,Sam(2016):TheRoleofDigitalProductsUndertheWTO:ANewFrameworkforGATTandGATSClassification.ChicagoJournalofInternationalLaw,17(1);GreenbergCenterforGeoeconomicStudies(2017):TheRiseofDigitalProtectionism.CouncilonForeignRelations.https://www.cfr.org/report/rise-digital-protectionism;PrimoBraga,CarlosA.(2005):E-commerce:Newgame,newrules?TheQuarterlyReviewofEconomicsandFinance,45;Weber,RolfH.(2010):DigitalTradeinWTO-Law:TakingStockandLookingAhead.AsianJournalofWTO&InternationalHealthLawandPolicy,5(1).7WorldTradeOrganization(hereinafter:WTO)(2017b):WorldTradeStatisticalReview2017,45;WTO:CommunicationfromCanada,Chile,Colombia,Côted'Ivoire,theEuropeanUnion,theRepublicofKorea,Mexico,Montenegro,Paraguay,SingaporeandTurkeyof13January2017.WTODoc.JOB/GC/116,JOB/CTG/4JOB/SERV/248,JOB/IP/21JOB/DEV/42,2.8WTO2017b,45.9WTO(1998):WorkProgrammeonElectronicCommerceof30September1998.WTODoc.WT/L/274,1.
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point out that nomonetary component would need to be involved for an activity to be
classifiedase-commerceaccordingtotheWTO’sdefinitionasonlytheelectronicdeliveryof
goods and services (e.g. free of charge or paid for with personal data) is enough to be
encompassedbythisdefinition.
IncomparisontotheWTO,otherorganizationsuseanarrowerapproachwhendefiningdigital
trade.AccordingtothemostcurrentofficialdefinitionbytheOrganisationforEconomicCo-
operationandDevelopment(OECD)
“[a]n e-commerce transaction is the sale or purchase of goods or services,conducted over computer networks by methods specifically designed for thepurposeofreceivingorplacingorders.Thegoodsorservicesareorderedbythosemethods,butthepaymentandtheultimatedeliveryofthegoodsorservicesdonothave tobe conductedonline.Ane-commerce transaction canbebetweenenterprises, households, individuals, governments, and other public or privateorganisations.”10
TheOECDdefinitionnarrowsthescopeofe-commercetothesaleorpurchaseofgoodsor
services.Activitiesthatdonotincludeamonetarytransactionwould,therefore,fornow,not
fall under the scope of the OECD’s definition of e-commerce. However, discussions are
ongoing,andtheOECDcallsforincludingdataflowsintheconceptsoftradeingeneralas,in
manycases,thosesupportmonetarytransactions,eventhoughtheymightnotdirectlyresult
inone.11AnexampleofthiscanbeseeninthebusinessmodelofFacebook.
AnotherinterestingperspectiveisthedefinitionofdigitaltradebytheEuropeanUnion,since
itisprobablymoreadvancedinmakingrulesforthedigitaleconomythroughitsDigitalSingle
Market than other international organizations. EU law does not define the term e-
commerce,12butanexistingEUdirectiveone-commercemakesreferencetotheEUdirective
oninformationsocietyservicesdefiningan“InformationSocietyservice(…)[as]anyservice
normallyprovidedforremuneration,atadistance,byelectronicmeansandattheindividual
requestofarecipientofservices.”13AglossaryoftheEuropeanCommissionontheEUDigital
Single Market lays out that the term e-commerce was “used to describe trade over the
10OrganisationforEconomicCo-operationandDevelopment(hereinafterOECD)(2011):OECDGuidetoMeasuringtheInformationSociety2011,72.11OECD(2017b):WorkingPartyonInternationalTradeinGoodsandTradeinServicesStatistics:MeasuringDigitalTrade:TowardsaConceptualFramework.STD/CSSP/WPTGS(2017)3,7,8.12EuropeanCommission(2017c):DigitalSingleMarket:Glossary.Online:https://ec.europa.eu/digital-single-market/en/glossary.13Directive98/34/ECoftheEuropeanParliamentandoftheCouncilonlayingdownaprocedurefortheprovisionofinformationinthefieldoftechnicalstandardsandregulationsandofrulesonInformationSocietyservices[1998],OJL204,art.1.
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internet (…) [including] selling goods online, offering online information or commercial
communications, providing tools allowing for search of products and services, access and
retrievalofdata.”14
Therearetwointerestingobservationstomake:first,EUlawdoesonlyknowdigitalservices,
notgoods.Second,theseservicesdonotnecessarilyhavetoberemuneratedinordertofall
underthescopeofthisdefinition.TheEUGlossaryontheSingleDigitalMarketadditionally
includesactivities, suchassearchtoolsorofferingonline information,withoutmentioning
thatadirecteconomicmonetaryactivityneedstobeinvolved.TheEuropeanUnion,likethe
WTO,therefore,seemstoberelativelyflexiblewiththeuseoftheterme-commerceandits
terminformationsocietyservice,leavingthedefinitionssufficientlyopentoincludenewand
non-traditionally-remuneratedactivities.
Manydifferentconceptsofe-commerceordigitaltradeexist,withagrowingconsensusto
includeall“digitallyenabledtransactions”intradeingoodsandservices.15However,inclusion
of new developments in the concept of digital trade will need to be discussed, such as
transactionspaidforwithdata,transactionsmadewithintheso-called“sharingeconomy”,or
machine to machine (M2M) communications. While some transactions generated within
those new concepts might already be included in trade statistics, it would be useful to
disaggregatethemwithinstatisticstohighlighttheirimpactwithintheeconomy.16
ThisisalsoreflectedbytheG20,callingfora“commonunderstandingofDigitalTradethatis
broadenoughtocoverexistingapproaches,andflexibleenoughtotakeintoaccounton-going
technologicalevolution.”17Onepossiblesolutioncouldbetoseedigitaltradeasaconcept
withdifferentdimensions,orcategories,ratherthantryingtofindonesingledefinition.New
categoriescouldthenbeaddedtothisconceptasnewtechnologyevolves,orolddimensions
couldberemovedastheybecomeobsolete.
Fleuter (2016) disaggregates digital products into four categories: tangible goods ordered
through the Internet,electronicallydeliveredservices,e-products–meaningelectronically
delivered goods – and remote additive manufacturing.18 Another approach could be to
differentiatebetweentangiblegoodsorderedviatheinternet,traditionallydeliveredservices
14EuropeanCommission2017c.15LópezGonzález,Javier&Jouanjean,Marie-Agnes(2017):DigitalTrade:DevelopingaFrameworkforAnalysis.OECDTradePolicyPapers,No.205.Paris:OECDPublishing,12.16UnitedNationsConferenceonTradeandDevelopment(hereinafter:UNCTAD)(2017):InformationEconomyReport:Digitalization,TradeandDevelopment,35.17BundesministeriumfürWirtschaftundEnergie(2017):G20DigitalEconomyMinisterialDeclaration,18.18Fleuter2016,157.
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(e.g.in-person,viatelephone)orderedviatheinternet,andelectronicallydeliveredservices
and goods. The OECD names three different categories of products: goods, services, and
information(inthesenseofdata)andpointsoutthatitisnotasimplequestionofyesorno
ifacross-bordertransactionshouldbeconsidereddigitalornot.19AccordingtotheOECD,all
digitallydeliveredproductsshouldbewithinthescopeoftheconceptofdigitaltrade,aswell
asallgoodsandservicessuppliedinatraditionalway,butdigitallyorderedviaaplatform.
However,digitallyorderedproductsviatraditionalmeans,likeanemailoran(Internetbased)
phonecall,whicharedeliveredinaphysicalortraditionalwayshouldnotbeconsidereddigital
tradeaccordingtotheOECD.
Thisisinterestingas,withfasttechnologicalprogress,itcanbedifficulttodrawalineofwhat
istobeconsideredelectroniccommerceornot.If“platform”isthecriteriausedbytheOECD
to determine if trade is digital or not, what would apply if incoming order-emails were
assessed and processed by an artificial intelligence, instead of a human?Would that be
considereddigital trade?Makingcategoriesbasedondifferentusesof the Internetshould
thereforebe seenwith caution.On theother hand, theOECDalsohighlights theneed to
include information, or data, as new a dimension of international trade, since data is an
essentialpartoftheInterneteconomyandforsupportingmonetarytransactions.
Establishingdifferentcategoriesofdigitaltradeproductsandservicesisimportanttoclearly
define the subject of this paper, and to also differentiate relatively new trade concepts
(electronically transmitted products and services) from traditional, now digitally enabled,
tradeconcepts.
This paperwillmainly focus on cross-border transactions inwhich products and services,
including data, are transmitted electronically, to evaluate the response of theWTO with
regardtotheriseofthisnewkindoftrade.Referencetootherdigitallyenabled,“classical”,
cross-bordertradeingoodsandserviceswillonlybemadebrieflywheredeemednecessary.
Thetermsdigitaltrade,e-commerceandelectroniccommercewillbeusedinterchangeably.
2.2Developmentofdigitaltrade
Unquestionably,digitalizationoftheeconomy,andthusdigitaltrade,hasseenariseonthe
global scale, impacting both industries and nations in a short amount of time. However,
measuringtheexactdevelopmentofdigitaltradeisnotaseasyasmeasuringtradeingoods,
19Hereandfollowing:OECD2017b,5-8.
9
wheretangiblegoodsareshippedandcanbecounted.Asoftoday,littleempiricalinformation
existsondigitaltrade.20
Two main challenges can be identified when trying to quantify the impact of electronic
commerce.Giventheabsenceofagloballyaccepteddefinitionofwhatisunderstoodbythe
terms e-commerce ordigital trade, it is hardly possible to collect data and choosewhich
productsandservicestoincludewhenelaboratingstatisticsondigitaltrade.Thisisthefirst
challengearisingwhentryingtomeasuredigitaltrade.
Inadditiontothedifficultyofdefininge-commerce,separatingdigitallytransmittedproducts
andservicesviathe Internetaspartofaneconomictransactionfromdatatransmittedfor
otherreasons,likepersonalexchangesbetweenindividuals,canbeidentifiedasthesecond
mainchallenge.Asalldataistransmittedvia0sand1s,itisstilltechnicallydifficult,oralmost
impossible, for governments or statisticians to count and analyse what kind of data is
transmittedacrossbordersandwhichpartshouldbeconsideredtobetrade.Ontheother
hand, there is the need for expanding the scope of traditional goods and services trade
statisticsasbenefitsfromdataflowsarenotfullycovered.21
Statisticaldatapresentedondigital trade therefore ranges fromelectronically transmitted
productsandservices,toproductsandservicesorderedviatheinternet,cross-borderdata
flows,orindirectindicatorssuchasclassicaltradewithICTproducts.Often,statisticaldatais
simplynotavailable(e.g.forelectronicallydeliveredproductsandservices),orpresenteddata
areonlyestimateswhichcanvarysubstantially.22
Inaddition,indifferencetoclassicaltrade,e-commercetransactionscangoinalldirections:
therecanbeclassicalbusiness-to-consumer(B2C),business-to-business(B2B)andbusiness-
to-government (B2G) transactions, as well as consumer-to-consumer (C2C) (e.g. eBay),
consumer-to-business(C2B)(e.g.inthesharingeconomylikeAirbnb,wherepeopleprovide
their home to Airbnb for the platform to rent it), government-to-consumer (G2C) (e.g.
government e-services for citizens abroad), or government-to-business (G2B) (e.g.
governmente-servicesforbusinessesabroad).Statisticswilloftenonlycoveroneorsomeof
theabove-mentioneddirections.
20OECD2017b,2;WTO2017b,45.21OECD2017b,3,4.22SeeUNCTAD2017,32.
10
It is therefore necessary to analyse different dimensions of digital trade when trying to
compilestatisticsaboutitsgrowthorimpact.23Tobeawareofwhatkindofdataisincluded,
and what information can be derived from that, caution is needed when analysing and
interpretingstatisticsconcerningdigitaltrade.
Initsmostrecentreportonthedigitaleconomy,theUnitedNationsConferenceonTradeand
Development(UNCTAD)pointsoutthreerelevantindicatorsformeasuringdigitaltrade:trade
in“classical”ICT-services,tradeinelectronicallydeliveredservices(ICT-enabledservices)and
cross border B2C e-commerce in goods and services.24 It is important to note that those
groupsarenotdisjoint,buthavesubstantialoverlaps,oraresubsetsofeachother.Basedon
datajointlycompiledbytheUNCTAD,theWTO,andtheInternationalTradeCentre(ITC),the
reportstatesthatgrowthofthedigitaleconomyisreflectedbytheexpansionofICTservices
exportsinworldtradeoverthepastdecade,withcomputerandtelecommunicationservices
reaching$467billionin2016,andinformationservicesreaching$26billionin2016,almost
threetimesmorethanin2005.25
Figure1:Globalexportsoftelecommunications,computerandinformationservices,2005-2016
Source:UNCTAD2017,29,basedondatabyUNCTAD,WTOandITC.
Figure1showstheriseinglobalexportsoftelecommunications,computer,andinformation
services during the last decade, growing much faster than commercial services exports,
increasingitsshareinglobalservicesexportsconstantly.
23WTO2017b,45.24UNCTAD2017,28-34.25UNCTAD2017,28,29.
11
However,thesenumbersarenotdividedequallyovertheglobe:theEUandtheUSjointly
accountformorethanhalfoftheworld’stelecomsservicesexports,andtheEU,India,and
theUSaccountfor80percentoftheworld’sexportsincomputerservices.26
Trade in electronically transmitted services, including formerly non-tradeable and non-
classicalICT-services,isbelievedtohavegrownmuchoverthelastdecadeaccordingtothe
UNCTAD.27However,duetoalackofofficialdataontheamountoftradeinservicesdelivered
electronically,nostatisticscanbepresented–astrongdisadvantageforpolicymakersinthis
area.28
WhileB2Btransactionsaccount forthebiggestpartofcross-bordere-commerce,statistics
alsopointtoanincreaseinB2CandC2Ccross-bordertrade,giventhatcustomersaremore
andmoreenabledtobuyandsellabroad.29Eventhoughalackofofficialstatistics,andeven
alackofestimatesbycountries,makesitdifficultforpolicymakerstoevaluatetherealimpact
ofdigitalB2CandevenlessC2Ctrade,UNCTADestimatescross-borderB2Ce-commercein
2015tobearound$189billion,with380millionconsumersinvolved.30
Figure2:GlobalB2Ce-commercetransactionvalueandglobalB2Ce-commerceshoppers
Source:Manyikaetal.2016,35,basedondatabyAllResearch.
26UNCTAD2017,28-30.27UNCTAD2017,30.28id.29OECD2017b,7,1230UNCTAD2017,32.
12
For thesameyear,Manyikaetal. (2016), ina reportpublishedbyMcKinsey,estimatethe
volume of cross border B2C e-commerce (in this case meaning all products and services
ordered via the Internet) to be around $300 billion with around 400 million consumers
involvedasshowninfigure2.McKinseyalsoestimatesthatin2015approximately12percent
oftheglobaltradeingoodswasconductedviae-commerce(includingB2B).31
Despitethefactthatalldatapresentedprimarilyrepresentsestimates,allreportspointto
rapid growth of cross-border e-commerce in goods and services:McKinsey estimates the
volume of global cross-border e-commerce to be five times higher in 2020 than in 2014,
reaching$1trillionin2020.Inthesameway,cross-borderB2Ce-commercewillbecomemore
importantinrelationtoallB2Ce-commercetransactions,makingupforroughlyathirdofall
e-commercetransactionsworldwidein2020.32
Someregionsandcountriescollectdataonspecificaspectsofcross-borderB2Ce-commerce.
However,dataisnotsufficienttogainacompletepictureofthoseregionsinrelationtoB2C
e-commerce,andevenlesssotohavedataonalle-commercetransactions.33Asanexample,
theEUcollectsdataon theproportionofEUbusinessesbuyingandsellingonlineand the
proportionofonlineshoppersamongInternetusers.In2017,forinstance,68percentofall
EU Internetuserspurchasedgoodsor servicesonline,40percentmore than in2007.3433
percent of purchasers conducted cross-border e-commerce transactionswith sellers from
otherEUcountries,while23percentofe-shoppersboughtproductsandservicesfromsellers
outsidetheEU.35
31Manyikaetal.(2016):DigitalGlobalization:TheneweraofGlobalFlows.McKinseyGlobalInstitute,23.32Manyikaetal.2016,35.33UNCTAD2017,32.34Eurostat(2017):E-commercestatisticsforindividuals.Online:http://ec.europa.eu/eurostat/statistics-explained/index.php/E-commerce_statistics_for_individuals#68.C2.A0.25_of_internet_users_in_the_EU_shopped_online_in_2017.35Id.
13
Figure3:Cross-borderbandwidthgrowth
Source:Manyikaetal.2016,31,basedondatabyTeleGeography&GlobalBandwidthForecastService.
Anotherinterestingdimensiontoquantifythedevelopmentofdigitaltradeistolookatthe
increaseof flows indataasshowninfigure3,representedbycross-borderbandwidths. In
2014,cross-borderbandwidthwas45timeshigherthanin2005,whilethegrowthinflowsof
goods(10.5times),services(3.1times),foreigndirectinvestment(2.3times),andpeople(1.6
times) was significantly lower.36 It is important to note that not all of this data can be
considered relevant for digital trade. A great amount of this data supports, or is part of,
transactionsoftradeingoodsandservices,includingintra-companytrade,ispartofaM2M-
transaction,orconstitutesnon-commercialdata,suchaspersonaldatasentbyindividualsor
datatransmittedbygovernments.However,cross-borderdataflowsareagoodindicatorto
quantifythegrowingimportanceofdatainallpartsofglobalization,includingdigitaltrade.
Dataandtheuseofdataanalyticsarebecominganessentialpartofbasicallyanybusiness,
leadingtoanincreaseincross-borderdatatransfers.
Mostofthisdatamovesbetweenadvanceseconomies:93percentofcross-borderdataflows
happenbetweenthetop35economies(withthetop15accountingfor77percent),whilethe
restoftheworldonlyaccountsfor7percentofglobaldataflows.37
Thispointstoadeepdigitaldividebetweenthetopdigitaleconomiesandtherestoftheworld
as large parts of the globe are apparently not participating in the growth of the digital
economyanddigitaltrade.Thisdividecouldnotonlyleadtostrongdisadvantageswhennot
36Manyikaetal.2016,4,20,21.37Manyikaetal.2016,60,61.
14
participatinginalargepartoftheeconomy,butalsotodisagreementsbetweenMembersof
theWTOastheirinterestswillbebasedontheroletheytakewithindigitalglobaltrade(e.g.
participatingstronglyornotparticipatingatall).
Thissectionhasshownthat,whilesomedataondimensionsofdigitaltradeexist,thereisstill
a need for improved statistics to better understand the impact of digital trade in the
economy.38As theWTOstates in itsmost recent statistical review:“Thechallenge for the
international statistical community is to find a way of capturing these [digital trade]
transactions in international trade statistics and subsequently in macroeconomic
aggregates.”39Whiletherearealreadyanumberofinitiativesworkingonthisissue,suchas
by the OECD, UNCTAD, or the International Monetary Fund (IMF), these are still mostly
focusedonconceptualizingthedifferentaspectsofdigitaltrade.40
Thedirection,however,isclear,cross-borderdigitaltradeisbecominganimportantpartof
internationaltradeandtheglobaleconomy.Nevertheless,thissectionhasalsoshownthat
transactionsofdigitaltradeareunequallydistributedovertheglobe,leadingtogapsbetween
thenewdigitalplayersandthose,fornow,leftbehind,anissueofpotentialrelevanceforthe
WTO.
3.Anewdigitalprotectionism
3.1Existingpre-barrierstodigitaltrade
Before analysing measures implemented by governments that directly address digitally
transmittedproductsandservices,somefactorsarenoteworthytomentionthathaveadirect
or indirect impactonthedevelopmentondigitaltrade.However,thesewillnotbefurther
analysed in this paper as they do not constitutemeasures implemented by governments
restrictingdigitaltradedirectly.
These includebarriers to classical trade in information technology (IT) equipment such as
tariffs, quotas, or technical barriers, low participation in the Information Technology
Agreement(ITA)andongoingdiscussionsaboutitsscope,aswellasrestrictionstothesupply
38SeeOECD2017b.39WTO2017b,45.40Id.
15
oftelecommunications-services.41Alloftheseissuesarerelatedto,orpotentiallyhindering
thedevelopmentofdigitaltrade.
Apart from these more general factors, research has shown that especially developing
economiesfacesubstantialpre-existingbarrierstodigitaltrade,preventingthemtofullytake
advantageofthegainsofelectroniccommerce,thusleadingtotheabove-mentioneddigital
divideinrelationtoe-commerce.Itisimportanttonotethatthosepre-existingbarriersdo
notfallunderthescopeofWTO-lawaddressingtradebarriers.
Kshetri(2007)identifiesthreekindsoftradebarrierstoe-commerceprevailingindeveloping
economies, ofwhich some are also valid for advanced economies.42 The first category he
identifies is “economic barriers”, including slow or no access to the Internet, bad
telecommunications infrastructure, lack of electric supply, unavailability of credit cards,
economieslargelybasedonagriculture,andlogisticschallenges(e.g.forthedeliveryofonline-
orderedpackages).Thesecondkindaresocio-politicalbarriers,suchasapreferenceforface-
to-facecommunications,validityofelectronicsignatures,importdutiesonICT-products,weak
formalinstitutions,aswellaslegalburdens.ThelastcategoryKshetriidentifiesis“cognitive
barriers”, such as lack of awareness of potential opportunities, lack of trust, computer
illiteracy,orlackoflanguageskills.
Ofallthesefactors,thelackofwidespreadavailabilityoffastbroadbandInternetisoneofthe
mostrestrictingfactorsforthedevelopmentofe-commerceandcross-borderdigitaltradein
developingeconomies.43
This non-exhaustive list illustrates the numerous challenges countries are facing when
participatinginglobaldigitaltrade.Whilesomebarriersmightbeovercomewithinthenext
years,suchaslackofelectricsupplyoraccesstotheInternet,others,suchasweaknessof
formal institutions, might need longer, possibly leading to disadvantages for developing
economies.
While many scholars point to significant potential advantages for developing economies
throughdigitalizationofinternationaltrade,44othersnotethatstructuraldisadvantagesatthe
41SeeAhmed,Usman&Aldonas,Grant(2015):AddressingBarrierstoDigitalTrade.E15Initiative.Geneva:InternationalCentreforTradeandSustainableDevelopment(ICTDS)&WorldEconomicForum,3-6.42Hereandfollowing:Kshetri,Nir(2007):Barrierstoe-commerceandcompetitivebusinessmodelsindevelopingcountries:Acasestudy.ElectronicCommerceResearchandApplications,6,443-452.43Ahmed&Aldonas2015,6.44See,interalia,Ahmed&Aldonas2015,Kshetri2007,Manyikaetal.2016;Suominen,Kati(2017):FuellingTradeintheDigitalEra:PolicyRoadmapforDevelopingCountries.InternationalCentreforTradeandSustainableDevelopment(hereinafterICTSD).Online:https://www.ictsd.org/sites/default/files/research/suominen_fuelling_trade_in_the_digital_era_0.pdf.
16
startcouldbeexacerbatedthroughdigitaltradeandpossibleinternationalregulationinthat
field.45Manydevelopingcountriesthemselvesareoftheopinionthatdigitaltrade,basedon
rulesmainlyelaboratedbyadvancedeconomies,will impede their furtherdevelopment.46
Eventhoughthisissuewillnotbethefocusofthispaper,theimportanceofovercomingthose
pre-existingbarriers fordiscussionsonmultilateral rules fordigital tradebetweenallWTO
Membersasequalscanbehighlightedatthispoint.
3.2Keybarrierstodigitaltradeimplementedbygovernments
3.2.1Introduction
Alongwiththeriseofdigitaltrade,ariseinrestrictivemeasuresinthedigitalspacecanbe
identified,posingpotentialbarrierstodigitaltrade.47EventhoughtheInternetstillseemsto
be a relatively free space regarding trade, compared to the “real world”, with physical
frontiersbetweencountries,governmentsareprogressivelyunderstandingthefunctioningof
theInterneteconomyandstartingtoregulateit.Throughimplementingrestrictivemeasures,
somecountriesareintroducingakindof“digitalprotectionism”48,withsomemeasureshaving
a negative impact on digital trade. Some of these trade-restrictive barriers are similar to
measures that can be identified in classical trade in goods and services, while others are
uniquetoelectroniccommerce.Themotivesforimplementingsuchmeasuresarevariousand
reach from protecting public moral, security, or data privacy of citizens to economic
protectionism.Thelinebetweenthesemotivesisoftenblurredas,likeinclassicaltrade,the
evokingofpublicmoral,orsecurityreasons,insomecasesleadstocompetitiveadvantages
fordomesticcompanies.Thissectionaimstoidentifyandcategorizekeybarrierstotradein
digitally transmitted products and services, as well as motives of governments for their
implementation,withoutprejudiceifthosebarriersaresubjecttoanyoftheagreementsof
theWTOorinviolationofthem.
45James,Deborah(2017):TwelveReasonstoOpposeRulesonDigitalCommerceintheWTO.HuffingtonPost.Online:https://www.huffingtonpost.com/entry/twelve-reasons-to-oppose-rules-on-digital-commerce_us_5915db61e4b0bd90f8e6a48a.46WTO:StatementbytheAfricanGroupof20October2017,WTODoc.JOB/GC/144.47WTO,JOB/GC/116,JOB/CTG/4JOB/SERV/248,JOB/IP/21JOB/DEV/42.48Theterm“digitalprotectionism”includesallmeasurestakenbygovernmentstoputrestrictionsinthedigitalsphere(GreenbergCenterforGeoeconomicStudies2017).
17
3.2.2Tariffs
Classicalmarketaccesslimitationssuchastariffsarenotamajorissueinthefieldofdigital
trade,andtherearenonotedcasesofcountriesimposingcustomdutiesondigitalproducts
and services.49 This is mostly due to three reasons: first, digital trade50 includes mostly
services, where tariffs in a classical sense have never been a big issue. Second, it is still
technicallydifficult,ifnotimpossible,tocontrolallcross-borderflowsofdataandtherefore
impose tariffs on electronically transmitted products and services. And third, the WTO
currentlyholdsamoratoriumoncustomdutiesondigitallytransmittedproductsandservices
which – even though it is legally not binding – could additionally preventMembers from
implementingtariffbarriers.
3.2.3Datalocalizationmeasures
Datalocalizationmeasuresareamongthemostcitedbarrierstointernationaldigitaltrade.
Theyaremeasurestakenbygovernmentswhichprohibitorrestrictthecross-borderflowof
dataorrequirecompaniestostoreandprocessdatalocally.Theythereforelimitaccessto
digital markets in affected economies as they require development and use of local
infrastructure(e.g.computingcentres)asaconditionformarketaccess.51Datalocalization
measuresarenotonlyrelevantfordigitaltrade,butforclassicaltradeinallsectorsasdatais
becomingaresourcerelevantforeveryindustry.Thus,barrierstofreeflowsofdataconstitute
an important barrier not only to trade, but to growth in general, hindering digital trade
directly,hinderingtheenablingofclassicaltrade(e.g.e-payments,e-reporting)andhindering
thevaluecreationoftradedproducts(e.g.byhinderingcross-borderM2M-communications
inthemanufacturing,automotive,oragricultureindustries).52
Forcompanies,complyingwithlocaldatastoragerequirementscancomeatsignificantcosts.
AccordingtoasurveybytheUnitedStates InternationalTradeCommission(USITC)among
US-companies, 82 percent of large companies and 52 percent of small and medium
49SeeUnitedStatesTradeRepresentative(hereinafter:USTR)(2017a):2017NationalTradeEstimateReportonForeignTradeBarriers.Online:https://ustr.gov/sites/default/files/files/reports/2017/NTE/2017%20NTE.pdf;USTR(2017b):KeyBarrierstoDigitalTrade.USTRFactSheets.Online:https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2017/march/key-barriers-digital-trade.50Asoutlinedinchapter2.1:onlydigitallydeliveredproductsandservices.51SeeCrosby,David(2016):AnalysisofDataLocalizationMeasuresUnderWTOServicesTradeRulesandCommitments.E15Initiative.Geneva:ICTSDandWorldEconomicForum,1.52SeeInternationalChamberofCommerce(hereinafter:ICC)(2016):WTOBusinessFocusGroup1:MSMEsandE-Commerce.Online:https://cdn.iccwbo.org/content/uploads/sites/3/2016/10/WTO-Business-focus-Group-1-MSMEs-and-e-commerce.pdf,6;OECD2017b,4.
18
enterprises(SMEs)inthedigitalcommunicationssectorsfounddatalocalizationrequirements
tobeabarriertotheirbusiness.53
Several economies are considering implementing or have already implemented data
localizationrequirements, includingtheEU,Korea,Russia,andTurkey.Cory identifiesdata
localizationmeasuresinatotalof31countriesandtheEU54.Thisnumberillustratesthatmany
countries are considering somekindof “dataprotectionism”55, even though theextentof
existingdatalocalizationmeasuresandtheirimpactondigitaltradeisnotyetfullyclear.56
Themainreasonsevokedforimplementationaretheprotectionofprivacyofcitizens(suchas
the General Data Protection Regulation (GDPR) in the EU)57, as well as national security
interests(suchasinSouthKorea,prohibitingthecross-borderflowofdatarelatedtomaps)58.
However,therearefewexamplesofeconomicprotectionism:59
SouthKoreahasestablisheddatalocalizationrequirementstoprotectlocale-commerceand
onlinepaymentoperators:foreigne-commercecompaniesareonlyallowedtostoreKorean
customercreditcarddataabroadwhenoperatinginfiveormorecountries.60
Another example of economic protectionism could be Kazakhstan, requiring all websites
registeredwitha.kz-domaintooperateonserverslocatedwithinthecountry.61
In Turkey, Internet-based payment providers, like PayPal, must store all data within the
countryfortenyears,which,interalia,madePayPalexitthecountry.62
The impact of data localization requirements on the economy is notmarginal: the USITC
estimates that removing data localizationmeasures posed by foreign governmentswould
increasetherealGDPoftheUSby0.1to0.3percent.63Thisnumberwillgrowasanincreasing
numberofbarrierstothefreeflowofdataare implementedandmoreandmoreclassical
sectorsortradedisciplineswilldependondataflows,suchasmanufacturing,automotiveor
53UnitedStatesInternationalTradeCommission(hereinafter:USITC)(2014):DigitalTradeintheU.S.andGlobalEconomies,Part2.Online:https://www.usitc.gov/publications/332/pub4485.pdf,81.54Cory,Nigel(2017):Cross-BorderDataFlows:WhereAretheBarriers,andWhatDoTheyCost?InformationTechnology&InnovationFoundation.Online:http://www2.itif.org/2017-cross-border-data-flows.pdf?_ga=2.13714868.2007752918.1518863940-1236132695.1518863940,20-31.55Cory2017,2.56SeeUSTR2017a,USTR2017b.57USITC2014,90.58Cory2017,28.59Crosby2016,2.60Cory2017,28.61Deibert,Ronald;Palfrey,John;Rohozinski&Zittrain,Jonathan(eds.)(2008):AccessDenied:ThePracticeandPolicyofGlobalInternetFiltering.Cambridge,MA;London:TheMITPress,315.62Cory2017,29.63USITC2014,78.
19
agriculture. A study publishedby the EuropeanCentre for International Political Economy
(ECIPE)comestotheresultthatinascenariowitheconomy-widedatalocalizationmeasures
applying to all sectors, GDP-losses would be substantial in countries analysed, with -1.1
percent in the EU and South Kora, -0.8 percent in Brazil and India, and -0.7 percent in
Indonesia.64
3.2.4Quotas
There are no cited cases quotas in the classical sense regarding the supply of digitally
transmitted products and services.65 There are however some cases in which countries
implementatotalprohibitionofthesupplyofadigitalproductorservicewithintheirterritory
whichcanbeinterpretedasazeroquotaasthecaseUS–Gamblinghasshown.66Giventhat
azeroquotaisaspecialcaseinWTO-law,thisshouldbeseenmoregenerallyinrelationto
blocking and filteringwebsites and applications (apps).Aquota canbe interpreted as the
prohibitionofwebsitesandappsofferingacertainkindofservice(webblockingandfiltering),
andvice-versa.
3.2.5Webblockingandfiltering
Blockingandfilteringofwebsitesandappsisoneofthemostcommonbarrierstodigitaltrade,
ofwhichtwodimensionscanbeidentified:websitesorappscaneitherbeblockedasawhole,
orsomeoftheircontentcanbefiltered.Filteredcontentandservicesmay includecertain
news,information,movies,e-books,music,orpaymentservices.Webblockingandfiltering
couldbeinterpretedassomekindofaquota,butgivenitsimportance,itsowncategoryseems
tobemoreuseful.
Numerousexamplescanbenamed:Chinaisoneofthemostcitedandwell-knownexamples
forwebblockingandfiltering:currentlytherearemorethan3,000websitesblocked,including
11ofthetop25globalwebsitesandservices likeFacebook, Instagram,andTwitter.These
measures–knownastheGreatFirewall67–constituteoneofthebiggest,ifnotthebiggest,
tradebarriersfordigitaltradeglobally.68Besidesblockedwebsitesandapps,lotsofcontent
64Bauer,Matthias;Lee-Makiyama,Hosuk;Marel,Erikvander&Verschelde,Bert(2014):Thecostsofdatalocalisation:friendlyfireoneconomicrecovery.EuropeanCentreforInternationalPoliticalEconomy(ECIPE).Online:http://www.ecipe.org/app/uploads/2014/12/OCC32014__1.pdf,6.65USTR2017a;USTR2017b.66WTOAppellateBodyReportadopted7April2005:UnitedStates–MeasuresAffectingtheCross-BorderSupplyofGamblingandBettingServices(US–Gambling),WT/DS285/AB/R,hereinafter:ABreportUS–Gambling.67USTR2017a,90.68“China’sprotectionismcomeshometoroost”.FinancialTimes,03January2018.Online:https://www.ft.com/content/14196546-f098-11e7-ac08-07c3086a2625.
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isfilteredbycompaniesthemselvesinordertocomplywithChineselawtobeabletoenter
theChinesemarket.
Notalwaysarewebsitesandappsblockedentirely:sometimesonlypartsareblocked,making
thewebsiteorapplessuseful.Thiswas,forexample,thecasewithWhatsAppinChina:the
government, prior to blocking the app completely, interrupted the possibility of sending
photos,videos,andvoicemessages,aswellasfilteredsometextmessagessothatuserscould
notbesureiftheirmessagehadbeenreceived,hencemakingtheappbasicallyuseless.69Even
thoughnationalsecuritymightbeoneofthemotivesforblockingmanywebsites,itcannot
bedeniedthatthishasledtoanincreaseinnational,verysimilar,services,suchasWeChat
(similar to Facebook and WhatsApp) or Baidu (similar to Google), giving China and its
companiesanadvantageintheglobaleconomy.70Withitssuccessfulimplementationofweb
filtering and blocking, Chinese blocking behaviour also serves as an example for other
countrieswhichareimplementingsimilarmeasures.71
OtherexamplesincludePakistan,regularlyblockingwebsitesthatitsgovernmentconsiders
tobeblasphemousorimmoral.72InTurkey,over111,000websiteswerebannedasofMay
2016,basedoncomplaintsregardingTurkey’scivilcodeandviolationsofIntellectualProperty
rights(IPRs),accordingtotheOfficeoftheUnitedStatesTradeRepresentative(USTR).73
Motivesforblockingwebsitesandfilteringcontentincludecultural,moral,political,orsafety
reasons. Economic protectionism, the reason for classically imposing quotas, cannot be
consideredanevidentmotiveforwebsiteandappblocking,74eventhoughsupportforlocal
similarservicesmightbearesult.
Itisimportanttonotethatnotallwebblockingandfilteringcanbeconsideredabarrierto
lawful international trade as some websites might be non-commercial, such as personal
websites or blogs, while others might include clear violations of IPRs (like illegal music
downloads)orbasichumanrights(e.g.childpornography).
69Bradsher,Keith(2017):ChinaBlocksWhatsApp,BroadeningOnlineCensorship.TheNewYorkTimes.Online:https://www.nytimes.com/2017/09/25/business/china-whatsapp-blocked.html.70GreenbergCenterforGeoeconomicStudies2017.71Coca,Nithin(2017):ThemissingtradewaragainstChina’sdigitalprotectionism.Engadget.Online:https://www.engadget.com/2017/09/15/china-digital-protectionism-firewall-trade/.72USTR2017a,340.73Haas,Benjamin(2017):ChinamovestoblockinternetVPNsfrom2018.TheGuardian.Online:https://www.theguardian.com/world/2017/jul/11/china-moves-to-block-internet-vpns-from-2018;USTR2017a,441.74SeeUSTR2017a.
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Questionsarisearoundtheevaluationofblockingandfilteringwebsitesandappsthatdonot
have a direct commercial activity involvedwith the final consumer, such as Facebook, or
WhatsApp,butwhereconsumers“pay”withtheirdata(inthecaseofFacebook,monetary
transactionsare,however,involvedbetweentheplatformandcompaniesadvertisingonthe
platform). Given that data is often cited to be an essential resource in the 21st century,
blocking and filtering of websites and apps which generate “data revenue” (rather than
“monetaryrevenue”)monetizedatalaterstageinthevaluechainshouldalsobeconsidered
tobeabarriertodigitaltrade.
The numbers presented show that web blocking and filtering constitutes amajor barrier
internationaldigitaltrade.
3.2.6AccesstonetworkinfrastructureandtheInternet
Thetransportofdatatoitsdestinationisessentialfordigitaltradetobepossiblewhichiswhy
itshouldbeanalysedwithfurtherdetail.Countriesarestartingtoputbarrierstoaccessto
networkinfrastructure,theInternet,orothernetworks.Accesstotelecommunications-and
Internet-serviceshastobeseenasamediumforfacilitatingdigitaltrade,comparabletoroads
orharboursinclassicaltrade.Withoutliberalizedaccess,digitaltradecanfacerestrictions.
AfamousexampleforrestrictingaccesstoinfrastructureistheWTOdisputesettlementcase
Mexico–TelecomsinwhichthePanelfoundthatMexicohadfailedtoofferreasonableand
non-discriminatory access to basic telecommunications-services forUS companies at cost-
orientatedprices.75Eventhoughthedisputewasonpricesforinternationalphonecallsand
notondata,itillustrateshoweasilyaccesstotelecommunications-infrastructureand-services
canberestricted.
AveryrecentcaseofrestrictingaccesstotheInternetisChinawhichin2017announcedthe
totalprohibitionofVirtualPrivateNetworks(VPNs),exceptforVPN-softwarelicensedbythe
Chinese government, taking affect 31 March 2018.76 In China, VPNs are largely used by
individuals,researches,andbusinessestocircumventtheGreatFirewall.VPNsarealsoused
bybusinessestocommunicateandexchangedatawithintheir intra-companynetworks.As
75SeeWTOPanelReportadopted2April2004:Mexico–MeasuresAffectingTelecommunicationsServices(Mexico−Telecoms),WTODoc.WT/DS204/R,hereinafterPanelreportMexico–Telecoms.76“ChinaTellsCarrierstoBlockAccesstoPersonalVPNsbyFebruary”.BloombergNews,10July2017.Online:https://www.bloomberg.com/news/articles/2017-07-10/china-is-said-to-order-carriers-to-bar-personal-vpns-by-february;“ChinaschränktZugangzufreiemInternetweiterein”.SpiegelOnline,31March2018.Online:http://www.spiegel.de/netzwelt/web/china-regierung-erlaubt-nur-noch-staatlich-lizenzierte-vpn-software-a-1200731.html;“USflagsfearsoverChina’snewVPNruleswiththeWorldTradeOrganisation”.SouthChinaMorningPost,23February2018.Online:http://www.scmp.com/news/china/diplomacy-defence/article/2134550/us-flags-fears-over-chinas-new-vpn-rules-world-trade.
22
themeasure isonly ineffectsinceveryrecently, it isyetunclearhow itwillaffect foreign
businesses using VPNs.77 However, concerns of the US show that restrictions to network
accessviaVPNsmightposeasignificantbarriertotradeforforeigncompanies.78Restrictions
toVPN-usewillalsohaveaneffectonChinesecustomers,usingVPNstopurchasegoodsand
servicesabroadviaVPNs,hence,posingabarriertoe-commerce.
AnotherexampleforimplementingarbitraryaccessrestrictionstotheInternetisVietnam,not
allowingaccesstotheInternetthroughforeignInternetServicesProviders(ISPs),againposing
abarriertodigitaltrade.79
Web filteringandblockingalsoposes restrictions to theaccess to the Internet.Due to its
importance, different nature, and frequent use by countries, it was treated above in a
separatesection.
3.2.7Netneutrality
NetneutralityensuresthatalldataontheInternetistreatedequally,nomattertheoriginor
destination.Theconceptis,thus,similartotheprincipleofnon-discriminationinWTO-law.80
Wheneliminatingnetneutrality,ISPsareabletochargecompaniesfortransportingdatawith
higherpriority.Thiscanleadtodefactodiscriminationofcompaniesbasedontheircountry
oforigin,forexample,ifamonopolistISPtransportsdatafromlocalcompaniesfasterthan
datafromforeigncompanies.Eveninliberalizedmarkets,ISPscouldchargeforeignbusinesses
more to transport theirdata thandomestic companies.Netneutrality is still an important
principleinallmajordigitaleconomymarkets,exceptfortheUSThere,ithasbeenrecently
eliminated,81hence,enablingISPstodiscriminatedataofcompaniesbasedonfeespaidor
potentiallythecountryoforigin.AsthesupplyofInternetisamonopolymarketinlargeparts
oftheUS,82thiswillleadtosubstantialbarrierstodigitaltrade:companieswillhavenochoice
77“MIIT:ChinaonlyprohibitsVPNsofunauthorisedcompaniesorindividuals”.GBTimes,25July2017.Online:https://gbtimes.com/miit-china-only-prohibits-vpns-unauthorised-companies-or-individuals;SpiegelOnline,31March2018;SouthChinaMorningPost,23February2018.78GBTimes,25July2017;SouthChinaMorningPost,23February2018.79UnitedStatesDepartmentofState(2016):Vietnam2015HumanRightsReport.Online:https://www.state.gov/documents/organization/253025.pdf,28.80SeeShroff,Tvisha&Kuhlmann(2016):ALegalPerspectiveonDigitalTrade:KeepingtheInternetNeutral.Trade,LawandDevelopment,8(2),13.81Rushe,Dominic&Gambino,Lauren(2017):USregulatorscrapsnetneutralityrulesthatprotectopeninternet.TheGuardian.Online:https://www.theguardian.com/technology/2017/dec/14/net-neutrality-fcc-rules-open-internet.8231percentofZIPcodeareashavenochoiceregardingtheirInternetproviderasonlyoneISPoffersservicesintheirarea.70percentofUSZIPcodeareashavenoneoronlyoneproviderofferinghighspeedbroadbandInternet>25Mbpsintheirarea.99percentofUSZIPcodeareashavenoneoronlyoneproviderofferinghighspeedbroadbandInternet>100Mbpsintheirarea(Segan,Sascha(2017):CheckOuttheTerribleStateofUSISP
23
buttopayanadditionalfeeoracceptthattheirdataisdeliveredwithlessprioritywithinthe
respectiveareas.83
Given that elimination of net neutrality in the US has been very recent and developing
economies,wherenetneutralityissometimesdefactonon-existent,areoftennoimportant
digitalmarkets, effectsofnon-existingnetneutrality asapotentialbarrier todigital trade
cannotbefullyevaluatedyet.
3.2.8Taxation
Differencesintaxationcanpreventliberalizationofdigitaltradewhengovernmentsgiveless
favourabletaxregimestoforeigndigitalserviceprovidersthandomesticones.Lowtaxesfor
domesticdigitalcompaniescanconstituteasubsidyforcompetinginthedomesticmarketas
wellasforexporting.
Brazil,forexample,providessignificanttaxreductionsonmanydomestically-producedICT-
products, and digital products and services, like software or technical services under the
Processo Produtivo Basico (PPB) regulation,84 putting foreign suppliers at a significant
disadvantage.85GiventhattherelatedBrazilianSupportProgramfortheDevelopmentofthe
InformationTechnologySectorhastheobjectivetostrengthenresearchanddevelopmentin
theBrazilianinformationtechnologysector,tofosternationaldevelopment,andsupportand
projectsofnationalinterest,86itcanbearguedthatthemotivefordifferentiationintaxispure
economicprotectionism.
Anotherexample tobenamedwith regard toeconomicprotectionism is India,where the
governmentintroducedan“equalizationlevy”,posinganadditional6percentwithholdingtax
on foreignonline advertisingplatforms, aiming to “equaliz[e] theplaying field”87 between
Indianandforeignserviceproviders.88
Competition.PCMag.Online:https://www.pcmag.com/news/357972/exclusive-data-shows-the-terrible-state-of-us-isp-competitio).83Datadeliverywithalowerprioritycanhaveseriousimplicationsfordigitalbusinesses.Ifforexampledataofavideoportalisdeliveredtooslowly,consumersmightnotbeabletowatchvideosonacertainwebsitewithouthavingtowaitforthevideotoload,whilevideosoncompetitor’swebsiteshavingpaidextrafeesforquickerdatadeliverywillloadwithoutanyproblems.84WTOPanelReportadopted30August2017:Brazil–CertainMeasuresConcerningTaxationandCharges(Brazil–Taxation),WTODoc.WT/DS472/R,WT/DS497/R,para.2.46,hereinafter:PanelReportBrazil–Taxation.85“Brazil-InformationTechnology-ComputerSoftwareandHardware”.Export.gov,2017.Online:https://www.export.gov/article?id=Brazil-Information-Technology-Computer-Software-and-Hardware;USTR2017a,51.86DecretoNº5.906de26Septembrode2006,DiárioOficialdaUnião-Seção1-27/9/2006[Brazil],art.10§1.87USTR2017a,217.88Id.
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3.2.9Intellectualpropertyrights
Tooweak,aswellastoostrict,IPRscanalsoconstitutebarrierstodigitaltrade.Itisagreed
thatstrongIPRsarecriticalforinnovation,whileweakIPRscanhinderinnovationaswellas
digitaltrade,forexample,duetoillegaldownloads.89Ontheotherhand,innovationinthe
Interneteconomy,and thereforealsodigital trade,depends, toacertaindegree,onopen
innovation and open source codes. IPRs that are too strict can, therefore, equally pose a
barrier to thedevelopmentof thedigitaleconomyand, thus,digital trade, for instance, in
regardtodevelopingandtradingnewsoftware,orthedistributionofmoviesormusic(see
geoblockingbelow).
3.2.10Geoblocking
Many companies use geoblocking to restrict access to content in a certain territory.
Geoblocking can also be induced by governments, such as when countries do not allow
websites,likeYouTubeorNetflix,toshowcertaincontentintheircountry.Thesemeasures
shouldthenbecategorizedaswebblockingorfiltering,asdescribedabove.Companiesusually
usegeoblockingtoincreaserevenuesviaIPRs,ortotailorcontenttoaspecificmarket.They
can,thus,reducecostsforIPRsorareabletousedifferentpricingindifferentmarkets.Even
thoughfromaconsumerperspectivethiscanbeseenasabarriertotrade,thesecompany-
inducedmeasuresshouldratherbeconsideredaregularbusinessmeasurethanabarrierto
digitaltradeasitiscomparablewithcompaniestailoringtheiroffertoaspecificmarketinthe
traditionalindustry.
While eliminating company-induced geoblocking barriers can be seen as positive from a
consumerperspective,companiescanseethisasanadditionalbarriertotrade:tostrengthen
theSingleDigitalMarket,theEUrecentlyeliminatedwhatitcalls“unjustifiedgeoblocking”90,
hence, forcing companies toprovideequal access to content for all consumerswithin the
EuropeanUnion,strengtheningtherightsofconsumers.UScompanies,ontheotherhand,
haveexpressedconcernsthat thiswouldaffect theirability tomarketofferingstailoredto
differentmarketsorengageinlicensingofaudio-visualworkbasedonterritoriallimitations,
increasingcostsrelatedtoIPRs.91Thisillustratesthecomplexnatureofbarrierstodigitaltrade
89PrimoBraga,CarlosA.2005,546.90EuropeanCouncil&CounciloftheEuropeanUnion(2018):Geo-blocking:Unlockinge-commerceintheEU.Online:http://www.consilium.europa.eu/en/policies/geo-blocking/.91USTR2017a,183
25
andrespectiveregulation:whileitmightreducebarriersononeside,regulationcanposenew
barriersontheothersideoftheequation.
3.2.11Technicalstandardsandforcedtechnologytransfer
Theforceduseofdifferentorunusualtechnicalstandards,theneedforcertaincertifications,
ortherequirementtouselocaltechnologyposeadditionalbarrierstodigitaltrade.China,for
example,requirestheuseofChineseencryptionalgorithms(e.g.forWiFiorLTE-products).92
InthecaseofChina,thisisprobablyrelatedtogovernmentinducedwebblockingandfiltering
astheuseofChinesetechnologymakescensorshiptechnicallyeasier.
Forcedtechnologytransferis,asintraditionaltrade,alsoanissueindigitaltrade,especially
incountrieswhereestablishingasubsidyisonlypossibleintheformofajointventure,such
asinChina.
3.2.12Otherbarriers
There isanumberofother internalregulationsaffectinge-commerce lessrelevantforthis
paper,includingregulationofthetelecommunicationsmarket,competitionpolicy,orfurther
internetgovernanceissues,suchasallocationofIPaddresses.93Eventhoughtheseissuescan
alsoposebarriersindigitaltrade,duetolimitationsinspace,theywillnotbefurtheranalysed
inthispaper.
3.3Summary
Thissectionhasshownthatgovernmentsareimplementingawiderangeofbarrierstodigital
trade, thus, leading to a new, digital, protectionism. The line between thedifferent trade
barriersissometimesblurred,suchasbetweenwebblockingandquotas,ordatalocalization
measuresandaccesstonetworkinfrastructureaswellasnetneutrality.Aggregatingthose
barriersfurtherontheotherhandwouldcomeatthedisadvantageofclear,existingbarriers
notbeingnamedassuch.This iswhy inthispaperthemost importantbarriershavebeen
includedinowncategories,respectively.
Naturally,notallcountriesareimplementingbarrierstotradewiththesameintensity.The
USITChasidentifiedcountriesposingmostbarriersforUScompanies,ledbyNigeria,Algeria,
China,Bangladesh,Russia,andPakistan.94Also,barriersmightvarysubstantiallydepending
onthetypeofcompanyorindustry.Whilesocialnetworkingcompanies,suchasFacebook,
92USTR2017a,91.93PrimoBraga2005,545.94USITC2014,79.
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mightfacesubstantialbarrierstooffertheirproductsinsomemarkets,thismightnotbethe
caseforcompaniesofferingbusinesssoftwareasaservice,suchasAdobe.
Interestingly,Baldwin(2016a),whileacknowledgingthefactthatgovernmentpoliciescould
counteract falls in communication costs, points out in relation to free flows of data and
communicationthatatleastintheG7countries,“theinstinctforanopensocietyisstronger
than any protectionist instinct that is likely to arise.”95 This statement, however, seems
questionable when having in mind the broad spectrum of barriers to digital trade
governmentsare starting to implement, including theG7, aswell as the recently changed
international trade environment, with rising protectionism not only in digital, but also in
classicaltradeasnotedinthispaper’sintroduction.
4.WTOframeworkregardingdigitaltrade
4.1TheWorkProgrammeonElectronicCommerce
InMay1998,ministersofMemberStatesattheSecondMinisterialConferenceoftheDoha
Roundcalledfortheadoptionofacomprehensiveworkprogrammeonelectroniccommerce,
recognizing the growing importanceof digital trade creating newopportunities. TheWTO
Work Programme on Electronic Commerce was subsequently established by the General
CouncilinSeptemberthatyear.
Itshouldbe“acomprehensiveworkprogrammetoexaminealltrade-relatedissuesrelating
toglobalelectroniccommerce,takingintoaccounttheeconomic,financial,anddevelopment
needsofdevelopingcountries.”96TheWorkProgrammeshouldbeasbroadaspossibleand
ofexploratorynature.Inadditiontoprovidingaworkingdefinitionofwhatisunderstoodto
beelectroniccommerceforthemeansoftheWorkProgramme(asdescribedinchapter2.1),
thedocumentalsoprovidesalistoftasksfortheCouncilforTradeinServices,theCouncilfor
TradeinGoods,theCouncilforTRIPS,andtheCommitteeforTradeandDevelopment.The
GeneralCouncil,ontheotherhand,shouldplayacentralroleintheprocessandreviewthe
Work Programme on a continuous basis. Since May 2001, the General Council has held
95Baldwin2016a,287.96WTO:MinisterialDeclarationof25May1998.WTODoc.WT/MIN(98)/DEC/2.
27
dedicated biannual discussions on cross-cutting issues. However, deliverables of those
debateshavebeenlimitedasdifferencesbetweenMemberStatesaresubstantial.97
Work carried out in the different bodies has been of varying intensity. Progress reports
submittedtotheGeneralCouncilshowthatwhiletherehavebeen17reportssubmittedby
theCouncilforTradeinServices,onlyfourhavebeensubmittedbytheCouncilforTRIPs.98
WorkintherespectivebodieshasbeenveryactiveintheyearsafterlaunchingoftheWork
Programme.However,almostnoreportshavebeenissuedinthe2000sandearly2010sas
interestofMembersinthetopichadwaned.99Morerecently,thebodieshavebecomemore
activeagainthankstorenewedinterestofMemberStatestoengageinthisissue.100Rising
barrierstodigitaltradeasoutlinedinchapter3cancertainlybeseenasonetriggerforthis
development.
Todate,theWorkProgrammehasnotbeenabletopresentsubstantialresults:thisispartially
due to Member States having diverging opinions on key issues of electronic commerce
includingonhowdiscussionsshouldtakeplace.101Somehavestatedneedingmoretimeto
internallyevaluate the impactofdigital trade,whileothershavenot taken interest in the
matter, and thus have not participated in the discussions at the relevantmeetings of the
differentCouncils.102WhilemostMemberspointouttheneedtofurtherinvestigatetheissue
ofelectroniccommerceandtocontinueexaminingandexploring itstraderelatedaspects,
othersviewthate-commercewasbeinggivenahigherprioritycomparedtotheDohaissues
ofinteresttothem.103SomeMemberStatesbelievethatsomeofthesubmissionsmadeother
Memberswentbeyond theexploratorynatureof theWorkProgrammeandwere looking
towards rule-making, something thatwas not part of the 1998mandate.104OneMember
refusedtoengagewithintheDedicatedDiscussionconvenedbytheGeneralCouncil,since
fromitsviewpointtheGeneralCouncilhadnomandatetoconvenesuchadiscussion.Still
97SeeWTO:DocumentsOnline:GeneralCouncil:DedicatedDiscussionsonElectronicCommerce;Farrokhnia,Farrokh&Richards,Cameron(2016):E-CommerceProductsUndertheWorldTradeOrganizationAgreements:Goods,Services,BothorNeither?JournalofWorldTrade,50(5).98WTO:DocumentsOnline:GeneralCouncil.99SeenumberofpublisheddocumentsinWTODocumentsOnline;Foster,Christopher&Azmeh,Shamel(2018):TheDigitalTradeAgendaandAfrica.InternationalCentreforTradeandSustainableDevelopment.Online:https://www.ictsd.org/bridges-news/bridges-africa/news/the-digital-trade-agenda-and-africa.100Id.101SeeWTO:ReporttotheGeneralCouncilof8December2016,WTODoc.WT/GC/W/728,para.1.6.102SeeWTO:ReporttotheGeneralCouncilof8December2014,WTODoc.WT/GC/W/692,para.1.5.103WTO,WT/GC/W/728,para.1.8.104Id.
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others would accuse some delegations of using procedural issues to block discussions
entirely.105
Asaconsequence,consensusonsubstantial issuescanhardlybeexpectedwithoutatleast
agreeingonhowdiscussionsonelectroniccommerceshouldbecarriedout.Theissueslaid
outabovehighlighttheneedforamorepractice-orientated,hands-on,approachinorderto
deliverresultswithinareasonableamountoftime.
4.2ApplicabilityofWTOprovisionstoelectroniccommerce
4.2.1Difficultiesofclassification
ClassificationofdigitalproductsandserviceswithintheframeworkoftheWTOisoneofthe
main controversies between Member States as well as among scholars. With regard to
classificationofcrossborderdigitaltrade,twoofthemainWTOagreementsarepotentially
ofrelevance:theGeneralAgreementonTariffsandTrade(GATT)andtheGeneralAgreement
on Trade in Services (GATS). While trade related IPRs are also an important issue when
analysingdigitaltradewithintheWTOframework,thispaperwillnotfocusontheseaspects
due to the different nature of the Agreement on Trade-Related Aspects of Intellectual
PropertyRights(TRIPS).ThisprovidesminimumstandardsregardingIPRs,therebysupporting
tradeliberalizationinaffectedgoodsandservicesratherthanprovidingrulesforliberalization
oftradeperse.106
Discussionshavebeenongoingformorethantwentyyearsnowwithoutanyfinaldecision
made.Thisisnotonlyatechnicalquestionintermsofstatisticalclassification107butahighly
politicalone:108 classificationofe-commerceproductsandservicesunder theGATTor the
GATScanhaveseriousimplicationsfordigitaltrade,giventhattheregimeprovidedbythe
GATTismoreliberalisedthantheGATS.109
105WTO,WT/GC/W/728,para.1.9.,1.10.106ForfurtherresearchtraderelatedIPRsinrelationtodigitaltradesee,interalia,Taubmann,Antony(2012):TRIPSencounterstheInternet:Ananaloguetreatyinadigitalage,orthefirsttrade2.0agreement?Burri,Mira&Cottier,Thomas(Eds.):TradeGovernanceintheDigitalAge.Cambridge:CambridgeUniversityPress;Wunsch-Vincent,Sascha&Hold,Arnold(2012):Towardscoherentrulesfordigitaltrade:Buildingoneffortsinmultilateralversuspreferentialtradeagreements.Burri,Mira&Cottier,Thomas(Eds.):TradeGovernanceintheDigitalAge.Cambridge:CambridgeUniversityPress.107WTO2017b,45.108SeeBurri,Mira(2013):ShouldThereBeNewMultilateralRulesforDigitalTrade?E15Initiative.Geneva:InternationalCentreforTradeandSustainableDevelopment&WorldEconomicForum,3.109GATS:GeneralAgreementonTradeinServices,Apr.15,1994,MarrakeshAgreementEstablishingtheWorldTradeOrganization,Annex1B,1869U.N.T.S.183,33I.L.M.1167(1994),hereinafterGATS;GATT1994:GeneralAgreementonTariffsandTrade1994,Apr.15,1994,MarrakeshAgreementEstablishingtheWorldTradeOrganization,Annex1A,1867U.N.T.S.187,33I.L.M.1153(1994),hereinafterGATT.
29
Thereisnotonlycontroversyabouttheclassificationperse,butalsoifclassificationisneeded
atthispointornot.110Thisquestionisinteresting,asneithertheGATTnortheGATSclarify
whatisunderstoodtobeaproductoraservice.However,thedifferentnatureofe-commerce
products and services, and especially of electronically transmitted products and services,
seems to bring the need for definition, as discussed in chapter 2, and clarification in
classification.At thispoint, it isunclearwhatWTOregimeshouldbeapplied,especially in
regardtodigitallydeliveredproductsandservices.111
WhiletheWTOisstrugglingtoclarifytheissueofclassification,fasttechnologicalchangehas
evenoutdatedparts of thediscussion.Oneexampleof this is if softwaredeliveredon an
optical disc and software delivered via download should be considered like-products as
softwareismostlynotsoldonopticaldiscsanymore.112Thisexampleillustratesthechallenges
fortheWTOthatlayahead.AsnegotiationswithintheWTOareverytimeconsuming,it is
importanttoestablishasolidandexhaustivesystem,encompassingarisingtechnologiesfor
comingdecades.Asoftoday,manyquestionsstillremainunanswered.
Thebasicquestionguidingthosediscussionsiswhethere-commerceproductsandservices
fallunderthescopeofoneoftheexistingWTOagreements,andifso,whichone,orwhether
modifications,orevenanentirelynewagreementregardinge-commerceproducts,isneeded.
Giventhattheterme-commerceisnotevenclearlydefined,itwillbeadvantageoustomake
useofthecategories,outlinedinchapter2,toanalysetheapplicabilityandclassificationofe-
commerceproductsandserviceswithintheWTOframework:tangiblegoodsorderedviathe
internet,servicesdeliveredinatraditionalway,electronicallydeliveredproducts,aswellas
theissueofinformationordata,andremoteadditivemanufacturing.
Scholars widely agree that goods ordered or payed for via the internet but delivered in
tangibleformstillremaingoodsforthepurposesoftheGATTwhencrossingtheborder,while
traditionally delivered services (including remotedelivery) ordered via the internet clearly
remainsubjecttotheGATS.113
As a side note, it is interesting to mention that growth of B2C and C2C cross-border e-
commerce,aswellastheriseofjust-in-timedeliveryintheB2Bsegment,areleadingtoan
110Farrokhnia&Richards2016,799,800.111WTO2017b,45.112SeeLópezGonzales&Jouanjean2017,21.113Fleuter,Sam(2016):TheRoleofDigitalProductsUndertheWTO:ANewFrameworkforGATTandGATSClassification.ChicagoJournalofInternationalLaw,17(1),158.
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increaseinsmallpackagesandsmallvalueproductscrossingborders.114Thismeansitwillbe
importantforgovernmentstoevaluateand,ifnecessary,adjusttheircurrentdeminimisto
respondtothisdevelopment.115TheWTOcouldassistMembersevaluatingtheoptimalde
minimisinorderforregulationnottohamperthedevelopmentofthiskindoftrade.Atthe
sametime,theWTOcouldensurethatMembersdonotlosetoomuchtariffincome,whichin
somedevelopingcountriesisstillanimportantsourceofincome.
Remotely supplied digital services are encompassed by the GATS, given its technological
neutrality within the respective modes,116 as clarified by the Panel US – Gambling and
confirmedinChina–PublicationsandAudiovisualProducts.117Questionsariseconcerningthe
remainingproducts,likethosewhichpossessaphysicalequivalent,suchase-books,movies,
music,orsoftware.
4.2.2ClassificationofdigitallytransmittedproductsundertheGATT
SomeargumentscanbemadetoclassifydigitallytransmittedproductsundertheGATT,such
asthatcontentismoreimportantthantheneedtobeaphysicalgood(giventhattheGATT
doesnotstatethatitonlyappliestophysicalgoods).ClassificationundertheGATTwouldalso
eliminatetheuncertaintiesaroundlikeness inrelationtotheirphysicalcounterpart.118The
existingmoratorium on applying custom duties on electronic transmission can further be
valuedinthelightofapplyingGATTrulestodigitallytransmittedproductsascustomduties
arenotanissuewithintheGATSframework.
Additionally, theWTO Panelmight havemade a case for classifying digital products that
possessaphysicalcounterpartasproductsundertheGATTinarecentruling:thebeforecited
BraziliantaxmeasureshavebeenchallengedattheWTOundertheGATT,asthePPBmostly
includesphysicalICT-goods,andonlysomerelatedservicesandpossiblydigitalproducts.119
ThePanelfoundBrazil’smeasures,interalia,tobeinconsistentwithparagraphs2and4of
114LópezGonzales&Jouanjean2017,8;OECD2017b,11,12.115SeeAhmed&Aldonas2015,5;LópezGonzales&Jouanjean2017.116Inthisregard,itisimportanttonotethatMemberscandiscriminatebasedonthefourmodesofsupply.ItisequallyimportanttonotethatthespecificschedulesofMembersarepartoftheGATS.117PanelReportUS–Gambling,interaliapara.6.285,6.355,7.2(b);WTOAppellateBodyreportadopted21December2009:China–MeasuresAffectingTradingRightsandDistributionServicesforCertainPublicationsandAudiovisualEntertainmentProducts(China–PublicationsandAudiovisualProducts),WTODoc.WT/DS363/AB/R,hereinafterABreportChina–PublicationsandAudiovisualProducts;WTOPanelreportadopted12August2009:China–MeasuresAffectingTradingRightsandDistributionServicesforCertainPublicationsandAudiovisualEntertainmentProducts(China–PublicationsandAudiovisualProducts),WTODoc.WT/DS363/R,hereinafter:PanelreportChina–PublicationsandAudiovisualProducts.118SeeFarrokhina&Richards2016,801,802.119PanelReportBrazil–Taxation,para.2.2.1.3,2.2.2.3,2.2.3.3,2.2.4.3,2.2.5.3,2.2.6.3,2.2.7.3.
31
articleIII(NationalTreatmentonInternalTaxationandRegulation)oftheGATT,includingfor
software.120Thisisinteresting,asthiswouldincludesoftwarethatissuppliedelectronically
(given that software today is often supplied electronically and no restrictions on how the
softwarehastobesupplied(e.g.inphysicalform)havebeenmadeinthePanelreport).Ifthis
isthecase,thePanelwouldhavetreateddigitalproductsliketheirphysicalcounterpartsby
applying GATT rules to them. The still outstanding Appellate Body Report might bring
clarification to this issue. If theAppellate Body reaffirms the findings of the Panel, digital
productsdeliveredelectronicallywouldpossiblyhavetobeanalysedundertheprovisionsof
theGATT–atthefirstsightagoodsigninthelightof liberalization.Physicalproductsand
theirdigitalcounterpartscouldthenbetreatedaslike-productsundertheGATT.Noliterature
analysingthisspecificissueofthisdisputesettlementcasecanbefoundatthismoment,but
furtherdiscussionsonthisissuewillbenecessary.Questionsaroundcustomdutiesondigitally
transmittedproductsandthelinebetweendigitalproductspossessingaphysicalcounterpart,
andthosethatdonot,wouldthenhavetobeevaluated.
4.2.3ClassificationofdigitallytransmittedproductsandservicesundertheGATS
Todate,discussionsamongscholarspointtowardsclassifyingdigitallytransmittedproducts
and services as services under theGATS.121 Arguments include that a productwas rather
definedby its content than its formor the importanceofdomestic regulation fordigitally
deliveredproducts.122OthersemphasizethattheGATThasbeendesignedonlyforphysical
goods,withanumberofevidencespointingtowardsthis,suchasthelistingofphysicalgoods
accordingtotheirphysicalappearance.123TheWTOSecretariatpointedoutthatanykindof
electronictransmissionshouldbeseenasaservice,astherelevantissueistheactofcross-
border transmission,notwhat canbedonewith the transmitteddataafterwards, suchas
downloadingorprintingitout.124Furthermore,itwashighlightedthat“[a]nysuggestionthat
"electronictransmissions"assuchshouldberegardedasoutsidethescopeoftheGATSwould
120PanelReportBrazil–Taxation,para.7.1-8.22.121Chen,John-ren&Smekal,Christian(2009):ShouldtheWTOdealwithe-tradetaxationissues?ProgressinDevelopmentStudies,9(4);Farrokhina&Richards2016;Fleuter2016;Singh,HarshaV.,Abdel-Latif,Ahmed&Tuthill,L.Lee(2016):GovernanceofInternationalTradeandtheInternet:ExistingandEvolvingRegulatorySystems.CIGI&ChathamHouse(Publishers):MappingtheDigitalFrontiersofTradeandIntellectualProperty.Ontario,London:CIGI,ChathamHouse,108.122Farrokhina&Richards2016,801,802.123WTO:SubmissionfromtheEuropeanCommunitiesof09May2003,WTODoc.WT/GC/W/497.124WTO:NotebytheSecretariatof16November1998,WTODoc.S/C/W/68,para.37,38.
32
of course fundamentally damage the entire Agreement and undermine a wide range of
existingcommitments(…).”125
ClassifyingalldigitallydeliveredproductsandservicesundertheGATSleadstothequestion
ofdifferencesinmarketaccesscommitmentsfortangiblegoodsandtheirdigitalcounterparts
aswell as discrimination between both, based on national regulation. There has been an
ongoingdiscussioniftangiblegoodsandtheirphysicalcounterpartsshouldbetreatedaslike-
products.126Incasealldigitallydeliveredproductsaretobeclassifiedasservicesunderthe
GATS,fromaWTO-lawstandpoint,thisisarathertheoreticalquestion.WhiletheGATTonly
makesreferencesto like-products(ruledbytheGATT),theGATSonlymakesreferencesto
like-services (ruled by the GATS). A service therefore can legally not be a like-product in
referencetoagoodorviceversa.
Eventhoughthisquestioncouldbesolvedfroma legal-perspective ifalldigitallydelivered
productswere tobe services, it still poses challenges inpractice as this leads todifferent
treatment,e.g.formusicdeliveredonaCDandmusicdownloaded,intermsofmarketaccess
andnational treatment– aquestion, theWTOwill possiblyhave todealwith in thenear
future.
4.2.4Neitherproductsnorservices–asuigeneris?
Classifying all digitally delivered products and services as services under the GATS is not
unchallenged.Farrokhina&Richards(2016),forexample,criticizethediscussionfocusingonly
onachoicebetweenGATTandGATS,beingasourceofinconsistencies.127Somescholarsas
wellasWTOMemberStatespointoutthate-commerceproductsandservices(sometimes
evenincludingtangiblegoodsorderedviatheinternet)wereneitherproductsnorservices,
butathirdcategory,sometimesleadingtotheconclusionthatanewtreatyforthem,asui
generissolution,wouldbenecessary.128Thisisaninterestingproposal,giventhat,withouta
doubt,e-commerceblurs the linebetweenwhat traditionallywasconsideredtobesimply
goodsandservices.
However, when aiming to solve the issue of classification of e-commerce, and especially
digitally transmitted, products, those suggestions seem not be useful for delivering quick
125WTO:NotebytheSecretariatof16November1998,WTODoc.S/C/W/68,para.37.126LópezGonzales&Jouanjean2017.127Farrokhina&Richards2016,816.128Seei.a.Burri2013;Farrokhina&Richards2016;Fleuter2016;Lee-Makiyama(2011):Future-proofingworldtradeintechnology:TurningtheWTOITAgreement(ITA)intotheInternationalDigitalEconomyAgreement(IDEA).EuropeanCentreforInternationalPoliticalEconomy(ECIPE).Online:http://ecipe.org//app/uploads/2014/12/WP201104.pdf.
33
resultsandclaritytotheissueofclassification.Thisisespeciallytruegiventhealreadyexisting
tradeagreementswithintheWTOframeworkandthetime-consumingnatureofmultilateral
negotiations.Anewagreementwouldriskunderminingthevalueofexistingagreements.129
Inaddition,itwouldemphasizetheneedforclarifyingthequestionofwhatkindsofproducts
shouldbeunderitsscopebeforehand.This,again,leadstothequestionofclassificationwhich
that potentially new agreement was originally meant to avoid. Also, negotiating a new
agreementsolelyfordigitaltradewouldposetheriskbeingmorerestrictivethanexistingrules
as Member States currently seem to be imposing greater rather than fewer barriers,
somethingwhichcouldbereflectedinapossiblenewagreement.
4.2.5Newchallenges
Evenifallelectronicallydeliveredproductsandserviceswereunderstoodtobeservices,and
thereforesubjecttotheGATS,newchallengeswouldarise.
Thebundlingofproducts,mixingtraditionalgoodsandelectronicallydeliveredservices(e.g.
afarmequipmentmanufacturerprovidingdataonweather,thesoil,healthofanimalsetc.),
ortheas-a-service-culturewouldagaincomplicateidentifyingtheapplicableWTOregime.130
Emerging technologies will challenge the existing WTO framework additionally, such as
additivemanufacturing.In1998,theWTOSecretariat, inanotetotheCouncilforTradein
Services, stressed that “of course it would be impossible to deliver a tangible product
electronically.”131Thisstatementisnotquiteobviousanymore.Baldwin(2016a)notesthat
when 3D-printing becomes normal, “the transmission of data would substitute for the
transportationofgoods.”132ThisleadstothequestionthatifaComputer-AidedDesign(CAD)-
filefor3D-printingissentfromonecountrytoanothertobeprintedatamanufacturingsite
orathome,isthistobeconsideredaservice(providingthefile)oragood(asatitspointof
consumption,itwillbeagood)?Whileitcouldbearguedthatthecross-bordersendingofthe
fileisclearlyaservice,133questionsarisearoundthefinalstateoftheproduct:willtariffsapply
toprintedproductsoronly to itsmaterials, if imported? If the cross-border transaction is
solelyaservice,customdutiesontheproductarenot likely tobeapplied,challengingthe
conceptofcountriesprotectingcertainpartsoftheireconomythroughhightariffs.Thiswill
129Fleuter2016,174.130Gonzales&Jouanjean2017,5-9;OECD(2017a):OECDDigitalEconomyOutlook2017.Paris:OECDPublishing.Online:http://dx.doi.org/10.1787/9789264276284-en,232.131WTO,S/C/W/68,para.37.132Baldwin2016a,291.133SeeLópezGonzales&Jouanjean2017,16.
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alsoraisethequestionifthosegoodsarelike-productsinrelationtoproductsthathavebeen
deliveredinatraditionalway.
Atthispoint,noclearanswercanbeidentifiedforthosequestionsgiventhelimitedscopeof
this paper. In addition, further development in the additivemanufacturing sector will be
necessarytodeterminenewkindofquestionsthatwillariseinthefieldofinternationaltrade
inpracticeandhowtheWTOcouldbestaddressthem.Itisnecessary,however,tohavethese
issuesinmindwhendiscussingrulesfordigitaltrade,soastonotmissessentialpointsthat
arealreadyontherise.Hence,moreresearchontheseissueswillbenecessarytogainabetter
understandingoftheimpactof3D-printingininternationaltrade.
Given the uncertainties highlighted above, it is critical for theWTO to clarify the issue of
classificationofdigitalgoodsandservicesalongsidethedescribedimplications,especiallyin
relationtodata.
5.AnalysisofdigitaltradeundertheGATS
5.1ThelogicoftheGATS
Asthemajorityofscholarspointstotradeindigitallytransmittedproductsandservicestobe
ruledbytheGATS,asoutlinedinchapter4.2.3,thissectionaimstoanalysesuchdigitaltrade
undertheprovisionsofthatagreementtoevaluate ifexistingrulesalreadyaddressarising
issues.AsimilaranalysisinregardtotheGATTisnotundertakenatthispoint,giventhelimited
scopeofthispaper,withoutprejudicetothestilloutstandingAppellateBodyrulinginthecase
Brazil – Taxation and its possible subsequent implications. Further research on the
applicabilityofGATTrulestodigitaltradewillbenecessary.
The GATS provides a framework for international trade rules for services in all sectors134
supplied inoneofthefourmodesoutlined intheagreement(mode1:cross-bordertrade,
mode2:consumptionabroad,mode3:commercialpresenceofaforeigncompany,mode4:
presenceofnaturalforeignpersons).
It includes two sets of basic obligations forMembers: first, GeneralObligations, including
most-favoured nation (MFN)-treatment (article II), prohibiting to discriminate between
Members, as well as transparency (article III), automatically applying to all Members in
relation toall servicescoveredby theGATS.Andsecond,SpecificCommitments regarding
market access (article XVI) and national treatment (article XVII), applying to services
134Exceptservicessuppliedintheexerciseofgovernmentalauthorityaswellasairtrafficrightsservices.
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designated by Member States in their individual schedules of commitments. Potentially,
provisions on domestic regulation (art. VI) disciplines also apply to all services for which
Members have undertaken commitments.135 However, GATS disciplines on domestic
regulationingeneral,orwithregardtoe-commerce,havenotyetbeenconcluded.136
Thus,theGATSprovidesamoreflexible,lessliberalized,regimethantheGATTasMembers
candecideforwhichservicestheywanttoundertakeliberalizationcommitmentsunderwhich
modesofsupply.
5.2Modesofsupply
AccordingtotheschedulingguidelinesoftheGATS,modesareessentiallydefinedonthebasis
oftheoriginoftheservicesupplierandconsumeraswellasthedegreeandtypeofterritorial
presenceatthemomenttheserviceisdelivered.137
Itmightbeapparentthatcross-bordertradeofdigitallytransmittedproductsandservicesis
akindofremotesupplyandthereforeundermode1.138However,someauthorsarguethat
certainpartsofthistradecouldalsobeseenasconsumptionabroad(mode2),alwayswhen
aconsumer“visits”aforeignwebsitewhichishostedintheterritoryofaforeigncountry.139
Othersarguethatthelinebetweenmode1,2,and3isblurredastheintangiblenatureof
products and services delivered via the Internet has created incentives for providers to
establish their service where it is best advantageous, for instance, in terms of cost or
legislation.140
Even thoughmode 1 seems to be themost obviousway of supply for digitally delivered
productsandservices,anexamplecanillustratetheemergingdifficulties:Uberisacompany
135Inthatcase,itisimportanttonotethatmeasurescoveredbyarticleVIcannotbecoveredbyarticleXVIatthesametime,astheyaremutuallyexclusive(PanelReportUS–Gambling;Wunsch-Vincent,Sascha(2006):TheInternet,cross-bordertradeinservices,andtheGATS:lessonsfromUS-Gambling.WorldTradeReview,5(3),339).136WTO(2018b):WTOnegotiationsondomesticregulationdisciplines.Online:https://www.wto.org/english/tratop_e/serv_e/dom_reg_negs_e.htm;Seealso:Wunsch-Vincent,Sascha(2008):Traderulesforthedigitalage.Panizzon,Marion,Pohl,Nicole&SauvéPierre(eds.)(2008):GATSandtheRegulationofInternationalTradeinServices,Cambridge:CambridgeUniversityPress,7-9.137Crosby2016,3.138ThiswasalsoconfirmedbythePanelandtheAppellateBodyinUS–Gambling.139SeeFarrokhnia&Richards2016,796;Tinawi,Emad&Berkey,JudsonO.(2000):E-ServicesandtheWTO:TheadequacyoftheGATSclassificationframework.InstituteforAgriculture&TradePolicy.Online:https://www.iatp.org/sites/default/files/E-Services_and_the_WTO_The_Adequacy_of_the_GAT.pdf;Wunsch-Vincent2006,325.140OECD2017b,4.
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thatactsasabrokerfortransportationservices.141Uberitselfdoesnotownanycars,might
not even employ the driver, but operates an app where clients can order an “Uber”, a
transportationservice.IfaclientordersanUberviathisapp,thetransportationservicewill
takeplaceinonecountry.Otherservices,likethematchingserviceviatheapp,thepayment
for the driver by Uber, or the insurance are potentially provided from another country.
Depending on the classification of the service Uber provides, it operates under different
modes of supply of the GATS. If classified as a transportation service, it is, according the
argumentationusedbytheOECD,operatingunderGATSmode3,whilewhenclassifiedasa
businessservice,itisoperatingremotely(mode1).142The2008SystemofNationalAccounts
specifies this service as a transportation service (and therefore according to the OECD
operatingundermode3).ItcouldalsobearguedthatUber,asacompany,doesonlyprovide
businessservicestothedriver(findingclients)andclients(findingadriver,providinginsurance
fortheride).143AnotherpointviewwouldbethatUberprovidesitstransportationservices
remotely(mode1),orthateachserviceprovidedinthebundlewouldbesubjecttodifferent
rules.Thus,thebundlingofservicesposesadditionalchallengesforansweringthequestionof
modesofsupply.144
Mostmembershavemadebroadliberalizationcommitmentsundermode2,whiletheyhave
beenmorerestrictivewithcommitmentsundermode1.145Again,thismakesthequestionof
classificationapoliticalone.Classifyingcross-bordere-commerceundermode1mightput
significant barriers to further development of e-commerce due to lower market access
commitments.Ontheotherhand,classificationasmode2wouldputMembersintheposition
tofindthemselveswithservicesmoreliberalizedthantheyhadintendedto.146
Thesearisingquestionsposechallengesforpolicymakersandhighlighttheneedforfurther
clarificationontheissueofmodesofsupplyindigitaltradetogiveMembersthepossibilityto
updatetheirschedulesifdeemednecessary.
141Hereandfollowing:OECD2017b,6-7.142OECD2017b,7.143Id.144SeeLópezGonzales&Jouanjean2017,10,15,16.145Tinawi&Berkey2000,5-7;Wunsch-Vincent2006,324.146Id.
37
5.3InclusionofdigitalservicesanddatawithinGATSschedules
Liberalizationcommitmentsinservicesinrelationtomarketaccessandnationaltreatment
dependonthespecificschedulesofeachmember.Throughapositivelistapproach,Members
havetoundertakeliberalizationcommitmentsforeachspecificservice(orsector)andmode
of supply in regard to market access and national treatment. Doing so, they are free to
schedule(ornottoschedule)specificcommitmentsforcompletesectorsoranysingleservice,
ifdesired.147
Asdigitalizationprogressivelyaffectsallindustries,moreandmoreservicesareaffectedby
digital trade, even those that were formerly non-tradeable, or at least non-tradeable
remotely.On the other hand, there is a number of new services, such as search engines,
mobile applications, or cloud computing, for which clarification is needed where those
servicesfitwithintheexistingUNCentralProductClassification(CPC)148,onwhichtheWTO
ServicesSectoralClassificationlistisbased.
However, there has been no significant progress in improving the coverage of GATS
commitmentsatthemultilaterallevelsince1997.149EventhoughtheUNhasupdateditsCPC-
list,thisprogresshasnotyetbeenincorporatedinGATSschedules.150Hardlyanyonecould
haveimaginedthetremendousimpacttheInternetwouldhaveonallareasof lifeandthe
implicationsfor internationaltradeinserviceswhenGATScommitmentswereundertaken.
Thisisespeciallythecaseforsectorswheredigitalizationhasbeenfasterthaninothers,such
as telecommunications, media, financial services, retail, education, healthcare, business
services,aswellasdataservices.
This can have serious implications for Members when scheduling was undertaken at a
momentwhentheservicescheduledwasessentiallydifferentfromtoday.
This can be illustrated by the WTO dispute settlement case China – Publications and
AudiovisualProducts:151theUSaccusedChinaofposinglimitationstomarketaccessaswell
as national treatment in regard to distribution services for publications and audiovisual
products,includingsoundrecordings.Chinaarguedthatbythetimewhenithadundertaken
147SeetherulingofthePanelin:WTOPanelReportadopted31August2012:China–CertainMeasuresAffectingElectronicPaymentServices(China–ElectronicPaymentServices),WTODoc.WT/DS413/R,hereinafter:PanelreportChina–ElectronicPaymentServices.148WTO:CommunicationbytheRussianFederationof13July2017,WTODoc.JOB/GC/131,para.3.2.149Crosby2016,1.150Weber2010,9.151ABReportChina–PublicationsandAudiovisualProducts;PanelReportChina–PublicationsandAudiovisualProducts.
38
commitmentsin“soundrecordingdistributionservices”,theyhadbeenexclusivelyintended
for distribution of sound recordings in their traditional hardcopy format and that those
commitmentsdidnotincludenetworkmusicservices.In2007,whenthecasewasdiscussed,
themajorityofsounddistributionwasalreadyconductedviatheInternet.152So,thenotionof
whatwasunderstoodby“soundrecordingdistributionservices”wasdifferenttowhenChina
hadundertakencommitmentsforthisservice.153
Inthatcase,theAppellateBodynotedthatinterpretationofcommitmentsscheduledhasto
bebasedonthecommonintentionsofallMembersandnotontheunilateralinterpretation
ofitscommitmentsbyasingleMember.154Itdid,thus,notfollowtheargumentationofthe
PanelwhichassumedthatChinawasawareofthetechnologicpossibilityofnetworkmusic
servicesbythetime itundertook itscommitments.However, theAppellateBodyassumed
thatusinggenerictermsintheGATSschedulesevidencestheconvincementofMembersfor
technologytochangeovertime.155
In this regard, again, the case US – Gambling can be cited in which the intra-modal
technologicalneutralityoftheGATSwaspointedout156,thus,confirmingitsapplicabilityin
regard to new technologies. In the case China – Publications and Audiovisual Products
applicabilityinregardtonewtechnologieswasconfirmedagain,eventhoughtheAppellate
Bodyusedadifferentargumentation.157
With the intra-modal technologicalneutralityof theGATSand theuseofgeneric terms in
Members’schedules,theGATSseemstobeequippedtorespondtotechnologicalchanges.
Thismeans,ontheotherhand,Memberswouldhavetore-evaluateand,ifneeded,modify
their specific schedules if due to technological change original market access or national
treatment commitments are not reflected anymore, e.g. when wanting to differentiate
betweendifferentmeansofsupply.
Anotherissuearisesaroundthequestionofdata: itcanbeconfirmedthatGATSschedules
alsoincluderelevantsectorsandsubsectorsfordigitallytransmittedservices,including“Data
andProcessingServices” (CPCSection843)and“DataBaseServices” (CPCSection844),158
152Peng,Shin-yi(2012):RenegotiatetheWTO“SchedulesofCommitments”?:TechnologicalDevelopmentandTreatyInterpretation.Cornellinternationallawjournal,45(2),416-418.153Id.154Peng2012,419-426;ABreportChina–PublicationsandAudiovisualProducts.155Peng2012,427.156PanelReportUS–Gambling,interaliapara.6.285,6.355,7.2(b).157Peng2012,429.158Crosby2016,5.
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both subsectors within “Computer and Related Services” which falls under “Business
Services”.However,notallcross-borderdataflowscanbeclearlydefinedasaserviceinvolving
a monetary transaction. Many data flows rather support an economic activity, such as
personaldatacollectedbycompanies.Furtherclarificationonhowthisdataistobeclassified
isneeded.
5.4.BarrierstodigitaltradecoveredbyGATSprovisions
5.4.1Generalobservations
Inthelightofscholarsemphasizingtheneedforclearrulesfordigitaltrade,orevennewrules,
itisimportanttoseeifexistingruleswouldalreadyprovideacomprehensiveframeworkto
addressarisingchallenges.Consequently,thequestionwaspointedout,ifnewrulesfordigital
tradecouldberedundantastheywerepotentiallyalreadycoveredbyexistingdisciplines.159
AgainstthebackdropoftheGATSseemingtobemostusefulforclassifyingalltradeindigitally
delivered products and services as shown above, this section aims to analyse if theGATS
alreadyprovides a comprehensive framework to address rising barriers to digital trade as
describedinchapter3,orifotheroptionsormodificationsoftheagreementwouldhaveto
beevaluated.
5.4.2Tariffs
Tariffsaretraditionallynotanissueintheservicessector.Apartfromtheearlier-citedarticles
IIandIII,potentialtariffsonelectronicallysubmittedproductsandserviceswouldespecially
effectsupplyinmode1andcouldbechallengedagainstarticleXVI:1(marketaccess)ofthe
GATS. While there is currently a customs moratorium on digital transmissions, GATS
provisionscouldbecomerelevantifthiswasnolongerupheld.However,incontrasttothe
GATT,theGATSdoesnotincludeanyprovisionsspecificallyontariffs.
5.4.3Datalocalizationmeasures
DatalocalizationmeasuresareaparticularlysensitivetopicasMembersprobablydidnothave
inmindtheflowofcross-borderdataatalargescalewhenmakingGATScommitments,given
thattheInternetwasessentiallylessdevelopedatthattime.
Itcanbearguedthatthecross-borderremotesupplyofadigitallydeliveredservice(mode1)
necessarilyrequires“data-transfer”.Eventhoughnotlistedexplicitlyasasubsector,transfer
159Wunsch-Vincent&Hold2012,30.
40
ofdataisnecessarytosupplyaserviceelectronically.160Additionally,physicalpresenceofa
companycannotberequiredwhenamemberhasfullyscheduledmarketaccesscommitments
inmode1,includingfordigitalservices.161
Data localization measures requiring the establishment of local infrastructure directly or
indirectly (prohibition of cross border data flows), and consequently local presence of a
company, can, therefore, be seen as a restriction on market access in a sector with no
limitationsonmode1,violatingarticleXVI:2(c)oftheGATSasitlimitsthenumberofservice
operationsdefactotozero.162However,forinterpretationofthoseparagraphsitisimportant
toexaminethecommonintentionofMemberswithregardtocross-borderdatatransferat
thetimewhenschedulingcommitmentswereundertaken.163
An indication for Members’ intention can be found in paragraph 5(c) of the Annex on
Telecommunications,statingthat“eachMembershallensure(…)movementofinformation
within and across borders, including for intra-corporate communications of such service
suppliers,andforaccesstoinformationcontainedindatabases[sic!]orotherwisestoredin
machine-readableformintheterritoryofanyMember.”164Thiscanbeseenasanindicator
that Members knew cross-border data transfer would be necessary for the supply of
services.165Members,therefore,wouldhavetoensurefreecross-borderdatatransmissions
ofsuppliersofallscheduledservices,includingdatathatissupportingaservicestransaction.
However,thisparagraphhasnotyetbeenchallengedinthelightofrisingdatalocalization
measuresandaccessrestrictionstotheInternetimplementedbygovernments.
ItcanalsobearguedthatdatalocalizationmeasuresareinviolationofarticleXVIIoftheGATS
insectorswithnolimitationsonmode1,asrequiringcompaniesfromotherMemberStates
to establish infrastructure in its own territory will come at additional costs for those
companies. This, thus, modifies the conditions of competition through giving them less
favourabletreatmentthannationalcompanies,asoutlinedinparagraph3ofarticleXVII.
160Crosby2016,6.161SeeCrosby2016,3;LópezGonzáles&Jouanjean2017,13.162FollowingtheargumentationprovidedbythePanelandtheAppellateBodyinUS–GamblinginrelationtoarticleXVI:2(a)andapplyingitto2(c).163SeeinthisregardthefindingsoftheAppellateBodyinUS–Gambling(ABreportUS–Gambling,para.159)andChina–PublicationsandAudiovisualProducts(ABreportChina–PublicationsandAudiovisualproductspara.405)remindingoftheimportancethecommonintentionofpartiesasoutlinedintheViennaConvention.164GATSAnnexonTelecommunications,para.5(c).165Crosby2016,8.
41
Followingthisargumentation,datalocalizationrequirementscouldonlybeincompliancewith
theGATS for “unbound” services,or serviceswhereaccording toGATS schedulesphysical
presenceisrequiredforamode1supply.
5.4.4Quotas
ArticleXVI:2oftheGATSprohibitslimitationsonthenumberofservicesuppliers(XVI:2(a)),
thetotalvalueofservicetransactionsorassets(b),thetotalnumberofoperations(c),the
totalnumberofnaturalpersons(d),thetypeoflegalentity(e),andtheparticipationofforeign
capital(f),wherespecificcommitmentshavebeenundertaken.Alloftheseparagraphsareof
relevancefortradeindigitallydeliveredproductsandservices.US–Gamblinghasshownthat
thetotalprohibitionofa(digital)serviceisconsideredanumericalquotaandthusinviolation
ofarticleXVI:2(a).InChina–electronicpayments,thePanelhasreaffirmedthisargumentation
inrelationtomaintainingamonopolysupplierwheremarketaccesscommitmentshavebeen
undertaken.166
5.4.5Webblockingandfiltering
Blockingandfilteringofcommercial167websitesandappscanbeinterpretedinthelightof
various provisions of the GATS. In the first place, prohibiting the supply of a service, by
blockingorfilteringthesupplier’swebsite,couldbeinterpretedinthelightofarticleXVI:2(a)
and(b)insectorswherecommitmentshavebeenundertaken.Thiswouldalsobethecaseif
a service, such as access to a social network, is supplied on a non-monetary basis to the
consumers, but rather on the basis of “paid with data” as GATS does not specify that a
monetary transaction needs to be involved. However, as those “free to use” services are
usuallymonetized throughadvertising, thequestionariseshowacase likeblockingof the
Facebook website should be analysed: in the light of commitments undertaken in the
“ComputerandRelatedServices”section,suchas“DataProcessingServices”(CPC843),orthe
“CommunicationServices”section(e.g.CPC7523)asthisishowFacebookgetsitsdata?Or,
ratherasadvertisingservices(CPC871)inthe“OtherBusinessServices”section168asthishow
Facebook realises sales?This isequally thecase forallwebsitesandappswithabusiness
modelbasedonconnectinguser-dataandadvertising.
166PanelReportChina–ElectronicPayments.167Filteringandblockingofprivate,non-commercialwebsitescannotbeconsideredabarriertotradeasstatedinchapter3.168See:WTO:ServicesSectoralClassificationListfrom10July1991,WTODoc.MTN.GNS/W/120.
42
Itcanalsobearguedthatfilteringandblockingforeignwebsitesandappsinscheduledsectors
is inviolationofarticleXVIIoftheGATSwhennational“like-websitesandapps”(as inthe
conceptoflike-servicesandlike-servicessuppliersasoutlinedinarticleXVII:1)areallowedto
operate. This could be the case for China when blocking Facebook and WhatsApp or
underminingitsuse(byfilteringmessagessent)169,butatthesametimeallowingWeChat,a
ChineseplatformwhichoffersverysimilarserviceslikeFacebookandWhatsApp.Especially
thecaseofblockingWhatsApp,butalsoFacebookMessenger,couldbechallengedagainst
China’s commitments undertaken in Telecommunications and Value-added Services,
includingelectronicmail, voicemail, andelectronicdata interchange in regard tonational
treatment,wherenolimitationsareincludedintheChineseschedule.170
Webblocking and filtering could also violateMFN-obligations (art. II), ifmeasures applied
accordlessfavourabletreatmenttoservicesorservicesuppliersfromoneMemberStatein
relation to anotherMember State. This is the case ifmainly American newswebsites are
blocked,whilee.g.Russiannewswebsitesareavailable.
5.4.6Accesstotelecommunicationsinfrastructureandnetneutrality
Regardingbarrierstoaccesstotelecommunicationsinfrastructureandservicesaswellasnet
neutrality, three additional agreements to the GATS should bementioned: the Annex on
Telecommunications,the4thprotocoltotheGATS,andtheReferencePaper.171
TheAnnexonTelecommunications recognizes theessential natureof telecommunications
services for trade in services and ensures access to telecom networks and basic telecom
servicesforthesupplyofscheduledservices,regardlessifbasictelecommunicationsservices
have been scheduled.172 Hence, the Annex on Telecommunications provides essential
protectionagainstrestrictionsforaccesstotelecommunications-infrastructureandservices
inthesectorswherecommitmentshavebeenundertaken.
The 4th protocol to the GATS includes provisions on commitments by Member States to
liberalize a significant number of basic telecommunication services, including data
transmission, however, only for scheduled services.173 The Reference Paper, on the other
hand, includes some key principles for net neutrality, including transparency and non-
discrimination. It also contains positive language on competition and interconnection
169Bradsher2017.170GATS,ScheduleCLII–ThePeople'sRepublicofChinaof01October2001.WT/ACC/CHN/49/Add.2.171SeeShroff&Kuhlmann2016.172GATSAnnexonTelecommunications,para.5(a)-(e);Seealso:Shroff&Kuhlmann2016,21.173Shroff&Kuhlmann2016,21
43
betweentelecommunicationscompanies.However,thislanguagehasneverbeenappliedin
theInternetcontext.174
EventhoughthescopeofthesethreeagreementsislimitedbyparticipationofMembersand
commitments made, they provide a starting point for ensuring liberalized access to the
InternetandInternetservices,theprohibitionofdata localizationmeasures,aswellasthe
principleofnetneutrality.
5.4.7Taxation
Asinclassicaltradeinservices,theGATSprovidesaframeworkforaddressingdiscriminatory
taxationwithintheconceptofMFN(art.II),nationaltreatment(art.XVII),whenscheduled
accordingly,andpotentiallydomesticregulation(articleVI).
Asoutlinedinchapter4.2.2,thebefore-citedcaseofBrazilhasnotbeenchallengedatthe
WTOunderGATS,butundertheGATT,asthePPBmostlyincludesphysicalgoodsandonly
somerelatedservicesanddigitalproducts.175Nevertheless, taxationmeasures focusingon
servicescouldbechallengedat theWTOunder theGATS insectorswhereMembershave
undertakenspecificcommitmentsinthelightofarticleVI:1andarticleXVII:1,aswellasarticle
IIiftaxregimesdiscriminatebetweenMembers.
5.4.8Technicalstandards
Theforceduseofspecifictechnologyortechnicalstandardscouldpotentiallybeseenasin
violationofarticleVI:5(a)i.Thisisthecaseiftheuseofacertaintechnologyorstandardisnot
basedonobjectiveandtransparentcriteria,suchasthemereabilitytosupplycertainservices,
or more burdensome than necessary to ensure the service’s quality as outlined in the
paragraphs4(a)and(b)ofarticleVIoftheGATS.However,relevantdisciplines,asoutlinedin
articleVIoftheGATS,havenotbeendevelopedyet,thus,beingonlyapotentialcoverage.
Theneedtousespecifictechnologyortechnicalstandardscould,however,beanalysedinthe
light of national treatment commitments for scheduled services (art. XVII:3): forcing
companies to use a different, potentially unusual, standard or technology will come at
additionalcostsforforeigncompaniescomparedtonationalcompaniesthatoperatefromthe
beginningbasedonthesedifferentstandardsortechnologies.Incaseofadispute,itwould
174WhilethecaseMexico–TelecomsthePanelclarifiedtheapplicabilityoftheReferencePapertocross-borderdatainterconnection,itsapplicabilityontheInternethasnotbeenchallengedyetandremainsthereforeunclear.See:Ahmed&Aldonas2015,8;PanelReportMexico–Telecoms;Shroff&Kuhlmann2016,22.175PanelReportBrazil–Taxation.
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thenbeuponthePanelorAppellateBodytodetermineifatechnologyorstandardwould
havetobeconsideredunusual,sothatitmodifiestheconditionsofcompetition.
5.4.9Intellectualpropertyrights,geoblocking,andothers
As IPRs are essentially addressed by the TRIPS agreement, geoblocking undertaken by
governmentscanbeinterpretedinthesameregardaswebblockingandfiltering,andInternet
governancerelatedtopicsdonotfallunderthemainscopeoftheWTO,thoseissueswillnot
be further analysed at this point, given the limitations in space. However, clarifying their
relationtoWTO-lawisimportantandshouldbeaddressedbyfutureresearch.
5.5GATSexceptions
BarriersviolatingoneorseveralarticlesoftheGATSmaybecoveredbyarelevantexception
asstatedinarticleXIV“GeneralExceptions”oftheagreement.Inordertodoso,themeasure
inquestionmust,first,fallwithinthescopeofoneoftheexceptionslaidoutinarticleXIVand,
second, complywith the chapeauof article XIV. Twoof themost cited exceptionswill be
analysedinthefollowing.
Theprotectionofpublicmoralandmaintainingthepublicorder(asoutlined inart.XIV(a):
necessary to protect public morals or tomaintain public order) is one of the often-cited
argumentsforimplementingquotasaswellasmeasuresforblockingandfilteringofwebsites.
Thus, ithasbeenreferredto in twoWTOdisputesettlementcasesrelatedtodigital trade
already.IntheWTOdisputesettlementcasesUS–GamblingaswellasChina–Publications
andAudiovisualProducts,theAppellateBodyupheldtheargumentationofprohibitingcertain
digital services to protect public morals. However, in the case China – Publications and
AudiovisualProducts,itwasmadeclearthatthisexceptioncouldnotbeevokedforbanning
services (in that case, inter alia, digital distributionof books andmovies) in awidespread
generalmanner,buthadtobeappliedbasedonindividualcircumstances.176 Itcanalsobe
notedthatcompliancewiththechapeauofarticleXIVisquestionable,especiallyininregard
to web blocking and filtering in an arbitrary manner, leading to possible de facto
discriminationbetweenMembers.
Inthecaseofdatalocalizationrequirements,thedataprivacyofcitizens(art.XIV(c)ii)isone
of the most mentioned reasons for implementation of such requirements. However, its
applicability has not yet been challenged in the ambit of digital trade. It is questionable,
176ABreportChina–PublicationsandAudiovisualProducts,para.234-311.
45
however,ifthesemeasureswouldsustainthenecessitytest,asitcanbearguedthatsecurity
ofdatadoesnotdependontheterritorystored,butratheronsecuritymeasurestakenby
companiestoprotectdata.177Ontheotherhand,itcanbearguedthatforeigngovernments
couldaccessdataor forcecompaniesby legislation to sharedata ifdata is stored in their
territory.Butevenifdataisstoredwithinnationalterritory,foreigngovernmentscanforce
theirdomesticbasedcompaniestogivethemaccesstodatastoredabroadasthecaseofthe
US government, forcing Google to share data stored on servers in Ireland, shows.178 The
passingofthenecessitytestfordatalocalizationmeasureswould,again,beinquestion.
SouthKorea’sPersonalInformationProtectionAct,forexample,requirescompaniestoobtain
userconsentpriortoexportingdata,includingdetailsonwhoreceivesthedata,thepersonal
information provided, the period the data will be stored, as well as the purpose of
exporting.179Itcanbearguedthatsuchcomprehensiveprovisions,especiallytherequirement
toprovideadditionalinformation,donothaveanyeffectontheprivacyofdata,leadingto
theconclusionthatthismeasureisnotnecessaryfortheprotectionofdataprivacyofcitizens
and, consequently, does not comply with the GATS in sectors in which South Korea has
scheduledmarketaccesscommitments.
RestrictivemeasuresmightalsobecoveredbyArticleXIVbis“SecurityExceptions”,especially
byparagraph1(b).ThisparagraphcoversallmeasuresthatMembers“considernecessary”for
theprotectionofessentialsecurityinterests.Thesesecurityrelatedexceptionsare,therefore,
difficulttochallengeattheWTO.Hence,a“fairuse”ofthisarticlebyMembersisnecessary
toensureoperabilityoftheGATS,alsointhedigitalsphere.
Withincreasingregulationlimitingcross-borderdataflowsjustifiedwithprivacyorsecurity
questions,itwillbeimportantforgovernmentstofindtherightbalancebetweenprotection
of interestsandopennessof the internet.WhiletheGATSmightgrantWTOMembersthe
opportunitytorestrictcertainactivitiesintheirterritory,thismightalsolimitthepossibilities
of their citizensandcompanies toparticipate in the internationaldigitaleconomy.On the
otherhand,astherecentscandalregardingFacebookandCambridgeAnalyticahasshown,
governments will also have the duty to ensure that private companies, including foreign
177SeeCorry2017,3-5.178Kerr,Orin(2017):Googlemustturnoverforeign-storedemailspursuanttoawarrant,courtrules.TheWashingtonPost.Online:https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/02/03/google-must-turn-over-foreign-stored-e-mails-pursuant-to-a-warrant-court-rules/?utm_term=.f041e246e251.179Cory2017,5.
46
companies, will not abuse data of their citizens in their interest.180 However, when
implementingrestrictionstodigitaltradetoachieverelevantpolicygoals,Membersshould
alwaysonlyimplementmeasuresthataretheleasttrade-restrictivetoattaintherespective
objective.
5.6Summary
When applied to existing barriers, it was shown that GATS rules already address most
identified barriers to international trade in digitally delivered products and serviceswhen
WTOMembersundertakerelevantcommitments.
Howevermuchofitsprovisionsremainyetunchallengedinrelationtodigitaltrade,apartfrom
someclarificationsmadebythePanelandtheAppellateBodyinthecasesMexico–Telecoms,
US–Gambling,China – PublicationsAudiovisual Services, andChina – Electronic Payment
Services.Furtherclarification,eitherthroughWTOdisputesettlementcases,orthroughactive
rule-making,isthereforenecessarytoconfirmtheapplicabilityofGATS.
6.WTOMinisterialDecisionsandnewways
6.1MinisterialDecisionssincethelaunchoftheWorkProgramme
BesidesthelaunchoftheWorkProgramme,theresponseoftheWTOasanorganizationwith
regardtothetheriseofe-commercecanbeanalysedthroughMinisterialDecisionsissuedas
no other results have been conveyed, yet. Since the launch of theWork Programme on
ElectronicCommerce,MinistersofMemberStateshaveincludedlanguageone-commercein
mostoftheirMinisterialDecisionsmadeatMinisterialConferences(MCs).However,content
of thoseDecisions, so far, has been limited as they contain only theminimum consensus
reachedbyMembersinregardtoelectroniccommerce.
The GenevaMinisterial Declaration on global electronic commerce of 1998 called for the
establishment of a comprehensive work programme by the General Council as outlined
earlier. The Declaration also established a moratorium on custom duties on electronic
transmissions,statingthat“[w]ithoutprejudicetotheoutcomeoftheworkprogrammeor
the rights and obligations ofMembers under theWTOAgreements,we also declare that
180Schulz2018,12-24.
47
Memberswillcontinuetheircurrentpracticeofnot imposingcustomsdutiesonelectronic
transmissions.”181
Inthe2001DohaDeclaration,besidestakingnoteoftheworkaccomplishedintherespective
bodies, Ministers acknowledged that “electronic commerce creates new challenges and
opportunities for trade forMembersatall stagesofdevelopment”182and recognized“the
importanceof creatingandmaintaininganenvironmentwhich is favourable to the future
developmentofelectroniccommerce.”183Ministersalsoupheldtheexistingmoratoriumon
customdutiesforelectronictransmissions.
The2005HongKongDeclarationand2009GenevaDecision,interalia,takenoteofthereports
submitted,statethattheWorkProgrammeisnotyetcomplete,andagreetomaintainthe
institutionalarrangements for theWorkProgrammeaswellas themoratoriumoncustom
dutiesonelectronictransmissionsuntilthenextsession.184
The2011GenevaMinisterialDecisionisbroaderinitsscopeas,forthefirsttime,languageis
includedspecificallymakingreferencetodevelopingandleast-developedcountriesaswellas
SMEs.ItalsoincludestaskingoftheGeneralCouncilontheseissues,includingexamination
andmonitoringofdevelopment-relatedissues,suchastechnicalassistance,capacitybuilding,
andthefacilitationofaccesstoelectroniccommerce.185Before,Declarationsonlyincluded
more generic language on “development-related issues”. Ministers also instructed the
General Council to consider recommendations on possiblemeasures related to electronic
commercewhich can be seen as a first step towardswidening themandate of theWork
Programmetowardsexploringpossibilitiesforrulemaking.
The2013BaliMinisterialDecisionhasbeenthebroadestinitsscopesofar.Whilemaintaining
some languageof the2011MinisterialDecision,Ministersadded languageon technology-
related issues, stating that “theWork Programme should continue to examine the trade
relatedaspectsof,interalia,enhancinginternetconnectivityandaccesstoinformationand
telecommunicationstechnologiesandpublicinternetsites,thegrowthofmobiletelephony,
electronically delivered software, cloud computing, the protection of confidential data,
privacy and consumer protection.”186 Thus, for the first time, besides naming relevant
181WTO:MinisterialDeclarationof25May1998,WTODoc.WT/MIN(98)/DEC/2.182WTO:MinisterialDeclarationof20November2001,WTODoc.WT/MIN(01)/DEC/1,para34.183Id.184WTO:MinisterialDeclarationof22December2005,WTODoc.WT/MIN(05)/DEC,para.46;WTO:MinisterialDecisionof11December2009,WTODoc.WT/L/782.185WTO:MinisterialDecisionof19December2011,WTODoc.WT/L/843.186WTO:MinisterialDecisionof11December2013,WTODoc.WT/MIN(13)/32,WT/L/907.
48
developmentrelatedissues,Ministersmadereferencetorelevanttrade-relatedtechnological
issueswhichcanbeinterpretedasasignofadvancingtheWorkProgrammeasmoreconcrete
languagewasadded. The2013Decisionequallymaintains tasking for theGeneralCouncil
relatedtoconsideringrecommendationsonpossiblemeasuresregardinge-commerce,and
upholds the moratorium on custom duties, thus underscoring the will of Ministers to
substantiallyadvanceonthisissue.Thisinterpretationissupportedbythe2013reportofthe
General Council submitted to Ministers prior to MC9, stressing that “delegations
demonstrated a high level of willingness to work towards a consensus text (…) showed
flexibilityandprovidedconstructivecommentsanddraftingsuggestions.”187
In2015however,momentumwas lost: the2015NairobiMinisterialDecisiondoesneither
includetaskingrelatedtodevelopmentissuesortechnologicalquestionsnortaskingofthe
GeneralCouncilinrelationtoconsideringrecommendationsonpossiblemeasures.188Instead,
Ministers instructed the Council to “hold reviews” and “report” to the next Ministerial
Conference.Eventhoughthedecisionmakesreferencesto“theexistingmandate”189,thelack
ofclearlanguagecomparedtopriorDecisionspointstoalackofconsensusbetweenMembers
ontheseissues.Thisisunderscoredbyseveraldraftproposalssubmittedbydifferentgroups
ofMemberStates190aswellasdisagreementbetweenMembersontheexactscopeofthe
mandate of the Work Programme.191 Only two key points from earlier decisions can be
identified:thecontinuationoftheworkoftheWorkProgrammeaswellasmaintainingthe
moratoriumoncustomduties.
Thelatest2017BuenosAiresDecisionhasbeentheshortestMinisterialDecisionontheissue
ofelectroniccommercesofar.Whileitbringsclaritytothescopeofthemandate,byagreeing
tocontinuetheworkoftheWorkProgrammebasedonthemandategivenintheoriginal1998
documentontheWorkProgrammeonElectronicCommerce,192itnullifiesprogressachieved
inpriorMinisterialDecisions,suchasin2011and2013.AsearlierDecisions,itmaintainsthe
practiceofnotimposingcustomdutiesonelectronictransmissions.
187WTO:GeneralCouncilReportof11November2013,WTODoc.WT/GC/W/676.188WTO:MinisterialDecisionof21December2015,WTODoc.WT/MIN(15)/42,WT/L/977.189Id.190WTO:DocumentsOnline.191WTO:GeneralCouncilReportof24July2015,WTODoc.WT/GC/W/701,para.1.5.192WTO:MinisterialDecisionof18December2017,WTODoc.WT/MIN(17)/65,WT/L/1032.
49
6.2PositionsofkeyWTOMemberStates
As outlined atmultiple points in this paper, opinions ofMembers regarding the different
aspects of electronic commerce are very diverse, consequently having led to hardly any
progressachievedwithintheWorkProgramme,despiteongoingdiscussionsfor20years.The
very limited scope of themost recentMinisterial Decisions points to a lack of consensus
betweenMembersonbasicallyallrelevanttopics.
ThiscanbeseenwhenlookingatdraftMinisterialDecisionssubmittedtotheGeneralCouncil
bydelegationsintheforerunofMC11.DraftMinisterialDecisionssubmittedwerebyeight
differentdelegationsandco-sponsors totheGeneralCouncil,whichwereallconsequently
forwarded toMinisters.193 Draft Decisions have been submitted by the African Group194,
Bangladesh,China,theEUandco-sponsors,India,Japanandco-sponsors,Russia,aswellas
Singaporeandco-sponsors.Interestingly,noproposalhasbeensubmittedbytheUSunderits
new administration. Efforts of the Chairman of the General Council to bridge differences
betweenproposalshavenotbeensuccessfulasproposalsincludedawiderangeofdifferent
standpoints thatcouldnotbebrought together.195With lackofconsensusat theworking-
level,resultsattheMC11high-leveldiscussionscouldhardlyhavebeenachieved.
Inordertoillustratethedifficultiesoffindingconsensusonimportantissues,keypointsof
Members’draftdecisionsshallbenoted:
Four delegations and their co-sponsors called for the establishment of a new forum for
discussionstoadvancethedigitaltradeagendaoftheWTO.TheEuropeanUnionanditsco-
sponsors called for establishing a Working Party on electronic commerce to “conduct
preparationsforandcarryoutnegotiationsontrade-relatedaspectsofelectroniccommerce
onthebasisofproposalsbyMembers.”196Inasimilarvein,Russiacalledfortheestablishment
ofanewWorkingGrouponelectroniccommerce“toprovideMemberswiththeappropriate
forumfordiscussionsone-commerceissuesanditsdevelopment,includingthepossibilityof
developinginternationalrules.”197MembersshouldbeabletosubmittopicstotheWorking
Group,includingoneliminationoftradebarriersandtradefacilitation.TheproposalofJapan
193WTO:GeneralCouncil:ReportbytheChairmanof1December2017.WT/GC/W/739.194WithoutprejudicetoparticipationofNigeriaintheJointMinisterialStatementattheendofMC11regardinge-commerce.195WTO,WT/GC/W/739.196WTO:CommunicationfromAustralia,Canada,Chile,Colombia,TheEuropeanUnion,Israel,TheRepublicofKorea,Mexico,Montenegro,NewZealand,Norway,Paraguay,PeruandUkraineof30November2017,WTODoc.JOB/GC/140/Rev.5.197WTO:CommunicationfromtheRussianFederationof06October2017,WTODoc.JOB/GC/137.
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andco-sponsorsequallycalledforestablishingaWorkingGrouptasked,interalia,withthe
assessment of whether clarification and strengthening of current WTO rules regarding
electronic commerce was necessary, as well as the identification of priority needs for
developingcountries.198China,inadditiontomaintainingthecurrentdiscussionsunderthe
General Council, proposed to establish a forum for horizontal “DedicatedDiscussions” on
issues such as facilitation of cross border digital trade.199 The four other draftMinisterial
Decisions,however,onlyreiteratedmaintainingthecurrentoverallworkingstructureofthe
WorkProgramme.
Three draft Ministerial Decisions raised concerns in relation to maintaining the customs
moratorium on electronic submissions, despite the moratorium being one of the few
deliverables of the currentWork Programme. The African proposal pointed out that “the
renewalofthemoratoriumshouldnotbeseenasautomatic[asthe](…)AfricanGroupisstill
discussingitinviewoftherevenueimplications.”200Inthesameregard,Bangladeshproposed
tograntthepossibilitytoleastdevelopedcountries(LDCs)toimposecustomsandquotason
digitallytransmittedproducts,whileadvancedeconomies,aswellasdevelopingeconomies
onavoluntarybasis,shouldberestrainedfromimplementingcustomdutiesandquotasfor
alldigitallytransmittedgoodsandservicesoriginatingfromLDCs.201India,ontheotherhand,
conditioneditsacceptanceofthemoratoriumtoMembers’decisiononTRIPSNon-Violation
andSituationComplaints.202
Furtherissuesbroughtupwerethedefinitionandclassificationofe-commerceproducts,as
wellasthecallforfurtherworkondevelopment-relatedissuesandtechnologicalquestions
includedinproposalsoftheAfricanGroup,Bangladesh,China,Japanandco-sponsors,and
Russia.
However, India opposed any discussions on issues thatwent beyond themandate of the
existingWorkProgramme,andespeciallyonbindingrulesregardingelectroniccommerce.203
Subsequently,followingthelogicoftheruleofconsensus,itsdraftDecisionsubmitted,being
theshortestofall,isalmostidenticalwiththefinalMinisterialDecisionadopted.
198WTO:CommunicationfromCostaRica;HongKong,China;Japan;SwitzerlandandtheseparatecustomsterritoryofTaiwan,Penghu,KinmenandMatsuof27November2017,WTODoc.JOB/GC/156/Rev.1.199WTO:CommunicationfromChinaof10November2017,WTODoc.JOB/GC/150.200WTO:CommunicationfromtheAfricanGroupof21November2017,WTODoc.JOB/GC/155.201WTO:CommunicationfromBangladeshof20November2017,WTODoc.JOB/GC/152/Rev.1.202WTO:CommunicationfromIndiaof20November2017,WTODoc.JOB/GC/153.203Suneja,Kirtika(2017):Indiaopposese-commercetalksatWTO;submitsdocument.EconomicTimesofIndia.Online:https://economictimes.indiatimes.com/news/economy/policy/india-opens-e-commerce-talks-at-wto-submits-document/articleshow/61907459.cms.
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6.3Newways–aplurilateralapproach?
GiventhesubstantialdifferencesbetweenMembersandthedifficultiesofreachingconsensus
onsubstantialmattersatMC11,agroupof71MemberStates,accountingfor77percentof
global trade,204 issued a Joint Statement, stating toworkmore closely together on trade-
relatedaspectsofelectroniccommerceby initiatingexploratoryworktowardsfutureWTO
negotiations.205
The initiative was mostly supported by advanced economies. Only some emerging and
developingeconomieshavejoinedandofallLDCs,onlyLaoPeople’sDemocraticRepublicand
Cambodiahavesignedthestatement.206Lowparticipationamongdevelopingcountriesinthis
declaration is interesting to note, given the beforementioned discussions: some scholars
pointoutthatespeciallySMEsfromdevelopingeconomiesandLDCswillbenefitmostfrom
digitalization of the trade.207 On the other hand,many developing economies themselves
statethattheyarecurrentlystill intheprocessofevaluatingtheimplicationsofthedigital
economy and do not want to be part of any agreement that later might come as a
disadvantage.208 African countries additionally pointed out that the narrative of SMEs
benefitingmostfrommultilateralrulesondigitaltradewas“false”209.
Nineproposalsbydelegations,includingtheUS,onhowtomoveforwardinrelevantaspects
havebeenputforwardinApril2018210inpreparationforameetingofthegrouptobeheldin
May2018.211ParticipationtonegotiationsisopentoallMembers.
204WTO(2017a):Newinitiativesonelectroniccommerce,investmentfacilitationandMSMEs.Online:https://www.wto.org/english/news_e/news17_e/minis_13dec17_e.htm.205WTO:CommunicationfromAlbania;Argentina;Australia;Bahrain;Brazil;BruneiDarussalam;Cambodia;Canada;Chile;Colombia;CostaRica;EuropeanUnion;Guatemala;HongKong,China;Iceland;Israel;Japan;Kazakhstan;Korea,Republicof;Kuwait;LaoPDR;Liechtenstein;theformerYugoslavRepublicofMacedonia;Malaysia;Mexico;Moldova,Republicof;Montenegro;Myanmar;NewZealand;Nigeria;Norway;Panama;Paraguay;Peru;Qatar;RussianFederation;Singapore;Switzerland;SeparateCustomsTerritoryofTaiwan,Penghu,KinmenandMatsu;Turkey;Ukraine;UnitedStates;andUruguayof13December2017,WTODoc.WT/MIN(17)/60.206LDCsasspecifiedbytheUN:UNCTAD(2018):UNlistofLeastDevelopedCountries.Online:http://unctad.org/en/Pages/ALDC/Least%20Developed%20Countries/UN-list-of-Least-Developed-Countries.aspx.207Seei.a.Ahmed&Aldonas2015;UNCTAD2017.208WTO,WT/GC/W/728,para.1.11.;WTO,JOB/GC/144.209WTO,JOB/GC/144,para.3.3,3.4.210Proposalssubmittedbetween6Apriland16April2018.Numberofsubmissionsasof21April2018(WTODocumentsOnline).211ICTSD(2018):WTOMembersSubmitProposalsAimedatAdvancingExploratoryE-CommerceWork.Bridges,22,13.Online:http://www.ictsd.org/bridges-news/bridges/news/wto-members-submit-proposals-aimed-at-advancing-exploratory-e-commerce.
52
Thisnewinitiativeof71MemberStatescouldultimatelyleadtoanew,plurilateralagreement
undertheauspicesoftheWTOwhichwouldgiveotherMemberstheoptiontojoinifthey
desired.Theadvantageofthiswayforwardmightbetoreachanagreementsoonerrather
thanlater.However,forcountriesnotinitiallyparticipating,joiningatalaterstagemightcome
as a disadvantage. Nevertheless, this opt-in, opt-out version could be a good way for
advancingtheWTOagendaonelectroniccommerce.Itwouldhelptheorganizationtoaddress
thechallengesthatlayaheadinadigitizedtradeworldrathersoonerthanlater,tonotlose
itscredibilityorbecomesimplyoutdated.212
Critics of this Joint Statement, on the other hand, emphasize the need to clarify open
questionswithrelevanceforallMembers,suchasthetechnologicalneutralityoftheGATS,
applicationofGATSmodes1or2,aswellasclassificationofdigitallydeliveredproducts,ona
multilateral basis first.213 In addition, a plurilateral approach would come at the risk of
fragmentationofWTO-lawinrelationtobasicissues.
AnotherwayforwardcouldbetowidenthescopeoftheTradeinServicesAgreement(TiSA)
whichiscurrentlynegotiatedasaplurilateralagreementbetween23MembersoftheWTO
toprovidefurtherliberalizationintheservicessector.TiSAnegotiationsaddressanumberof
issues related todigital trade, includingdata localizationmeasures, transparency, and the
needforregulationinthisarea.214
However, there has been no breakthrough that would suggest that a final agreement is
imminent. In addition, again, the plurilateral approach would come at the cost of
fragmentationofruleswithintheWTOandthequestionofinteroperabilitywiththeGATS.215
However,theTiSAmightproviderelevantinputtobuildonwhennegotiatingrulesfordigital
tradeonamultilateralbasis.
212SeeRodríguezMendoza,Miguel(2016):ANewArchitecturefortheWTO?PrimoBraga,CarlosA.&Hoekman,Bernard(eds.):FutureoftheGlobalTradeOrder.SanDomenicodiFiesole,Lausanne:EuropeanUniversityInstitute,15-30.213WTO,JOB/GC/144,para.2.5.214Ahmed&Aldonas2015,8.215Burri2013,8.
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7.Mid-conclusion:analysisoftheresponseoftheWTOtotheriseof
digitaltrade
TheWTO established itsWork Programme on Electronic Commerce in 1998, at the very
beginningoftheriseofthedigitaleconomy.Thus,itcannotbestatedthattheorganization
hasoversleptthebeginningofdigitalizationoftrade.
Despite recognizing the, at that time, new phenomena from an early stage on, the
organization has remained paralyzed ever since: 20 years have passed, with hardly any
deliverablesachieved.Apartfromestablishingamoratoriumoncustomdutiesonelectronic
transmission,MinisterialDecisionshavenotadvancedtheWTOagendaondigitaltrade.Small
progressmadeintheyears2011and2013hasbeenreversedbyrecentdecisions,especially
themostrecentone.
Thispaperhas identifiedanumberofopenbasicquestionstheWTOhasnotbeenableto
answer yet.216 In the first place, a clear definition of what is understood by the term e-
commerce as well as a clear statement regarding classification of digitally transmitted
products and services is pending. If GATS ruleswere to be applied, further clarification is
neededonthecorrectmodeofsupplyandtheapplicabilityofGATSprovisionstodigitaltrade
aswellasanupdateofGATSschedules.
Especiallyinthelightofexistingandrisingbarrierstodigitaltrade,acommitmentforapplying
GATS rules could be useful to address these barriers. This paper has shown that GATS
provisionsalreadyaddressmostbarrierstodigitaltrade.Thisis,interalia,relevantinregard
tomarketaccess,nationaltreatment,possibledomesticregulationprovisions,andtheGATS
general exceptions. Also, the applicability of the Annex on Telecommunications, the 4th
ProtocoltotheGATS,andtheReferencepapertothedigitaleconomyhasnotbeenclearly
confirmedyetandshouldthereforebeclarified.
Against this backdrop, different variables can be identified that may have impeded
progress.217Thosevariablesshouldonlyserveasindicatorsatthispoint,furtherresearchon
causalitywouldbenecessary toanalyse theeffectsof thedifferentvariableson theWork
Programme.
One part of the problem certainly is theway theWTO operates, relying on consensus of
Membersforrule-making.Hence,theaboveidentifiedgreatdiversityofinterestsofMembers
216Foratabularizedoverview,seetable1intheannexofthispaper.217Foratabularizedoverview,seetable2intheannexofthispaper.
54
StatesinrelationtotheWorkProgrammecanbenamedasamajorreason.ThestalledDoha-
round is anotherbarrierwhichnotonly impedesprogress in related tradeareas, but also
questionstheWTOasaninstitution,duetoalackofdeliverablesandputsfurtherburdenson
negotiationswithintheWTOingeneral.218
Another issuetobehighlighted ishowtheWorkProgrammeoperates.Work isconducted
withintherespectivebodiesonanexplorativebasis.ThebodiesreporttotheGeneralCouncil
which then reports toMinisters, currentlyevery twoyears.No real forum forpermanent,
more frequent, or more flexible discussions has been established. In the current, fast-
developing,environmentoftheInterneteconomy,twoyearscanbeasubstantialamountof
time. Russia, for example, is of the opinion that the lack of a proper forum for orderly
discussionsisoneofthemainreasonswhytheWorkProgrammehasnotbeenabletodeliver
resultsasoftoday,withworkonelectroniccommercehavingbecome,inthewordsofthe
Russiandelegation,“morechaoticthanever”219.
Anotherissuethatcanbeidentifiedisthemandategiven.AccordingtosomeMembers,the
Work Programme does not have a mandate to work towards rule-making but is only of
exploratory nature.220 When the Work Programme was established however, a clearer
mandatecouldhavebeengiven,forexampleclearlystatingthatonedeliverableshouldbeto
identifybarriersandwaystheWTOcanaddressthem.Aclearmandatefromthebeginningon
might have led to more focused work within the Work Programme. Without that clear
mandate, and induced by the dot-com crisis,221Member States lost interest very quickly,
activityintherespectivebodieswaned,andmomentumwaslost.Eventhoughmomentum
could be regained, the above outlined difficulties, such as need of consensus, become of
importanceagain.
Anotherbarrierforprogressistheexistingdigitaldivide,relatedtosignificantknowledgegaps
aswellasinfrastructuregaps:First,thereisaknowledgegap,betweenMembersoftheWTO
asmanycountriesarenotyetawareaboutalltheimplicationsdigitaltradewillhaveontheir
economyandcitizensasstatedintheirdifferentcommunications.Second,manydeveloping
218Baldwin,RichardE.(2016b):TheWorldTradeOrganizationandtheFutureofMultilateralism.JournalofEconomicPerspectives,30(1),113;PrimoBraga,CarlosA.&Hoekman,Bernard(2016):FutureoftheGlobalTradeOrder.PrimoBraga,CarlosA.&Hoekman,Bernard(eds.):FutureoftheGlobalTradeOrder.SanDomenicodiFiesole,Lausanne:EuropeanUniversityInstitute,IMD,2.219WTO,JOB/GC/131,para.4.1.220WTO,WT/GC/W/728,para.1.8.221Weber2010,13.
55
countries face substantial lack of infrastructure for conducting digital trade as outlined in
chapter3.1.
Additionally,aknowledgegapcanbeidentifiedbetweenthetradegovernancecommunity
andthe Internetgovernancecommunityastherehasbeennosignificantoverlapbetween
both until very recently.222 Trade policy makers have simply not been aware of Internet
specificrules,implications,andneeds.
Until very recently,Members also adopted a “wait-and-see” approach instead of actively
engaginginthesubject.Fewdisputesettlementcasesinrelationtodigitaltradehavebeen
broughttothetablesofar,buteachhasbroughtsignificantlymoreclaritytoopenquestions
than 20 years of work in the Work Programme. Given the stalled negotiations, further
clarificationonopenissuesinrelationtoe-commerceislikelytohappeninthenearfuture
onlyifaMemberfilesacomplaintagainstanotherMember.TheWTOSecretariatitselfdoes
nothave the right todoso itself,opposed to, forexample, theEUCommission.However,
Membersstillhesitatetoengageactivelyindisputesrelatedtodigitaltrade.Itcouldbeargued
thatthisisalsopartiallyduetouncertaintyorlackofknowledgeonthisissue.
The paralysation of the WTO has created a vacuum and legal uncertainty in which
governmentsarestartingtoimposebarrierstodigitaltrade.Businessescannotbesuretobe
backed by international WTO trade rules, leading to hampered GDP growth globally, as
outlinedinchapter3.
With fast technological progress, more uncertainties lay ahead, such as implications of
additive manufacturing, just in time delivery, the classification of data within the WTO
framework, thequestionofdataownershipandpotential abuse,or taxationof thedigital
economy.Specialattentionshouldbegiventonewlyevolvingtechnologieswiththepotential
todisrupttradeinitstraditionalway.Additivemanufacturingmightonlybethebeginning.
As countries are increasingly implementingmeasures restricting digital trade, and a great
numberofbarrierstodigitaltradealreadyexists,thereisaneedfortheWTOtoact,givenits
corepurposeoftradeliberalizationwhichiscurrentlyatriskinthedigitalspace.
Ultimately,adeeperdilemmaof theWTO-conceptandarchitecturecanbe identified.The
WTOwascreatedfortheliberalizationoftradeinananalogueworld,formedbynationstates.
AhmedandAldonas(2015)pointoutthatthecurrentagendaoftheWTOfocusesonremoving
barrierstotradethatwereintroducedinthefirsthalfofthe20thcentury.223Withtheriseof
222Singh,Abdel-Latif&Tuthill2016,104,105;UNCTAD2017,72-77.223Ahmed&Aldonas2015,11.
56
theInternet,aborderless,digital,economyhasrisen,theworldeconomyhaschanged.Thus,
itcanbequestionedifcurrentWTOconceptsfocusingongeographicalnotionswillbeableto
leadtoacomprehensivesolutionfordigitaltrade,raisingquestionsthatgobeyondclassical
liberalization.
8.Possiblesolutionstoensureliberalizationofdigitaltradewithinthe
WTOframework
8.1AviewoutsidetheWTO:TheEuropeanUnionandfreetradeagreements
WhenlookingatpossiblesolutionsonhowtoevolvetheWTOagendaondigitaltrade,aview
outsidetheorganizationcanbehelpfulasplurilateralrulesfordigitaltradealreadyexistin
differentcontexts,suchaswithinotherinternationalorregionalorganizationsorfreetrade
agreements(FTAs).
Ofall internationalandregionalorganizations,theEUcertainlyseemstopossessthemost
developed regulation in the area of digital trade. In difference to theWTO, which as an
internationalorganizationofcooperationdependsondecisionsmadebyitsdiverseMember
Statesinconsensus,theEUismoreflexiblewithregardtoimposingnewrules.Reasonsfor
this include a solid legislating-system aswell as less diversity betweenMember States in
comparison to theWTO.With the European Commission, the EU also possesses its own
administration with the power to propose legislation, implement decisions, and monitor
compliance of Members. TheWTO, on the other hand, only possesses a relatively small
secretariattosupporttheintergovernmentalworkofMemberStates.
However,takingacloserlookatEUregulationandtheEUDigitalSingleMarketcanhelpto
betterunderstandpossibilities inthefieldofdigitaltradeandidentify important issuesfor
regulation.
TheEUDigitalSingleMarkethasthegoaltoeliminatebarrierstodigitaltradeforbusinesses
andconsumerswithintheEUterritory,basedonthreeprinciplepolicystreams.Incomparison
totheWTO,theEUstrategyhasastrongerfocusonconsumerrightsandprotection.224
224Seealso:Pitschas,Christian&Gerstetter,Christiane(2017):ConsumerRightsinInternationalTradeAgreements.VerbraucherzentraleBundesverband.Online:https://www.vzbv.de/sites/default/files/downloads/2017/03/20/17-03-18_study_vzbv_consumer_rights_in_trade_agreements.pdf.
57
Oneofthethreemainpolicystreamsaimsforbetteraccessforconsumersandbusinessto
onlinegoodsandservices,includingthroughending“unjustified”geo-blockingandreducing
value-addedtax(VAT)burdensforcrossborderdigitalbusinesses.225Thepillaralsoincludes
plansonimplementingamoderncopyrightframework,facilitatingwideronlineavailabilityof
content across the EU, and ensuring that nation-based copyright rules do not impede
innovationandresearch.
The second pillar aims to create a better environment for digital networks and services,
includingbetteraccesstotelecoms-servicesforallEUcitizensandbusinesses.Italsofocuses
on adapting existing rules for audio-visual media to new business models for content
distribution,analysingtheroleofonlineplatforms,particularlywithregardtotransparency,
information use, illegal content, and the relationship between the supplier and the
platform.226Italsotacklestheissuesofstrengtheningdata-andcyber-security.
Thethirdpillar,named“economy&society”,addressesbarrierstodigitaltrade.Thisincludes
ensuringfreeflowsofnon-personaldata,workingonstandardsandinteroperabilitytoensure
compatibilitybetweensystems,andenablingEUcitizenstohavetherightskillstofullybenefit
fromthedigitaleconomy.227TheEuropeanCommissionestimatestheDigitalSingleMarketto
contribute€415billiontotheeconomyoftheEU.228
InregardtoWTO-law,thewilltomodernizeexistingrulesandframeworkstomakethemfit
forthedigitalagecancertainlybeidentifiedasoneofthekeytakeawaysofanalysingtheEU
DigitalSingleMarket.Ittriestocreateabalancebetweentherightsofconsumers,businesses,
andIPR-holders.TheWTO,ontheotherhand,hastraditionallyfocusedmoreonliberalization
of trade, thus focusing on mainly on businesses and only to a lesser degree IPRs and
consumers.However,inthedigitaleconomy,andwithdatabecominganimportanttradeable
resource,therightsofconsumersasimportantsuppliersoftheresource“data”willbecome
important.Multilateraltraderegulationwillhardlybeabletoignorethisissuewhenaiming
toinitiateasincereintentfordigitaltraderegulationandliberalization.Asshowninchapter
2.2,theconsumerisbecominganimportant,activeplayerininternationaltrade,andthusthe
225Hereandfollowing:EuropeanCommission(2017a):Betteraccessforconsumersandbusinesstoonlinegoods.Online:https://ec.europa.eu/digital-single-market/en/better-access-consumers-and-business-online-goods.226EuropeanCommission(2017e):Rightenvironmentfordigitalnetworksandservices.Online:https://ec.europa.eu/digital-single-market/en/right-environment-digital-networks-and-services.227EuropeanCommission(2017d):Economy&Society.Online:https://ec.europa.eu/digital-single-market/en/economy-society.228EuropeanCommission(2017b):Digitalsinglemarket:Bringingdownbarrierstounlockonlineopportunities.Online:https://ec.europa.eu/commission/priorities/digital-single-market_en.
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WTOwillalsohavetoensureconsumers’interestsaremet.TheEUDigitalSingleMarketgives
some examples on this matter. In addition, EU regulation directly addresses questions
essentialtodigitaltrade,suchasfreeflowsofnon-personaldata,theroleofplatforms,access
totelecoms-servicesordatasecurity.Allthoseissuescouldpotentiallybeaddressedatthe
WTOlevelaswell,wideningthescopeoftheorganization.
AnothersourceforpossiblesolutionstohowtotackletheissueofdigitaltradeattheWTO
areFTAsassomehavebettermanagedtoaddressdigital tradethantheWTO,bydirectly
includingprovisionsondigitaltradeandrelatedtopics,suchasprivacyorsecurity.229Examples
includetheEUagreementswithCanada(CETA)andKorea(KOREU)230,ortheComprehensive
and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the new version of the
formerlynegotiatedTrans-PacificPartnership(TPP).EspeciallytheTPP,whoseprovisionson
digital tradearenow fullypartof theCPTPP,hasbeen citedby scholars to illustratehow
provisionsone-commercecanbeincludedinaninternationaltradeagreement.231Thisiswhy
itseemsusefultohaveacloserlookatsomeprovisionsintheCPTPPregardinge-commerce.
Chapter14oftheCPTPP232addressesabroadrangeofissuesrelatedtoelectroniccommerce,
includingspecificprovisionsthatclarifytheobligationsofcountriesnottorestrictdigitaltrade,
hence creating greater legal certainty.233 The agreement does, for instance, not allow to
imposecustomdutiesonelectronictransmission(article14.3),ortoimplementmeasuresthat
prohibitcross-borderflowofdata, includingpersonaldata(article14.11.2),orthatrequire
businessestoestablishlocalcomputingfacilities(article14.13.2).TheCPTPPis,thus,thefirst
majortradeagreementincludinglanguageonbindingcommitmentstoprotectfreeflowof
information across borders.234 However, like the GATS, the CPTPP allows Parties to take
measures to achieve legitimatepublic policy objectives (articles 14.11.3 and14.13.3). The
agreementalsoaddressesawiderangeofotherimportantissues,suchasquestionsofsource
code, consumer protection and protection of personal information, or cooperation on
229Mavroidis,PetrosC.(2017):TradeRegulation,andDigitalTrade.ColumbiaSchoolofInternationalandPublicAffairs.Online:https://sipa.columbia.edu/sites/default/files/Mavroidis_Trade_Regulation_and_Digital_Trade_0502.pdf,1-4.230Id.231Seei.a.Cory2017,14;Singh&Tuthill2016,113.232CPTPP:ComprehensiveandProgressiveAgreementforTrans-PacificPartnership.Chapter14.(Signed8March2018).233Crosby2016,1.234Sillman,Ari&Peterson,ErikR.(2017):DigitalWallsontheRise.A.T.Kearney.Online:https://www.atkearney.com/web/the-purchasing-chessboard/article/-/asset_publisher/9AutfSQfJm6Y/content/digital-walls-on-the-rise/236833.
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cybersecuritymatters.Due to limitations in space,andhaving inmind thepurposeof this
paper,adeeperanalysisofprovisionsintheTPPwillnotbemadeatthispoint.
Theimportantpointtomakehereistwofold:first,thereareinternationaltradeagreements
addressingdirectlyopenquestions in relation todigital trade, its implications,and related
issuesinastraightforwardway.Withintheseagreements,thereisnoneedforinterpreting
andbending rules fromanalogue-ages tomake themapt to21st century trade. Important
topicsarerathernameddirectly.TheCPTPPdoesnotonlyincludeprovisionssolelyfocusing
on the liberalization of digital trade, but also important related issues, such as electronic
authentication,handlingofsourcecodesorthequestionofhowtohandledataandconsumer
privacy.Hence,CPTPPreflectsthemorecomplexnatureofdigitaltrade,whichincludesmore
technical,securityandethicalquestionsthanclassicaltradeingoodsandservices.Second,
whentheWTOistryingtoincludelanguageondigitaltradeinitsframework,theorganization
canrelyonworkone-commercethathasalreadybeendonewithinthescopeofmanyFTAs,
thusnotneedingtocomeupwithacompletelynewframeworkfromscratch.
Inamoregeneralmanner,Wunsch-Vincent(2008)highlightsthatmanyFTAsaddresstheissue
ofdigitaltradeinadirectway,byincludingarelevantdefinitionoftheterm,clearrecognition
oftheapplicabilityofWTOrulesandprovisionsoftheFTAinquestiontotheelectronicsupply
of a service.235 In addition, FTAs often established a clear and applicable customs duty
moratoriumonelectronic transmission,non-discriminationandMFNtreatment,aswellas
clearrulesfordomesticregulationbasedonGATSarticleVI.Byusinganegativelistapproach,
FTAshavealsoensured the inclusionofnewservicesaswellasmore flexibility.Mavroidis
(2017)additionallyhighlightstheinclusionofprovisionsagainstdatalocalizationmeasuresin
manyFTAs.236
AsystematicassessmentofFTAs in relationtodigital tradecould leadto findingthemost
useful provisions forpotentially including them inWTOagreements.237 Even thoughFTAs,
wherePartiesoftensharesimilarinterests,arenotdirectlycomparablewiththemultilateral
forumoftheWTO,whereinterestsofMemberscanbeverydiverse,theystillhighlighthow
theWTOcouldworktowardsbetteraddressingtheissueofdigitalizationoftrade.
235Hereandfollowing:Wunsch-Vincent2008,12-17.236Mavroidis2017.237Wunsch-Vincent&Hold2012,32.
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8.2AddressingopenbasicquestionsfortheWTOregardingdigitaltrade
Asshowninthispaper,theWTOasanorganizationisatadifficultpoint:whiledigitaltradeis
becominganincreasinglyimportantdisciplineininternationaltrade,resultswithintheWork
ProgrammeonElectronicCommercehavenotbeenachievedsofar,andopinionsondigital
tradeanditsliberalizationvarysubstantiallybetweenMembers.However,theWTOpossesses
a strong framework as a basis to address barriers to of digital trade, including rules on
transparencyandMFN,andisconsequentlystillthemostappropriateorganizationtocreate
bindingrulesformultilateraldigitaltrade.238
Beforedealingwithmoresophisticatedissues,theWTOwillhavetoaddressanumberofbasic
questionsthathavebeenoutlinedinthispaper.Indifferencetotradeingoodsandservices,
the development of an analytical framework including a defined terminology of what is
understoodbyelectroniccommerceordigitaltradeandindicatorsformeasurementisakey
preconditionforanyfurtherregulatoryworktobecarriedoutbytheWTO.Whilecommon
sensehasbeenenoughforunderstandingwhatisentailedbytheconceptsoftradeingoods
andservices,thisisnotthecasefordigitaltrade.
Thisdoesnotmeanthatanewdefinitionfordigitaltradehastobefound.Rather,thequestion
of defining the concept of digital trade for the purposes of the WTO could be seen in
connectionwiththequestionofapplicabilityofWTOagreementstodigitaltrade.
Fromthestandpointoftradeliberalization,atthefirstview,itwouldbemostbeneficialto
categorize all digitally supplied products as products ruled by theGATT,while all services
should remain subject to the GATS. Even though some indicators imply the potential
applicabilityoftheGATT,discussionsmostlypointtoclassifyingalldigitallydeliveredproducts
andservicesasservicesundertheGATSasindicatedearlier.
Ifdoneso,fromthestandpointofWTO-law,aformaldefinitionofwhatisincludedwithinthe
conceptofdigitaltradewouldthennotbenecessaryanymoreasallgoodswouldbesubject
totheGATT(leadingtotheneedtoadjustdeminimisasoutlinedinchapter4.2.1)whileall
services (including all digitally delivered products and services) would be subject to the
GATS.239Thebroadworkingdefinitionofelectroniccommercecouldbemaintainedsolelyfor
thepurposeoftheWorkProgrammeornewinitiatives.
238Burri2013,5.239Ofcourse,forthepurposesofstatistics,adefinitionfordigitaltrade,ordifferentdimensionsofdigitaltrade,willstillbenecessary.ThiswillequallybeimportantfordeterminingthevalueofcountermeasuresMemberscanimposeagainstotherMembersifthoseimplementbarrierstodigitaltrade.Researchanddiscussionson
61
TheframeworkprovidedbytheGATSseemstobewellequippedtoaddresscurrentandfuture
issuesinregardtodigitaltrade,legalcertaintyabouttheapplicabilityofGATSrulestodigitally
deliveredproductsandserviceswould,however,benecessary.EventhoughtheWTOdispute
settlementsystemhasledtosomeclarification,judicialdecisionscannotsubstitutepolitical
consensusonthesematters.240
ClassifyingallelectronicallydeliveredproductsandservicesasservicessubjecttotheGATS
wouldleadtoacoupleofimplicationsthatwouldneedtoberesolved.
Clarificationon the issueofhow to includeand classifynewarising services, forexample,
throughusingthemostcurrentCPC-listorthroughanautomatedinclusionprocess,isneeded.
Inthisregard,clarificationonthedifferentmodesofsupplyisnecessary.Aclearcommitment
formode1fordigitallysuppliedproductsandservicesbyMemberswouldbringclarity,not
only from a legal, but also from a political perspective. If consensus on this issue is not
achieved, thePanelandAppellateBodycould furtherexamine this issue in futuredispute
settlement cases related to digitally delivered products and services, based on decisions
alreadymade.Eventhoughthisdoesnotseemtobeanelegantsolution,sofar,ithasonly
beenthedisputesettlementsystembringingclarificationtoopenquestionsregardingdigital
trade.
Asaminimumsolution,MemberStatesshouldupdatetheirindividualGATSscheduleswith
regardtoservicesincludedandmodesofsupply.Thiswouldensurethattheircommitments
takefullyintoaccounttheeffectsoftheInternetontrade,giventhatmanyservicesnotexist
orexistedinadifferentmannerwhenscheduleswherenegotiated.TheWTO,inthisregard,
could support and guide Members, wanting to update their scheduled commitments, to
preventbroadde-liberalization.Inthisregard,theschedulingofentireservicesectorscould
beapossiblesolutiontoalsoincludenew,arisingserviceswithinanindustry.However,inthe
lightofMembersposingmoreandmorebarrierstodigitaltrade,successofthisapproachis
questionable,andde-liberalizationcouldbeapossibleresult.
theissueofstatisticalmeasurementiscurrentlycarriedoutbytheOECD,theWTO,UNCTAD,andotherorganizations,aswellasacademicscholars.Thosediscussionswillhavetobecontinued.240SeeBurri,Mira(2015):DesigningFuture-OrientatedMultilateralRulesforDigitalTrade.Sauvé,Pierre&Roy,Martin(eds.):ResearchHandbookonTradeinServices.Cheltenham,Northhampton:EdwardElgarPublishin;availablethrough:ResearchGate:https://www.researchgate.net/profile/Mira_Burri/publication/271803010_Designing_Future-Oriented_Multilateral_Rules_for_Digital_Trade/links/54d1d9ba0cf25ba0f041eb96/Designing-Future-Oriented-Multilateral-Rules-for-Digital-Trade.pdf,6.
62
Amoreusefulsolutionfromaliberalization-standpointwouldbetheintroductionofnegative
listsasdone inmanyFTAs: thisapproachwould lead toawidespread liberalization in the
services sector as, in the first place, all services would be fully scheduled, including new
servicesastheyarise.Governmentscouldthenmakerestrictionsspecificallytotheservices
they deem necessary. This would ensure new arising digital services to be automatically
included intheschedulesofallMembers, thus, leadingto further liberalization inthe first
place.However,whileMembersseemtobeopentothe inclusionofsuchnegative lists in
FTAs,implementationonamultilaterallevelseemsratherdifficult.
IfGATSrulesapply,practicalimplicationsofthequestiononhowtotreatdigitalproductsand
theirphysicalcounterpartswillhavetobeconsidered,eveniflikenessisnotgivenfromalegal
perspective.
Anotherimportantpointwillbetoaddressbarrierstodigitaltrademoredirectlyasdoneby
manyFTAs.GATSprovisionscovermostrelevantmeasuresrelatedtodigitaltradeasindicated
in chapter 5.4. However, this should be highlighted in a more straightforward way, for
example,byanexplanatorynoteoftheWTOSecretariat,summarizingkeyclarificationsofthe
PanelandAppellateBodywithregardtodigitaltrade.Memberscouldthendecideiftheywish
toincludeclearerlanguageintheGATSaddressingrelevantbarriers.However, it isequally
importantthatanykindofsolutiondoesnotharmthelevelofliberalizationalreadyexisting.
IfupdatingtheWTOagreementsisdesiredbyMemberstobetteraddressbarriers,language
couldbeusedfromexistingFTAs,suchastheCPTPP,includingoncross-borderdataflowsor
makingthecustomsmoratoriumondigitaltransmissionspermanent.
Another possible solution would be the negotiation of a new multilateral agreement on
electroniccommerceasmentionedearlier.However,besidesotherreservations,itcanhardly
be believed that a new multilateral agreement on electronic commerce could easily be
negotiatedwithintheWTOagainstthebackdropofthestalledDohaRound.
AplurilateralapproachasnowinitiatedatMC11ontheotherhandcannotbethesolutionfor
solvingopenbasicquestionsone-commerce,itcanonlybeaforumforfurtherdiscussions.If
onlyagroupofMembersadvancesontheissueofdigitaltrade,thiswillultimatelyleadtoa
fragmentation ofWTO-law regarding e-commerce as even basic questions have not been
answeredyetinthemultilateralforum.241Advancingonthesebasicquestionsonaplurilateral
basiscanhardlybeimaginedasimplicationsofclassification,GATSmodes,orapplicabilityof
241Comapreinthisregard:Baldwin2016b,114.
63
WTOagreementsarerelevantforallMembers.Asdigitaltransformationisaffectingmoreand
moresectorsoftheeconomy,questionsregardingdigitaltradeandcross-borderdataflows
mightbecomerelevantfortradeingoodsandservicesinallsectors.Asaconsequence,these
issues will need multilateral participation in order to be addressed and resolved, if the
multilateralnatureoftheWTOistobemaintained.Creatingaplurilateralagreement,besides
theriskoffragmentationofWTO-lawalsobearstheriskoffragmentationbetweenMembers:
countriesnotparticipatinginthefirstplacecouldfeelleftoutandtheirinterestswouldnot
berepresented,leadingtodisadvantagesfortheminthedigitaleconomy.Thiscouldpossibly
leadtoagreaterdigitaldividethanalreadyexisting.
8.3Overcomerootcausesofstandstill
Whileexistingliteraturemainlyfocusesdeliverablestobeachieved,242thoseapproachesdo
notgofarenough.Giventhestallednegotiationsone-commercefor20yearsnow,notonly
possibleoutcomeshavetobediscussed,butalsohowtoovercometherootcausesforthe
existingstandstilloutlinedinchapter7.
WhilechangingthewaytheWTOoperates(byconsensus)mightbetooambitioustodiscuss
atthispointinregardtodigitaltrade,otherissuescanbeaddressedinasimplermanner.
Theestablishmentofapermanent,moreflexibleforumformultilateraldiscussionregarding
digitaltradewouldbeimportantinthelightofspeedingupnegotiationsandimprovingthe
operationalworkone-commerce.Thosediscussionsshouldadditionallybemandatedtogo
beyondthescopeofthecurrentWorkProgramme,includingtoexplorepossibilitiesforrule-
makingaswellasexploringtheapplicabilityofGATSrulestodigitaltrade.TheJointStatement
by 71 Member States at MC11 and subsequent work can be a significant step into this
directionbutcannotbetheultimatesolutionasoutlinedinchapter8.2.
ManyMember States have reiterated the need for further work and discussions to fully
understand the implications of digital trade on their economy. Hence, building common
knowledgeamongstWTOMembersondigitaltradeanditsimplicationscouldbeoneofthe
keydeliverablesoftheWTOintheshort-term,possiblydrivenbytheWTOSecretariatand
backedbyotherMembers.ItwillbeessentialfortheWTOtoprovideaframeworkinwhich
noMemberStatefeels leftbehindordiscriminatedagainstothers.Giventhestrongdigital
242i.a.Burri2013;Burri2015;Farrokhnia&Richards2016;Fleuter2016;Lee-Makiyama2011;LópezGonzález&Jouanjean2011;Wunsch-Vincent2008.
64
dividebetweenadvancedanddevelopingeconomies243,itwillbecrucialtobuildbridgesand
includeallvoiceswithintheorganizationtomaketruetheWTOpromiseofamoreinclusive
internationaltrade,alsointhedigitalsphere.Inthisregard,capabilityandcapacitybuilding
programmesfordevelopingcountrieswouldbeawaytosupportMemberStatestobetter
benefitfromtheemergingdigitaleconomy.
In order to address the knowledge gap between trade policymakers and Internet policy
makers,theWTOandotherorganizationsfromthetradeambit,suchastheOECDorUNCTAD,
should enter into a regular, more coordinated dialogue with internet governance
organizations,forbothsidestolearnfromeachotherandtocoordinateInternetandtrade
regulationmoreclosely.244
IftheWTOistobetteraddresselectroniccommerce,itwillbeuponitsMemberstotakethe
necessarystepsandtomoveforward.Aslongascountriescontinuetoimplementbarriersto
digital tradeandmanyquestions remainunanswered, it is upon theMembers tobecome
moreactive infilingclaimsrelatedtodigital trade inordertoeliminatethosebarriersand
achievefurtherclarityontheapplicabilityofWTOrulestodigitaltrade.Whilemanyclaims
havebeenfiledrelatedtoclassicaltradeingoods,casesrelatedtodigitaltradehavebeen
rare.
Ultimately,inthelong-term,theissueofthescopeoftheWTOwillhavetobeaddressedas
theapproachofmainlyaddressingtradebarriersoftheanalogueworldmightnotbesufficient
tosucceedinthefuture.
ItwillbeimportantfortheWTOtodefinealltrade-relatedaspectsofthedigitaleconomythat
willberelevantforitsworkbesidesliberalization.TheEUandco-sponsorshaveproposeda
tentative frameworkmapping issues in four categories and numerous sub-categories that
couldserveasabasisforthewayforward.Categoriesincluderegulatoryframeworks,open
markets(liberalization),initiativesfacilitatingthedevelopmentofe-commerceandenhanced
transparencyofthemultilateraltradingframework.245Thisbroadspectrumshowsthemany
aspectsrelatedtodigitaltradepossiblyrelevantformultilateralregulationundertheauspices
oftheWTO.
243Seechapter2.2;inthesameregard:WTO(2017c):WTO-eWTP-WEFEnablingE-commerceLaunchEvent:RemarksbyDGAzevêdo.Online:https://www.wto.org/english/news_e/spra_e/spra206_e.htm.244SeeSingh,Abdel-Latif&Tuthill2016,115.245WorldTradeOrganization:CommunicationfromCanada,Chile,Colombia,Côted'Ivoire,theEuropeanUnion,theRepublicofKorea,Mexico,ParaguayandSingaporeof22July2016.WTODoc.JOB/GC/97/Rev.1.
65
Whilethispaperhasfocusedontheaspectofliberalizationofdigitaltrade,inlinewiththe
current agenda of theWTO, further research and work within theWTO will have to be
undertaken on other trade related aspects of digital trade with relevance for the WTO,
possiblybasedontheotherthreecategoriesproposedbytheEU.
Lessonscanbelearned,interalia,fromclassicaltradeingoods,whererulesonmanytrade
relatedissueshavebeenaddressedbytheWTObesidespureliberalizationoftrade,suchas
sanitaryandphytosanitarymeasures,trade-relatedenvironmentalmeasuresornon-product
relatedprocessandproductionmeasures.
Possiblesolutionscouldbetoworktowardsaninternationalframeworkthatissimilartothe
EU Digital Single Market, including rules on competition and stronger rules on non-
discriminationwithintheWTOframework,connectingdigitaltradewiththeUNSustainable
Development Goals (SDGs), as well as focusing on rights of consumers. The most recent
Facebook–CambridgeAnalyticascandalhasshownthatpure liberalizationofdigitaltrade
canleadtoimbalancesbetweenbusinesses,governmentsandcitizens,especiallyregarding
data. Thus, providing a balanced framework not solely focusing on liberalization will be
essential.
Otherissuestobeincludedcouldbethedevelopmentofinfrastructureorthefacilitationof
adopting new technologies, consequently leading to a more comprehensive approach.
Addressingtheissueofcorporatetaxationandspecificallytaxavoidancebybigdigitalplayers
willalsobeoneofthemajorchallengesrelatedtothedigitaleconomyinthenearfuture.In
thisregard,theWTOcouldserveasaforumfornegotiationsfortaxationindigitaltrade.246A
fair framework for taxationofe-commerceactivitieswith taxes fairlydividedby countries
wherevalueisadded247couldalsohelpdevelopingcountriesthatmightloseincomethrough
fewercustomdutiesasmoreandmore tradebecomesdigitized.A reformedWTO,witha
widerscope,couldalsoaddresstheseissuethatoriginallywerenotunderitsauspices.
However,thiswouldmeanforMemberstohandoversomeoftheirregulationsovereigntyin
theseareastotheWTO.AfactthatmostMemberswillhardlybewillingtodo.
246SeeChen&Smekal2009.247Valuecreationcould,forexample,possiblyalsoincludetheprovidingofdatabycustomers,notonlymonetaryvalue.
66
9.Conclusion
Thispaperhaspointedoutagreatnumberoftraderestrictivemeasuresthatgovernments
areimplementinginthedigitaleconomy,constitutinganewkindofdigitalprotectionism.It
wasshownthat theWTOframework isalreadywellequippedtoaddress thesebarriers, if
openkeyquestionsareclarified.TheWTOasanestablishedmultilateralforumisstilltheideal
placeforaddressingnewquestionsarisingaroundtrade,includingdigitaltrade.Itpossesses
widely accepted core principles, such as transparency and non-discrimination between
Members,aswellasa–still–soliddisputesettlementsystem.248Ashighlighted,aplurilateral
approachcannotbethesolutionforansweringbasicquestionsregardingdigitaltrade.Even
thoughtherecurrently isa lackofprogressatthemultilateral levelregardingdigitaltrade,
FTAscannotbethesolutionfordeterminingbindingrulesfordigitaltradeduetotheriskof
increasedfragmentationultimatelyharmingthemultilateralsystem.
Thispaperhas identifiedopenkeyopen issues for theWTOthatneed tobeaddressed in
relation to digital trade andhas indicated proposals for possible solutions. To do so, root
causesforthecurrentstandstill,outlinedinthispaper,needbeaddressed,inordertoachieve
progressmorequickly.TheGATS,ifapplied,providesasolidframeworkforaddressingrising
barriers in thedigital sphere as this paper has shown, even thoughmany issues could be
addressed in amore directmanner, ifMemberswished to do so.While theGATTwould
provide amore liberalized regime than theGATS, its application in regard todigital trade
seemsnottobeverylikelyasMemberswouldprobablynotbewillingtoliberalizedigitaltrade
tothatextent.FurtherresearchonapplicationofGATTrulestoe-commerceisnecessary.
For addressing digital trade in a comprehensive manner, widening of the scope of the
organizationwillbenecessaryandfurtherdiscussionsonthisissuewillhavetobeheld,going
beyondthescopeofthispaper.TheWTOisacreationofnationstatesandthereforegranting
the possibility to itsMembers to relatively freely regulate trade issues according to their
interests.The Internet,on theotherhand,hascreatedaborderlessdigitalworld,aglobal
248ThefunctioningoftheWTOdisputesettlementsystemiscurrentlyatriskduetotheUSblockingtheappointmentofAppellateBodyMembers.BySeptember2018,thenumberofmembersoftheAppellateBodywillbedowntothree,theminimumnumberofjudgesforthebodytocarryoutitswork(O’Grady,Sean(2018):TheWorldTradeOrganisationisterrifiedofDonaldTrumpandwillnotstoptheglobaltradewar.TheIndependent.Online:https://www.independent.co.uk/voices/world-trade-organisation-donald-trump-global-trade-war-tariffs-china-eu-a8285286.html;WTO(2018a):AppellateBodyMembers.Online:https://www.wto.org/english/tratop_e/dispu_e/ab_members_descrp_e.htm).
67
community, even though countries are starting to nationalise the Internet within their
borders.Somedosowithgreatsuccess,suchasChina.
Closenegotiationsandcooperationwith Internetgovernance relatedorganizationswillbe
necessarytoincludeallrelevantissueswithregardtotheInternetinanadequatemanner.
WithoutaddressingissuesrelatedtotheInterneteconomyanddigitaltradeatamultilateral
level,furthernationalizationoftheInternetmightbetheresult.
ItwillbeessentialnowfortheWTOtobringtogetheradvancedeconomies,wantingtomove
forwardontraderelated issuesofthedigitaleconomy,anddevelopingeconomies, feeling
thattheirinterestsarenotsufficientlyheard.Themultilateralforumwillhavetolistentothe
needsofallMembers,withaspecialfocusondevelopingeconomiesandLDCs.
Ultimately,bynotrespondingtonewemergingtradetopicsincludingdigitaltrade,theWTO
weakensitsposition.ThemultilateraltradesystemundertheauspicesoftheWTOiscurrently
atrisk.GiventhestalledDohaRound,manydiscussionshavebeenongoingonwhetherornot
theWTOisstilltheadequateforumforaddressing21stcenturychallengesoftrade,alsoin
relationtodigitaltrade.Criticshavecomefrommanysides,includingscholarsandMember
States.IntheUS,theTrumpadministrationhasleftnodoubtthatitseeslittlevalueinthe
organization.ByblockingnominationofjudgesfortheAppellateBody,itfurtherundermines
theworkoftheorganizationandmightultimatelyleaveitdysfunctional.
Beinganeasytargetiscertainlypartiallyduetohardlyhavingdeliveredanyresultssincethe
launchof theDohaRound,putting theorganization inaweakposition.Hardworkwillbe
necessarytomaketheWTOaptfor21stcenturychallenges,includingdigitaltrade,andforthe
organizationtoleavethecurrentcrisisstrongerthanithasbeenbefore.Deliveringresultson
openissuesrelatedtodigitaltradesoon,interaliabasedonproposalsforsolutionspointed
outinthispaper,couldbeonestepinthisdirection.
68
11.AnnexTable1:OpenbasicissuesfortheWTOregardingdigitaltradeandpossiblesolutionsIssues PossiblesolutionsDefinitionofe-commerce/digitaltrade - Keepworkingdefinition
- IfalldigitallydeliveredproductsandservicesaretobeservicessubjecttotheGATS,nofurtherdefinitionofe-commerceisnecessary
Needforclarificationofapplicabilityofagreements
- ClassificationofalltangiblegoodsincludingiforderedorpaidforviatheInternetasproductssubjecttoGATT
- ClassificationofalldigitallydeliveredproductsandservicesasservicessubjecttotheGATS
- (Possibly:classificationofalldigitallydeliveredproductsasgoodsundertheGATT)
- (ClassificationofallotherservicesasservicessubjecttotheGATS)
NeedforclarificationonGATSmodesofsupply
- ConsensusbyMemberstoclassifyasmode1- Untilagreedon:examinationofdifferentmodesofsupplybyPanel/AppellateBodyinnextDS-casesrelatedtodigitaltrade
NeedforMemberstoupdateGATSschedules
- IncorporationofmostfrequentCPC-list- Useofanegativelistapproach
Needtoaddressrisingbarriers - IfclassificationasservicesunderGATS:- RecognizethealreadyexistingprovisionsintheGATS,theAnnexonTelecommunications,the4thprotocoltotheGATS,andtheReferencePaper
- IncludelanguageintheGATSdirectlyaddressingrelevantissuessuchasdatalocalizationmeasuresbasedonlanguageusedinFTAs
- (IfclassificationunderGATT,workwouldneedtobecarriedoutrespectively)
Source:Ownelaboration
Table2:RootcausesofstandstillandpossiblesolutionstoovercomeRootcauses PossiblesolutionsOperatingofWTO,includingneedforconsensus
Longterm:WTOreformleadingtoamoreflexibleandagileorganization
OperatingoftheWorkProgramme Establishapermanentforumformoreactive,flexiblenegotiations
MandateoftheWorkProgramme Widenthescopeofthemandateincludingprovisionstowardsrule-making
Digitaldivide&knowledgegaps - BuildingacommonknowledgebetweenWTOMembersbycapacityandcapabilitybuildingthroughWTOSecretariatandMembersadvancedindigitaltrade
69
- EngagewithInternetgovernanceorganizationsinaregular,coordinateddialogue
MembersinactiveleadingtofewDSBcases
- MoreengagementandactivitybyMembersintheshort-tomid-termuntilclarificationisachievedonapolicylevel
NarrowscopeoftheWTO/TradeliberalizationfocusofWTO
WidenscopeoftheWTOinthelong-term:- IdentifytraderelatedissuesofdigitaleconomywithrelevanceforWTOpossiblybasedonproposalbytheEUandco-sponsors(JOB/GC/97/Rev.1)andincloseworktogetherwithotherorganizations
- Developmorecomprehensiveframeworkasdigitalizationaffectsmoreandmoreareasoftrade
Source:Ownelaboration
70
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