As World Trade Organization member states grapple with increasingly disappointing conditions at their February 26-29 ministerial meeting in Abu Dhabi, a small ray of light has shone in the gloom surrounding preparations for the Geneva meeting.
The 90-nation Joint Statement Initiative (JSI) negotiations on e-commerce, which seemed dead just a few weeks ago, have unexpectedly been revived. A realistic recalibration of goals will be at the heart of the negotiations, raising hopes that ministers representing the participating countries will reach an agreement at the meeting.
These negotiations were by no means smooth sailing. Launched at the Buenos Aires Ministerial Conference in 2017 along with a handful of other JSIs, the Multilateral System for Electronic Commerce began with high expectations. The initial idea was to establish what would become a global standard for cross-border data flows, data localization, and forced transfer of source code. However, negotiations on these political topics quickly reached a stalemate. Since then, much of the agenda has focused on fundamental issues such as electronic contracts, consumer protection, electronic signatures, and spam.
The Washington government has long championed achievements that support the free flow of data, few requirements for keeping data on local servers, and a ban on forced transfers of code. China rejected all three proposals, while the European Union sided with the US government, calling for stronger safeguards for data privacy and security. But in October, the Office of the U.S. Trade Representative reversed course, withdrawing support for the position it had once held firmly.
U.S. trade officials said no one should have been shocked. Agreement among all 90 WTO members on the three contentious issues never materialized because of China's opposition and the United States' extreme reluctance to accept an outcome that would leave China on the sidelines. Ta. While this may be true, the US's concern for appearance was a body blow to negotiations.
But the three ambassadors who led these talks – Australia's George Mina, Japan's Kazuyuki Yamazaki and Singapore's Tan Hun Sen – remained calm and deftly shifted their focus. They knew that developments in technological issues would not make headlines, while the WTO agreement, which provides a predictable, standardized and transparent framework for e-commerce, would reduce transaction costs and open new markets. We also knew that small businesses around the world understood the potential access we could bring.
Taking the 12 trade-related issues that are largely agreed upon and adding provisions on privacy, telecommunications and electronic payments would create a bit of a consensus. However, as is often the case at the WTO, there were disagreements. Almost all 90 countries participating in the negotiations wanted to make the WTO-wide moratorium on the application of tariffs on electronic commerce permanent.
Disturbingly, efforts by India and South Africa to lift the 1998 moratorium, which has been postponed at every ministerial meeting since the turn of the century, appear likely to succeed. Such an outcome could cause many U.S. companies, long disinterested in an organization they consider dysfunctional, to throw in the towel at the WTO.
Even a commitment to make the moratorium permanent among the participants in the JSI negotiations is unlikely, as Indonesia, Turkey, and perhaps Brazil also support expiration. Still, the pledge by 87 member states to make the moratorium permanent will send a message about which countries are interested in actively engaging in digital trade and which are not. .
E-commerce JSI proponents aren't celebrating yet. Neither India nor South Africa are party to the Multilateral Agreement on Electronic Commerce, nor are they part of any other JSI. That is one reason why these plurilateral negotiations have been so successful while the rest of the WTO's negotiating agenda has stalled. Supporters of the e-commerce negotiations fear New Delhi and Pretoria could use legal means to challenge each WTO member's commitment to support the deal, with a major announcement coming in Abu Dhabi. You're underestimating the possibility.
This can prolong the situation and create legal uncertainty. However, the realization of the threatened legal challenge, especially since the streamlined and more efficient trading conditions resulting from the e-commerce agreement will apply without discrimination to all WTO members, including those not party to the agreement. The possibility is questionable. Moreover, the threat of legal action rings hollow as the WTO dispute settlement system has been frozen following the US action to suspend the appeals process. Considering this, many members are ready to continue and let the saboteurs do what is best for them.
The end of the moratorium could have implications for the broader and long-dormant multilateral e-commerce work program, in which India and South Africa suddenly showed interest once JSI negotiations began. The future of less ambitious (non-negotiated) multilateral talks is uncertain. The work program, as well as the moratorium, was agreed at the 1998 Ministerial Conference, and the two issues have remained closely linked ever since. If the suspension ends, the work plan may also be discarded.
Many in parliaments, the private sector, and trade ministries around the world were disappointed that the most ambitious elements of the e-commerce negotiations were stripped away. But what remains within the grasp of negotiators has significant value, especially for small businesses, and should be pocketed. Such an outcome would give the WTO a decent start in laying the foundations for global digital trade rules.
