On February 27, 2024, the Digital Trade Alliance hosted a side event at the 13th Ministerial Conference (MC13) of the World Trade Organisation (WTO), titled ‘The Implications of Digital- Related Issues at MC13 and Beyond”.
Moderated by Rishab Bailey, Research Director at the Digital Trade Alliance, the event brought together an expert panel featuring Professor Jane Kelsey (emerita) from the University of Auckland, Sanya Reid Smith from Third World Network, Daniel Rangel from Rethink Trade, Sofia Scassera from Transnational Institute, and Melanie Foley from Public Citizen to explain some of the key digital economy-related issues being discussed at the WTO and how they are likely to affect regulation of the digital ecosystem.
The MC13 negotiations touched on a range of issues critical to how governments are able to govern the digital ecosystem, including the much debated Moratorium on applying tariffs to electronic transactions. In addition, negotiations were also expected to continue on the plurilateral Joint Statement Initiative (JSI) on E-Commerce, outside the mandated Work Programme on E-Commerce in the WTO. Typically, the debate on digital-related issues at the WTO has been contentious. There are differences related to the legality of the JSI process, as well as substantive concerns about the impact of provisions concerning taxation, data flows, non-discrimination, and more on the ability of countries to regulate the digital ecosystem.
In this context, Professor Kelsey pointed out that historical plurilateral agreements are fundamentally different to the E-Commerce JSI. Historically, certain plurilateral agreements were mandated by the WTO. However, current JSIs lack a mandate and are not negotiated through authorized bodies, but instead run in parallel to legitimate WTO processes such as the 1998 Work Programme on E-Commerce. The JSI on E-Commerce adopts positions put forth by Big Tech companies and attempts to force these through the WTO, thereby pushing these policies on the rest of the world. The few developing countries in the JSI have attempted to carve out policy space for themselves in the form of exceptions and carve-outs. However, all these exceptions have been left out of the current JSI text. Given the recent change in the United States’ position pertaining to a number of contentious provisions, negotiators are now left with an E-Commerce “light agreement, showing the difficulty in finding consensus on contentious issues. Nonetheless, the current text glosses over points of disagreement, and it remains unclear whether the current text will actually be agreed on.
Sanya Reid-Smith pointed to how a number of provisions that are commonly seen as non-controversial, such as those on electronic authentication or electronic contracting, could also cause problems for developing countries who may lack the regulatory and technical capacities to implement them. Noting that the implications of going electronic were significant, she pointed out how developing countries in particular may not be well positioned to take advantage of such technological developments. Further, the exceptions under international agreements did not provide sufficient flexibility to developing countries to regulate the digital ecosystem in their interest. This is also seen in the context of the E-Commerce Moratorium, which has a significant impact on revenues and trade balance of developing countries. The Moratorium largely benefits developed countries, who are the major exporters of digital products and services.
Daniel Rangel argued that, while implementing consumer protection measures at the international level — as the JSI appears to do — is welcome, the current text does not achieve this in a satisfactory manner. Certain critical rights — such as the right to repair — could be included in international agreements. Instead, a number of recent trade agreements include provisions that would restrict the ability of countries to require scrutiny of algorithms and source code, which would harm consumers.
Melanie Foley addressed the change in the U.S. position at the JSI and misinformation around the possible effects of this change. She pointed out that fears about authoritarian governments “writing the rules of the road” for the Internet are misplaced since the U.S. and other western countries continue to be a part of the JSI negotiations. Melanie also noted that the U.S. government is going in a positive direction by listening to their constituents and taking the necessary steps to try and regulate the excessive power that Big Tech enjoys.
Sofia Scassera argued that the Moratorium had outlived its utility and was no longer required, particularly in regard to the costs imposed on developing countries. Clarifying that a number of countries had refused to accept that the Moratorium applied to the content of electronic transactions, Sofia explained how taxation of the digital economy was vital to ensure fairness in the digital economy. Addressing common misconceptions about the Moratorium, such as the difficulty in imposing taxes on electronic transactions, Sofia pointed out how various mechanisms are already being used by multiple jurisdictions to implement different types of taxes on digital platforms. Further, countries have historically protected certain products under the General Agreement on Tariffs and Trade (GATT) framework, but the Moratorium attempts to bring digitized versions of these same products outside the GATT framework.
The panelists also addressed issues of regulating cross-border data flows, particularly in view of the U.S. adopting new regulations that seek to restrict flow of sensitive data to certain foreign countries, as well as broader issues related to taxation of Big Tech companies and the future of JSI negotiations.
