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WTO e-commerce moratorium and plurilateral talks: state of play

A lot is up in the air.

With next June’s twelfth World Trade Organization ministerial conference in Kazakhstan postponed and most meetings largely called off due to the COVID-19 global pandemic, there is now much less pressure on trade negotiators to meet a big deadline and secure deals.

So, what’s next in the digital trade sphere in Geneva?

What happens to the e-commerce moratorium?

There is the issue of whether to extend a two-year political moratorium on import duties on electronic transmissions, also known as the e-commerce moratorium.

India and South Africa, among others, are not keen, to say the least. One of the most recent concerns of these countries is the risk of government revenues being lost as trade becomes less goods-intensive and more digital.

The political trick every two years since the moratorium was introduced in 1998 has been to tie its extension to another moratorium India and others particular care about: a moratorium on ‘non violation complaints’ for the WTO agreement on intellectual property also known as TRIPs. That moratorium stops countries from suing others for not actually allowing them to benefit from TRIPs rules.

It’s not clear the ‘political linkage’ between the two files will work out this time round.

Last December, when it was due to expire, WTO members agreed to extend the e-commerce moratorium until MC12 hosted by Kazakhstan.

But it is unclear what happens now. Will the moratorium lapse in June, when the meeting should have happened, or will WTO members just keep on applying the moratorium until a new date is set for MC12?

“The decision that was taken by members says that the moratorium is extended to the 12th ministerial conference,” said Victor Do Prado, a senior WTO secretariat official overseeing the e-commerce portfolio. Do Prado said that most likely some governments would argue that this means the moratorium is extended beyond June. Nothing is settled yet, however.

In any case, the disagreements over the moratorium run deep enough to prompt some WTO members to make serious counter-arguments on lost revenues to their proponents, which have been encouraged by some studies by the UN body UNCTAD.

On 26 March, a group of twelve countries led by Switzerland circulated a piece to their counterparts arguing that economic gains from e-commerce outweigh any customs duty revenue losses.

Australia, Canada, Chile, Colombia, Hong Kong, Iceland; Korea, New Zealand, Norway, Singapore, Switzerland and Uruguay’s submission references to research by the Organisation for Economic Development and Cooperation which shows that “the overall benefits of duty free electronic transmissions outweigh the potential forgone government revenues due to the E-Commerce Moratorium.”

These exchanges are part of ‘structured discussions’ on the moratorium that WTO members agreed last December to hold by June, where they would discuss the ‘scope’ or the moratorium.

A workshop on the moratorium on 23 March was postponed until further notice.

Lack of adequate WTO digital infrastructure hampers e-commerce plurilateral talks

Negotiations on a plurilateral agreement on e-commerce that covers a whole range of new rules on digital trade were also de facto called off.

The talks agreed on at the 11th ministerial meeting in Buenos Aires in December 2017, then kicked-started in 2019, now include 84 WTO members (counting the EU as 27).

After a productive round of talks in February, meetings grounded to a halt.

This is not least due to the very un-digital nature of the way the WTO works. E-commerce negotiation rounds – orchestrated by Australia, Japan and Singapore – have so far been held in the WTO building in Geneva. The building is closed until end April so far.

Capacity to move negotiations online at the Centre William Rappard is very limited. WTO members want meetings to be leak-proof and safe and to be held in the three official working languges of the WTO English, French and Spanish.

Speaking to a US digital business audience – in a digital meeting – the WTO’s Do Prado said that if any such talks were to move ahead soon, “something ha[d] to give”, either the confidentiality or the language issues.

As of last Friday, the matter was not settled.

WTO members were confident earlier in 2020 that they could produce a ‘consolidated text’ for an e-commerce plurilateral agreement by early June’s MC12. “Given that there haven’t been meetings I think it would be difficult to meet that deadline, depending on when we can reopen the building. I would not be surprised if there is some delay in producing that consolidated text,” said Do Prado.

E-commerce negotiations are structured in eight ‘focus groups’.

Focus group A is about ‘enabling digital trade/e-commerce’ and covers basic trust issues such as e-signatures, e-contracts, spam.

Focus group B covers ‘openness and digital trade/e-commerce’ covers among others the most tricky issues of data flows, non discrimination in digital content, liability, and access to internet and data.

Focus group C is about ‘trust’, i.e. consumer protection, privacy and business trust.

Focus D is about ‘cross-cutting’ issues such as transparency, cybersecurity, capacity building, cooperation, domestic regulation, and a variety of legal issues.

Focus group E is about telecommunications, and focus group F is about market access.

Do Prado confirmed that market access issues also included discussions on a potential new extension of the other major plurilateral WTO agreement the Information Technology Agreement.

The most advanced areas of negotiations – where a common text is practically ready – is that pertaining to Focus group A.

The EU is lobbying for a WTO Telecommunications reference paper to be adopted by all participants in the e-commerce talks. Responding to critics and sceptics, the EU argued that its proposal does not seek to unduly restrict members ‘policy space’ on telecommunications regulation and market access but to reiterate existing commitments in GATT and GATS, and to prevent abuse of the national security exception.

Negotiations in the Focus group D on cross-cutting issues are yet in their infancy.

Now back to the e-commerce moratorium: some participants in the e-commerce plurilateral have considered extending the moratorium amongst the participants in these negotiations should the extension at or by MC12 fail.

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