E-commerce & services, Latest news, Other JSI, World Trade Organization

WTO: Permanent import duty ban challenges e-commerce deal 

The final draft text of the so-called ‘joint statement initiative’ agreement on electronic commerce includes a commitment to refrain from imposing import duties on e-commerce transactions. 

If agreed, all 90 negotiation participants will not place tariffs on e-commerce transactions even if the current general World Trade Organization moratorium expires as scheduled in under two years. 

“No party shall impose customs duties on electronic transmissions between a person of one party and a person of another party,” says Article 16.3 of the draft agreement. 

This text will pose a particular challenge for a number of JSI members who are opposed to a permanent moratorium.  

European Union negotiators expect some of the participants to drop out of the process rather than sign up to such an agreement – although they are hoping to keep the number of such dissenters down to just a handful. 

An agreement was reached at the MC13 WTO ministerial meeting at the end of February to extend the current temporary moratorium for another two years.

But the agreement states that the moratorium “will expire” on the date of the next ministerial meeting early in 2026. 

At least six JSI members oppose import duty ban 

Thus far, the proposed ban on e-commerce duties within the JSI agreement is explicitly supported by only 50 participants – 27 of these are EU member states. 

At least six participants stated their opposition to the inclusion of a permanent ban. These include Indonesia – a high-profile opponent of the moratorium extension at MC13 – as well as Brazil, China, Malaysia, Thailand and Turkey. 

One lobbyist told Borderlex that at least four other members were unhappy about the customs duties clauseand the views of the remaining members were currently unclear. 

The 33-page e-commerce text is set out for the first time in the form of a legal treaty, with 40 articles grouped under seven broad thematic headings. 

Much of the text is exhortative in nature. The phrase “shall endeavour…” features 30 times in the text. 

But the section on customs duties is a high-profile exception to this rule.  

It states that “no party shall impose customs duties on electronic transmissions…” It also clarifies that this interdiction covers “the content of the transmission” as well as the data transfer itself. 

“For greater certainty, [the ban on import duties] shall not preclude a party from imposing internal taxes, fees or other charges on electronic transmissions in a manner consistent with the WTO agreement,” the article adds. 

Co-convenors table clean text prior to ‘final’ review on 22 April 

The final text of the e-commerce JSI negotiations which is now under scrutiny by participants contains no alternate versions or square brackets, and thus represents ‘clean text’, in the Geneva jargon. 

Participating members have not reached agreement on the text. 

The three co-convenors of the negotiations – Australia, Singapore and Japan – stated in a foreword to the agreement that they “take sole responsibility for this chair’s text”. 

They said the text “reflects our judgement on where consensus is most likely to be achieved in the agreement”. 

The next JSI meeting is scheduled for the week of 22 April where members will embark on what the co-convenors hope will be a final review of the text. 

“The chairs’ text will be shared with all members for finalisation of the agreement, which members hope to do before the summer,” a Geneva-based trade official told Borderlex. 

Text finalised on cryptography and telecoms 

The negotiations have been up and running since December 2017. Many of the provisions of the agreement were settled some time ago. 

But negotiations on the article covering ICT products that use cryptography have been continuing until very recently. 

The draft agreement would ban governments from requiring exporters to ‘provide access to any proprietary information relating to cryptography’.  

There is an exception to this rule for legal investigations, or for cases which involve national security. 

The draft agreement requires each party to ensure that its national telecommunications regulatory authority ‘does not hold a financial interest or maintain an operating or management role in a supplier of public telecommunications networks and services’.  

The agreement also includes articles on e-authentication and e-signatures, e-contracts, paperless trading, open government data, online consumer protection, unsolicited commercial electronic messages and transparency.  

As well as electronic transactions framework, cybersecurity, open internet access, e-invoicing, single windows and personal data protection. 

The text says nothing on restrictions of data flows, localisation of data, or access to source code. 

As participants were unable to reach an agreement in these politically contentious areas, they have been left out of the agreement. Although a clause in the text makes clear that the agreement may subsequently be amended if there is a consensus to do so. 

Rows ahead over integration into WTO treaty ‘architecture’ 

If the text is agreed by the JSI members at some point this summer, as currently scheduled, it will only mark the starting point for further difficult political negotiations over the legal status of the e-commerce agreement. 

The co-convenors want the text to be adopted under Annex 4 of the WTO agreement. This would establish the deal as a recognised plurilateral agreement which binds only its signatories. 

This needs to be agreed by the unanimous consent of all WTO members – including those which had not participated in the e-commerce negotiations. 

An attempt to have the recently-concluded plurilateral agreement on investment facilitation approved in the same way at MC13 was blocked by India and a small group of allies. 

This was because of fundamental objections voiced by these countries over the legitimacy of WTO negotiations which are not conducted on a multilateral basis. 

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