Bridging the Digital Trade Law Gap: WTO E-Commerce Joint Statement Initiative
The disruption of COVID-19 has brought about an acceleration of several underlying social and economic trends. The digital transformation of the global economy, already well underway prior to the pandemic, has gathered pace over the past year as we all spend more time working, shopping and communicating online.
E-commerce has been a lifeline for many businesses throughout the crisis and will be crucial in the recovery to follow. In the United States, the share of e-commerce in total retail, which had only slowly increased from 9.6 per cent to 11.8 per cent in the preceding two years, spiked to 16.1 per cent between the first and second quarter of 2020. This represents several years ’ worth of growth in a period of months.
This unprecedented growth has underscored the urgency of developing a global set of rules on digital trade capable of meeting the needs of the modern economy. While existing World Trade Organization (WTO) rules have generally served Australia ’s interests well, they were mostly agreed at a time prior to the emergence of e-commerce as a key component of global trade and are therefore not specifically adapted to addressing some of the unique challenges and opportunities of the digital economy.
The ongoing E-Commerce Joint Statement Initiative negotiations are an effort to address this gap in global trade rules. Negotiations were launched in January 2019 and now include 86 WTO Members, together accounting for more than 90 per cent of global trade and representing all major geographical regions and levels of development. Australia is leading the negotiations, together with fellow co-convenors Japan and Singapore.
Participants are aiming to achieve high standard outcomes that build on existing WTO commitments, deliver meaningful benefits for businesses and consumers, and include as many WTO Members as possible. Australia values these negotiations both for their commercial and systemic value. The initiative demonstrates the WTO ’s continued relevance as a rule-making body that can address modern trade issues. There has been good progress in the negotiations so far, including reaching the important milestone of a consolidated negotiating text in December 2020. The consolidated text highlights particularly strong progress in areas such as e-signatures and authentication, paperless trading, customs duties on electronic transmissions, open government data, open internet access, consumer protection, spam and source code.
Provisions that enable and promote the flow of data are key to a high standard and commercially meaningful outcome. Data flows increasingly and for many years to come will enable the delivery of services, as well as the movement of finance and ideas. Virtually every cross-border transaction has a digital element. Investors send huge volumes of data internationally in their daily operations. Requirements to store data locally or restrict its flow across borders therefore risk major disruptions to global trade.
Many participants also see a permanent commitment not to impose customs duties on electronic transmissions as a key part of the final package. An existing moratorium on such duties agreed between WTO Members in 1998 and periodically rolled over since, has been critical for the growth of digital trade, providing business with better access to more markets and consumers more choice.
Discussions on these issues will be an important focus in 2021. These are areas in which some of the key participants have very different regulatory approaches and previous trade agreement practices. Australia believes that it is both possible and necessary to reconcile these different approaches. It is the expectation of industry and the public that we find a way to do so.
The 12th WTO Ministerial Conference, due to be held later this year, will be an important milestone, and the negotiations will intensify in coming months to ensure substantial progress can be achieved by that meeting.
There is an important role for businesses and civil society stakeholders to play, both in informing the substance of negotiations and in building support for the conclusion of ambitious disciplines. Interested stakeholders are invited to contact the Department of Foreign Affairs and Trade ’s Digital Trade team, at firstname.lastname@example.org to discuss their priorities in the negotiations.