WTO members concluded a plurilateral agreement on e-commerce after five years of negotiations.

If and when the agreement comes into force, it will represent the first set of global ground rules for digital trade.

A statement released by the three co-convenors of the so-called ‘joint statement initiative’ – Australia, Japan and Singapore – confirmed that participants had “achieved a stabilised text”.

The new agreement “recognise[s] the importance of global electronic commerce and the opportunities it creates for inclusive trade and development, and the important role of the WTO in promoting open, transparent, non-discriminatory and predictable regulatory environments in facilitating electronic commerce,” the co-convenors said.

“The agreement is set to benefit consumers and businesses involved in digital trade, especially MSMEs. It will also play a pivotal role in supporting digital transformation among participating members,” their joint statement adds.

United States wants stronger security exceptions

Nine of the 91 participants in the negotiations – including the United States – declined to be associated with the declaration.

A footnote stated that “due to ongoing domestic consultations and considerations, this statement is circulated on behalf of joint statement initiative participants, except for Brazil, Colombia, El Salvador, Guatemala, Indonesia, Paraguay, Taiwan, Türkiye and United States”.

The US government said the text released today represented “an important step forward for the WTO in a sector of growing importance to the global economy while demonstrating the supportive role that JSIs can play in revitalizing the WTO’s negotiating function”.

But it added: “As the United States has repeatedly communicated to the co-convenors and participants, the current text falls short and more work is needed, including with respect to the essential security exception”.

“We look forward to working with interested members in finding solutions to all remaining issues and moving the negotiation to a timely conclusion.”

Dissenters focus on permanent ban on import duties on e-commerce transactions

The other eight dissenters primarily have issues with the article which commits its signatories to a permanent ban on the imposition of import duties on digital transactions.

This clause is subject to a review five years after the agreement enters into force. But the text of the agreement may only be amended by unanimity: this makes a reversal of the commitment not to impose duties highly unlikely in practice.

Countries such as Indonesia, Brazil and Türkiye have repeatedly expressed concerns about being compelled to give up the option of applying import duties on digital products.

A global moratorium on the imposition of duties on digital products has been in force since 1998 and renewed at the WTO every two years.

The future of the moratorium hangs in the balance. At the MC13 ministerial conference in February, WTO members said deal will lapse in 2026 unless extended by unanimity once again.

The threat of a lapse gives added significance to a plurilateral commitment by a group of WTO members who encompass between them around 90% of global digital trade to keep digital cross-border transactions duty-free.

What’s in the agreement

The ‘Agreement on Electronic Commerce’ as it is now officially called, runs to 38 articles, plus a two-page annex on telecommunication services.

The provisions are classified under five broad themes.

Enabling electronic commerce: This section includes provisions on maintenance of an electronic transactions framework, electronic authentication and e-signatures, electronic contracts, electronic invoicing, paperless trading, the creation of ‘single windows’ for data submission, and electronic payments.

Openness and electronic commerce: This part includes an article banning customs duties on electronic transmissions, as well as provisions on open government data and access to the internet.

Trust and electronic commerce: This section includes articles on online consumer protection, unsolicited commercial messages (i.e. ‘spam’), and personal data protection.

Transparency, development and cooperation: This part contains articles on each of these three themes in turn. The article on development specifies that developing countries and LDCs may have a grace period of up to 7 years to implement provisions which they may find tricky, and that financial support should be made available to them.

Telecommunications: The agreement states that “each party shall ensure that its 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 accord consists of a number of firm legal commitments interspersed with looser expressions of intent. The word ‘endeavour’ appears 32 times in the text, while the word ‘encourage’ makes 11 appearances.

In many cases – such as personal data protection – the agreement does little more than require participant countries to apply and maintain legislation to govern this topic.

Attempts to reach agreement on basic principles to govern such regimes foundered in the negotiations, given the very differing approaches taken in jurisdictions such as the EU and US.

Nevertheless, even the minimalist principles set out in the accord are viewed by most observers of being of value, given that some of the developing countries involved in the negotiations do not currently have such regimes in place.

Review within two years

The agreement is designed to grow and evolve, in recognition of the rapidly-developing digital trade environment.

Signatories are due to review of the agreement “no later than two years after the date of entry into force of this agreement, and periodically thereafter,” the text says.

“Taking into account the evolving nature of electronic commerce and digital technology, and recognizing the importance of establishing global rules for electronic commerce […] the parties recognize that further negotiations may include outstanding issues […].”

This gives the participants the option of returning to questions which were left out of the final agreement because of failure to reach consensus.

These include provisions relating to data transfers, localisation of data storage, or transfers of source code.

India likely to oppose incorporation into WTO law-book

The agreement would be governed by the general WTO dispute settlement process, which would give the non-optional elements of the accord some teeth.

But access to dispute settlement will be dependent on whether or not the agreement is ultimately incorporated into the WTO’s treaty architecture, as its proponents would like.

Earlier this week, a small group of countries led by India and South Africa blocked a second attempt to have a similar plurilateral agreement, covering investment facilitation, accepted as a full WTO agreement.

The objections of these two countries – who were not among the 91 participants in the talks – are expected to extend equally to the new e-commerce agreement.

Governments and business welcome deal

The deal has nevertheless been welcomed by governments around the world, and by business organisations.

The European Commission said it “proudly supports” what it described as “the first-ever set of global digital trade rules”, while the UK government said that “global adoption of digital customs systems, processes and documents could significantly grow the UK economy”.

The Global Services Coalition and Asia Pacific Services Coalition said that the deal “will be the defining 21st century moment for the multilateral trading system and not a minute too soon for global economic development, MSME revival and jobs growth.”

“Today’s announcement demonstrates that the WTO negotiating function can deliver through a plurilateral process,” said Annette Meijer, president of the European Services Forum.

“This deal has the potential to deliver benefits for European businesses in every sector of the economy and to reduce the cost and complexity of international commerce and support trust and security for European consumers” added Pascal Kerneis, the Forum’s managing director.

To read the full article as it was published by Borderlex, click here.