ChapterPDF Available

Towards Coherent Rules for Digital Trade: Building on Efforts in Multilateral versus Preferential Trade Negotiations

Authors:

Abstract and Figures

The rapid development of the Internet as well as of other information and communication technology (ICT) has led to increased electronic cross-border delivery of services and digital products such as sound recordings, audiovisual works, video games, computer software and literary works. While regional trade agreements increasingly innovate as regards the incorporation of chapters on e-commerce, the cross-border delivery of services, and the inclusion of new Internet-related provisions on intellectual property rights in the online context, on the multilateral level, no substantial progress has been achieved since the end of the Uruguay Round. This paper reviews the progress made in bilateral and multilateral trade agreements in securing liberal digital trade, understood as the electronic cross-border trade of services and digital products. Provisions that concern new IPR rules specific to digital trade are also looked into. Building on these enquiries and taking into account the complexity of the regulatory environment, the paper discusses digital trade rules are needed today and in the future. Forthcoming in Mira Burri and Thomas Cottier (eds.), Trade Governance in the Digital Age (Cambridge: Cambridge University Press, 2011).
Content may be subject to copyright.
A preview of the PDF is not available
... 4. The literature also suggests that the attention has shifted over time from the WTO to PTAs as the prime location for rule-making resulting from diverging interests among WTO Members. In line with increasing politicization in the context of the WTO, we also witness PTA commitments that vary considerably (Wu, 2017;Wunsch-Vincent and Hold, 2016). 5. To a certain extent, the diverging PTA templates reflect what Aaronson and Leblond (2018) refer to as a 'new digital divide'. ...
Article
For a long time, the World Trade Organization (WTO) has been seen as the privileged multilateral regime to regulate trade. However, given its slow progress in negotiating new trade rules, countries have increasingly shifted their focus to preferential trade agreements (PTAs) since the early 2000s. Focusing on a timely and increasingly important topic (digital trade), we explore how countries’ interactions in the WTO impact on their approaches in designing rules in PTAs. Using newly collected data on digital trade‐related provisions in almost 350 PTAs signed since 2000, we find that countries’ participation in digital trade‐related initiatives at the WTO spill over to the design of their PTAs. More precisely, we show that countries which actively participate in the discussions of the WTO Work Programme on Electronic Commerce are more likely to negotiate ambitious commitments on digital trade in their PTAs. Furthermore, our analysis indicates that countries which participate in the WTO‐based plurilateral Information Technology Agreement (ITA) are more likely to commit to deeper cooperation in the area of digital trade. More broadly, this article contributes to our understanding of the dynamics of regime complexity and how interaction in the multilateral system spills over to regional and bilateral trade regimes. Given that the EU, China and others differ in their regulatory approach towards digital trade, it can well be that e‐commerce debates in the WTO will become increasingly salient and politicized over time.
Chapter
The multilateral framework of the WTO, by virtue of its principles of non-discrimination, its transparency requirements, and its enforceability through the WTO dispute settlement system, has proven capable of facilitating global economic liberalisation in the industrial economy of the twentieth century. However, the incumbent system of international trade governance does not adequately address the socio-economic transformation and the complex trade policy challenges presented by a data-driven digital economy. The nexus of digital trade and data privacy in its conceptual ambiguity and polycentric normative underpinnings epitomizes the exigent challenges for trade governance in a global digital economy. This chapter examines and develops approaches for a recontextualisation of trade law against the backdrop of digital globalisation as well as for a reconciliation of digital trade and data privacy.
Chapter
Given the heterogeneity of national data privacy standards, which have a significant impact on digital trade, the role of trade law in mitigating the resulting conflicts requires an in-depth examination. The analysis of the digital transformation of trade has revealed that a significant share of the regulatory challenges related to trade in the digital economy—notably the regulation of cross-border data flows—are inextricably linked to trade in services. This chapter will therefore examine potential conflicts between obligations under national data privacy regimes and multilateral trade law obligations as well as the regulatory responses of the GATS to the nexus of digital trade and data privacy. Furthermore, trade agreements that are currently serving as “laboratories” for the development of transnational data governance will be analysed with regard to their response to the nexus of digital trade and data privacy.
Chapter
International economic law faces a variety of challenges arising from digital business models and an increasing convergence of global markets in the era of digital globalisation. Against the backdrop of a successful tradition of multilateral regulation, the rule-based system of global trade law has been mobilised to address some of the transnational challenges related to digital globalisation. The convergence of trade governance and digital governance has put significant pressure on the pre-existing international trade regime. The cross-cutting challenges of the digital transformation involve all areas of the multilateral trade framework for goods (GATT), services (GATS) and trade-related aspects of intellectual property (TRIPS) implemented by the 1994 Marrakesh Agreement establishing the World Trade Organization (WTO). This chapter addresses the phenomenon of the digital transformation of cross-border economic activity in the context of the regulation and governance of global trade under multilateral trade law and current trade agreements.
Article
Full-text available
Rulemaking in digital trade is proceeding apace. Many preferential trade agreements contain dedicated e-commerce or digital trade chapters and some states have entered into stand-alone digital economy agreements. This article seeks to establish whether, and to what extent, normative change is occurring in digital trade agreements, the nature of any changes, and identify which states are acting as norm entrepreneurs. We employ a new method of legal coding, systematically comparing the nature and prescriptiveness of digital provisions in 12 trade agreements concluded between 2019 and 2023. We find evidence of substantial policy innovation, and identify Singapore as the key norm entrepreneur. A new wave of ‘Singapore-led’ agreements substantially expands the scope of digital trade, to cover areas such as digital identities, e-invoicing and e-payments, the governance of AI, and regulation of new digital technologies. Commitments are typically couched as soft rather than hard law, reflecting the nascent stages of rulemaking. Norm entrepreneurship on the part of Singapore and its allies reflects a desire to position themselves as ‘digital hubs’ in the global economy, spur rulemaking in areas where innovation is ahead of regulation, and promote digital interconnectivity at time of regulatory divergence and geopolitical rivalry.
Chapter
This chapter explores the far-reaching effects of the digital transformation on trade and trade law. It first sketches the state of affairs under the multilateral forum of the World Trade Organization (WTO) and, second, analyzes the more deliberate regulatory responses to the challenges of digitization formulated in free trade agreements (FTAs). The focus here is placed on distinct advanced models of digital trade regulation, such as the Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP), as well as on particular forms of legal innovation, such as the new generation of Digital Economy Agreements. By looking at specific agreements, the chapter also demarcates the positioning of key stakeholders, in particular the US, the EU, and China, and contributes to the understanding of the dynamic and contentious landscape of global trade law, as reshaped by digital transformation in recent years. This chapter finally asks whether the emergent regulatory environment is adequate to match the data-driven economy and whether certain pitfalls of international cooperation and path dependencies hinder this.KeywordsDigitizationData flowsData-driven economyInternational trade lawFree trade agreementsWorld Trade Organization
Chapter
Full-text available
The chapter starts with a brief look into disruptive technologies and discusses the Internet as a discrete type of general purpose technology (GPT). It then explores the sweeping effects of digitization at different levels of the economy and on trade and trade policies. In order to understand what needs to be changed or at least calibrated in existing external trade policies, we also need to know what we have in terms of existing regulatory frameworks. It is the objective of the chapter’s third part to attend to this need, as well as to show how selected countries have responded to the digital challenge and formulated distinct or less distinct responses in their respective trade policies. The focus here is placed on the newer and most advanced templates in the area of digital trade law - those of the Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP) and of the United States Mexico Canada Agreement (USMCA). The chapter goes on to contextualize and assess the impact of the existing legal framework, as shaped by preferential trade agreements. In its last part, the chapter asks whether there are better ways to address the data-driven economy and what the essential elements of such a model may be.
Article
Digitisation has significantly impacted international trade. This book explains the impact of digitisation on trade in services, the ensuing concept of 'digital services' and the different types of trade barriers these services face. This book establishes that the legal framework that applies to trade in services also applies to digital services. It elaborates on the scope of the General Agreement on Trade in Services (GATS) and how to classify digital services. The relevant GATS obligations are subsequently applied to several case studies that illustrate the barriers to digital services trade. These case studies demonstrate the impact of the applicability of GATS to digital services on countries' international obligations. Finally, the book maps the electronic commerce-related provisions in in regional trade agreements (RTAs). Six extensive e-commerce RTAs are compared in depth and it is considered whether they add substantially to the existing multilateral obligations applicable to digital services trade.
Article
The World Trade Organization (WTO), a unique multilateral trading regime, has failed to establish its relevance to the digital nature of trade. This article revisits the ‘principle of technological neutrality’ to make the cross-border supply of services by electronic means subject to the current rules-based trading regime. I argue that the principle of technological neutrality could help resolve a number of thorny legal issues: confirming the applicability of the General Agreement on Trade in Services (GATS) rules to the delivery of services by electronic means; providing a guideline to determine the likeness of services in the era of digital trade; and backing up an evolutionary approach to interpreting the GATS schedules of commitments. However, the WTO adjudicatory bodies have been reluctant to rely on the principle of technological neutrality, which is referred to as strategic neutrality in this article. This article urges the WTO adjudicatory bodies to abandon their strategically neutral position on technological neutrality immediately. It also explores ways to incorporate the principle of technological neutrality into the world trading system at the bilateral, plurilateral, and multilateral levels.
Article
Full-text available
The article highlights the controversial issues of the state, contradictions and trends of modern globalization in the face of new challenges and threats associated with political, immigration, pandemic, climate, economic and trade shocks – Britain’s exit from the EU, the implementation of the US President’s policy “America Above All”, the beginning of trade de-globalization as a result of the revision of free trade agreements (FTAs) and the trade “war” between the United States and China, the impact of the global COVID-19 pandemic and climate change on deepening the global economic recession, the collapse of national economies and international trade, lack of financial resources for active government support of the health care systems, social protection, small and medium-sized businesses. Political, economic, managerial and academic circles are actively discussing the problems of the “end” of globalization, de-globalization, “new” globalization, the need for a “new world order”, which will actually embody the fundamental values ??of democracy, economic freedom, free trade and, at the same time, will strengthen social responsibility of the world community and its international institutions, the main geopolitical, geo-economic and military centers of power (primarily the United States, China, the European Union, Russia, etc.) for the preservation of peace on the basis of consensus, recognition of global priorities in countering climatic and epidemic threats to human life on Earth , consistent implementation of the Sustainable Development Goals to eradicate poverty in all its forms and manifestations, combat inequality within and between countries, ensure continuous, inclusive and sustainable economic growth and promote social inclusion. The article drew attention to the strengthening of the trends of protectionism and economic nationalism, in particular, the US withdrawal from the Trans-Pacific Partnership agreement and attempts to revise the North American Free Trade Agreement (NAFTA). The article shows the loss of the US leadership in world trade due to the accelerated economic development of other countries, primarily the Asian region. The discussion of these problems at the Davos Economic Forum led to the conclusion about the likely end of Atlanticism and globalization. At the same time, the UN report (2018) highlighted a special section on trade hyperglobalization. The article hypothesizes that the Bali Round (2013) of negotiations on trade began the fourth wave of its globalization, and proposes a new theory of international trade – the theory of globalization impact.
Article
Full-text available
Cross-border trade in services is growing rapidly, with both developed and developing countries among the most dynamic exporters. Despite the substantial global benefits from such trade, the adjustment pressures created in importing countries could provoke a protectionist backlash -some signs of which are already visible in procurement and regulatory restrictions. The current negotiations under the Doha Development Agenda offer an opportunity to lock in current openness and preempt protectionism. This note describes how a bold initiative under the General Agreement on Trade in Services (GATS) can help secure openness. The views expressed in this paper are those of the authors, and not necessarily those of the institutions to which they belong. Discussions with Rudolf Adlung, Abdel-Hamid Mamdouh, Catherine Mann and Juan Marchetti were critical to developing the arguments presented here. The comments of other participants in seminars in India and Paris are gratefully acknowledged.
Article
Full-text available
This study analyses the extent to which e-commerce provisions in existing RTAs can be multilateralised. E-commerce has been recognised as an important engine for growth and development, yet WTO negotiations in this area have yielded very little progress so far. Against the backdrop of WTO stalemate, an increasing number of RTAs adopted specific provisions and rules for e-commerce. While these provisions increase the tradability of e-commerce, they also risk the creation of an e-commerce spaghetti bowl that will undermine the prospects for future WTO consensus in this area. This study considers two broad approaches for multilateralisation of RTA provisions. First, it suggests bottom-up multilateralisation extending RTAs e-commerce undertakings and provisions to a larger number of trading partners. Second, it proposes top-down multilateralisation which can advance e-commerce provisions, commitments and common learning at the WTO level. Both approaches to multilateralisation emphasise the importance of common definitions, rule-making and extension of bilateral liberalisation undertakings. The study highlights that despite the proliferation of e-commerce provisions in RTAs, many commonalities exist thus increasing the possibility of multilateral convergence.
Article
Full-text available
Cross-border trade in services is growing rapidly, with both industrial and developing countries among the most dynamic exporters. Despite the substantial global benefits from such trade, the adjustment pressures created in importing countries could provoke a protectionist backlash-some signs of which are already visible in procurement and regulatory restrictions. The current negotiations under the Doha Development Agenda offer an opportunity to lock in current openness and preempt protectionism. This paper describes how a bold initiative under the General Agreement on Trade in Services can help secure openness.
Article
Electronic data interchange and particularly the internet have opened up vast possibilities for electronic commerce and posed various problems for the taxman. Taxation issues relating to electronic commerce are not confined to customs duties alone. Equally important concerns arise in relation to domestic taxes such as sales tax, value added tax and income tax relating to sale of products over the internet. It is no small challenge to experts in taxation, law and economics to design an equitable tax system for electronic commerce.
Article
The rapid development of the Internet and other information communication technologies (ICTs) has led to the growing electronic cross-border delivery of services and digital products such as software. 1 While regional trade agreements increasingly innovate as regards the cross-border delivery of services and the incorporation of chapters on e-commerce, on the multilateral level the General Agreement on Trade in Services (GATS) has not evolved since the end of the Uruguay Round. This paper reviews the progress in bilateral and multilateral trade agreements in securing liberal digital trade, i.e. electronic cross-border trade flows of data, services and digital products. The paper's purpose is to start thinking about what digital trade rules may be needed today and in fifteen years from now. It focuses on the role of the multilateral trading system as regards digital trade flows actually taking place over information networks. The first and the second parts of this paper analyse developments with respect to electronically delivered products and services at the multilateral and bilateral trade levels. The third part raises the question of what digital trade rules are needed today and in 2015–2020. The views expressed in this paper are those of the author, and shall neither be attributed to the Organisation for Economic Co-Operation and Development (OECD) nor its member countries. 1 The term 'e-commerce' is used within the WTO as the 'production, distribution, marketing, sale, or delivery of goods and services by electronic means' (see General Council (GC), Work Programme on Electronic Commerce, WT/L/274 (30 September 1998). With the term digital content the author refers to products which are digitally encoded and transmitted electronically over networks (e.g. movies, music, software, computer games).
Article
Figures in digital trade show a substantial growth over the last years, but WTO law does not provide for an adequate legal framework encompassing digital trade rules. The Information technology Agreement might not encompass all new goods since the relevant Appendices have not been amended for 14 years and the digital services are only partially covered in the Specific GATS Commitments of WTO Members due to the fact that the so-called positive list approach requires active national commitments with respect to newly developed services. The most recent court practice (US-Gambling, China-AVHE), however, contains some promising signs of accepting e-commerce as service covered by the GATS. Legal scholars are now invited to formulate new digital trade rules facilitating the cross-border delivery of electronic goods and services as well as to develop concepts to overcome anticipated digital trade barriers (such as lack of access to technology, of interconnectivity and compatibility). Finally, the present digital divide must be overcome and turned into a digital opportunity for all.
Book
Electronic commerce is changing the way businesses and consumers create, sell, and buy products, and the way they communicate and learn. How can policymakers position their countries to take advantage of this new environment? How should policymaking adjust to a more global, more networked, and more information-rich marketplace where relationships and jurisdictions between the governments, businesses, and citizens increasingly overlap? How can governments effectively harness rapidly changing technologies and partner with both domestic and foreign private sectors to reap the greatest benefits for their constituents? * This primer answers these questions using both general analysis and specific examples. It addresses in particular the needs of policymakers in emerging markets who must formulate and refine policies that affect e-commerce in areas such as telecommunications, finance, taxation, privacy, and international trade and domestic distribution. Companies considering doing business in these economies also will find that the examples offer insights into the issues that policymakers face, the different policy approaches they choose, and the market opportunities that arise as more and more economies around the world embrace global electronic commerce.
Article
The increased ability to copy and distribute information, knowledge, and entertainment in the digitally networked age has provoked a series of responses. In order to gain back control, copyright holders have made use of so-called technological protection measures (TPM) - including, for instance, Digital Rights Management (DRM) schemes - that are aimed at regulating the copying, distribution, and use of and access to digital works through code ("code is law"). Activists, in turn, have immediately taken counter-measures and designed tools that enable the hacking of technological protection measures such as copy and access controls. In response, law makers at both the international and national level have enacted legal provisions aimed at banning the act of circumvention of TPM on the one hand and the production and dissemination of circumvention tools on the other hand. Prominent examples of such legislation, among others, are the WIPO Internet Treaties (WCT art. 11 and WPPT art. 18), the Digital Millennium Copyright Act (DMCA sec. 1201), the European Copyright Directive (EUCD, art. 6 and art. 8), and the respective implementations of the EUCD into the laws of EU Member States. Against this backdrop, this paper takes it as its baseline that many countries have already enacted legislation or will soon legislate on TPM in order to comply either with international obligations under WIPO, or with international free trade agreements involving a party that has powerful content industries such as the U.S. Thus, the immediate question before us is no longer whether the second and third layer of protection of digital works is appropriate or viable. Rather, at this stage, attention should be drawn to the alternative design choices that remain with countries that face the challenge of drafting or revisiting a legal regime aimed at protecting TPM. Consequently, the purpose of this paper is to identify different legislative and regulatory approaches and to discuss them in the light of previous experiences with TPM legislation in the U.S. and in Europe. Ultimately, the paper seeks to formulate basic design (or best practice) principles and to sketch the contours of a model law that aims to foster innovation in the digitally networked environment and minimize frequently observed spillover effects of TPM legislation.
Article
Since the mid-1990s East Asian countries have negotiated 25 free trade agreements (FTAs) with a services component. There are important architectural differences in these agreements, which ultimately affect their value in promoting transparency, fostering the credibility of trade policies, and advancing market opening in services. This article reviews key architectural choices, focusing on the approach towards scheduling commitments, the treatment of investment and the movement of natural persons, rules of origin, provisions for the settlement of trade dispute, and selected deeper integration issues. In doing so, it assesses the advantages and drawbacks of different architectural approaches and discusses a number of lessons learned.
Article
The benefits of services trade reform are huge but services negotiations in the World Trade Organization (WTO) are making little progress. A proximate cause is the current negotiating process, based on an inertial request-and-offer approach rather than a set of goals that would give direction and momentum to the negotiations. The paper suggests that WTO members should consider: (1) locking in the current openness of cross-border trade for a wide range of services; (2) eliminating barriers to foreign investment either immediately or in a phased manner where regulatory inadequacies need to be remedied; and (3) allowing greater freedom of international movement at least for intra-corporate transferees and for service providers to fulfill specific services contracts. A deeper problem is that WTO members have sought to negotiate market access in services without adequately addressing concerns that the General Agreement on Trade in Services (GATS) commitments limit regulatory freedom unduly and unpredictably, that regulatory institutions in many countries are too weak to cope with liberalized markets, and that there is no provision for the regulatory cooperation that is necessary for successful liberalization, particularly of temporary labor mobility. Three types of actions are needed: (1) at the current stage of its development, theGATS must focus primarily on disciplines for measures that discriminate against foreign services and providers, rather than on politically sensitive and legally complex rules for nondiscriminatory measures; (2) a credible assistance mechanism must be established to help developing countries make the regulatory improvements needed for successful liberalization; and (3) where necessary, WTO members should make access commitments on labor mobility conditional on the fulfillment of specific conditions by source countries-to screen services providers, accept and facilitate their return, and combat illegal migration.