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Policy Analysis

Joint Statement Initiative on E-commerce at Crossroads for a “Substantial” Conclusion by MC13

The JSI on e-commerce has made significant progress, engaging an increasing number of WTO members through multiple negotiation rounds. Yasmin Ismail, Programme Officer at CUTS International Geneva, examines the progress, prospects, and challenges of reaching a consolidated text by MC13.
By Yasmin Ismail on July 17, 2023

The Joint Statement Initiative (JSI) on Electronic Commerce, launched at the World Trade Organization’s (WTO) 11th Ministerial Conference in December 2017 by a group of 71 WTO members, aims to “achieve a high standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO Members as possible.” At the same time, the global e-commerce governance landscape has developed rapidly through hyper-national policy interventions, the negotiation and adoption of regional trade agreements (RTAs) with special e-commerce chapters, and the rise of “digital-only” accords known as digital economy agreements (DEAs). This dynamic landscape has influenced the JSI by either facilitating progress toward an outcome or slowing the process due to growing divergence between participants’ approaches in certain policy areas, notably cross-border data flows and data localization.

The JSI now has 89 WTO members—including only 7 African countries and 4 least developed countries (LDCs). The absence of most African nations and LDCs has triggered concerns about the digital divide at the centre of WTO talks on e-commerce, particularly under its Work Programme on Electronic Commerce, the non-negotiating multilateral track established in 1998, and the developing world’s capacity to engage in e-commerce or digital trade negotiations on an equal footing. International organizations, non-governmental organizations, and academia have increasingly highlighted and studied these concerns.

The International Institute for Sustainable Development and CUTS International Geneva published a report in March offering an overview of the larger e-commerce governance context affecting the JSI’s progress. The report draws attention to the latest developments in the negotiating text circulated in December 2022 and explores scenarios toward an outcome at the next WTO ministerial conference, MC13.

This article summarizes the report’s highlights and introduces recent updates, along with a 2023 mid-year review of the JSI negotiation progress.

Increased National Policy Interventions and Heterogeneity

One significant trend in the global e-commerce policy landscape is the rise in national policy interventions, resulting in greater regulatory heterogeneity. The Digital Policy Alert Activity Tracker reveals that since January 2020, there have been 3,799 policy or regulatory changes in European Union and G20 governments and Switzerland. These interventions span a wide range of areas, including data governance, consumer protection, online content moderation, competition, taxation, and international trade. The tracker reveals that data governance is the most active policy area targeted by interventions and state actions. The unilateral adoption of state policies with divergent approaches from one jurisdiction to another—particularly on cross-border data flows and data-localization policies—has created challenges to achieving a converged clean text on cross-border data flows in the e-commerce JSI.

Achieving a clean text on cross-border data flows and other data-related policy the main milestone toward a “technical” wrap-up of the talks.

The JSI talks reached converged texts on many of the technical policy issues falling under the category of facilitating e-commerce, such as e-signatures, e-contracts, spam, and paperless trading. They also converge on the key trust issue of consumer protection. Cross-border data flows have now come to the centre stage of the negotiations in 2023. Achieving a clean text on cross-border data flows and other data-related policy issues, such as personal data protection and privacy, is the main milestone toward a “technical” wrap-up of the talks.

The Influence of RTAs and DEAs

RTAs have played a crucial role in shaping e-commerce governance, with comprehensive chapters on e-commerce or digital trade included in agreements such as Comprehensive and Progressive Agreement for Transpacific Partnership, the U.S.–Mexico–Canada Agreement, and the Regional Comprehensive Economic Partnership. The influence of these RTAs extends to the JSI negotiations, where the Asia-Pacific region has emerged as a central player in e-commerce governance.

Moreover, the emergence of DEAs, such as the Digital Economy Partnership Agreement among Chile, New Zealand, and Singapore, has expanded the scope of e-commerce governance to encompass broader issues of the digital economy, including emerging technologies like artificial intelligence and digital identities. These agreements have affected the dynamics and direction of the JSI, where emphasis has been placed on e-commerce facilitation and less on market access.

Progress Toward a “Substantial Conclusion” of the JSI Talks by MC13

Australia, Japan, and Singapore, the co-conveners of the JSI, circulated the third updated consolidated negotiating text among participants in December 2022. This text serves as the basis for the discussions and future agreement, incorporating proposals submitted by JSI participants. The revision shows progress achieved in 2022 by several thematic small groups engaged in technical negotiations with the aim of reaching “cleaned” or “converged” provisions. According to the consolidated text, 10 articles had reached the stage of clean text, including electronic transactions framework, electronic signatures/authentication, and online consumer protection. They represent a “lower hanging fruit” deal to facilitate a “technical” conclusion of the negotiations by MC13, scheduled for February 2024.

Reaching conversion has been difficult in some areas, such as privacy/personal information protection and source code.

However, reaching conversion has been difficult in some areas, such as privacy/personal information protection and source code. The latest text also included notable changes, such as deleting the market access section (which showed in earlier versions) and adding a new section titled Annex. Furthermore, certain articles were moved to different sections in the updated text, reflecting the evolving dynamics. For instance, articles related to the free flow of data were shifted from the “openness and e-commerce” section to the “cross-cutting issues” section, and several articles, including services market access, were moved under the new Annex section.

In general, the Annex is meant to group proposals that are not yet included in a small group negotiation or are not gaining traction in the negotiations. The Annex also covers issues that complicate the prospects of integrating the future agreement into the WTO legal architecture, which is another challenge the negotiation process will soon have to face.

Minor Convergence on Cross-Border Data Flows and a New Chinese Proposal

As already mentioned, deliberations in 2023 need to achieve convergence on cross-border data flows and data localization—for which there are varying approaches and proposals. The latest consolidated text signals minor convergence in positions. A joint text proposal between seven participating members limited exceptions to cross-border data flows to “legitimate public policy objectives.” Proponents of the joint proposal are as follows: Australia, Canada, Japan, Singapore, the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu, South Korea, the United Kingdom, and the United States. However, other proposals remain in play, such as the European Union’s proposal for a privacy/personal data protection exception and Nigeria’s proposal to allow policy space carve-outs for developing countries and LDCs. Also, China has just submitted its long-awaited proposal on data flows, representing another step toward a more constructive negotiation for a converged data flow approach.

More Emphasis on Bridging the Digital Divide

Established by the WTO General Council in 1998, the WTO Work Programme on Electronic Commerce (WPEC) represents the multilateral forum on e-commerce to explore its linkages and impacts on WTO agreements, though it was not mandated to negotiate rules on e-commerce. To date, the WPEC is the only multilateral forum of discussion on e-commerce where all members, including developing and LDCs, are fully represented.

At the 12th Ministerial Conference in 2022, members agreed to reinvigorate the work under the WPEC, with a specific focus on the development dimension of e-commerce. Subsequent discussions have highlighted important issues such as the digital divide, small firms’ competition concerns, technology transfer, consumer protection, legal and regulatory frameworks, digital trade facilitation, and economic empowerment and inclusion. International organizations (including the United Nations Conference on Trade and Development and the Enhanced Integrated Framework) and non-governmental organizations (such as CUTS International, the International Institute for Sustainable Development, and DiploFoundation) have contributed analysis and organized discussions on collaborative means to address the digital divide in the WTO talks and the JSI negotiations.

The participation of African countries and LDCs in the JSI’s discussions remains significantly limited.

At the same time as the WPEC’s emphasis on the digital divide is growing, the participation of African countries and LDCs in the JSI’s discussions remains significantly limited, underscoring the need for a future JSI deal that levels the playing field for developing economies. These talks reflect growing recognition of the need to ensure that the benefits of e-commerce are accessible to all, especially developing countries and LDCs. Two recent proposals were reflected in the December 2022 JSI negotiating text, opening the door for intensified discussions in 2023 on a comprehensive development and inclusion angle for the future agreement.

The first, INF/ECOM/70, is a nine-page comprehensive proposal submitted by Côte d’Ivoire that integrates a new subsection under Section D on cross-cutting issues: D.5. Special and Different Treatment Provisions for Developing Country Members and Least Developed Country Members. The proposed articles almost replicate the same text in the WTO’s Trade Facilitation Agreement.

The second proposal, INF/ECOM/71, submitted by New Zealand, proposes text under various articles while focusing on cooperation to support the digital inclusion of Indigenous Peoples, as well as women, rural communities, and small and medium-sized enterprises. Also recognizing the challenges faced by developing economies and LDCs in participating in the negotiations, the ministers of the JSI co-conveners announced the launch of development initiatives aimed at supporting their meaningful engagement. However, there is little information on what this initiative has contributed.

Prospects and Challenges of Potential Conclusion by MC13

The JSI on e-commerce has made important progress, with multiple rounds of negotiations and the active involvement of a slowly growing number of WTO members. The initiative has created a platform for discussions on establishing high-standard rules for the global digital economy, addressing a wide range of issues related to e-commerce and digital trade. Convergence on cross-border data flow proposals has been limited, but there are signs that the JSI may be on track for a “substantial” conclusion of the technical aspects of the “lower hanging fruit” consolidated converged text by MC13.

But there are signs that the JSI may be on track for a “substantial” conclusion of the technical aspects of the “lower hanging fruit” consolidated converged text by MC13.

Providing developing countries’ negotiators with more technical assistance is crucial to help shape provisions that deliver on their development aspirations. One last milestone on which the JSI co-conveners and participants must intensify efforts is figuring out how the future agreement can be conceived in WTO legal architecture as per the original objective of the initiative announced in 2017 to achieve an outcome that “builds on existing WTO agreements and frameworks with the participation of as many WTO Members as possible.”

Yasmin Ismail is a Programme Officer at CUTS International in Geneva.

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