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Addressing Digital Services in PTAs: Only Convergence in the 11th Hour?

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Coherence and Divergence in Services Trade Law

Part of the book series: European Yearbook of International Economic Law ((Spec. Issue))

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Abstract

The chapter maps how digital services trade is addressed under the General Agreement on Trade in Services (GATS) and e-commerce chapters in preferential trade agreements. It sets out the applicability of the GATS to digital services trade and identifies three elements of the current framework that adversely affect the liberalisation of digital services trade and that can be addressed at the PTA level. Moreover, the chapter studies whether existing gaps are being filled in the e-commerce chapters of PTAs. The e-commerce-related content of these PTAs is identified through a term-frequency analysis, which allows for a mapping of the presence of different barriers to digital services trade in PTAs.

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Notes

  1. 1.

    WTO, ‘Work Programme on Electronic Commerce – Adopted by the General Council on 25 September 1998’, WT/L/274, 30 September 1998, p. 1.

  2. 2.

    The last extension of this moratorium was done in the General Council Decision of 10 December 2019 until the 12th Ministerial Conference, to be held in June 2020. WTO, ‘Work Programme on Electronic Commerce – General Council Decision of 10 December 2019’, WT/L/1079, 11 December 2019. For a brief history of the work in the context of the WPEC until 2004, see Wunsch-Vincent (2004), pp. 8–24.

  3. 3.

    Article I:3(b) GATS.

  4. 4.

    WTO Council for Trade in Services, ‘The Work Programme on Electronic Commerce’, Note by the Secretariat, S/C/W/68, 16 November 1998, para. 37.

  5. 5.

    WTO Work Programme on Electronic Commerce, ‘Progress Report to the General Council adopted by the Council for Trade in Services on 19 July 1999’, S/L/74, 27 July 1999, para. 4. The Chairman of the Council for Trade in Services also reported that “Members agreed that all services delivered electronically were covered by the GATS”. WTO Council for Trade in Services, ‘Report of the Meeting Held on 14 and 15 December 1998 – Note by the Secretariat’ S/C/M/32, 14 January 1999, para. 16.

  6. 6.

    The principle of technological neutrality was explicitly recognised by the Panel in US – Gambling, stating that technological neutrality encompasses all means of delivery, including the Internet. Panel Report, US – Gambling, para. 6.285. See also Farrokhnia and Richards (2016), p. 806.

  7. 7.

    Respectively, Articles XVI, XVII and VI:5 GATS.

  8. 8.

    Or, put differently, “products that are digitally encoded and that –before the rise of the Internet– were traditionally traded as part of a physical carrier medium” in Wunsch-Vincent (2004), p. 10.

  9. 9.

    As also discussed in Farrokhnia and Richards (2016).

  10. 10.

    Wu (2006), p. 268.

  11. 11.

    WTO Work Programme on Electronic Commerce, ‘Communication from the European Communities and their Member States’, S/C/W/183, 30 November 2000, p. 3.

  12. 12.

    WTO Work Programme on Electronic Commerce, Submission by the United States, WT/GC/16, G/C/2, S/C/7, IP/C/16, WT/COMTD/17, 12 February 1999, p. 5.

  13. 13.

    WTO Council for Trade in Services, ‘The Work Programme on Electronic Commerce’, Note by the Secretariat, S/C/W/68, 16 November 1998, para. 37.

  14. 14.

    WTO Council for Trade in Services, ‘The Work Programme on Electronic Commerce’, Note by the Secretariat, S/C/W/68, 16 November 1998, para. 37.

  15. 15.

    Adlung (2006), p. 873.

  16. 16.

    Liberalisation of services has occurred more in accessions and PTAs. Adlung (2007), p. 560.

  17. 17.

    For the history of the EU-US discussions on audiovisual services, see Pauwels and Loisen (2003).

  18. 18.

    See also the chapter by Yakovleva in this volume.

  19. 19.

    Chung (2018), pp. 188–189; Porges and Enders (2016), p. 5.

  20. 20.

    Appellate Body Report, US – Gambling, WT/DS285/AB/R, para. 265.

  21. 21.

    Several other articles have pointed out the disproportionate burden of DLRs on foreign companies: Chander (2019), p. 15; Meltzer (2019), p. 25; Wolfe (2019), p. 80.

  22. 22.

    Which can be almost any service sector, considering that many services can now be supplied through electronic transmission.

  23. 23.

    See inter alia: Aaronson and Leblond (2018); Bauer et al. (2014); Chung (2018); Crosby (2016); Ferracane and Lee-Makiyama (2017); Mattoo and Meltzer (2018); Mihaylova (2016); Mitchell and Mishra (2018); Peng and Liu (2017); Tuthill (2016).

  24. 24.

    These plurilateral negotiations were initiated by a group of 73 WTO Members following the WTO Ministerial Conference in Buenos Aires in 2017. WTO Ministerial Conference 11th session, Buenos Aires, ‘Joint Statement on Electronic Commerce’, WT/MIN(17)/60, 13 December 2017.

  25. 25.

    WTO Joint Statement on Electronic Commerce Initiative, ‘Proposal for the exploratory work by Japan’, INF/ECOM/4, 25 March 2019, para. 3.8; WTO Joint Statement on Electronic Commerce Initiative, ‘Communication from the United States’, INF/ECOM/5, 25 March 2019, para. 2.1; WTO Joint Statement on Electronic Commerce, ‘EU Proposal for WTO disciplines and commitments relating to electronic commerce’, INF/ECOM/22, 26 April 2019, para. 2.7.1(a); WTO Joint Statement on Electronic Commerce, ‘Communication from Singapore’, INF/ECOM/25, 30 April 2019, p. 3.

  26. 26.

    Source code is the basis of any software and mainly written by human programmers.

  27. 27.

    As explained by Japan in WTO Joint Statement on Electronic Commerce Initiative, ‘Proposal for Exploratory Work by Japan’, INF/ECOM/4, 25 March 2019, para. 3.13.

  28. 28.

    However, for an overview of possibly relevant WTO obligations, see Neeraj (2017).

  29. 29.

    WTO General Council, ‘Work Programme on Electronic Commerce – Non-Paper from the United States’, JOB/GC/94, 4 July 2016, para 2.7; WTO Work Programme on Electronic Commerce, ‘Trade Policy, the WTO, and the Digital Economy’, Communication from Canada, Chile, Colombia, Côte d’Ivoire, the European Union, the Republic of Korea, Mexico and Singapore, JOB/GC/97/Rev. 3, 14 July 2016, p. 6; WTO Work Programme On Electronic Commerce, ‘Non-Paper for the Discussions on Electronic Commerce / Digital Trade from Japan’, JOB/GC/100, 25 July 2016, p. 3.

  30. 30.

    WTO General Council, ‘Statement by the African Group’, Work Programme on Electronic Commerce, JOB/GC/144, 20 October 2017, para. 3.5.

  31. 31.

    WTO Joint Statement on Electronic Commerce Initiative, ‘Proposal for the exploratory work by Japan’, INF/ECOM/4, 25 March 2019, para. 3.13; WTO Joint Statement on Electronic Commerce Initiative, ‘Communication from the United States’, INF/ECOM/5, 25 March 2019, para. 4.1; WTO Joint Statement on Electronic Commerce, ‘Communication from Ukraine’, INF/ECOM/14, 25 March 2019, para. 4.2; WTO Joint Statement on Electronic Commerce, ‘Communication from Brazil’, INF/ECOM/17, 25 March 2019, p. 8 (interestingly, this provision was omitted in Brazil’s later proposal (INF/ECOM/27)); WTO Joint Statement on Electronic Commerce, ‘EU Proposal for WTO disciplines and commitments relating to electronic commerce’, INF/ECOM/22, 26 April 2019, para. 2.6; WTO Joint Statement on Electronic Commerce, ‘Communication from Singapore’, INF/ECOM/25, 30 April 2019, para. 4.1.

  32. 32.

    See the definition of ‘barrier’ in Van den Bossche and Zdouc (2017), p. 479: “all government imposed and sponsored actions or omissions that act as prohibitions or restrictions on trade, other than ordinary customs duties and other duties and charges on imports and exports”.

  33. 33.

    Section 5 of the Telecoms Annex. On the scope, see also the interpretation by the panel in Mexico – Telecoms at para. 7.278.

  34. 34.

    See para. 3(a) of the GATS Annex on Telecommunications: “‘public telecommunications transport service’ means any telecommunications transport service require, explicitly or in effect, by a Member to be offered to the public generally.” Gao (2008), p. 692.

  35. 35.

    WTO Joint Statement on Electronic Commerce Initiative, ‘Proposal for the exploratory work by Japan’, INF/ECOM/4, 25 March 2019, para. 3.9; WTO Joint Statement on Electronic Commerce Initiative, ‘Communication from the United States’, INF/ECOM/5, 25 March 2019, para. 2.1; WTO Joint Statement on Electronic Commerce, ‘EU Proposal for WTO disciplines and commitments relating to electronic commerce’, INF/ECOM/22, 26 April 2019, para. 2.9; WTO Joint Statement on Electronic Commerce, ‘Communication from Singapore’, INF/ECOM/25, 30 April 2019, p. 4; WTO Joint Statement on Electronic Commerce, ‘Communication from Brazil’, INF/ECOM/27, 30 April 2019, p. 2.

  36. 36.

    As already observed and aptly termed the ‘spaghetti bowl’ effect in Bhagwati (1995).

  37. 37.

    UNCTAD (2016), pp. 37–38.

  38. 38.

    UNCTAD (2016), p. 38.

  39. 39.

    Mitchell and Mishra refer to the various new provisions in the CPTPP and warn about risks of fragmentation. Mitchell and Mishra (2018), p. 1097.

  40. 40.

    This however requires that the provisions on e-commerce in PTAs are subject to the PTA’s dispute settlement mechanism, which is sometimes not the case.

  41. 41.

    Burri (2017), pp. 93–95.

  42. 42.

    Burri (2017), p. 128.

  43. 43.

    Herman (2010), p. 11.

  44. 44.

    Burri (2017), p. 127.

  45. 45.

    The shortcomings he identifies are related to the definition of digital trade/products, classification of digital services, lack of market access liberalisation, lack of provisions on cross-border data flows, consumer-related regulatory measures, security-related regulatory measures and trade facilitation. Wu (2017), p. 5.

  46. 46.

    This list was compiled on the basis of information from the WTO’s Regional Trade Agreements Information System (RTA-IS), WTO documents and literature. Including WTO Work Programme On Electronic Commerce, ‘Non-Paper for the Discussions on Electronic Commerce / Digital Trade from Japan’, JOB/GC/100, 25 July 2016, 5–8; Burri and Polanco Lazo (2020); Lopez-Gonzalez and Ferencz (2018); Monteiro and Teh (2017); Wu (2017). This list is up to date until 23 August 2019.

  47. 47.

    First, because parties use (slightly) different terms in their PTAs to address the same kind of provisions, many variations of each of these terms were also included in the search. Secondly, as the text of several PTAs could only be provided in Spanish, the Spanish translation of these terms has also been included in the search. Both of these elements allowed for a complete mapping of these provisions in all e-commerce PTAs.

  48. 48.

    With perhaps the exception of the EEA Agreement, which entered into force in 1994 and which contained a reference to ‘information services’, in the context of further cooperation outside of the four freedoms (article 78).

  49. 49.

    Monteiro and Teh (2017), p. 5.

  50. 50.

    Huang (2017), p. 316.

  51. 51.

    Monteiro and Teh (2017), p. 5; Wu (2017), p. 6 The advantage of including e-commerce rules in a separate chapter of a PTA is that it avoids the discussion on the goods v services classification. Wunsch-Vincent and Hold (2012), p. 202.

  52. 52.

    See the US – Chile PTA and the US – Singapore PTA, both of which entered into force on 1 January 2004.

  53. 53.

    Huang (2017), p. 316.

  54. 54.

    Aaronson and Leblond (2018), p. 255; Huang (2017), pp. 316–317. See articles 15.7 and 15.8 KORUS PTA.

  55. 55.

    111 out of 164 WTO Members are party to a PTA that includes at least one e-commerce related provision. Calculations based on own database.

  56. 56.

    It does not require this treatment for digital products and like offline products.

  57. 57.

    See EU – Korea PTA, EU – Georgia PTA, EU – Moldova PTA, EU – Ukraine PTA, EU – Armenia PTA, JEEPA, EU – Singapore PTA and EU – Vietnam PTA.

  58. 58.

    Article 119 EU – CARIFORUM PTA, Article 127 EU – Georgia PTA, Article 254 EU – Moldova PTA, Article 139 EU – Ukraine PTA and Article 193 EU – Armenia PTA. EU PTAs containing the prohibition are: the EU – Korea PTA, EU – Central America PTA, CETA, JEEPA, EU – Mexico PTA, EU – Singapore PTA and EU – Vietnam PTA.

  59. 59.

    E.g. Article 13.4 Australia – Peru PTA, Article 12.4 Costa Rica – Singapore PTA, Article 9.4 Japan – Mongolia PTA and Article 15.4 Mexico – Central America PTA.

  60. 60.

    E.g. Article 1503 Canada – Peru PTA.

  61. 61.

    E.g. fn 3 to Chapter 14 on Electronic Commerce in the Australia – Singapore PTA. Mexico also does so in the Mexico – Panama PTA (fn 1 to Chapter 14) but not in its PTA with Central American countries.

  62. 62.

    Article V:1 GATS.

  63. 63.

    Roy et al. (2007), p. 158.

  64. 64.

    Roy et al. (2007), p. 158; Sauvé and Shingal (2011), p. 955.

  65. 65.

    See Roy et al. (2007), pp. 173 and 179; Stephenson (2002), p. 194.

  66. 66.

    Hufbauer and Stephenson (2007), p. 619; Jara and Domínguez (2006), p. 114; Roy et al. (2007), p. 173.

  67. 67.

    Hoekman and Mattoo (2013), p. 14.

  68. 68.

    Roy et al. (2007), p. 173.

  69. 69.

    ‘NA’ refers to PTAs whose text has been agreed upon but that have not yet entered into force.

  70. 70.

    19% of all PTAs entered into force since 2000 take the negative-list approach, compared to 21% of e-commerce PTAs.

  71. 71.

    16% (all PTAs since 2000) compared to 32% (e-commerce PTAs).

  72. 72.

    It should however be cautioned that it has been argued that many PTAs contain ‘GATS-minus commitments’, thereby committing to a lower level of liberalisation than at the multilateral level. See Adlung and Morrison (2010); Adlung and Miroudot (2012).

  73. 73.

    The classification issue for digital services is discussed and a solution is proposed in Willemyns (2019).

  74. 74.

    See inter alia Burri (2017); Gao (2018); Herman (2010); Huang (2017); Kim (2019); Monteiro and Teh (2017); Weber (2012); Willemyns (2020); Wunsch-Vincent and Hold (2012).

  75. 75.

    ICTSD (2018), p. 3.

  76. 76.

    In the spirit of the chapeau of the general exceptions in Article XIV GATS. It should be noted that the necessity requirement is not included in the Singapore – Sri Lanka PTA and the Australia – Peru PTA.

  77. 77.

    Only USMCA and the EU PTAs do not include this limitation of the scope.

  78. 78.

    Article 8.73.1 JEEPA and Article 9.2 Chapter Digital Trade EU – Mexico PTA.

  79. 79.

    Article 8.73.2 JEEPA and Article 9.3 Chapter Digital Trade EU – Mexico PTA.

  80. 80.

    Article 19.16.2 USMCA.

  81. 81.

    Article 8.73.3 JEEPA, Article 9.2 Chapter Digital Trade EU – Mexico PTA.

  82. 82.

    Article 19.4 Chapter 14 Australia – Singapore PTA, Article 14.17.4 CPTPP, Article 13.16.4 Australia – Peru PTA.

  83. 83.

    Article 19.3 Chapter 14 Australia – Singapore PTA, Article 14.17.3 CPTPP, Article 13.16.3 Australia – Peru PTA.

  84. 84.

    Article 15.7 KORUS, Article 12 Chapter 14 Australia – Singapore PTA, Article 14.10 CPTPP, Article 10 Chapter on digital trade EU – Mexico, Article 19.10 USMCA and Article 13.10 Australia – Peru PTA.

  85. 85.

    WTO Joint Statement on Electronic Commerce Initiative, ‘Proposal for the exploratory work by Japan’, INF/ECOM/4, 25 March 2019; WTO Joint Statement on Electronic Commerce Initiative, ‘Communication from the United States’, INF/ECOM/5, 25 March 2019; WTO Joint Statement on Electronic Commerce, ‘EU Proposal for WTO disciplines and commitments relating to electronic commerce’, INF/ECOM/22, 26 April 2019; WTO Joint Statement on Electronic Commerce, ‘Communication from Singapore’, INF/ECOM/25, 30 April 2019.

  86. 86.

    WTO Joint Statement on Electronic Commerce, ‘Communication from Brazil’, INF/ECOM/27, 30 April 2019, p. 2.

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  1. Leuven Centre for Global Governance Studies, KU Leuven, Leuven, Belgium

    Ines Willemyns

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Willemyns, I. (2020). Addressing Digital Services in PTAs: Only Convergence in the 11th Hour?. In: Hoffmann, R., Krajewski, M. (eds) Coherence and Divergence in Services Trade Law. European Yearbook of International Economic Law(). Springer, Cham. https://doi.org/10.1007/978-3-030-46955-9_6

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