Pearls and Irritations

Despite ongoing debates about the need to regulate Big Tech companies Australia is sponsoring a deregulatory international agreement in the face of opposition from both the US and developing countries.

The 166-member World Trade Organisation (WTO) negotiates multilateral agreements that set the rules for global trade. The process is slow because consensus is required by all members.

In 2019, discussions began about an electronic commerce agreement involving all WTO member countries, but consensus could not be reached. In 2021, a group of mostly richer WTO countries decided to go it alone and have been negotiating a plurilateral agreement or Joint Sectoral Initiative (JSI) on e-commerce. Such an agreement among those members would not have the status of an official WTO agreement without consensus by all WTO members. The JSI Co-conveners are Australia, Japan and Singapore.

The stated aim of the agreement is to set global rules to support the expansion of e-commerce and digital trade. Some of these are not controversial, like enabling electronic ordering and payment systems. However, richer countries in the Global North have driven other aspects of the negotiations on behalf of their global digital companies who want to protect their market share, maximise cross-border data flows and minimise national regulation. This approach has been resisted by developing countries who want to retain more capacity to develop their own digital industries and to regulate them. This reflects the broader ongoing divide in the WTO between industrialised and developing countries, whose governments argue that WTO rules often ignore their specific development needs.

More recently, the US Biden administration has also expressed the intention to regulate the market concentration of digital companies like Google and Meta and to regulate the use of data to deal with challenges like protection of consumer data privacy, cybersecurity breaches, Artificial Intelligence and fake news.

The US was an initial supporter of the JSI negotiations on e-commerce. However, after a national political debate in 2023 about the need to regulate in the face of the above challenges, the US removed its support for proposals on deregulation of cross-border data flows, localisation of servers, and source code, arguing that unrestricted off-shore data storage and lack of government access to source code could be an obstacle to national regulation.

Civil society groups welcomed the withdrawal of these proposals because it gives more space for governments to regulate to protect the public interest in the rapidly changing digital trade environment. Despite criticism from the global digital industry, the US has maintained this policy in the JSI negotiations. Despite similar Australian debates about regulating the digital domain, the Australian government has continued to support a more deregulatory approach in the WTO.

On 26 July 2024, the JSI Co-conveners, Australia, Japan and Singapore, issued a statement that the now 90 participants of the JSI agreement on e-commerce had achieved a ‘stabilised’ text. The statement and text are here.

A vague but optimistic media release from the Australian Department of Foreign Affairs and Trade gave the misleading impression that governments had agreed on the text, may proceed to ratify the text soon, and that the agreement will be integrated into the WTO system and apply to all WTO members. However, the use of the word ‘stabilised’ rather than ‘final’ in the official statement showed that the text is not yet agreed upon amongst all 90 participants. The joint Co-conveners’ statement itself also flags that important issues have not been addressed.

“Taking note of the evolving nature of cross-border electronic commerce and digital technology, participants recognise that some issues of importance to digital trade have not been addressed in this text. Participants will discuss the inclusion of these issues in future negotiations. Participants reserve the right in any future negotiations to propose amendments to the attached Agreement, including with respect to scope, exceptions and dispute settlement. We encourage all WTO Members to support and join this Initiative.”

Reported statements have since emerged from other negotiating governments, including the US, China, Brazil and Indonesia, which have indicated that the text is not agreed. Developing countries want to preserve regulatory space and are also concerned about plurilateral agreements that do not involve all 166 WTO members. They fear that such agreements can then be imposed on those mostly low-income countries that have had no say in the negotiations.

The sponsors of the negotiations, including Australia, are exerting pressure to conclude it by presenting it as a done deal. However this may have the opposite effect, given the ongoing divide between industrialised and developing countries. It is clear that there is no agreement on a finalised text for ratification by participating governments, let alone its adoption by all WTO members.

Share and Enjoy !

SHARE TWEET SHARE COPY EMAIL PRINT