General Rules in a WTO Digital Trade Agreement

Before erecting this flexible, modular structure, though, the 86 negotiating members of the WTO should, ideally, agree to include in their new agreement some new general rules that are needed to help maximize the flow of digital trade. First, they should decide what precisely they are negotiating about, and how specifically the existing WTO rules apply to digital trade; they should first define what they mean by “digital trade.” In addition, they should eliminate the lingering global market uncertainty about whether customs duties will be imposed on digital transactions; they should make the WTO moratorium on such taxation permanent. Moreover, they should eliminate some of the current uncertainties in digital trade by clarifying the ways in which a number of existing WTO rules apply to digital trade; otherwise, digital trade will be constrained because many of those uncertainties will be left to resolution in the outcomes of future contentious international trade disputes.

Defining the Scope of Digital Trade

Digital trade is not defined in the current WTO trade rules. Any consideration of WTO rules to govern digital trade should begin by defining it. Only then can WTO members know the scope of what will be covered by the new rules. What is more, the continuing and accelerating technological evolution of digital trade, which involves the ever more varied dimensions of constantly transforming international commerce, suggests that digital trade should be defined in broad terms that will encompass its ever-widening scope, not only now but also in the future.

Separate and apart from this current omission in the WTO rules is that worldwide, there is no one recognized and accepted definition of digital trade. Globally, the terms “digital trade” and “e-commerce” are often used interchangeably. Helpfully, but without the force of law, the OECD (2011, 72) describes an e-commerce transaction as “the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders. The goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online. An e-commerce transaction can be between enterprises, households, individuals, governments, and other public or private organisations.”

The WTO work program on e-commerce defines it (“without prejudice” to the outcome of the WTO digital trade negotiations) as “the production, distribution, marketing, sale or delivery of goods and services by electronic means.”25 The identical phrasing — still in brackets — is used to define “[digital trade/e-commerce]” in Annex 1(2)1 of the WTO consolidated negotiating text. Thus, in defining the scope of the potential new rules as they have done in their work program, these 86 WTO members seem to have taken sides in the long-running debate over whether e-commerce is comprised of only those transactions where the end product or service delivered is digital, or whether e-commerce also includes every part of the global value chain of that end product or service. In effect, the WTO negotiators appear to have embraced much of the second broader view in their negotiations.

To make way for the innovations of the future, these WTO members should consider going further by emulating the scope of coverage in the DEPA. The DEPA does not define digital trade as such; however, module 1, article 1.1.1 of the DEPA defines the scope of that agreement broadly as covering “measures adopted or maintained by a Party that affect trade in the digital economy.” The DEPA makes exceptions in module 1, article 1.1.2 for services made in the exercise of governmental authority, electronic payments through delivery of financial services, government procurement, and — apart from open government data — “information held or processed by or on behalf of a Party, or measures related to that information, including measures related to its collection.” This

25 See www.wto.org/english/tratop_e/ecom_e/ecom_e.htm.