World Trade Organization conference could be consequential for e-commerce

* This piece was cowritten by Farzaneh Badiei who serves as the Executive Director of the Internet Governance Project.

Introduction

The World Trade Organization (WTO) will be holding a ministerial conference from Dec. 10 to 13. This conference could be of high importance for e-commerce and internet governance.

The WTO has discussed the e-commerce work program at every ministerial conference – which occurs every four years – since 1998. It has not, however, advanced on any e-commerce-related discussions, and discussions that have occurred have not been binding.

For the WTO to get involved with e-commerce in a more binding fashion, an agreement must be made. A WTO e-commerce agreement would prevent data localization and maintain better privacy protection for consumers. Additionally, the WTO should consider balancing intellectual property rights in the context of e-commerce and implementing strong fair-use provisions. 

A brief background on WTO activities on e-commerce

In 1998, the WTO issued a declaration that established a work program to identify trade issues related to e-commerce. Four councils were mandated to carry out the work program: the Council for Trade in Services, the Council for Trade in Goods, the Council for TRIPS and the Committee for Trade and Development. The WTO ministers have considered the work program at each of the ministerial conferences and have instructed the work program to continue.

However, there is no sign that the councils have taken binding action related to e-commerce. Despite early initiation of and involvement in the trade issues work program, the WTO’s involvement with setting trade rules regarding e-commerce has been minimal. The WTO’s only decision regarding e-commerce since 1998 was the Declaration on Electronic Commerce, which stated that “Members will continue their current practice of not imposing customs duties on electronic transmissions.” The declaration has remained unchanged and has had positive effects on free flow of information and digital free trade.

WTO should have a more active role in e-commerce

The passive role of the WTO might not last; various trade agreements are being negotiated and discussed in different forums, and these negotiations include e-commerce chapters. Europe and the United States, among other countries, have already requested that e-commerce-related topics be discussed at the ministerial meeting this month. The flurry of interest in the issue make now an excellent time for the WTO to look into coming up with trade related e-commerce policies.

Member states have also raised the need to discuss the role of the WTO in e-commerce, and whether this role should change, at the WTO Goods Council. Some member states have agreed to discuss the formation of a working party on e-commerce. A working party at the WTO would have more authority to make decisions and start negotiations, and would thus represent a step forward towards e-commerce involvement.

Why is the WTO a suitable forum to discuss e-commerce?

Data localization hampers digital trade, requires information services to incur substantial costs to provide their services globally, and defeats the very cross-border nature of the Internet. Additionally, data localization can have damaging effects on freedom of expression and other human rights. In countries with weak or no privacy protection laws, data localization can lead to surveillance and activist arrests. With the rise of internet-of-things (IoT) devices and cloud computing, cross-border data flow is gaining even more importance.

Historically, trade agreements have helped protect and sustain information services and the free flow of information. The WTO should agree on rules that facilitate cross-border data flow and prevent data localization. This can prevent data localization, which is a form of non-tariff trade barrier, can be framed as trade protectionism and it will not contribute to the growth and expansion of IoT industry.

Moreover, with a multilateral agreement on minimum privacy protection for consumers, WTO can commit its members to consider privacy measures in their local laws. This measure would be especially beneficial to those countries with no privacy laws. The practice of not imposing customs duties on electronic transmissions should also be indefinitely binding on the member states.

Intellectual property rights, digital trade and the WTO

Intellectual property rights (IPR) are government-granted protections used to encourage innovation and creative output by ensuring monetary compensation for the use of a work. Since the WTO’s institution of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), a balance has existed in terms of protected works throughout the member countries. Whilst TRIPS is broad, its light-touch approach has provided guidance for countries to cultivate their own domestic laws relating to intellectual property.

The protection and enforcement of IPR has always been a longstanding component of United States international trade policy. But as IPR creeps into more internationally traded goods –  especially those conventionally seen as “low tech,” such as household goods and automobiles – it is implicit upon the WTO to continue to its broad approach to IPR protection. As more and more goods become “smart,” countries cannot allow the enforcement of IPR to put undue burdens on consumers, researchers and tinkerers. The WTO should be careful not to impose excessive copyrights or “digital locks” that keep users from accessing goods they legally purchase.

Since IPR has been stripped from the Trans-Pacific Partnership, the WTO would do well to retain a balanced approach to IPR. The WTO can achieve such a balance by promoting open and flexible general exceptions like the American four-step fair use test. While it may be unrealistic to expect WTO agreements to include language mirroring U.S. law, the WTO could include similar language to the TPP’s call for all parties to “endeavor to achieve balance” in copyright. Currently, forty-seven countries have some form of fair use.

The WTO should also express caution when considering IPR term length. Regarding copyright, for works other than a photographic work or work of applied art, the term length is calculated on a basis other than the life of the person, and it will be no less than 50 years. Regarding patent, it is 20 years from the filing date. Protecting works is important and this should be stressed, however onerous term length will stifle derivative works and the ability of users to enjoy the fruits of a creator’s labor in new and innovative ways.

 

 

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