Digital Trade Agreements Failing to Reflect Internet Community Input: UNCTAD – EFF

A hallmark of the new generation of trade agreements under negotiation, such as the North American Free Trade Agreement (NAFTA) and the Regional Comprehensive Economic Partnership (RCEP), is the inclusion of chapters on e-commerce or digital trade. But interest in using trade agreements to address issues such as data localization, disclosure of software source code, and platform safe harbors, isn’t restricted to these regional trade negotiations.

The same issues have also been raised at the international level at bodies such as the World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD), and the World Economic Forum (WEF). Recent reports from some of these bodies highlight some serious shortcomings in the way that these digital issues are being shoehorned into new trade agreements without adequate transparency and consultation.

UNCTAD Information Economy Report 2017

Last week UNCTAD released the 2017 edition of its Information Economy Report (PDF). The annual publication acknowledges that a growing number of countries are adopting disincentives or barriers to processing, storage and transfer of data, which are driving the push to address these barriers through trade agreements. It suggests that  harmonization and interoperability of national data protection regimes could help to to find an appropriate balance between supporting processes that allow the transfer of data, on the one hand, and addressing concerns related to issues such as privacy and security on the other.

But more significantly the report also criticizes the lack of dialogue between the trade and Internet communities on risks related to data privacy and security, and devotes an entire chapter to exploring the interfaces between trade and Internet governance policy making, including the differences in workings and expectations of the two communities. The chapter stresses the need for aligning trade processes with multi-stakeholder values such as transparency, openness, and inclusive peer-to-peer participation by any interested party on an equal-footing. It recommends a bottom-up agenda-setting and iterative multi-stage consultation processes to address Internet-related issues, such as those being proposed for the digital trade chapter of NAFTA. EFF’s Open Digital Trade Network and our Brussels Declaration on Trade and the Internet that call upon governments to make trade policymaking on Internet issues more transparent and accountable are explicitly referenced in the report.

In contrast to the hard law-making approach that the U.S. Trade Representative is bringing to the NAFTA negotiations, the report draws upon a  framework proposed by the World Economic Forum (WEF) to suggest how norms for e-commerce and the digital economy should be developed. The WEF paper outlines a three-pronged strategy:

  1. Rather than attempting to agree on binding trade rules, nations should come together to issue declarative statements of mutual interest, based on inputs from stakeholders at the national and global level. Currently efforts are underway to formulate principles and best practices for cooperation across several multilateral mechanisms including the G-7, G-20 and OECD. UNCTAD is put forward as a possible facilitator to help improve synergies amongst these efforts and serve as a platform for formulating soft law rules  outside of the pressure of trade negotiations.
  2. Groups of experts from both the trade and Internet communities should be used to build consensus on key issues. Consensus building is seen as critical for reconciling the multi-stakeholder and traditional trade processes to create an approach that is open, transparent and inclusive at the levels of agenda setting, rules design and implementation, while preserving governments’ final decision making authority. One possible model for such expert groups would be based on the Global Commission on Internet Governance and the Global Commission on the Stability of Cyberspace (GCSC). In tandem with this “inner circle” of experts, a more broadly inclusive range of interested stakeholders could be engaged through online platforms and given opportunities to provide inputs into the work of the inner circle. The UNCTAD E-Commerce Week, a new UNCTAD Intergovernmental Group of Experts on E-Commerce and the Digital Economy, and the Internet Governance Forum (IGF) are recommended as potential avenues for engagement with this outer circle.
  3. There should also be long-term efforts to open up trade processes so they can benefit from being informed by a broader matrix of analysis and dialogue.  Reforms allowing relevant stakeholders to track developments and contribute perspectives and experiences, could increase their buy-in and support for trade policies being developed through trade processes. (EFF has recommended such a set of reforms for U.S. trade policymaking.) The report also recommends an assessment on whether trade process or other mechanisms are more suitable for developing new rules on digital issues not covered under existing trade rules.

All of these recommendations are derived from existing practices drawn from other sectors or in other trade negotiations on the digital economy. For example, the European Commission report on the Trade in Services Agreement (TISA) notes that consultations are an essential part of every trade negotiation, stating, “The interaction between international and local experts, NGOs, business, national government officials, EU officials and other stakeholders leads to a two-way exchange of information.”  

Although it doesn’t go as far as we would like, the Commission’s approach to the TISA negotiations does provide a stark contrast with those of the NAFTA negotiations.  For example, there is a dedicated website which forms an essential part of the consultation process and serves as the main tool for sharing information and updates about the study with stakeholders. The website is used to share drafts of the inception and interim reports and newsletters. It also includes information and documents from civil society dialogues, stakeholder surveys, and summary reports of the TISA negotiation rounds. A dedicated email address exists where stakeholders can send their questions or feedback on the reports.

Going forward, the Commission has also committed to releasing its negotiating mandates for trade agreements and establishing a new Advisory Group on EU trade agreements.

Future of Multilateral Negotiations at the WTO

The UNCTAD and WEF recommendations aren’t relevant only to regional and bilateral negotiations such as those in NAFTA and RCEP, or to plurilateral deals such as TISA, but also to the future of fully multilateral trade discussions at the WTO. In parallel to the release of the Information Economy Report and the first meeting of UNCTAD’s Intergovernmental Group of Experts which took place on October 4-6, Ministers of a select group of WTO member countries gathered in Morocco between 9-10 October to firm up the agenda for negotiations for the WTO’s upcoming Ministerial Conference in December in Buenos Aires, Argentina.

The WTO’s biennial summit is the biggest multilateral consultation among nations regarding global trade and investment norms, and the meeting in December will set the discussion and norms for sectoral issues, at least for the next 2 years. Several countries including United States, Australia, Switzerland and Norway have submitted proposals to include global e-commerce rules. Other countries are opposing these proposals on different grounds, which has resulted in a stalemate at the WTO. WTO procedures mandate that any new resolution garner the unanimous support of member-countries before being adopted.

The Morocco “mini-Ministerial” aims to provide political momentum on these long-standing issues and reconcile member nations at  loggerheads with each other. The EU has tabled proposals in several areas including e-commerce and recently called upon WTO partners to plan for substantive ambitious outcomes. However other member states are neither as optimistic nor keen on expanding the the multilateral trade order. In a series of tweets on Tuesday, the Indian Commerce and Industry Minister Suresh Prabhu said: “Trying hard to ensure multilateral WTO remain intact, despite huge pressures. Having several bilaterals with all important countries”. India is of the view that WTO members need to first deal with the issues which were already under negotiation, before moving on to new ones and urged nations to “avoid further widening and perpetuation of the imbalance between developed and developing countries.”

Around 300 civil society organisations from 150 nations have also raised concerns over the e-commerce liberalisation seemingly gaining priority over traditional issues such as food security. The letter (PDF) addressed to WTO members describes a push for “a dangerous and inappropriate new agenda under the disguising rubric of ‘e-commerce’, while there is no consensus to introduce this new issue during or since the last WTO Ministerial conference.” The letter argues that the WTO is not the proper forum to negotiate e-commerce issues which “have either already been discussed and resolved, or are currently being discussed, in other forums, most of which are more responsive and accountable to public interest concerns than the WTO.”

Despite our opposition to the secretive trade agreements of the past, EFF isn’t against free trade. We would like to see future trade agreements that work for Internet users and innovators, as well as for traditional trade stakeholders. But as UNCTAD and the WEF recognize, expectations around the levels of transparency and public consultation that can be expected in trade negotiations have changed. This is especially so in relation to Internet-related rules, where prescriptions nominally about commerce and trade can affect citizens’ free speech and other fundamental individual rights. The future for trade negotiations whether they are pursued at bilateral, plurilateral, or multilateral venues lies in the adoption of more transparent, consultative practices. The WEF and UNCTAD recommendations are a welcome exploration of possible reforms to trade negotiation practices to make them fit for the 21st century.

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