Digital Trade in Analogue Regime: Liberalization of Digital Trade and the Role of Trade Agreements

Abstract

The growing pervasiveness of Internet connectivity and the widespread use of information communication technologies have helped cross-border digital trade expand. However, as digital trade mushrooms, governments are naturally tempted to set up protectionist trade policies to protect public morals or to safeguard the domestic service industry. This is where international trade agreements come in to prevent countries from adopting discriminatory trade policies and bring heterogeneous domestic disciplines in compliance with international ones. This paper aims to examine what contribution multilateral trade agreements/negotiations, the WTO dispute settlement body, and bilateral or regional trade agreements have made to promote the liberalization of digital trade. At the multilateral trade negotiation level, several rounds of negotiation on digital trade was held based on the WTO Work Program on E-Commerce. However, WTO Member countries have agreed only on the temporary expansion of duty-free moratorium on electronic transmissions, failing to draw any concrete agreement on other thorny issues because of different national interests in digital trade. The WTO dispute settlement body have had a chance to clarify digital trade-related issues in two trade disputes: US-Gambling and China-Publication. One of the greatest progress made in US – Gambling is the confirmation that WTO rules are indeed applicable to e-commerce or electronically supplied services. It is also confirmed that GATS mode 1 (cross-border supply) commitments are applicable to cross-border electronic delivery of services. Yet in the two cases, Panels and the Appellate Body avoid to make a ruling on the issue of likeness and technical neutrality. With the Doha Round in stalemate, major players in international digital trade are relying on bilateral or regional trade agreements to establish new rules applicable to digital trade. Several achievements are witnessed: the duty-free moratorium on digital products becomes permanent

countries take a pragmatic approach toward the classification of digital products

the applicability of WTO rules to electronic commerce is confirmed

non-discriminatory treatment is applicable to digital products

deep digital trade rules start to appear. Yet WTO Member countries should make their best endeavor to make digital trade-relevant rules in bilateral or regional trade agreements compatible with one in the multilateral trading system. Digital trade has become an integral part of multilateral trade negotiations and regional trade agreement negotiations. This study examines the liberalization movement of digital trade in three arenas: in WTO multilateral trade negotiations (WTO-led liberalization), in WTO dispute settlement body (DSB-led liberalization), and in regional trade agreements (RTA-led liberalization). Global trade environment surrounding digital trade, for the time being, is likely to be established through regional trade negotiations and common provisions in e-commerce chapters are expected to become a global trade norm. With few achievements so far, uncertainties about the future negotiation process make desire for global rules on digital trade nothing but swelling. Negotiation shall continue.