WTO members introduce proposals on e-commerce for the December Ministerial

Member countries of the World Trade Organisation (WTO) are preparing for the next Ministerial Conference (MC11) to take place in December, in Buenos Aires. E-commerce is high on the organisation’s thematic priorities. Member states have started producing draft texts, despite the lack of a unified view on how to move discussions forward, aiming to shape the agenda for the Ministerial.

Preparatory discussions for the WTO MC11

E-commerce was introduced as a topic at the WTO as early as 1998, following the Ministerial Declaration on Global Electronic Commerce. Nevertheless, the report produced by the chairperson of the Council for Trade in Goods, mentions that progress has so far been uneven, and has mostly focused on the pillar of services. The expectations on making a breakthrough have never been so high as they are this year. Some countries would like to launch the negotiation of a treaty on e-commerce in Buenos Aires.

In preparation for the WTO MC11, non-papers were circulated in July 2016 with the aim of enhancing the understanding of the different views espoused by member states. The papers do not express formal negotiating positions, but represent an attempt to brainstorm on a potential agenda and on the topics it should comprise. These non-papers were discussed in a previous blog post. They include several regulatory areas and issues which have traditionally been part of the digital policy agenda, such as data localisation, interoperability, network neutrality, privacy, cybersecurity, encryption, and access to the source code.

The non-paper put forth by the European Union (EU) on behalf of its 28 member states and ten other countries, provided a mapping of the trade-related aspects of e-commerce that would fall under the remit of the WTO. In the EU proposal, issues were clustered into four groups: regulatory frameworks, open markets, initiatives facilitating the development of e-commerce, and transparency of the multilateral trading system. Some other delegations have opined that the EU document is comprehensive and could be used as a starting point for discussions, an understanding that seems to be confirmed by the fact that new versions of the EU non-paper have been published in June 2017, taking onboard additional co-sponsors of the proposal: Ukraine and Moldova.

The EU presents a draft proposal

In addition to its non-paper, the EU recently shared with the members of the Council for Trade in Services, the communication ‘An enabling environment to facilitate online transactions’ (TN/S/W/64). This document has two important characteristics. First, it narrows the scope of topics mentioned in the non-paper, singling-out three issues: consumer protection, unsolicited messages (spam), and authentication, trust services and electronic contracts. Second, it makes a concrete proposal of a legally binding text encompassing principles in the four aforementioned areas, which would be the basis for the development of regulatory frameworks on these issues.

By means of this text, member states would oblige themselves to adopt measures on the national level leading to the implementation of the agreed principles, or would commit to refraining from adopting measures that would be contrary to those principles. The key thematic areas included in the document are the following:

• Consumer protection: members shall adopt or maintain measures that protect consumers from fraudulent and deceptive commercial practices and recognise the importance of co-operation between their respective national consumer protection agencies.
• Unsolicited commercial electronic messages: members shall protect consumers from spam by adopting measures that: require the consent of recipients to receive commercial messages; require suppliers to clearly identify themselves and to provide mechanisms to prevent the future reception of messages; and provide channels of recourse against non-compliant suppliers of commercial messages.
• Electronic authentication and trust services, including electronic signatures: members shall not deny legal effect and admissibility of electronic authentication and trust services, solely on the basis that they are in electronic form.

In addition, the text proposed definitions to some terms that had not yet been defined at the WTO, such as unsolicited commercial electronic messages, electronic authentication and electronic trust services.

The communication from the EU does not make clear whether these topics have been selected to receive priority over other potential areas of negotiation, but it makes the case that ‘a WTO outcome’ in the three areas would benefit consumers, strengthen trust, facilitate e-payments and unlock the potential of e-commerce in developing regions, where legal frameworks are not yet well-developed. In the context in which many developing countries seem reluctant to launch a full-fledged negotiating process on e-commerce, the selection of relatively non-controversial topics seems to be a strategic move.

Consumer protection increasingly requires an international approach. In the past, consumers rarely needed international protection; they bought locally and therefore needed local protection. With the growth of e-commerce, an increasing number of transactions takes place across international borders, requiring a global coordinated approach. Nevertheless, any initiative on consumer protection at the WTO should take into account and be consistent with previous efforts of harmonisation on the global level. The United Nations has developed Guidelines for Consumer Protection (UNGCP), revised in 2015. They provide a set of principles and define the main characteristics of effective consumer protection legislation, enforcement institutions, and redress systems.

When it comes to curbing unsolicited commercial messages, it should be taken into account that technical measures can be very efficient in reducing spam. A successful case story can be found in Brazil, with the substitution of Port 25/TCP – a TCP port with low security standards – with Port 587/TCP, which has higher standards, now used for e-mail exchange. The Brazilian Internet Steering Committee (CGI.br) made the recommendation and led the educational process that gathered the buy-in of key stakeholders. The measure drastically reduced spam in Brazil.

Moreover, the request for a clear identification of suppliers of unsolicited messages could be difficult to enforce, since a large volume of spam messages actually comes from botnets (networks of hijacked personal computers that perform remotely commanded tasks without the knowledge of their owners). This could also limit the ability to seek redress against non-compliants.

The field of electronic authentication and trust services – which includes signatures, electronic seals, time-stamps and website authentication – would benefit from international harmonisation. The text proposed in the EU’s communication seems to adopt a minimalist approach with regards to authentication and trust services, specifying that they cannot be denied recognition just because they are in electronic form, but not getting into details about specific methods for the electronic transaction. Although this approach may be adequate for a norm focused on advancing principles, there is a need to make further progress on standardisation in order to guarantee interoperability. This requires coordination with the many international and non-governmental organisations responsible for standardisation in this field.

The benefits of transparency

Although the EU’s non-paper has been published on the website of the WTO, the content of EU’s communication has been restricted to member countries. The communication has, nevertheless, been shared by third parties in public mailing lists. Making e-commerce discussions more transparent could benefit WTO member states. As they start to navigate a complex digital policy sea, it is important to consider the vast amount of knowledge accumulated over the years outside the walls of the organisation. Creating channels of dialogue with non-governmental stakeholders is key to achieving efficient and enforceable decisions at the WTO.