The Joint Statement Initiative on Electronic Commerce as a Remedy for the Digital Trade Challenge to Global Trade Governance

Abstract

The World Trade Organization (WTO) recognizes the importance of electronic commerce (e-commerce) for global trade almost since its inception. As early as 1998, the organization established the Work Programme on Electronic Commerce to analyze the challenge that e-commerce presents to the WTO regime. However, in 2023, the work program is still in its exploratory phase and lacks a mandate for negotiations. Consequently, in 2017, a group of WTO members declared in a joint statement their interest in advancing the discussions on e-commerce. One year later, the Joint Statement Initiative on Electronic Commerce (JSI) reached its negotiating stage. Further success in those negotiations allowed consolidating the text proposals from the several JSI participants into a draft agreement on e-commerce. By late 2022, the participants had agreed upon most provisions in that agreement. Despite the progress made in the negotiations, important issues remain unresolved. Open challenges in the JSI negotiations include rules on market access, custom duties on electronic transmissions, cross-border data flows and data localization, and source code. Different policy principles and diverging economic interests make consensus on these issues difficult even among the three “major digital trading powers,” the United States of America, the European Union, and China. Therefore, one view in the academic literature speculates that the JSI participants might opt for an agreement with a limited scope that excludes the most contentious issues. Furthermore, the JSI negotiations have yet to address the legal architecture of the eventual agreement. The most likely outcome is a critical mass agreement that allows all WTO members to join but benefits even non-parties. Because of the large share of global trade represented by the JSI participants, the economic gains from limiting the benefits to the parties do not justify the higher legal burden of a closed plurilateral agreement. At this time, opposition from India, South Africa, and other WTO members makes a multilateral agreement practically impossible. Implementation through existing schedules would have only limited effect. An agreement outside the WTO framework would strip the agreement of the benefits that result from WTO membership, and it would significantly weaken the organization.