WASHINGTON– July 26 2024 – The World Trade Organization has published an interim “Agreement on Electronic Commerce” after five years of negotiations in the Joint Statement Initiative on Electronic Commerce. The Agreement offers a mixed result.
On the one hand, the Agreement contains a prohibition on the imposition of customs duties on electronic transmissions, as well as provisions on E-Authentication, E-Contracts, E-Payments, and Open Government Data. The Agreement also contains protections for cybersecurity and consumers online. Finally, the Agreement’s robust privacy provisions include obligations: (1) to adopt or maintain a legal framework that provides for the protection of the personal data of users of electronic commerce; (2) to account for international norms of data protection; (3) to avoid discriminating against non-nationals; and (4) to promote interoperability/compatibility with other privacy frameworks.
On the other hand, the Agreement does not contain disciplines on cross-border data, localization mandates, discriminatory treatment of digital products, or source code. Furthermore, the Agreement contains a self-judging exception that allows WTO members to restrict data transfers on a purely subjective basis. This provision – Article 25 – is an open-ended exception from all of the Agreement’s outcomes for any measure that any WTO member unilaterally asserts is a “measure on the protection of personal data and privacy, including with respect to cross-border data transfers.”
The only limit on this exception is a requirement that the Party “provide for instruments enabling transfers.” It should be observed – for example – that China’s uniquely onerous standard contract requirements and intrusive data security assessment mandates could arguably qualify as “instruments enabling transfers.” To the extent that Article 25 gives international legal cover to such measures, it is not clear that Article 25 has been drafted in a way that actually advances privacy or international trade.
Several major economies have indicated that they do not plan to join the Agreement at this time, including Brazil, Indonesia, and the United States. The United States issued the following explanation of its refusal to join the Agreement:
The text released today [is]… an important step forward … [but] the current text falls short and more work is needed, including [on] the essential security exception. We look forward to working with interested Members in finding solutions to all remaining issues and moving the negotiation to a timely conclusion.
Future active US participation is of critical importance, including to ensure that the Agreement’s legal provisions support their stated objectives, reflect democratic values, and support US strategic interests.