electronic commerce

The Impending Collapse of a Key Digital Rule

The Impending Collapse of a Key Digital Rule

At the end of November, the 164 members of the World Trade Organization (WTO) will meet. In what was originally billed as an every-other-year obligation but has been less smooth in practice, trade ministers will be gathering in Geneva for MC12. There are a number of outcomes that are meant to flow from the session, including something on the apparently endless negotiations over fisheries subsidies, a few bits and bobs that might be pulled from various plurilateral initiatives, and maybe an announcement on trade and health. (Stay tuned for the Talking Trade update in the wake of MC12.) But what has not been noticed is that 2021 is likely to spell the end to a critically important digital trade rule. It goes by the innocuous name of the “customs moratorium on electronic transmissions.” It may be that the bland and unfamiliar phrasing has not captured imaginations. Or it may be that this provision has seemed to be under threat for so long that most have forgotten about it. Covid disruptions have not helped anyone focus on much. But now odds are high that the moratorium will actually fall at MC12. Companies and consumers will have an unexpected and potentially rude awakening to this apparently minor rule that did not ever get the support it needed.

The WTO at a Crossroads

Having agreements that may not apply to all members also makes using the final agreements trickier for companies.  The main reason for negotiating trade rules in the first place is to create common practices for businesses to help reduce risk and uncertainty in the trade environment.  However, as the WTO has gotten bigger and as some members have grown bolder in their obsession with using the consensus principle as a means for blocking all actions, the institution has clearly gotten bogged down.   One way to move forward is to allow smaller groupings to proceed with issues that matter to them.  This process is now, apparently, going to begin again at the WTO.  First on the agenda is the start of a possible work program on electronic commerce, supported by about 70 members.