Open Digital Trade: Background Paper (DC on Trade)

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Background Paper
Dynamic Coalition on Trade & the Internet [Full Report]

Preface 

Overview of Digital Trade Frameworks 
2.1 General Agreement on Tariffs and Trade (GATT) 
2.2 General Agreement on Trade in Services (GATS) 
2.3 Information Technology Agreement (ITA)
2.4 Developments from the Doha Round 
2.5 Digital Trade and Dispute Settlement at the WTO 
2.6 Declaration on Global Electronic Commerce 
2.7 Trade-Related Aspects of Intellectual Property Rights (TRIPS) 
2.8 Digital Trade and WTO: Present Status 

Plurilateral and Mega-regional Trade Agreements 
3.1 Trans-Pacific Partnership (TPP) 
3.2 Trade in Services Agreement (TiSA) 
3.3 Transatlantic Trade and Investment Partnership (TTIP) 
3.4 North-American Free Trade Agreement (NAFTA) 
3.5 The Regional Comprehensive Economic Partnership (RCEP) 

4. Digital Trade and Internet Governance 
4.1 Paperless Trading 
4.2 Custom Duties 
4.3 Cross-border Data Flows and Data Localization 
4.4 Intellectual Property Rights 
4.5 Unsolicited Emails and Malware 
4.6 Prohibition on Source Code Disclosure 
4.7 Access: Net Neutrality 
4.8 Online Protection of Personal Information 
Part IV: Transparency and Openness in Trade Negotiations 
Rethinking Internet and Trade 
Brussels Declaration on Trade and Internet 

Part IV: Transparency and Openness in Trade Negotiations 
Rethinking Internet and Trade 
Brussels Declaration on Trade and Internet

LIST OF ABBREVIATIONS
APEC Asia-Pacific Economic Cooperation
EU European Union
FTAs free trade agreements
GATS General Agreement on Trade in Services
GATT General Agreement on Tariffs and Trade
GDP gross domestic product
ICANN Internet Corporation for Assigned Names and Numbers
IP Internet Protocol
IPRs intellectual property rights
ISPs Internet service providers
IT information technology
ITA Information Technology Agreement
MNEs multinational enterprises
OECD Organisation for Economic Co-operation and Development
PCs personal computers
RCEP Regional Comprehensive Economic Partnership
SMEs small and medium enterprises
TBT Technical Barriers to Trade
TiSA Trade in Services Agreement
TRIPS Trade Related Intellectual Property Rights
TPP Trans Pacific Partnership
TTIP Transatlantic Trade and Investment Partnership
UNCITRAL United Nations Commission on International Trade Law
UPICC Uniform Principles of International Commercial Contracts
US United States
WIPO World Intellectual Property Organization
WTO World Trade Organization

1. Preface
Proliferation of digital technologies and cross-border flow of information has created social, economic
and cultural growth. Nations now face the challenge of ensuring that the opportunities and benefits driven
by Internet and communications technologies (ICT) are shared by all. With the development of national
standards and the emergence of digital players transforming production processes and industries, there is
increased push for centrally controlled regulatory environment for the Internet and Internet related
services. This is driven by both economic and strategic interests.

The pace of ICT adoption and its impact on national economies has raised concerns about the legitimacy
of control and civic participation. Issues that were considered purely technical have transformed into
areas for strategic governance and tools for foreign policy. While the Internet was conceived as a
technology that would defy national borders, the historical imbalance of the United States' domination of
ICTs and growing fears of surveillance has created the political momentum for increased state control on
regulatory aspects of the Internet.

The evolution of the Internet from a research network to a platform for commerce presents challenges for
trade law. The World Trade Organization (WTO) agreements were developed more than two decades ago
and are inadequate in dealing with complex issues of present day digital economy. While the role of
nation states in regulating physical goods and services has been established in global trade order, the role
of nation states with respect to cross-border flow of information is less understood.

This is partly due to the novelty of digital technologies and the associated unorthodox processes that have
evolved in the context of its governance. Existing Internet governance (IG) frameworks—many of which
are still evolving—are led by multistakeholder decision-making where state and non-state actors address
issues through open and transparent arrangements of rulemaking. This is in contrast to conventional
regulatory domains which feature state-led processes for the development of global norms and treaties.

In the absence of global binding norms on Internet related issues, and in light of fears of rising 'digital
protectionism', states are are seeking to draw up rules and frameworks for regulation of the digital
economy through conventional mechanisms for international cooperation such as trade agreements.
Although trade and Internet governance appear to be disconnected, with the growing significance of the
Internet for international trade, a tenuous and complex relationship between the fields is emerging that
will have repercussions on the development of the digital economy.

Direct or indirect inclusion of contemporary issues related to the Internet are being included in plurilateral
and multilateral arrangements with the aim to counter restrictive measures on data flows that hinder cross-
border trade. For example, the Electronic Commerce Chapter of the Trans-Pacific Partnership Agreement
(TPP) contains provisions that ban data localization. Such provisions are accompanied by other legal
obligations on cybersecurity, spam and intellectual property. Similar provisions are also being proposed in
other ongoing plurilateral trade negotiations including the the Transatlantic Trade and Investment
Partnership (TTIP), the Trade in Services Agreement (TISA), the Regional Comprehensive Economic
Partnership (RCEP) and most recently the North American Free Trade Agreement (NAFTA ).

Any framework or rules evolving out of these agreements will have a deep impact and Internet
governance processes and policymaking. Regulating commercial aspects of Internet through trade
agreements entails choices that will significantly influence and bear repercussions for critical aspects of
the emerging digital economy. It requires coming up with global solutions that strike a balance between
trade liberalization and preservation of fundamental goals of Internet governance such as openness,
transparency and protection of human rights. It would also necessitate resolving differences in political
and ideological stance on issues like privacy, innovation and democratic standard setting.

It is important to understand the complexities and risks involved in aligning the disciplines of trade policy
and Internet governance. Despite recent initiatives, it is important to take a step back and question
whether trade agreements should be concerned with setting standards for Internet technologies or on
issues such as national security and privacy. Going forward policymakers and governments need to
understand how the application of international trade law could be better aligned with values of Internet
governance such as openness and inclusion.

With the aim of bringing in a multistakeholder approach to application of international trade civil society,
private sector, technical and academic community members have come together to form the Dynamic
Coalition on Trade and the Internet (DCTI). The Dynamic Coalition was formally approved by the
Internet Governance Forum (IGF) Secretariat in February, 2017 and the inaugural meeting will be held in
Geneva in December 2017. The Dynamic Coalition aims to serve as a liaison between representatives
from trade institutions and government delegations and the broader IGF community. The Coalition been
established to address the lack of transparency in international trade negotiations and domestic
consultation processes and provide recommendations about how Internet public policy can be developed
in a transparent and inclusive way. The Coalition will also serve as an interface for the exchange of
information and best practices on Internet public policy issues.

This paper is a resource developed for the DCTI and summarizing the issues, concerns and recent
developments on trade and digital rights. The paper is divided in four parts.
Part I provides a background to the evolution of trade frameworks in the context of digital trade agenda.
This section will draw on history of intellectual property trade frameworks and recent attempts to
introduce e-commerce related issues in the digital trade agenda.

In Part II we cover the trade negotiations that have included digital issues or are currently being
negotiated. We delve into the status of negotiations including the areas where countries have reached
consensus or others where negotiations face inability to pass muster and what experts have been saying
on these issues.

Part III we address some of the emerging themes and issues in the context of the digital economy that are
increasingly being included in trade agreements. We analyze these provisions based on the implications
for Internet governance and on consumers and human rights online.

In Part IV we highlight some of the procedural inconsistencies between the multistakeholder approach
that is common to Internet governance. We provide a broad-range of recommendations for introducing
transparency and opening up digital trade negotiation processes by by governments for the participation
by affected stakeholders and NGOs. The recommendations seek to establish a framework for participation
of diverse stakeholders when developing rules through regional and mega-regional trade treaties.