India, South Africa, others skip WTO negotiations on e-commerce at Davos meet

The US and China, embroiled in a worsening trade war, on Friday joined hands with more than 70 countries to launch World Trade Organization (WTO) negotiations on trade-related aspects of e-commerce on the margins of the World Economic Forum meeting in Davos.

Significantly, the US, which is a signatory to the joint call issued by 75 countries, was absent at the meeting because of the shutdown of the federal government. However, the US is in the forefront of crafting the initiative that wants to frame rules for conducting e-commerce at the WTO.

Despite serious concerns on data flows and growing opposition to localization of servers for holding data within national borders, the US wants rules for cloud computing to ensure its leading companies—Amazon, Microsoft, and Apple among others—control the global cloud computing businesses.

India, South Africa and a large majority of countries at the WTO chose to stay away from the meeting on the grounds that they would like to adhere to the WTO’s 1998 work programme on e-commerce.

India has all along said the best way to achieve a balanced multilateral outcome in e-commerce is to complete the exploratory work in the e-commerce under the 1998 work programme.

South Africa’s trade minister Rob Davies characterised the call to launch the e-commerce negotiations as a political statement without substance. South Africa said it does not want to be bulldozed into a process without knowing the implications. “It a first draft and we want to see what it contains,” Davies said.

In a political statement issued after a brief breakfast meeting, the three chairs overseeing the plurilateral process, Australia, Japan and Singapore, confirmed the intention of more than 75 countries “to commence WTO negotiations trade-related aspects of e-commerce”.

“We will seek to achieve a high standard outcome that builds on existing WTO agreements and frameworks with the participation of as many WTO members as possible,” the signatories said.

“We recognise the unique opportunities and challenges members face, including developing countries and LDCs, as well as micro, small and medium sized enterprises, in relation to e-commerce,” the signatories said in a bid to woo other developing countries who stayed out of the plurilateral initiative.

The signatories appealed to other countries who are not part of the initiative to “participate” in order to further enhance the benefits of e-commerce for businesses, consumers and the global economy.

China’s trade envoy to the WTO, Zhang Xiangchen, said that “China want to be part of the negotiations” for achieving a balanced outcome. He said it would be important to arrive at balanced rules for e-commerce.

“The multilateral trading system is in a deep crisis and against this, the launching of e-commerce negotiation will be in a significant way help reinvigorate the negotiating function of the WTO, and shore up confidence in the multilateral trading system and economic globalisation,” he said.

China’s envoy said he wants to support “making rules on trade-related aspects of e-commerce at WTO” that will revitalise “WTO negotiating function and the necessary reform of the WTO, and will help the WTO better respond to calls from the industry and boost the confidence of all in the multilateral trading system and economic globalisation at large.”

Nevertheless, there are differences among sponsors over several issues concerning “free flow” of data across borders and regulatory barriers imposed on retaining data locally in the servers, said people familiar with the development.